-----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, Dr5I3EO8yz3UCJIuHv27bNINqjxh8eAepkCVBGvCr/WDFEBnP+Y8qa9BqpN2cEMD qJpaxoHwtSwX8AnljCBdGw== 0001002105-99-000092.txt : 19990517 0001002105-99-000092.hdr.sgml : 19990517 ACCESSION NUMBER: 0001002105-99-000092 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HILB ROGAL & HAMILTON CO /VA/ CENTRAL INDEX KEY: 0000814898 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 541194795 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15981 FILM NUMBER: 99623233 BUSINESS ADDRESS: STREET 1: 4235 INNSLAKE DR CITY: GLEN ALLEN STATE: VA ZIP: 23060 BUSINESS PHONE: 8047476500 MAIL ADDRESS: STREET 1: P O BOX 1220 CITY: GLEN ALLEN STATE: VA ZIP: 23060 10-Q 1 10-Q - HILB, ROGAL AND HAMILTON COMPANY SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1999 Commission file number 0-15981 HILB, ROGAL AND HAMILTON COMPANY (Exact name of registrant as specified in its charter) Virginia 54-1194795 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P. O. Box 1220, Glen, Allen, VA 23060-1220 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (804) 747-6500 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at May 3, 1999 - ---------------------------------- ---------------------------- Common stock, no par value 13,201,314 HILB, ROGAL AND HAMILTON COMPANY INDEX ----- Page ---- Part I. FINANCIAL INFORMATION Item 1. Financial Statements Statement of Consolidated Income for the three months ended March 31, 1999 and 1998 3 Consolidated Balance Sheet March 31, 1999 and December 31, 1998 4 Statement of Consolidated Shareholders' Equity for the three months ended March 31, 1999 and 1998 5 Statement of Consolidated Cash Flows for the three months ended March 31, 1999 and 1998 6 Notes to Consolidated Financial Statements 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-13 Item 3. Qualitative and Quantitative Disclosures About Market Risk 14 Part II. OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds 14 Item 6. Exhibits and Reports on Form 8-K 15-16 PART I -- FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS STATEMENT OF CONSOLIDATED INCOME HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1999 MARCH 31, 1998 Revenues Commissions and fees $45,975,124 $46,568,841 Investment income 337,115 375,805 Other income 3,941,376 344,380 ----------- ----------- 50,253,615 47,289,026 Operating expenses Compensation and employee benefits 25,069,940 24,796,899 Other operating expenses 9,941,029 9,921,756 Amortization of intangibles 2,004,499 1,937,231 Interest expense 686,323 563,749 ----------- ----------- 37,701,791 37,219,635 ----------- ----------- INCOME BEFORE INCOME TAXES 12,551,824 10,069,391 Income taxes 5,114,868 4,123,848 ----------- ----------- NET INCOME $ 7,436,956 $ 5,945,543 =========== =========== NET INCOME PER SHARE: Basic $0.61 $0.47 ===== ===== Diluted $0.60 $0.46 ===== ===== See notes to consolidated financial statements. 3 CONSOLIDATED BALANCE SHEET HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES (UNAUDITED)
MARCH 31, DECEMBER 31, 1999 1998 ------------ ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 24,044,251 $ 19,394,958 Investments 5,094,983 3,383,742 Receivables: Premiums, less allowance for doubtful accounts of $1,335,000 and $1,505,000, respectively 39,708,664 45,313,620 Other 6,873,699 6,257,370 ------------ ------------ 46,582,363 51,570,990 Prepaid expenses and other current assets 3,057,245 3,852,095 ------------ ------------ TOTAL CURRENT ASSETS 78,778,842 78,201,785 INVESTMENTS 2,978,042 3,068,140 PROPERTY AND EQUIPMENT (NET) 12,814,691 12,387,194 INTANGIBLE ASSETS Expiration rights 81,390,316 81,074,920 Goodwill 36,435,889 35,985,542 Noncompetition agreements 14,609,266 14,740,145 ------------ ------------ 132,435,471 131,800,607 Less accumulated amortization 43,842,083 44,329,974 ------------ ------------ 88,593,388 87,470,633 OTHER ASSETS 6,931,746 6,938,074 ------------ ------------ $190,096,709 $188,065,826 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Premiums payable to insurance companies $ 58,618,202 $ 65,436,784 Accounts payable and accrued expenses 12,458,883 13,025,426 Premium deposits and credits due customers 10,040,169 7,765,575 Current portion of long-term debt 2,871,354 2,277,479 ------------ ------------ TOTAL CURRENT LIABILITIES 83,988,608 88,505,264 LONG-TERM DEBT 43,112,139 43,658,306 OTHER LONG-TERM LIABILITIES 11,028,762 10,191,881 SHAREHOLDERS' EQUITY Common Stock, no par value; authorized 50,000,000 shares; outstanding 12,171,314 and 12,117,412 shares, respectively 4,596,353 3,831,208 Retained earnings 47,370,847 41,879,167 ------------ ------------ 51,967,200 45,710,375 ------------ ------------ $190,096,709 $188,065,826 ============ ============
See notes to consolidated financial statements. 4 STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES (UNAUDITED) COMMON RETAINED STOCK EARNINGS ----------- ----------- Balance at January 1, 1999 $ 3,831,208 $41,879,167 Issuance of 56,014 shares of Common Stock 765,145 Payment of dividends (1,945,276) Net income 7,436,956 ----------- ----------- Balance at March 31, 1999 $ 4,596,353 $47,370,847 =========== =========== Balance at January 1, 1998 $16,540,461 $34,798,138 Issuance of 51,600 shares of Common Stock 717,313 Purchase of 132,000 shares of Common Stock (2,412,590) Payment of dividends (1,972,225) Other 49,733 Net income 5,945,543 ----------- ----------- Balance at March 31, 1998 $14,894,917 $38,771,456 =========== =========== See notes to consolidated financial statements. 5 STATEMENT OF CONSOLIDATED CASH FLOWS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1999 MARCH 31, 1998 -------------- -------------- OPERATING ACTIVITIES Net income $ 7,436,956 $ 5,945,543 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 973,778 851,373 Amortization of intangible assets 2,004,499 1,937,231 ----------- ----------- Net income plus amortization and depreciation 10,415,233 8,734,147 Provisions for losses on accounts receivable 62,109 118,845 Gain on sale of assets (3,671,207) (148,505) Changes in operating assets and liabilities net of effects from insurance agency acquisitions: Decrease in accounts receivable 6,066,245 4,102,365 Decrease in prepaid expenses 808,604 722,911 Decrease in premiums payable to insurance companies (7,567,194) (3,641,662) Increase in premium deposits and credits due customers 2,125,746 1,121,720 Increase (decrease) in accounts payable and accrued expenses (1,658,419) 322,429 Other operating activities 161,695 18,551 ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 6,742,812 11,350,801 INVESTING ACTIVITIES Proceeds from maturities of held-to-maturity investments 449,758 1,441,413 Purchase of investments (2,070,901) (81,799) Purchase of property and equipment (1,589,075) (760,048) Purchase of insurance agencies, net of cash acquired (1,446,931) (2,891,212) Proceeds from sale of assets 4,490,306 499,361 Other investing activities (44) 30,210 ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (166,887) (1,762,075) FINANCING ACTIVITIES Principal payments on long-term debt (746,501) (779,887) Proceeds from issuance of Common Stock 765,145 717,313 Repurchase of Common Stock -- (2,412,590) Dividends (1,945,276) (1,972,225) ----------- ----------- NET CASH USED IN FINANCING ACTIVITIES (1,926,632) (4,447,389) ----------- ----------- INCREASE IN CASH AND CASH EQUIVALENTS 4,649,293 5,141,337 Cash and cash equivalents at beginning of period 19,394,958 22,314,860 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $24,044,251 $27,456,197 =========== ===========
See notes to consolidated financial statements. 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES March 31, 1999 (UNAUDITED) NOTE A--BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1999, are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Form 10-K for the year ended December 31, 1998. In accordance with industry practice, the Company has changed its reporting to state revenues net of commissions paid to outside brokers. Amounts for the prior period have been reclassified to conform to current year presentation. NOTE B--INCOME TAXES The Company files a consolidated federal income tax return. Deferred taxes result from temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. The Company's effective rate varies from the statutory rate primarily due to state income taxes. NOTE C--ACQUISITIONS During the first three months of 1999, the Company acquired certain assets and liabilities of one insurance agency for $2,244,000 ($1,450,000 in cash and $794,000 in guaranteed future payments) in a purchase accounting transaction. Proforma revenues and net income are not material to the consolidated financial statements. 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES March 31, 1999 (UNAUDITED) NOTE C--ACQUISITIONS-Continued On March 29, 1999, the Company signed a definitive Stock Purchase Agreement with PM Holdings, Inc., Phoenix Home Life Mutual Insurance Company and Martin L. Vaughan, III to acquire all of the issued and outstanding shares of American Phoenix Corporation, a subsidiary of Phoenix Home Life Mutual Insurance Company for approximately $49 million in cash, $32 million in 5.25% Convertible Subordinated Debentures due 2014, with a conversion price of $22.75 per share, callable in 2009, and 1,000,000 shares of Common Stock of the Company. The acquisition, which will be accounted for using the purchase method of accounting, closed on May 3, 1999. The Company has funded the cash portion of the purchase price with a credit facility obtained in connection with the acquisition. American Phoenix Corporation reported total assets of $106.6 million as of December 31, 1998 and revenues of $72.9 million for the year then ended. NOTE D--SALE OF ASSETS During the three months ended March 31, 1999 and 1998, the Company sold certain insurance accounts and other assets resulting in gains of approximately $3,700,000 and $149,000, respectively. These amounts are included in other income in the statement of consolidate income. Revenues, expenses and assets were not material to the consolidated financial statements. 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES March 31, 1999 (UNAUDITED) NOTE E--NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share.
THREE MONTHS ENDED March 31, 1999 March 31, 1998 -------------- -------------- Numerator for basic and dilutive net income per share - net income $ 7,436,956 $ 5,945,543 =========== =========== Denominator Weighted average shares 12,136,440 12,769,257 Effect of guaranteed future shares to be issued in connection with agency acquisitions 118,081 10,101 ----------- ----------- Denominator for basic net income per share 12,254,521 12,779,358 Effect of dilutive securities: Employee stock options 83,488 206,740 Contingent stock - acquisitions 2,885 -- ----------- ----------- Denominator for diluted net income per share - adjusted weighted average shares and assumed conversions 12,340,894 12,986,098 =========== =========== Net Income per Common Share: Basic $0.61 $0.47 ===== ===== Diluted $0.60 $0.46 ===== =====
9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations: For the three months ended March 31, 1999, commissions and fees were $46.0 million, a decrease of 1.3% from commissions and fees of $46.6 million during the comparable period of the prior year. Approximately $2.5 million of commissions were derived from purchase acquisitions of new insurance agencies. This increase was offset by decreases of approximately $3.2 million from the sale of certain offices and accounts in 1999 and 1998 and decreases due to a change in the amount and timing of certain payments from selected carriers, which are no longer heavily concentrated in the first quarter. Commissions and fees from operations owned during both periods increased 1.5%. Investment income remained relatively level and other income increased $3.6 million from the prior year. Amounts in other income include gains from the sale of certain insurance accounts and other assets of $3.6 million and $0.2 million in 1999 and 1998, respectively. Expenses remained relatively level with the prior year. Increases relate to increased earnings and purchase acquisitions, offset by the impact of certain offices sold in 1999 and 1998. The Company's overall tax rate of 40.8% for the three months ended March 31, 1998, was relatively comparable to the rate of 41.0% for the same period of the prior year. The timing of contingent commissions, policy renewals and acquisitions may cause revenues, expenses and net income to vary significantly from quarter to quarter. As a result of the factors described above, operating results for the three months ended March 31, 1999 should not be considered indicative of the results that may be expected for the entire year ending December 31, 1999. Liquidity and Capital Resources: Net cash provided by operations totaled $6.7 million and $11.4 million for the three months ended March 31, 1999 and 1998, respectively, and is primarily dependent upon the timing of the collection of insurance premiums from clients and payment of those premiums to the appropriate insurance underwriters. The Company has historically generated sufficient funds internally to finance capital expenditures for personal property and equipment. Cash expenditures for the acquisition of property and equipment were $1.6 million and $0.8 million for the three 10 months ended March 31, 1999 and 1998, respectively. The timing and extent of the purchase of investments is dependent upon cash needs and yields on alternate investments and cash equivalents. The purchase of insurance agencies accounted for under the purchase method of accounting utilized cash of $1.4 million and $2.9 million in the three months ended March 31, 1999 and 1998, respectively. Cash expenditures for such insurance agency acquisitions have been primarily funded through operations and long-term borrowings. In addition, a portion of the purchase price in such acquisitions may be paid through Common Stock and deferred cash payments. Cash proceeds form the sale of accounts and other assets amounted to $4.5 million and $0.5 million in the three months ended March 31, 1999 and 1998, respectively. The Company did not have any material capital expenditure commitments as of March 31, 1999. Financing activities utilized cash of $1.9 million and $4.4 million in the three months ended March 31, 1999 and 1998, respectively, as the Company made scheduled debt repayments. In addition, during the three months ended March 31, 1998, the Company repurchased 132,000 shares of its Common Stock under a stock repurchase program. The Company is currently authorized to purchase an additional 770,000 shares and expects to continue to repurchase shares at a decreased level from 1998 during the remainder of 1999. The Company anticipates the continuance of its dividend policy. The Company had a bank credit agreement for $40.0 million under loans due through 2003. At March 31, 1999, there were loans of $40.0 million outstanding under the agreement. In May 1999, this facility was refinanced with a $110 million credit facility obtained in connection with the acquisition of American Phoenix Corporation. The Company had a current ratio (current assets to current liabilities) of 0.94 to 1.00 as of March 31, 1999. Shareholders' equity of $52.0 million at March 31, 1999, is improved from $45.7 million at December 31, 1998, and the debt to equity ratio of 0.83 to 1.00 is decreased from the ratio at December 31, 1998 of 0.96 to 1.00 due to net income. On March 29, 1999, the Company entered into a Stock Purchase Agreement with PM Holdings, Inc., Phoenix Home Life Mutual Insurance Company and Martin L. Vaughan, III to acquire all of the issued and outstanding shares of capital stock of American Phoenix Corporation. The acquisition closed May 3, 1999. Upon consummation of the acquisition, the Company incurred debt of approximately $49 million under a credit facility obtained in connection with the acquisition and issued $32 million principal amount of 5.25% Convertible Subordinated Debentures due 2014. The Company expects repayment and servicing of the debt to be funded largely from cash flows of the combined operations. Additionally, management believes that these cash requirements will be partially offset by federal income tax benefits related to the interest expense and a portion of the goodwill amortization. Based upon the historic ability of the Company and American Phoenix Corporation to generate consistent, positive cash flows, the Company believes that the combined company will have sufficient liquidity and adequate capital resources to meet both its short- and long-term capital needs. 11 Market Risk The Company has certain investments and utilizes (on a limited basis) derivative financial instruments which are subject to market risk; however, the Company believes that exposure to market risk associated with these instruments is not material. Impact of Year 2000 Many existing computer programs use only two digits to identify a year in the date field. These programs were designed and developed without considering the impact of the upcoming change in the century. If not corrected, this could result in a system failure or miscalculations causing disruption of operations, and could conceivably have a material adverse effect on the Company. The Company's technological operations rely primarily on personal computers ("PC's") and off-the-shelf software applications. As such, management is monitoring a program to evaluate external software relationships and ready its computer systems for the year 2000. As part of this process, the Company has assessed its year 2000 readiness by (1) performing an inventory of its PC's and applications software; (2) seeking compliance statements from its agency management system and other third party software vendors; and (3) testing PC hardware. As a result of this assessment, the Company is upgrading or replacing portions of its existing software and hardware that were not year 2000 compliant. Generally, these modifications and replacements were contemplated with normal system enhancements and improvements. The Company substantially completed the required software replacements during 1998 and expects hardware replacements to be completed during 1999. The Company is also assessing any systems that may contain embedded chips or microcontrollers, such as elevators, office equipment, telephones or security systems. This assessment should be completed by mid 1999 with replacements or upgrades and limited testing to occur during the remainder of 1999. The Company is also evaluating insurance carriers, financial institutions and other third party vendors. This process is expected to be complete by mid 1999. Determining the year 2000 readiness of external parties requires the collection of compliance statements made by those parties, together with factual research. Although the Company has taken, and will continue to take, reasonable efforts to gather information to determine the readiness of external parties, often such information is not provided voluntarily, is not available or is not reliable. In assessing the material risks to the Company's business arising from the year 2000 problem, the Company considers the year 2000 readiness of agency management system vendors, insurance carriers, financial institutions and other third parties (including public utilities and telecommunication service companies) to be the primary risk to its business. The loss of services from any one of these entities could disrupt operations and have a material adverse effect on the Company. The year 2000 12 readiness of third parties is substantially beyond the Company's knowledge and control, and there can be no assurances that the Company will not be adversely affected by the failure of a third party to adequately address the year 2000 problem. The Company has begun a comprehensive contingency planning effort to ensure that all critical business functions will continue on January 1, 2000. The plan will outline the procedures to follow for the most likely areas of risk. The Company expects its contingency plan to create a business continuity project work group, define triggers for activating contingency plans, assess business resumption strategies and establish alternative processes for core business functions, where commercially reasonable. The Company's contingency planning efforts will be ongoing throughout 1999. The Company currently estimates that the total costs for addressing the year 2000 issue, including the necessary enhancements, will be approximately $3.8 million. Software and hardware replacements are being capitalized; whereas, the costs associated with preparing for the year 2000 are expensed as incurred and are being funded with cash from operations. As of March 31, 1999, the Company had spent approximately $2.4 million. The Company does not expect the total cost of addressing the year 2000 issue with respect to its internal computer systems and hardware to be material to its consolidated financial condition or results of operations. Forward-Looking Statements The Company cautions readers that the foregoing discussion and analysis includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by that Act. These forward-looking statements, including but not limited to statements regarding the impact of the year 2000 issue on the Company's business and operations, are believed by the Company to be reasonable based upon management's current knowledge and assumptions about future events, but are subject to the uncertainties generally inherent in any such forward-looking statement, including factors discussed above as well as other factors that may generally affect the Company's business, financial condition or operating results. Reference is made to the discussion of "Forward-Looking Statements" contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998, regarding important risk factors and uncertainties that could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied in any forward-looking statement made by or on behalf of the Company. 13 Item 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is set forth under the caption "Market Risk" in Item 2 -- Management's Discussion and Analysis of Financial Condition and Results of Operations. PART II - OTHER INFORMATION Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS (a) Not applicable. (b) Not applicable. (c) On March 29, 1999, the Company entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with PM Holdings, Inc. ("Holdings"), Phoenix Home Life Mutual Insurance Company ("Phoenix") and Martin L. Vaughan, III ("Vaughan"). Pursuant to the Stock Purchase Agreement, the Company agreed to acquire all of the issued and outstanding capital stock of American Phoenix Corporation ("American Phoenix") (collectively, the "Acquisition") from Holdings and Vaughan. As part of the consideration to be paid by the Company in connection with the Acquisition, the Company agreed to issue to Holdings and Phoenix an aggregate principal amount of $32,000,000 of the Company's 5.25% Convertible Subordinated Debentures (Due 2014) (the "Subordinated Debentures"). The closing of the Acquisition and the issuance of the Subordinated Debentures to Holdings and Phoenix occurred on May 3, 1999. The Subordinated Debentures are convertible at any time at the option of the holder into shares of the Company's Common Stock at a conversion price of $22.75 per share of Common Stock (or 1,406,593 shares of Common Stock in the aggregate), subject to certain anti-dilution adjustments as provided in the Indenture, dated as of May 3, 1999, between the Company and Crestar Bank, as trustee (the "Indenture"), relating to the Subordinated Debentures. For a description of these and other terms of the Subordinated Debentures, see the Indenture, which is attached to this report as Exhibit 10.2. The offer and sale of the Subordinated Debentures to Holdings and Phoenix were made pursuant to the exemption from registration under Section 5 of the Securities Act of 1933, as amended (the "Securities Act"), provided by Section 4(2) of the Securities Act. (d) Not applicable. 14 Item 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits Exhibit No. Document ----------- -------- 10.1 Credit Agreement dated as of May 3, 1999, among the registrant, as Borrower, the lenders named therein, First Union National Bank, as administrative agent, PNC Bank, as documentation agent and NationsBanc Montgomery Securities LLC, as syndication agent (incorporated by reference to Exhibit 99.1 to the Company's Form 8-K dated May 3, 1999, File No. 0-15981) 10.2 Indenture dated as of May 3, 1999 made by and among the registrant and Crestar Bank as Trustee* 10.3 Risk Management Agreement dated as of May 3, 1999 by and between Phoenix Home Life Mutual Insurance Company and the registrant* 10.4 Employment Agreement for Martin L. Vaughan, III* 10.5 Voting and Standstill Agreement dated as of May 3, 1999 made by and among the registrant, PM Holdings, Inc. and Phoenix Home Life Mutual Insurance Company* 10.6 Registration Rights Agreement dated as of May 3, 1999 made between the registrant, PM Holdings, Inc. and Phoenix Home Life Mutual Insurance Company* 27 Financial Data Schedule (filed electronically only)* *Filed Herewith 15 b) Reports on Form 8-K (i) The Company filed a Current Report on Form 8-K with the Securities and Exchange Commission on April 1, 1999. The Form 8-K, which was dated March 30, 1999, reported items 5 and 7 and attached as an exhibit and incorporated by reference a press release that announced the signing of a definitive agreement to acquire American Phoenix Corporation (American Phoenix), the property and casualty brokerage subsidiary of Phoenix Home Life Mutual Insurance Company, for approximately $49.0 million in cash, $32.0 million (principal amount) of convertible notes and 1.0 million shares of Common Stock for all of American Phoenix's outstanding stock. (ii) The Company filed a Current Report on Form 8-K with the Securities and Exchange Commission on May 14, 1999. The Form 8-K, which was dated May 3, 1999, reported items 2 and 7 and announced the consummation of the acquisition and included as exhibits (i) the audited financial statements of American Phoenix and (ii) proforma condensed financial statements of the Company giving effect to the acquisition, both for the period ended December 31, 1998. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Hilb, Rogal and Hamilton Company -------------------------------- (Registrant) Date May 14, 1999 By: /s/ Andrew L. Rogal --------------------------------- President and Chief Executive Officer (Principal Executive Officer) Date May 14, 1999 By: /s/ Carolyn Jones --------------------------------- Senior Vice President-Finance (Principal Financial Officer) Date May 14, 1999 By: /s/ Robert W. Blanton, Jr. --------------------------------- Vice President and Controller (Chief Accounting Officer) 16 EXHIBIT INDEX Exhibit No. Document - ----------- -------- 10.1 Credit Agreement dated as of May 3, 1999, among the registrant, as Borrower, the lenders named therein, First Union National Bank, as administrative agent, PNC Bank, as documentation agent and NationsBanc Montgomery Securities LLC, as syndication agent (incorporated by reference to Exhibit 99.1 to the Company's Form 8-K dated May 3, 1999, File No. 0-15981) 10.2 Indenture dated as of May 3, 1999 made by and among the registrant and Crestar Bank as Trustee* 10.3 Risk Management Agreement dated as of May 3, 1999 by and between Phoenix Home Life Mutual Insurance Company and the registrant* 10.4 Employment Agreement for Martin L. Vaughan, III* 10.5 Voting and Standstill Agreement dated as of May 3, 1999 made by and among the registrant, PM Holdings, Inc. and Phoenix Home Life Mutual Insurance Company* 10.6 Registration Rights Agreement dated as of May 3, 1999 made between the registrant, PM Holdings, Inc. and Phoenix Home Life Mutual Insurance Company* 27 Financial Data Schedule (filed electronically only)* * Filed Herewith EX-10 2 EXHIBIT 10.2 Exhibit 10.2 HILB, ROGAL AND HAMILTON COMPANY and CRESTAR BANK, as Trustee _____________________ INDENTURE Dated as of May 3, 1999 _____________________ $32,000,000 5 1/4% Convertible Subordinated Debentures due 2014 Reconciliation and tie between the Trust Indenture Act of 1939 and Indenture dated as of May 3, 1999*: ss. 310(a)(1) ................................................... 609 (a)(2) ................................................ 609 (a)(3) ................................................ Not Applicable (a)(4) ................................................ Not Applicable (a)(5) ................................................ 609 (b) ................................................ 608 (c) ................................................ Not Applicable ss. 311(a) ...................................................... 613 (b) ................................................... 613 (c) ................................................... Not Applicable ss. 312(a) ...................................................... 701, 702(a) (b) ................................................... 702(b) (c) ................................................... 702(c) ss. 313(a) ...................................................... 703(a) (b) ................................................... 703(a) (c) ................................................... 703(a) (d) ................................................... 703(b) ss. 314(a) ...................................................... 704 (a)(4) ................................................ 1004 (b) ................................................... Not Applicable (c)(1) ................................................ 102 (c)(2) ................................................ 102 (c)(3) ................................................ Not Applicable (d) ................................................... Not Applicable (e) ................................................... 102 (f) ................................................... Not Applicable ss. 315(a) ...................................................... 601 (b) ................................................... 602 (c) ................................................... 601 (d) ................................................... 601 (e) ................................................... 514 ss. 316(a)(1)(A) ................................................ 502, 512 (a)(1)(B) ............................................. 513 (a)(2) ................................................ Not Applicable (b) ................................................... 508 (c) ................................................... 104(c) ss. 317(a)(1) ................................................... 503 (a)(2) ................................................ 504 (b) ................................................... 1003 ss. 318(a) ...................................................... 107 ___________________ *This table shall not, for any purpose, be deemed to be a part of the Indenture. i TABLE OF CONTENTS*
Page Parties...........................................................................................................1 Recitals of the Company...........................................................................................1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions..........................................................................................1 "Act"..........................................................................................................2 "Affiliate"....................................................................................................2 "Agent Member".................................................................................................2 "Authenticating Agent".........................................................................................2 "Beneficial Owner".............................................................................................2 "Board of Directors"...........................................................................................2 "Board Resolution".............................................................................................2 "Business Day".................................................................................................2 "Certificated Security"or "Certificated Securities"............................................................2 "Commission"...................................................................................................2 "Common Stock".................................................................................................3 "Company"......................................................................................................3 "Company Request"or "Company Order"............................................................................3 "Corporate Trust Office".......................................................................................3 "Corporation"..................................................................................................3 "Current Market Price".........................................................................................3 "DTC"..........................................................................................................3 "Defaulted Interest"...........................................................................................3 "Depositary"...................................................................................................3 "Event of Default".............................................................................................3 "Exchange Act".................................................................................................3 "Global Security"or "Global Securities"........................................................................4 "Global Securities Legend".....................................................................................4 "Holder".......................................................................................................4 "Indenture"....................................................................................................4 "Interest Payment Date"........................................................................................4 "Maturity".....................................................................................................4 "Officers'Certificate".........................................................................................4 ___________________ *Note: This table of contents shall not, for any purposes, be deemed to be a part of the Indenture. i "Opinion of Counsel"...........................................................................................4 "Outstanding"..................................................................................................4 "Paying Agent".................................................................................................5 "Payment Blockage Notice"......................................................................................5 "Payment and Remedy Blockage Period"...........................................................................5 "Payment Default"..............................................................................................5 "Person".......................................................................................................5 "Predecessor Security".........................................................................................6 "Record Date"..................................................................................................6 "Redemption Date"..............................................................................................6 "Redemption Price".............................................................................................6 "Regular Record Date"..........................................................................................6 "Repurchase Event".............................................................................................6 "Repurchase Price".............................................................................................6 "Resale Restriction Termination Date"..........................................................................6 "Responsible Officer"..........................................................................................6 "Restricted Securities Legend".................................................................................6 "Rule 144A"....................................................................................................6 "Rule 144A Global Security"....................................................................................6 "Securities Act"...............................................................................................7 "Securities Custodian".........................................................................................7 "Security Register"and "Security Registrar"....................................................................7 "Senior Agent".................................................................................................7 "Senior Credit Agreement"......................................................................................7 "Senior Indebtedness"..........................................................................................7 "Special Record Date"..........................................................................................8 "Stated Maturity"..............................................................................................8 "Subsidiary"...................................................................................................8 "Trust Indenture Act"..........................................................................................8 "Trustee"......................................................................................................8 "Vice President"...............................................................................................8 SECTION 102. Compliance Certificates and Opinions.................................................................8 SECTION 103. Form of Documents Delivered to Trustee...............................................................9 SECTION 104. Acts of Holders; Record Dates........................................................................9 SECTION 105. Notices, Etc., to Trustee and Company...............................................................10 SECTION 106. Notice to Holders; Waiver...........................................................................11 SECTION 107. Conflict with Trust Indenture Act...................................................................11 SECTION 108. Effect of Headings and Table of Contents............................................................12 SECTION 109. Successors and Assigns..............................................................................12 SECTION 110. Separability Clause.................................................................................12 SECTION 111. Benefits of Indenture...............................................................................12 SECTION 112. Governing Law.......................................................................................12 SECTION 113. Legal Holidays......................................................................................12 SECTION 114. No Security Interest Created........................................................................13 SECTION 115. Limitation on Individual Liability..................................................................13 ii ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally.....................................................................................13 SECTION 202. Form of Face of Security............................................................................15 SECTION 203. Form of Reverse of Global Securities and Certificated Security......................................17 SECTION 204. Form of Trustee's Certificate of Authentication.....................................................22 ARTICLE THREE THE SECURITIES SECTION 301. Title and Terms.....................................................................................23 SECTION 302. Denominations.......................................................................................24 SECTION 303. Execution, Authentication, Delivery and Dating......................................................24 SECTION 304. Registration, Transfer and Exchange.................................................................24 SECTION 305. Temporary Securities................................................................................28 SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities....................................................29 SECTION 307. Payment of Interest; Interest Rights Preserved......................................................30 SECTION 308. Persons Deemed Owners...............................................................................31 SECTION 309. Cancellation........................................................................................32 SECTION 310. Computation of Interest.............................................................................32 SECTION 311. CUSIP Number........................................................................................32 ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture.............................................................32 SECTION 402. Repayment to Company................................................................................33 ARTICLE FIVE REMEDIES SECTION 501. Events of Default...................................................................................33 SECTION 502. Acceleration of Maturity; Rescission and Annulment..................................................34 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.....................................36 SECTION 504. Trustee May File Proofs of Claim....................................................................36 SECTION 505. Trustee May Enforce Claims Without Possession of Securities.........................................37 SECTION 506. Application of Money Collected......................................................................37 SECTION 507. Limitation on Suits.................................................................................38 SECTION 508. Unconditional Right of Holders to Receive Principal and Interest and to Convert...........................................................................38 SECTION 509. Restoration of Rights and Remedies..................................................................38 SECTION 510. Rights and Remedies Cumulative......................................................................39 SECTION 511. Delay or Omission Not Waiver........................................................................39 iii SECTION 512. Control by Holders..................................................................................39 SECTION 513. Waiver of Past Defaults.............................................................................40 SECTION 514. Undertaking for Costs...............................................................................40 ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities.................................................................40 SECTION 602. Notice of Defaults..................................................................................41 SECTION 603. Certain Rights of Trustee...........................................................................41 SECTION 604. Not Responsible for Recitals or Issuance of Securities..............................................43 SECTION 605. May Hold Securities.................................................................................43 SECTION 606. Money Held in Trust.................................................................................43 SECTION 607. Compensation and Reimbursement......................................................................43 SECTION 608. Disqualification; Conflicting Interests.............................................................44 SECTION 609. Corporate Trustee Required; Eligibility.............................................................45 SECTION 610. Resignation and Removal; Appointment of Successor...................................................45 SECTION 611. Acceptance of Appointment by Successor..............................................................46 SECTION 612. Merger, Conversion, Consolidation or Succession to Business.........................................46 SECTION 613. Preferential Collection of Claims Against Company...................................................47 SECTION 614. Appointment of Authenticating Agent.................................................................47 ARTICLE SEVEN HOLDERS'LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders...........................................49 SECTION 702. Preservation of Information; Communications to Holders..............................................49 SECTION 703. Reports by Trustee..................................................................................50 SECTION 704. Reports by Company..................................................................................50 SECTION 705. Rule 144A Information Requirement...................................................................50 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, Etc., Only on Certain Terms................................................50 SECTION 802. Successor Substituted...............................................................................51 ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures Without Consent of Holders..................................................51 SECTION 902. Supplemental Indentures With Consent of Holders.....................................................52 SECTION 903. Execution of Supplemental Indentures................................................................53 SECTION 904. Effect of Supplemental Indentures...................................................................53 SECTION 905. Conformity with Trust Indenture Act.................................................................53 iv SECTION 906. Reference in Securities to Supplemental Indentures..................................................54 SECTION 907. Notice of Supplemental Indenture....................................................................54 ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal and Interest..................................................................54 SECTION 1002. Maintenance of Office or Agency....................................................................54 SECTION 1003. Money for Security Payments to Be Held in Trust....................................................55 SECTION 1004. Statement by Officers as to Default................................................................56 ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Right of Redemption................................................................................56 SECTION 1102. Applicability of Article...........................................................................56 SECTION 1103. Election to Redeem; Notice to Trustee..............................................................57 SECTION 1104. Selection by Trustee of Securities to be Redeemed..................................................57 SECTION 1105. Notice of Redemption...............................................................................57 SECTION 1106. Deposit of Redemption Price........................................................................58 SECTION 1107. Securities Payable on Redemption Date..............................................................58 SECTION 1108. Securities Redeemed in Part........................................................................59 ARTICLE TWELVE SUBORDINATION OF SECURITIES SECTION 1201. Securities Subordinated to Senior Indebtedness.....................................................59 SECTION 1202. Payment Over of Proceeds Upon Dissolution, Etc.....................................................59 SECTION 1203. Prior Payment to Senior Indebtedness upon Acceleration of Securities...............................61 SECTION 1204. No Payment When Senior Indebtedness in Default; Suspension of Remedies.............................61 SECTION 1205. Payment Permitted If No Default....................................................................62 SECTION 1206. Subrogation to Rights of Holders of Senior Indebtedness............................................63 SECTION 1207. Provisions Solely to Define Relative Rights........................................................63 SECTION 1208. Trustee to Effectuate Subordination................................................................63 SECTION 1209. No Waiver of Subordination Provisions..............................................................63 SECTION 1210. Notice to Trustee..................................................................................64 SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating Agent.....................................65 SECTION 1212. Trustee Not Fiduciary for Holders of Senior Indebtedness...........................................65 SECTION 1213. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights.................................................................................65 SECTION 1214. Article Applicable to Paying Agents................................................................65 SECTION 1215. Certain Conversions Deemed Payment.................................................................66 v ARTICLE THIRTEEN CONVERSION OF SECURITIES SECTION 1301. Conversion Privilege and Conversion Price..........................................................66 SECTION 1302. Exercise of Conversion Privilege...................................................................67 SECTION 1303. Fractions of Shares................................................................................67 SECTION 1304. Adjustment of Conversion Price.....................................................................68 SECTION 1305. Notice of Adjustments of Conversion Price..........................................................74 SECTION 1306. Notice of Certain Corporate Action.................................................................74 SECTION 1307. Company to Reserve Common Stock....................................................................75 SECTION 1308. Taxes on Conversions...............................................................................75 SECTION 1309. Covenant as to Common Stock........................................................................76 SECTION 1310. Cancellation of Converted Securities...............................................................76 SECTION 1311. Effect of Consolidation, Merger or Sale of Assets..................................................76 SECTION 1312. Trustee's Disclaimer...............................................................................77
vi INDENTURE, dated as of May 3, 1999, between HILB, ROGAL AND HAMILTON COMPANY, a corporation duly organized and existing under the laws of Virginia (herein called the "Company"), having its principal executive offices at 4235 Innslake Drive, P. O. Box 1220, Glen Allen, VA 23060-1220 and CRESTAR BANK, a duly organized banking institution existing under the laws of the Commonwealth of Virginia, as Trustee (herein called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation of an issue of its 5 1/4% Convertible Subordinated Debentures due 2014 (herein called the "Securities") 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 Securities, 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 Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities, 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 generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted and accepted and adopted by the Company at the date of this Indenture; and (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. Certain terms used in Articles Twelve and Thirteen are defined in such Articles. "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. "Agent Member" has the meaning specified in Section 201. "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate Securities. "Beneficial Owner" shall be determined in accordance with Rule 13d-3 promulgated by the Commission under the Exchange Act as in effect on the date hereof. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. "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, New York or the city in which the Corporate Trust Office is located are authorized or obligated by law to close by law or executive order. "Certificated Security" or "Certificated Securities" has the meaning specified in Section 201. "Commission" means the Securities and Exchange Commission as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the 2 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" includes any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which is not subject to redemption by the Company. However, subject to the provisions of Section 1311, shares issuable on conversion of Securities shall include only shares of the class designated as Common Stock of the Company at the date of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company; provided, that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "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 Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Corporate Trust Office" means the offices of the Trustee in the Commonwealth of Virginia, at which at any particular time its corporate trust business shall principally be administered, which initially shall be 919 East Main Street, Richmond, Virginia 23219. "Corporation" means a corporation, association, company, joint-stock company and business trust. "Current Market Price" has the meaning specified in Section 1304. "DTC" has the meaning specified in Section 304. "Defaulted Interest" has the meaning specified in Section 307. "Depositary" has the meaning specified in Section 304. "Event of Default" has the meaning specified in Section 501. "Exchange Act" means the Securities Exchange Act of 1934, as amended. 3 "Global Security" or "Global Securities" means the Rule 144A Global Security. "Global Securities Legend" means the legend set forth in Section 202 under the heading Global Securities Legend. "Holder" means a Person in whose name a Security is registered in the Security 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, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Securities. "Maturity", when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity thereof or by declaration of acceleration, redemption or otherwise. "Officers' Certificate" means a certificate, in form reasonably satisfactory to the Trustee, signed by the Chairman of the Board, the Chief Executive Officer, 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. One of the officers signing an Officers' Certificate given pursuant to Section 1004 shall be the principal executive, financial or accounting officer of the Company. "Opinion of Counsel" means a written opinion, in form reasonably satisfactory to the Trustee, of counsel, who may be counsel for or an employee of the Company, and who shall be acceptable to the Trustee. "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount have been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, that if such Securities, or portions thereof, are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision for such notice satisfactory to the Trustee has been made; 4 (iii) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities 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 Securities which the Trustee knows to be so owned shall be so disregarded. Securities 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 Securities and that the pledgee is not the Company or any other obligor upon the Securities 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 and interest on any Securities on behalf of the Company. "Payment Blockage Notice" means a notice that a specified default in respect of any Senior Indebtedness has occurred and is continuing beyond any applicable grace period that permits holders of the Senior Indebtedness as to which such default relates to accelerate its maturity and that a Payment and Remedy Blockage Period is in effect, delivered by the Senior Agent or, with respect to Senior Indebtedness other than the Senior Credit Agreement, the holders thereof entitled to provide such notice. "Payment and Remedy Blockage Period" means, (a) with respect to a Payment Default, the period commencing upon the occurrence of such Payment Default and ending upon the date such Payment Default has been cured or waived or shall have been ceased to exist and (b) with respect to any other default on any Senior Indebtedness, the period commencing upon the Company's receipt of a Payment Blockage Notice and ending upon the earlier of the date on which such default is cured or waived or shall have ceased to exist or 179 days after the date on which the applicable Payment Blockage Notice is received, unless in each of case (a) or (b) the maturity of any Senior Indebtedness has been accelerated. "Payment Default" means the failure, after taking into account any applicable grace period, to pay principal of or interest on any Senior Indebtedness when due and payable. "Person" means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. 5 "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Record Date" means either a Regular Record Date or a Special Record Date, as applicable. "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture on the applicable Redemption Date. "Regular Record Date", for the interest payable on any Interest Payment Date means March 15, June 15, September 15 or December 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Repurchase Event" has the meaning specified in Section 1406. "Repurchase Price" has the meaning specified in Section 1401. "Resale Restriction Termination Date" means, with respect to any Security, the date which is two years after the later of (i) the original issue date of such Security and (ii) the last date on which the Company or any Affiliate of the Company was the owner of such Security (or any Predecessor Security). "Responsible Officer" means, when used with respect to the Trustee, the chairman of the Board of Directors, any vice chairman of the Board of Directors, the chairman of the trust committee, the chairman of the executive committee, any vice chairman of the executive committee, the president, any vice president (whether or not designated by numbers or words added before or after the title "vice president"), the cashier, the secretary, the treasurer, any trust officer, any assistant trust officer, any assistant cashier, any assistant secretary, any assistant treasurer, or any other officers or assistant officers of the Trustee customarily performing functions similar to those performed by the Persons who at the time shall be such officers, respectively. "Restricted Securities Legend" means the legend set forth in Section 202 under the heading Restricted Securities Legend. "Rule 144A" has the meaning specified in Section 201. "Rule 144A Global Security" has the meaning specified in Section 201. 6 "Securities Act" means the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder. "Securities Custodian" means the Trustee, as custodian with respect to the Securities in global form, or any successor entity thereto. "Security Register" and "Security Registrar" have the respective meanings specified in Section 304. "Senior Agent" shall mean, at any time, the administrative agent at such time under the Senior Credit Agreement. "Senior Credit Agreement" shall mean the Credit Agreement, dated as of May 3, 1999, between the Company, the banks and financial institutions from time to time party thereto, and First Union National Bank, as administrative agent, as such agreement may be amended, modified, supplemented or restated from time to time. "Senior Indebtedness" means the principal of and interest on (a) all indebtedness (whether secured or unsecured) of the Company for money borrowed under the Company's revolving credit and term loan facilities, including any such indebtedness under the Senior Credit Agreement, and any predecessor or successor credit facilities thereto, whether outstanding on the date of execution of this Indenture or thereafter created, incurred or assumed, (b) all indebtedness of the Company for money borrowed, whether outstanding on the date of execution of this Indenture or thereafter created, incurred or assumed, except any such other indebtedness that by the terms of the instrument or instruments by which such indebtedness was created or incurred expressly provides that it (i) is junior in right of payment to the Securities or (ii) ranks pari passu in right of payment with the Securities, (c) all obligations to make payment pursuant to the terms of financial instruments, such as (i) securities contracts and foreign currency exchange contracts, (ii) derivative instruments, such as swap agreements (including interest rate and foreign exchange note swap agreements), cap agreements, floor agreements, collar agreements, interest rate agreements, foreign exchange agreements, options, commodity futures contracts and commodity options contracts, and (iii) similar financial instruments, and (d) any amendments, renewals, extensions, modifications, refinancings and refundings of the foregoing. For the purposes of this definition, "indebtedness for money borrowed" when used with respect to the Company means (i) any obligation of, or any obligation guaranteed by, the Company for the repayment of borrowed money (including without limitation fees, penalties or other obligations in respect thereof), whether or not evidenced by bonds, debentures, notes or other written instruments and reimbursement obligations for letters of credit, (ii) any deferred payment obligation of, or any such obligation guaranteed by, the Company for the payment of the purchase price of property or assets evidenced by a note or similar instrument, and (iii) any obligation of, or any such obligation guaranteed by, the Company for the payment of rent or other amounts under a lease of property or assets which obligation is required to be classified and accounted for as a capitalized lease on the balance sheet of the Company under generally accepted accounting principles, but such term shall exclude indebtedness to trade creditors. 7 "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 Security or any installment of interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable. "Subsidiary" means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "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, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "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. "Vice President", when used with respect to the Company means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". 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 certificate and opinions as may be required under the Trust Indenture Act. 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 shall include: (1) a statement that each individual or firm 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; 8 (3) a statement that, in the opinion of each such individual or such firm, he has or they have made such examination or investigation as is necessary to enable him or them 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 or such firm, 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 by 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 of public officials or 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. 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 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 9 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 acknowledgments 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. Notwithstanding the foregoing, the Company shall not set a record date for, and the provisions of this paragraph shall not apply with respect to, any Act by the Holders pursuant to Section 501, 502 or 512. (d) The ownership of Securities shall be proved by the Security Register. (e) Any Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer therefor or in exchange therefor or in lieu 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 Security. (f) Without limiting the foregoing, a Holder entitled hereunder to give or take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any different part of such principal amount. SECTION 105. Notices, Etc., to Trustee and Company. Any Act of Holders or other documents provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, 10 (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 Administration, or at any other address previously furnished in writing to the Holders and the Company by the Trustee; 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. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, registered or certified with postage prepaid, if mailed; when answered back if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by nationally recognized overnight air courier guaranteeing next day delivery. 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 made, given, furnished or filed in writing to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. 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. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, registered or certified with postage prepaid, if mailed; when answered back if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by nationally recognized overnight air courier guaranteeing next day delivery. In case, by reason of the suspension of or irregular mail service or by reason of any other cause it shall be impracticable to give 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 the duties imposed by any of Sections 310 through 317, inclusive, of the Trust Indenture Act through the operation of Section 318(c) thereof, the imposed duties shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. 11 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 and the Trustee shall bind each of their successors and assigns, whether so expressed or not. SECTION 110. Separability Clause. In case any provision in this Indenture or in the Securities 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 Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the Holders of Securities and, with respect to Article Twelve, the holders of Senior Indebtedness, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, without regard to the principles of conflicts of laws thereof. SECTION 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security or the last date on which a Holder has the right to convert his Securities shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal or conversion of the Securities 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 or Redemption Date, or at the Stated Maturity, or on such last day for conversion; provided, that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, to the next succeeding Business Day. 12 SECTION 114. No Security Interest Created. Nothing in this Indenture or in the Securities, express or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect in any jurisdiction where property of the Company or its Subsidiaries is or may be located. SECTION 115. Limitation on Individual Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture or in any Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or any successor corporation, either directly or through the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, shareholders, officers or directors, as such, of the Company or any successor Person, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any Security or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, shareholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any Security or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Security. ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally. The Securities and the Trustee's certificate of authentication 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 any organizational document, any applicable law or with the rules of any securities exchange on which the Securities are listed or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. 13 (a) Global Securities. If eligible according to DTC rules and procedures and, if the Company consents, the Securities offered and sold to Qualified Institutional Buyers ("QIBs") in reliance on Rule 144A under the Securities Act ("Rule 144A") shall be issued in the form of one or more permanent Global Securities in definitive, fully registered form without interest coupons with the Global Securities Legend and Restricted Securities Legend set forth in Section 202 hereto (each, a "Rule 144A Global Security"), which shall be deposited on behalf of the purchasers of the Securities represented thereby with the Trustee, at its Corporate Trust Office, as Securities Custodian for the Depositary, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Rule 144A Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, as hereinafter provided. (b) Book-Entry Provisions. This Section 201(b) shall apply only to the Rule 144A Global Security (the "Global Securities") deposited with or on behalf of the Depositary. The Company shall execute and the Trustee shall, in accordance with this Section 201(b), authenticate and deliver initially one or more Global Securities that (i) shall be registered in the name of Cede & Co. or other nominee of such Depositary and (ii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions or held by the Trustee as Securities Custodian for the Depositary. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or by the Trustee as the custodian of the Depositary or under such Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security. (c) Certificated Securities. Except as provided in Section 305, owners of beneficial interests in Global Securities will not be entitled to receive physical delivery of certificated Securities. If the Securities are not issued in the form of a Global Security, purchasers of Securities will receive certificated Securities bearing the Restricted Securities Legend set forth in Section 202 hereto ("Certificated Securities"). Certificated Securities will bear the Restricted Securities Legend set forth in Section 202 unless removed in accordance with Section 304 hereof. 14 SECTION 202. Form of Face of Security. GLOBAL SECURITIES LEGEND: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. RESTRICTED SECURITIES LEGEND: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO 15 WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION. HILB, ROGAL AND HAMILTON COMPANY 5 1/4% Convertible Subordinated Debenture due 2014 No.__________ $___________ Hilb, Rogal and Hamilton Company, a corporation duly organized and existing under the laws of Virginia (herein called the "Company," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _________________________, or registered assigns, the principal sum of _____________ Dollars [or such greater or lesser amount as indicated on the Schedule of Exchanges of Securities on the reverse hereof] 1 on May 3, 2014, and to pay interest thereon from the date of original issuance of Securities pursuant to the Indenture or from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly on March 31, June 30, September 30 and December 31 in each year, commencing June 30, 1999, at the rate of 5 1/4% per annum, until the principal hereof is paid or made available for payment. The Company shall pay interest on overdue principal and interest on overdue installments of interest, to the extent lawful, at the rate per annum borne by the Securities. 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 Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be March 15, June 15, September 15 or December 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment 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 Security (or one or more Predecessor Securities) 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 or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Notice of a Special Record Date shall be given to Holders of Securities not less than 10 days prior to such Special Record Date. Payment of the principal and interest on the Securities shall be made (i) in respect of the Global Securities in immediately available funds to the accounts specified by the Global Security Holder on or prior to the respective payment dates and (ii) in respect of Certificated Securities by wire transfer of 16 immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each such Holder's registered address. __________________ 1 This phrase should be included only if the Security is issued in global form. Reference is hereby made to the further provisions of this Security 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 Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated:_________________ HILB, ROGAL AND HAMILTON COMPANY [SEAL] By _____________________________ Attest: _____________________________ SECTION 203. Form of Reverse of Global Securities and Certificated Security. This Security is one of a duly authorized issue of Securities of the Company designated as its 5 1/4% Convertible Subordinated Debentures due 2014 (herein called the "Securities"), limited in aggregate principal amount to $32,000,000, issued and to be issued under an Indenture, dated as of May 3, 1999 (herein called the "Indenture"), between the Company and Crestar 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 Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Subject to and upon compliance with the provisions of the Indenture, the Holder of this Security is entitled, at his option, at any time on or after the 60th day following the date of original issuance of Securities pursuant to the Indenture and on or before the close of business on May 3, 2014, or in case this Security or a portion hereof is called for redemption, then in respect of this Security or such portion hereof until and including, but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the second business day 17 preceding the Redemption Date, to convert this Security (or any portion of the principal amount hereof which is $1,000,000 or an integral multiple thereof), at the principal amount hereof, or of such portion, into fully paid and non-assessable whole shares (calculated as to each conversion to the nearest share) of Common Stock at a conversion price of $22.75 per share (or at the current adjusted conversion price if an adjustment has been made as provided in the Indenture) by surrender of this Security, duly endorsed or assigned to the Company or in blank, to the Company at its office or agency maintained for that purpose pursuant to Section 1002 of the Indenture, accompanied by written notice to the Company in the form provided in this Security (or such other notice as is acceptable to the Company) that the Holder hereof elects to convert this Security, or if less than the entire principal amount hereof is to be converted, the portion hereof to be converted, and, in case such surrender shall be made during the period from the opening of business on any Regular Record Date next preceding any Interest Payment Date to the close of business on such Interest Payment Date (unless this Security or the portion thereof being converted has been called for redemption), also accompanied by payment in New York Clearing House funds, or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of this Security then being converted. Subject to the aforesaid requirement for payment and, in the case of a conversion after the Regular Record Date next preceding any Interest Payment Date and on or before such Interest Payment Date, to the right of the Holder of this Security (or any Predecessor Security) of record at such Regular Record Date to receive an installment of interest (with certain exceptions provided in the Indenture), no payment or adjustment is to be made upon conversion on account of any interest accrued hereon or on account of any dividends on the Common Stock issued upon conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion. In addition, the Indenture provides that in case of certain consolidations or mergers to which the Company is a party or the sale or transfer of all or substantially all of the assets of the Company, the Indenture shall be amended, without the consent of any Holders of Securities, so that this Security, if then outstanding, will be convertible thereafter, during the period this Security shall be convertible as specified above, only into the kind and amount of securities, cash and other property receivable upon the consolidation, merger, sale or transfer by a holder of the number of shares of Common Stock into which this Security might have been converted immediately prior to such consolidation, merger, sale or transfer (assuming such holder of Common Stock failed to exercise any rights of election and received per share the kind and amount received per share by a plurality of non-electing shares). The Securities are subject to redemption upon not less than 30 and not more than 60 days' notice by mail, at any time on or after May 3, 2009, as a whole or in part, at the election of the Company, at a Redemption Price equal to the principal amount, plus accrued interest to and including the day before the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date). In the event of redemption or conversion of this Security in part only, a new Security or Securities for the unredeemed or unconverted portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. 18 The indebtedness evidenced by this Security is, in all respects, subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination so provided, and (c) appoints the Trustee his attorney- in-fact for any and all such purposes. If an Event of Default shall occur and be continuing, the principal of all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. 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 Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding, and, under certain limited circumstances, by the Company and the Trustee without the consent of the Holders. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, 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 Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security 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 Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed or to convert this Security as provided in the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities are issuable only in fully registered form without coupons in denominations of $1,000,000 and any integral multiple of $1,000,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities of a different authorized denomination, as requested by the Holder surrendering the same. 19 No service charge shall be made for any such registration of transfer or exchange except as provided in the Indenture, and the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security 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 Security is registered as the owner hereof for all purposes, except as provided in this Security, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. [FORM OF CONVERSION NOTICE] TO HILB, ROGAL AND HAMILTON COMPANY The undersigned registered owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion hereof (which is $1,000,000 or a multiple of $1,000,000 in excess thereof) designated below, into shares of Common Stock in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon the conversion, together with any check in payment for a fractional share and any Security representing any unconverted principal amount hereof, be issued and delivered to the registered owner hereof unless a different name has been provided below. If this Notice is being delivered on a date after the close of business on a Regular Record Date and prior to the close of business on the related Interest Payment Date, this Notice is accompanied by payment in New York Clearing House funds, or other funds acceptable to the Company, of an amount equal to the interest payable on such Interest Payment Date on the principal of this Security to be converted (unless this Security has been called for redemption). If shares or any portion of this Security not converted 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. Any amount required to be paid by the undersigned on account of interest accompanies this Security. Dated:_______________________ __________________________________ Signature(s) NOTICE: Signature(s) must be guaranteed by an institution which is a participant in the Securities Transfer Agent Medallion Program (STAMP) or similar program. _____________________________ Signature Guarantee 20 Fill in for registration of shares of Common Stock if they are to be delivered, or Securities if they are to be issued, other than to and in the name of the registered owner: ____________________________________ (Name) ____________________________________ (Street Address) ____________________________________ (City, State and zip code) (Please print name and address) Register: Common Stock Securities (Check appropriate line(s)). Principal amount to be converted (if less than all): $ 000,000 Social Security or other Taxpayer Identification Number of owner [ASSIGNMENT FORM] If you the holder want to assign this Security, fill in the form below and have your signature guaranteed: I or we assign and transfer this Security to ________________________________________________________________________________ (Insert assignee's social security or tax ID number)____________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint 21 ________________________________________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. ________________________________________________________________________________ Date:__________________ Your Signature:__________________________ (Sign exactly as your name appears on the face of this Security) Signature Guarantee: _________________________________ NOTICE: Signature(s) must be guaranteed by an institution which is a participant in the Securities Transfer Agent Medallion Program (STAMP) or similar program. [FORM OF SCHEDULE OF EXCHANGES OF CERTIFICATED SECURITIES]2 The following exchanges of a part of this Global Security for Certificated Securities have been made:
Principal Signature of Amount of Amount of Amount of this authorized decrease in Increase in Global Security signatory of Principal Principal following such Trustee or Date of Amount of this Amount of this decrease (or increase) Securities Exchange Global Security Global Security Custodian 1. 2. 3. 4. 5.
SECTION 204. Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the following form: This is one of the Securities referred to in the within-mentioned Indenture. 22 _______________________________, as Trustee By _____________________________ Authorized Signatory __________________ 2 This Schedule should be included only if the Security is issued in global form. ARTICLE THREE THE SECURITIES SECTION 301. Title and Terms. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is limited to $32,000,000, except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906, 1108 or 1302. The Securities shall be known and designated as the "5 1/4% Convertible Subordinated Debentures due 2014" of the Company. Their Stated Maturity shall be May 3, 2014 and they shall bear interest at the rate of 5 1/4% per annum, from the date of original issuance of Securities pursuant to this Indenture or from the most recent Interest Payment Date to which interest has been paid or duly provided for, as the case may be, payable quarterly on March 31, June 30, September 30 and December 31, commencing June 30, 1999, until the principal thereof is paid or made available for payment. The principal of and interest on the Securities shall be payable (i) in respect of the Global Securities in immediately available funds to the accounts specified by the Global Security Holder on or prior to the respective payment dates and (ii) in respect of Certificated Securities by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each such Holder's registered address. The Securities shall be subject to the transfer restrictions set forth in Section 305. The Securities shall be redeemable as provided in Article Eleven. The Securities shall be subordinated in right of payment to Senior Indebtedness as provided in Article Twelve. The Securities shall be convertible as provided in Article Thirteen. 23 SECTION 302. Denominations. The Securities shall be issuable in fully registered form without coupons and only in denominations of $1,000,000 and any integral multiple of $1,000,000 in excess thereof. SECTION 303. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents, under its corporate seal or a facsimile thereof reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities 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 Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities; and the Trustee in accordance with such Company Order shall either at one time or from time to time pursuant to such instructions as may be described therein shall authenticate and deliver such Securities as in this Indenture provided and not otherwise. Such Company Order shall specify the amount of Securities to be authenticated and the date on which the original issue of Securities is to be authenticated, and shall certify that all conditions precedent to the issuance of such Securities contained in this Indenture have been complied with. The aggregate principal amount of Securities Outstanding at any time may not exceed the amount set forth above except as provided in Section 306. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. The Trustee may appoint an Authenticating Agent pursuant to the terms of Section 614. SECTION 304. Registration, 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 "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall 24 provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. At all reasonable times the Security Register shall be open for inspection by the Company. The Company initially appoints The Depository Trust Company ("DTC") to act as depositary (the "Depositary") with respect to the Global Security(ies). The Company initially appoints the Trustee to act as Securities Custodian with respect to the Global Security(ies). Where Securities are presented to the Security Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal amount of Securities of other denominations, the Security Registrar shall register the transfer or make the exchange if its requirements for such transactions are met. To permit registrations of transfers and exchanges, the Company shall issue and deliver to the Trustee and the Trustee shall authenticate Securities at the Security Registrar's request. No service charge shall be made for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer tax or similar governmental charge payable upon exchanges pursuant to Sections 305, 906 or 1108 hereof). The Company shall not be required to (i) issue, register the transfer of or exchange Securities during a period beginning at the opening of business fifteen (15) days before the day of any selection of Securities for redemption under Section 1104 and ending at the close of business on the day of selection or (ii) register the transfer or exchange of any Securities so selected for redemption in whole or in part, except the unredeemed portion of any Securities being redeemed in part. All Securities issued upon any transfer or exchange of Securities in accordance with this Indenture shall be the valid and binding obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture as the Securities surrendered upon such registration of transfer or exchange. (a) Notwithstanding any provisions to the contrary in this Indenture, so long as a Global Security remains outstanding and is held by or on behalf of the Depositary, transfers of a Global Security, in whole or in part, or of any beneficial interest therein, shall only be made in accordance with Section 201(b) and this Section 304; provided, however, that beneficial interests in a Global Security may be transferred to persons who take delivery thereof in the form of a beneficial interest in the same Global Security in accordance with the transfer restrictions set forth in the Restricted Securities Legend. (i) Except for transfers or exchanges made in accordance with clause (ii) of this Section 304(a), transfers of a Global Security shall be limited to transfers of such 25 Global Security in whole, but not in part, to nominees of the Depositary or to a successor of the Depositary or such successor's nominee. (ii) Global Security to Certificated Security. If an owner of a beneficial interest in a Global Security deposited with the Depositary or with the Trustee as custodian for the Depositary wishes at any time to transfer its interest in such Global Security to a person who desires or is required to take delivery thereof in the form of a Certificated Security, such owner may, subject to the rules and procedures of the Depositary, cause the exchange of such interest for one or more Certificated Securities of any authorized denomination or denominations and of the same aggregate principal amount at maturity. Upon receipt by the Trustee, as Security Registrar, at its Corporate Trust Office of (1) instructions from the Depositary directing the Trustee, as Security Registrar, to authenticate and deliver one or more Certificated Securities of the same aggregate principal amount at maturity as the beneficial interest in the Global Security to be exchanged, such instructions to contain the name or names of the designated transferee or transferees, the authorized denomination or denominations of the Certificated Securities to be so issued and appropriate delivery instructions, (2) a certificate in the form of Exhibit A attached hereto given by the owner of such beneficial interest and stating that the person transferring such interest in such Global Security reasonably believes that the person acquiring the Certificated Securities for which such interest is being exchanged is an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and is acquiring such Certificated Securities having an aggregate principal amount of not less than $1,000,000 for its own account or for one or more accounts as to which the transferee exercises sole investment discretion, (3) a certificate in the form of Exhibit B attached hereto given by the person acquiring the Certificated Securities for which such interest is being exchanged, to the effect set forth therein, and (4) such other certifications, legal opinions or other information as the Company may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, then the Trustee, as Security Registrar, as the case may be, will instruct the Depositary to reduce or cause to be reduced such Global Security by the aggregate principal amount at maturity of the beneficial interest therein to be exchanged and to debit, or cause to be debited from the account of the person making such transfer the beneficial interest in the Global Security that is being transferred, and concurrently with such reduction and debit the Company shall execute, and the Trustee shall authenticate and deliver, one or more Certificated Securities of the same aggregate principal amount at maturity in accordance with the instructions referred to above. (iii) Certificated Security to Certificated Security. If a holder of a Certificated Security wishes at any time to transfer such Certificated Security to a person who is required or who desires to take delivery thereof in the form of a Certificated Security, such holder may, subject to the restrictions on transfer set forth herein and in such Certificated Security, cause the exchange of such Certificated Security for one or more Certificated Securities of any authorized denomination or denominations and of the same aggregate principal amount at maturity. Upon receipt by the Trustee, as Security 26 Registrar, at its Corporate Trust Office of (1) such Certificated Security, duly endorsed as provided herein, (2) instructions from such holder directing the Trustee, as Security Registrar, to authenticate and deliver one or more Certificated Securities of the same aggregate principal amount at maturity as the Certificated Security to be exchanged, such instructions to contain the name or authorized denomination or denominations of the Certificated Securities to be so issued and appropriate delivery instructions, (3) a certificate from the holder of the Certificated Security to be exchanged in the form of Exhibit A attached hereto, (4) a certificate in the form of Exhibit B attached hereto given by the person acquiring the Certificated Securities for which such interest is being exchanged, to the effect set forth therein, and (5) such other certifications, legal opinions or other information as the Company may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, then the Trustee, as Security Registrar, shall cancel or cause to be canceled such Certificated Security and concurrently therewith, the Company shall execute, and the Trustee shall authenticate and deliver, one or more Certificated Securities of the same aggregate principal amount at maturity, in accordance with the instructions referred to above. (iv) Certificated Security for Global Security. If the Holder of a Security (other than a Global Security) wishes at any time to transfer all or any portion of such Security to a Person who wishes to take delivery thereof in the form of a beneficial interest in a Global Security, such transfer may be effected only in accordance with the provisions of this clause (a)(iv) and subject to the rules and procedures of the Depositary. Upon receipt by the Trustee, as Security Registrar, at its Corporate Trust Office of (1) such Certificated Security, duly endorsed as provided herein, (2) instructions satisfactory to the Security Registrar directing that a beneficial interest in the Global Security in a specified principal amount not greater than the principal amount of such Security be credited to a specified Agent Member's account, (3) a certificate from the holder of the Certificated Security to be exchanged in the form of Exhibit A attached hereto, (4) a certificate in the form of Exhibit B attached hereto given by the person acquiring the beneficial interest in a Global Security for which such Certificated Security is being exchanged, to the effect set forth therein, and (5) such other certifications, legal opinions or other information as the Company may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, then the Trustee, as Security Registrar, shall cancel or cause to be canceled such Certificated Security and concurrently therewith issue a new Security in respect of the untransferred portion thereof, if any, to the holder of such Certificated Security and increase the aggregate principal amount of the Global Security as provided in Section 305(b). (b) If Securities are issued upon the transfer, exchange or replacement of Securities bearing the Restricted Securities Legend set forth in Section 202 hereto, or if a request is made to remove such Restricted Securities Legend on Securities, the Securities so issued shall bear the Restricted Securities Legend, or the Restricted Securities Legend shall not be removed, as the case may be, unless there is delivered to the Company such satisfactory evidence, which may 27 include an opinion of counsel, as may be reasonably required by the Company, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A or Rule 144 under the Securities Act or, with respect to Certificated Securities, that such Securities are not "restricted" within the meaning of Rule 144 under the Securities Act. Upon provision of such satisfactory evidence, the Trustee, at the direction of the Company, shall authenticate and deliver Securities that do not bear the legend. (c) Neither the Company nor the Trustee shall have any responsibility for any actions taken or not taken by the Depositary. SECTION 305. Temporary Securities. (a) Until definitive Securities are ready for delivery, the Company may prepare and the Trustee, upon receipt of a written order of the Company as set forth in Section 303, shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities in exchange for temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. (b) A Global Security deposited with the Depositary or with the Trustee as custodian for the Depositary pursuant to Section 201 shall be transferred to the beneficial owners thereof in the form of Certificated Securities only if such transfer complies with Section 304 and (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or if at any time such Depositary ceases to be a "clearing agency" registered under the Exchange Act and a successor depositary is not appointed by the Company within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing or (iii) pursuant to the following sentence. All or any portion of a Global Security may be exchanged for a Security that has a like aggregate principal amount and is not a Global Security upon 20 days prior request made by the Depositary or its Agent Member to the Security Registrar. If any Global Security is to be exchanged for Certificated Securities or canceled in whole, it shall be surrendered by or on behalf of the Depositary or its nominee to the Security Registrar for exchange or cancellation as provided in this Section 305. If any Global Security is to be exchanged for Certificated Securities or canceled in part, or if Certificated Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this Section 305 or (ii) the principal amount thereof shall be reduced, or increased by an amount equal to the portion thereof to be so exchanged or canceled, or equal to the principal amount of such Certificated Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Security Registrar, whereupon the Trustee shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions and, to the extent required by Section 304, a Restricted Securities Certificate, the Trustee shall, subject to Section 304 and as otherwise provided in this Article 28 Three, authenticate and make available for delivery any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Depositary shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions. (c) Any Global Security that is transferable to the beneficial owners thereof in the form of Certificated Securities pursuant to this Section 305 shall be surrendered by the Depositary to the Trustee at its drop facility located in the Borough of Manhattan, the City of New York and specified in Section 1002, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount at maturity of Securities of authorized denominations in the form of Certificated Securities. Any portion of a Global Security transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000,000 and any integral multiple of $1,000,000 in excess thereof and registered in such names as the Depositary shall direct. Any Security in the form of Certificated Securities delivered in exchange for an interest in the Rule 144A Global Security shall, except as otherwise provided by Section 304(b), bear the Restricted Securities Legend set forth in Section 202. (d) Subject to the provisions of Section 305(c), the registered holder of a Global Security may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a holder is entitled to take under this Indenture or the Securities. (e) In the event of the occurrence of either of the events specified in Section 305(b), the Company will promptly make available to the Trustee a reasonable supply of Certificated Securities in definitive, fully registered form without interest coupons. SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security 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 Security 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 to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. The Trustee may charge the Company for the Trustee's expenses in replacing such Security. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. 29 Upon the issuance of any new Security 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 Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security 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 Securities 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 Securities. SECTION 307. Payment of Interest; Interest Rights Preserved. Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Persons in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. Payment of interest on the Securities shall be made (i) in respect of the Global Securities in immediately available funds to the accounts specified by the Global Security Holder on or prior to the respective payment dates and (ii) in respect of Certificated Securities by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each such Holder's registered address. Any interest on any Security 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: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) 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 Security 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 30 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 Security 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 Securities (or their respective Predecessor Securities) 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 Securities 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 Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. In the case of any Security which is converted after any Regular Record Date and on or prior to the next succeeding Interest Payment Date (other than any Security 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 Security (or one or more Predecessor Securities) is registered at the close of business on such Regular Record Date, provided, however, that Securities so surrendered for conversion shall (except in the case of Securities or portions thereof called for redemption) be accompanied by payment in New York Clearing House funds or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount being surrendered for conversion. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security which is converted, interest whose Stated Maturity is after the date of conversion of such Security shall not be payable. SECTION 308. Persons Deemed Owners. Prior to due presentment of a Security 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 Security is registered as the owner of such Security for the purpose of receiving payment of principal of and (subject to Section 307) interest on such Security and for all other purposes whatsoever, whether or not such Security 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. 31 SECTION 309. Cancellation. All Securities surrendered for payment, redemption, registration of transfer, exchange or conversion shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of as directed by a Company Order. SECTION 310. Computation of Interest. Interest on the Securities of each series shall be computed on the basis of a 360- day year of twelve 30-day months. SECTION 311. CUSIP Number. The Company in issuing the Securities may use a "CUSIP" number, and if so, such CUSIP number shall be included in notices of redemption, repurchase or exchange as a convenience to holders of Securities; provided, however, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Securities and that reliance may be placed only on the other identification numbers printed on the Securities. The Company will promptly notify the Trustee of any change in the CUSIP number. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except that the Company's obligations under Sections 607 and 402 hereof shall survive), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities 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; (B) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (C) 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. 32 SECTION 402. Repayment to Company. The Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal of or interest on the Securities that remains unclaimed for two years after the date upon which such payment shall have become due; provided, however, that the Company shall have first caused notice of such payment to the Company to be mailed by first-class mail to each Holder entitled thereto at such Holder's last known address no less than 30 days prior to such payment. The Company and the Trustee shall have no further liability or obligation to advise Holder. After payment to the Company, the Trustee and the Paying Agent shall have no further liability with respect to such money and Holders entitled to the money must look to the Company for payment as general creditors unless any applicable abandoned property law designates another person. ARTICLE FIVE REMEDIES SECTION 501. Events of Default. "Event of Default", wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Article Twelve or 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 the principal of any Security at its Maturity, whether or not such payment is prohibited by the provisions of Article Twelve; or (2) default in the payment of any interest on any Security when it becomes due and payable, whether or not such payment is prohibited by the provisions of Article Twelve, and continuance of such default for a period of 30 days; 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 60 days after there has been given, by registered or certified 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 Securities 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 33 (4) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or (5) the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of a general assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action. Upon receipt by the Trustee of any Notice of Default pursuant to this Section 501, a record date shall automatically and without any other action by any Person be set for the purpose of determining the Holders of Outstanding Securities entitled to join in such Notice of Default, which record date shall be the close of business on the day the Trustee receives such Notice of Default. The Holders of Outstanding Securities on such record date (or their duly appointed agents), and only such Persons, shall be entitled to join in such Notice of Default, whether or not such Holders remain Holders after such record date; provided, that unless such Notice of Default shall have become effective by virtue of the Holders of the requisite principal amount of Outstanding Securities on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such Notice of Default shall automatically and without any action by any Person be canceled and of no further force or effect. SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than as specified in subparagraph (4) or (5) 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 Securities may declare the principal of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration the principal of and interest accrued 34 on the Securities to the date of declaration shall become immediately due and payable. If an Event of Default specified in subparagraph (4) or (5) of Section 501 occurs and is continuing, then the principal of, and accrued and unpaid interest on all of the Securities 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 of Securities. 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 Securities, 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 interest on all Securities, (B) the principal of any Securities which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Securities, (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Securities, and (D) all sums paid or advanced by the Trustee and each predecessor Trustee, their respective agents and counsel hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and each predecessor Trustee, their respective agents and counsel; and (2) all Events of Default, other than the nonpayment of the principal of and interest on the Securities that have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission and waiver shall affect any subsequent default or impair any right consequent thereon. Upon receipt by the Trustee of any declaration of acceleration, or any rescission and annulment of any such declaration, pursuant to this Section 502, a record date shall automatically and without any other action by any Person be set for the purpose of determining the Holders of Outstanding Securities entitled to join in such declaration, or rescission and annulment, as the case may be, which record date shall be the close of business on the day the Trustee receives such declaration, or rescission and annulment, as the case may be. The Holders of Outstanding Securities on such record date (or their duly appointed agents), and only such Persons, shall be entitled to join in such declaration, or rescission and annulment, as the case may be, whether or not such Holders remain Holders after such record date; provided, that unless such declaration, or 35 rescission and annulment, as the case may be, shall have become effective by virtue of Holders of the requisite principal amount of Outstanding Securities on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such declaration, or rescission and annulment, as the case may be, shall automatically and without any action by any Person be canceled and of no further force or effect. 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 interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and interest, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and on any overdue interest, at the rate borne by the Securities, 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 and each predecessor Trustee, their respective agents and counsel, and any other amounts due the Trustee or any predecessor Trustee under Section 607. 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 and may prosecute any such proceeding to judgment or final decree, and may enforce the same against the Company (or any other obligor upon such Securities) 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 such Securities), 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 any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have the claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any 36 custodian, 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 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 and each predecessor Trustee for the reasonable compensation, expenses, disbursements and advances of the Trustee and each predecessor Trustee and their respective agents and counsel, and any other amounts due the Trustee under Section 607. No provision of this Indenture 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 Securities 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; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and may be a member of the Creditors' Committee. SECTION 505. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities 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 and each predecessor Trustee and their respective agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. 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 Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: Subject to Article 12, to the holders of Senior Indebtedness; SECOND: To payment of all amounts due the Trustee under Section 607; THIRD: To the payment of the amounts then due and unpaid for principal of and interest on the Securities 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 Securities for principal and interest, respectively; and FOURTH: The balance, if any, to the Company or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. 37 SECTION 507. Limitation on Suits. No Holder of any Security 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; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities 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 Securities; it being understood and intended that no one or more of such Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such 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, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and (subject to Section 307) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to convert such Security in accordance with Article Thirteen and to institute suit for the enforcement of any such payment and right to convert, 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, 38 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. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in Section 306, 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 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 Security 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 at least a majority in principal amount of the Outstanding Securities 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; and (3) subject to the provisions of Section 601, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall determine that the action so directed would involve the Trustee in personal liability or would be unduly prejudicial to Holders not joining in such direction. Upon receipt by the Trustee of any such direction, a record date shall automatically and without any other action by any Person be set for the purpose of determining the Holders of Outstanding Securities entitled to join in such direction, which record date shall be the close of business on the day the Trustee receives such direction. The Holders of Outstanding Securities on such record date (or their duly appointed agents), and only such Persons, shall be entitled to 39 join in such direction, whether or not such Holders remain Holders after such record date; provided, that unless such direction shall have become effective by virtue of Holders of the requisite principal amount of Outstanding Securities on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such direction shall automatically and without any action by any Person be canceled and of no further force or effect. SECTION 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities may on behalf of the Holders of all the Securities waive any past default hereunder and its consequences, except a default (1) in the payment of the principal of or interest on any Security, 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 Security 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, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company, in any suit instituted by the Trustee, in a suit by a Holder pursuant to Section 508, or in a suit by a Holder or Holders of more than 10% in principal amount of the outstanding Securities. ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. The duties and responsibilities of the Trustee shall be as provided by this Indenture and the Trust Indenture Act for securities issued pursuant to indentures qualified thereunder. Except as otherwise provided herein, notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability or risk 40 in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. The Trustee shall not be liable (x) for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts or (y) with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding relating to the time, method and place of conducting any proceeding or any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this indenture. Prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default which may have occurred: (i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture and in the Trust Indenture Act, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture and in the Trust Indenture Act, and no implied covenants or obligations shall be read in to this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture and believed by the Trustee to be genuine and to have been signed or presented by the proper party or parties; but in the case of any such statements, certificates or options which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform on their face to the requirements of this Indenture. If a default or an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise thereof as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. SECTION 602. Notice of Defaults. The Trustee shall give the Holders notice of any default hereunder known to it as and to the extent provided by the Trust Indenture Act; provided, however, that in the case of any default of the character specified in Section 501(5), no such notice to Holders shall be given until at least 30 days after the occurrence thereof. 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. For purposes of this Section 602, the Trustee shall not be deemed to have knowledge of an Event of Default hereunder unless a corporate trust officer of the Trustee has actual knowledge thereof, or unless written notice of any event which is an Event of Default is received by the Trustee and such notice references the Securities or this Indenture. SECTION 603. Certain Rights of Trustee. Subject to the provisions of Section 601: 41 (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) 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, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (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 security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) before the Trustee acts or refrains from acting with respect to any matter contemplated by this Indenture, it may require an Officers' Certificate or an Opinion of Counsel, which shall conform to the provisions of Section 102, and the Trustee shall be protected and shall not be liable for any action it takes or omits to take in good faith and without gross negligence in reliance on such certificate or opinion; (g) the Trustee shall not be required to give any bond or surety in respect of the performance of its power and duties hereunder; (h) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and (i) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee 42 shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. SECTION 604. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificate of authentication, shall be taken as the statements of the Company, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 605. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities 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, Security Registrar or such other agent. SECTION 606. Money Held in Trust. Money held by the Trustee or any Paying Agent in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee or any Paying Agent 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 (including its services as Security Registrar or Paying Agent, if so appointed by the Company) as may be mutually agreed upon in writing by the Company and the Trustee (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 and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in connection with the performance of its duties under any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel and all other persons not regularly in its employ) except to the extent any such expense, disbursement or advance may be attributable to its negligence or bad faith; and 43 (3) to indemnify the Trustee and each predecessor Trustee and their respective officers, directors, employees and agents (each an "indemnitee") for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder (including its services as Security Registrar or Paying Agent, if so appointed by the Company), including enforcement of this Section 607 and including the costs and expenses of defending itself against or investigating any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Company shall defend any claim or threatened claim asserted against an indemnitee for which it may seek indemnity, and the indemnitee shall cooperate in the defense unless, in the reasonable opinion of the indemnitee's counsel, the indemnitee has an interest adverse to the Issuer or a potential conflict of interest exists between the indemnitee and the Company, in which case the indemnitee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel; provided that the Company shall only be responsible for the reasonable fees and expenses of one law firm (in addition to local counsel) in any one action or separate substantially similar actions in the same jurisdiction arising out of the same general allegations or circumstances, such law firm to be designated by the indemnitee. As security for the performance of the obligations of the Company under this Section 607, the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities, and the Securities are hereby subordinated to such prior lien. The obligations of the Company under this Section to compensate and indemnify the Trustee and any predecessor Trustee and to pay or reimburse the Trustee and any predecessor Trustee for expenses, disbursements and advances, and any other amounts due the Trustee or any predecessor Trustee under Section 607, shall constitute an additional obligation hereunder and shall survive the satisfaction and discharge of this Indenture. When the Trustee or any predecessor Trustee incurs expenses or renders services in connection with the performance of its obligations hereunder (including its services as Security Registrar or Paying Agent, if so appointed by the Company) after an Event of Default specified in Section 501(4) or (5) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any applicable bankruptcy, insolvency or other similar federal or state law to the extent provided in Section 503(b)(5) of Title 11 of the United States Code, as now or hereafter in effect. SECTION 608. Disqualification; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. 44 SECTION 609. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a Person that (i) is eligible pursuant to the Trust Indenture Act to act as such, (ii) has (or, in the case of a corporation included in a bank holding company system, whose related bank holding company has) a combined capacity and surplus of at least $50,000,000 and (iii) has a Corporate Trust Office, or a designated agent, in the Borough of Manhattan, The City of New York. If such Person publishes reports of conditions at least annually, pursuant to law or to the requirements of a Federal or state supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. 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 in accordance with the applicable requirements of 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 required by Section 611 shall not have been delivered to the resigning 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 an Act of the Holders of a majority in principal amount of the Outstanding Securities 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 Security for the last 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, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on 45 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 and such successor Trustee shall comply with the applicable requirements of Section 611. 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 Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611 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 required by Section 611, any Holder who has been a bona fide Holder of a Security for at least six months 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 to all Holders in the manner provided in Section 106. 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. 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 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, provided such 46 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 Securities 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 Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. 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 Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of such claims against the Company (or any such other obligor). SECTION 614. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or Agents acceptable to and at the expense of the Company which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer, partial conversion or partial redemption or pursuant to Section 306, and Securities 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 Securities 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 Person 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 Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such Person 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. 47 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 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 notice of such appointment by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment under this Section 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. No successor Authenticating Agent shall be appointed unless eligible to act as such under the provisions of this Section. Any Authenticating Agent by the acceptance of its appointment shall be deemed to have represented to the Trustee that it is eligible for appointment as Authenticating Agent under this Section and to have agreed with the Trustee that: it will perform and carry out the duties of an Authenticating Agent as herein set forth, including among other things the duties to authenticate Securities when presented to it in connection with the original issuance and with exchanges, registrations of transfer or redemptions or conversions thereof or pursuant to Section 306; it will keep and maintain, and furnish to the Trustee from time to time as requested by the Trustee, appropriate records of all transactions carried out by it as Authenticating Agent and will furnish the Trustee such other information and reports as the Trustee may reasonably require; and it will notify the Trustee promptly if it shall cease to be eligible to act as Authenticating Agent in accordance with the provisions of this Section. Any Authenticating Agent by the acceptance of its appointment shall be deemed to have agreed with the Trustee to indemnify the Trustee against any loss, liability or expense incurred by the Trustee and to defend any claim asserted against the Trustee by reason of any acts or failures to act of such Authenticating Agent, but such Authenticating Agent shall have no liability for any action taken by it in accordance with the specific written direction of the Trustee. The Trustee shall not be liable for any act or any failure of the Authenticating Agent to perform any duty either required herein or authorized herein to be performed by such person in accordance with this Indenture. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. If an appointment is made pursuant to this Section, the Securities may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: This is one of the Securities described in the within-mentioned Indenture. _____________________________________ As Trustee 48 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 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date, and (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. Notwithstanding the foregoing, so long as the Trustee is the Security Registrar, no such list shall be required to be furnished. 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 Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act. (c) Every Holder of Securities, 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 any disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act or otherwise in accordance with this Indenture. 49 SECTION 703. Reports by Trustee. (a) Not later than 60 days following each September 15, the Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to 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 the Company. SECTION 704. Reports by Company. The Company shall file with the Trustee, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided, that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. SECTION 705. Rule 144A Information Requirement. If at any time prior to the Resale Restriction Termination Date the Company is no longer subject to Section 13 or 15(d) of the Exchange Act, the Company will furnish to the Holders or beneficial holders of the Securities and prospective purchasers of the Securities designated by the Holders of the Securities, upon their request, information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act until the Resale Restriction Termination Date. 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 Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless: (1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease all or substantially all of its properties and assets to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, all or substantially all of the properties and assets of the Company shall be a corporation, partnership or trust, shall be organized and validly 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 50 Trustee, the due and punctual payment of the principal of and interest on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed and shall have provided for conversion rights in accordance with Section 1311; (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 happened and be continuing; and (3) such consolidation, merger, conveyance, transfer or lease does not adversely affect the validity or enforceability of the Securities; and (4) the Company or the successor Person has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, 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 Substituted. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of all or substantially all of the properties and assets of the Company in accordance with Section 801, the successor Person 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 as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures Without Consent of Holders. Without the consent of any Holders, 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 cause this Indenture to be qualified under the Trust Indenture Act; or 51 (2) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or (3) to add to the covenants of the Company for the benefit of the Holders or an additional Event of Default, or to surrender any right or power conferred herein or in the Securities upon the Company; or (4) to secure the Securities; or (5) to make provision with respect to the conversion rights of Holders pursuant to the requirements of Section 1311; or (6) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities; or (7) to cure any ambiguity, to correct or supplement any provision herein or in the Securities which may be defective or inconsistent with any other provision herein or in the Securities, 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, that such action pursuant to this Clause (7) shall not materially adversely affect the interests of the Holders in any material respect and the Trustee may rely upon an opinion of counsel to that effect; or (8) to cause the Securities to be eligible to be held in book-entry form by DTC or other nationally recognized securities depositary. 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 Securities, by 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 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 Security affected thereby, (1) change the Stated Maturity of the principal of, or any installment of interest on, any Security, 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 Security or any premium or 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 adversely affect the right to convert any Security as provided in Article Thirteen (except as permitted by Section 901(5)), or 52 modify the provisions of Article Fourteen, or the provisions of this Indenture with respect to the subordination of the Securities, in a manner adverse to the Holders, or (2) reduce the percentage in principal amount of the Outstanding Securities, 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) make any change in Section 513, Section 508 or Section 902 hereof (including this sentence), or (4) 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 Security affected thereby; provided, however, that this Clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of Section 901(6). 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. 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 Officers' Certificate and 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. 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 Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act. 53 SECTION 906. Reference in Securities to Supplemental Indentures. Securities of any series 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 Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and (at the specific direction of the Company) authenticated and delivered by the Trustee in exchange for Outstanding Securities. SECTION 907. Notice of Supplemental Indenture. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to Section 902, the Company shall transmit to the Holders a notice setting forth the substance of such supplemental indenture. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal and Interest. The Company shall pay the principal of and interest (including interest accruing on or after the filing of a petition in bankruptcy or reorganization relating to the Company, whether or not a claim for post-filing interest is allowed in such proceeding) on the Securities on (or prior to) the dates and in the manner provided in the Securities or pursuant to this Indenture. The Company shall pay interest on overdue principal and interest on overdue installments of interest (including interest accruing on or after the filing of a petition in bankruptcy or reorganization relating to the Company, whether or not a claim for post-filing interest is allowed in such proceeding), to the extent lawful, at the rate per annum borne by the Securities, which interest on overdue interest shall accrue on the date such amounts became overdue. SECTION 1002. Maintenance of Office or Agency. The Company will maintain in New York, New York an office or agency (which may be a drop facility) where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer, where Securities may be surrendered for exchange or conversion and where notices and demands to or upon the Company in respect of the Securities 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 any 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, or the offices of its Agent, DTC, and 54 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 where the Securities 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. The Company hereby designates the Trustee c/o Harris Trust Company, 88 Pine Street, 19th Floor, New York, New York 10005 as such drop facility in compliance with this Section 1002. SECTION 1003. Money for Security Payments to Be Held in Trust. If 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 Securities, 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 prior to 11:00 a.m. (New York City time) on each due date of the principal of and interest on any Securities, deposit with a Paying Agent a sum in same day funds sufficient to pay the principal and any premium and interest so becoming due, such sum to be held as provided by the Trust Indenture Act, 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 or the Company 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 (i) comply with the provisions of the Trust Indenture Act and this Indenture applicable to it as a Paying Agent and hold all sums held by it for the payment of principal of or interest on the Securities 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; (ii) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities; and (iii) at any time during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities, and account for any funds disbursed. 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 55 Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent 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 and interest on any Security and remaining unclaimed for two years after such principal and 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 Security 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 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. Statement by Officers as to Default. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Right of Redemption. The Securities may be redeemed at the election of the Company, in whole or from time to time in part, at any time on or after May 3, 2009, at the Redemption Prices specified in the form of Security hereinbefore set forth, together with accrued interest to the Redemption Date. SECTION 1102. Applicability of Article. Redemption of Securities at the election of the Company as permitted by any provision of this Indenture shall be made in accordance with such provision and this Article. 56 SECTION 1103. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities 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 Securities, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter period shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities to be redeemed. In case of any redemption at the election of the Company of all of the Securities, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter period shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date. SECTION 1104. Selection by Trustee of Securities to be Redeemed. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities not previously called for redemption, by lot or pro rata or by such other method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $1,000,000 or any integral multiple of $1,000,000 in excess thereof) of the principal amount of Securities of a denomination larger than $1,000,000. If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for redemption. Securities which have been converted during a selection of Securities to be redeemed shall be treated by the Trustee as Outstanding for the purpose of such selection. In any case where more than one Security is registered in the same name, the Trustee in its discretion may treat the aggregate principal amount so registered as if it were represented by one Security. The Trustee shall promptly notify the Company and each Security Registrar in writing of the Securities selected for redemption and, in the case of any Securities 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 Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities 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 the Trustee and to each Holder of Securities to be redeemed, at his address appearing in the Security Register. All notices of redemption shall state: 57 (a) the Redemption Date, (b) the Redemption Price, (c) if less than all the Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption of any Securities, the principal amounts) of the particular Securities to be redeemed, (d) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and that (unless the Company shall default in payment of the Redemption Price) interest thereon will cease to accrue on and after said date, (e) the conversion price, the date on which the right to convert the Securities to be redeemed will terminate and the place or places where such Securities may be surrendered for conversion, and (f) the place or places where such Securities are to be surrendered for payment of the Redemption Price. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request received by the Trustee at least 45 days prior to the Redemption Date, by the Trustee in the name and at the expense of the Company. SECTION 1106. Deposit of Redemption Price. At or prior to 9:00 a.m. (New York City time) on 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 in same day funds sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities or portions thereof which are to be redeemed on that date other than any Securities called for redemption on that date which have been converted prior to the date of such deposit. If any Security called for redemption is converted, any money deposited with the Trustee or with any Paying Agent or so segregated and held in trust for the redemption of such Security shall (subject to any right of the Holder of such Security or any Predecessor Security to receive interest as provided in the last paragraph of Section 307) be paid to the Company upon Company Request or, if then held by the Company, shall be discharged from such trust. SECTION 1107. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities 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 Securities shall cease to bear interest. Upon 58 surrender of any such Security for redemption in accordance with said notice, such Security 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 Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, 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 Security 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 Security. SECTION 1108. Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at an office or agency of the Company maintained 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 Security without service charge, a new Security or Securities, 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 Security so surrendered. ARTICLE TWELVE SUBORDINATION OF SECURITIES SECTION 1201. Securities Subordinated to Senior Indebtedness. The Company covenants and agrees, and each Holder of a Security, by his acceptance thereof, likewise covenants and agrees, that, at all times and in all respects, the indebtedness represented by the Securities and the payment of the principal and interest on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness. SECTION 1202. Payment Over of Proceeds Upon Dissolution, Etc. In the event of (a) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding, relative to the Company or to its creditors, as such, or to a substantial part of its assets, or (b) any proceeding for the liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (c) any general assignment for the benefit of creditors or any other marshalling of assets and liabilities of the Company, then and in any such event the holders of Senior Indebtedness shall be entitled to receive payment in full of all amounts due or to become due on or in respect of all Senior Indebtedness, or provision shall be made for such 59 payment in money or money's worth, before the Holders of the Securities are entitled to receive any payment or distribution of any kind or character, whether in cash, property or securities, on account of principal of or interest on the Securities, and to that end the holders of Senior Indebtedness shall be entitled to receive, for application to the payment thereof, any payment or distribution of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities, which may be payable or deliverable in respect of the Securities in any such case, proceeding, dissolution, liquidation or other winding up or event. Upon notice from the Senior Agent during a reorganization proceeding described in (a), (b) or (c) above, the remedy and payment blockages provided for in Section 1203 and 1204 shall terminate and the Holders shall accelerate the Subordinated Indebtedness and all distributions and payments to which the Holders would be entitled but for this Article Twelve shall be paid and applied to the Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. In the event that, notwithstanding the foregoing provisions of this Section, the Trustee or the Holder of any Security shall have received any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities, before all Senior Indebtedness is paid in full or payment thereof provided for, and if such fact shall, at or prior to the time of such payment or distribution, have been made known to the Trustee or such Holder, as the case may be, then and in such event such payment or distribution shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making 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, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. In the event of any reorganization proceeding described in (a), (b) or (c) above, the Trustee agrees and each Holder, by its acceptance of the Securities agrees, to promptly take such action as the Senior Agent may request to collect any payment with respect to the Subordinated Indebtedness for the account of the holders of the Senior Indebtedness and to file appropriate claims or proofs of claim in respect of the Subordinated Indebtedness in such proceeding. Upon the failure of any Holder to take any such action as of the tenth (10th) Business Day preceding the bar date therefor, the Senior Agent is hereby irrevocably authorized and empowered (in its own name or otherwise), but shall have no obligation, to demand, sue for, collect and receive any payment referred to in respect of this Indenture or the Securities and to file claims and proofs of claim and take such other action as it may deem necessary or advisable for the exercise or enforcement of any of the rights or interests of the Holders with respect to the Securities. 60 For purposes of this Article only, the words "cash, property or securities" shall not be deemed to include securities of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, which are subordinated in right of payment to all Senior Indebtedness which may at the time be outstanding to substantially the same extent as, or to a greater extent than, the Securities are so subordinated as provided in this Article. 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, reorganization, general assignment for the benefit of creditors or marshalling of assets and liabilities of the Company for the purposes of this Section if the Person formed by such consolidation or into which the Company is merged or 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 1203. Prior Payment to Senior Indebtedness upon Acceleration of Securities. In the event that any Securities are declared due and payable before their Stated Maturity, then and in such event the holders of Senior Indebtedness outstanding at the time such Securities so become due and payable shall be entitled to receive payment in full of all amounts due on or in respect of such Senior Indebtedness, or provision shall be made for such payment in money or money's worth, before the Holders of the Securities are entitled to receive any payment (including any payment which may be payable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities) by the Company on account of the principal of or interest on the Securities or on account of the purchase or other acquisition of Securities. In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the Holder of any Security prohibited by the foregoing provisions of this Section, and if such fact shall, at or prior to the time of such payment, have been made known to the Trustee or such Holder, as the case may be, then and in such event such payment shall be paid over and delivered forthwith to the Company. The provisions of this Section shall not apply to any payment with respect to which Section 1202 would be applicable. SECTION 1204. No Payment When Senior Indebtedness in Default; Suspension of Remedies. Except as provided in Section 1202, (a) in the event and during the continuation of any Payment Default in respect of any Senior Indebtedness, or upon receipt by the Company of a Payment Blockage Notice, until the expiration or termination of the Payment and Remedy Blockage Period relating to such Payment Default or such Payment Blockage Notice, or (b) in the event any judicial proceeding shall be pending with respect to any such default in payment or 61 event of default, then no payment (including any payment which may be payable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities) shall be made by the Company on account of the principal of or interest on the Securities or on account of the purchase or other acquisition of Securities and neither the Trustee nor any Holder of any Security shall declare or join in any declaration of the Securities, or any of the indebtedness under the Securities, to be due and payable by reason of an Event of Default or otherwise take any action against the Company (including without limitation commencing any legal action against the Company or filing or joining in the filing of any insolvency petition against the Company); provided that, unless the Senior Indebtedness under the Senior Credit Agreement has been accelerated or an Event of Default specified in subparagraphs (4) or (5) of Section 501 has occurred, in no event shall the Trustee or any Holder of any Security accelerate the Securities until a period of five (5) consecutive Business Days has expired after notice of intention to accelerate on account of the occurrence of such Event of Default shall have been given by the Trustee to the Company and the Senior Agent. Notwithstanding any other provision of this Indenture, no Payment and Remedy Blockage Period may be commenced within 360 days after the receipt by the Company of any prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made to be, the basis for a subsequent Payment Blockage Notice; provided, however, that a default that arises on account of actions or facts occurring after the time of delivery of a Payment Blockage Notice to the Trustee shall not be considered as existing or continuing at the time of delivery of such Payment Blockage Notice. In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the Holder of any Security prohibited by the foregoing provisions of this Section, and if such fact shall, at or prior to the time of such payment, have been made known to the Trustee or such Holder, as the case may be, then and in such event such payment shall be paid over and delivered forthwith to the Company. The provisions of this Section shall not apply to any payment with respect to which Section 1202 would be applicable. SECTION 1205. Payment Permitted If No Default. Nothing contained in this Article or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time except during the pendency of any case, proceeding, dissolution, liquidation or other winding up, general assignment for the benefit of creditors or other marshalling of assets and liabilities of the Company referred to in Section 1202 or under the conditions described in Section 1203 or 1204, from making payments at any time of principal of or interest on the Securities, or (b) the application by the Trustee of any money deposited with it hereunder to the payment of or on account of the principal of or interest on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge that such payment would have been prohibited by the provisions of this Article. 62 SECTION 1206. Subrogation to Rights of Holders of Senior Indebtedness. Subject to the payment in full of all amounts due on or in respect of Senior Indebtedness, the Holders of the Securities 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 (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to other indebtedness of the Company to substantially the same extent as the Securities are subordinated and 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 Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Securities 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 of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness. SECTION 1207. Provisions Solely to Define Relative Rights. The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of and interest on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company or the Holders of the Securities and creditors of the Company other than the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. SECTION 1208. Trustee to Effectuate Subordination. Each holder of a Security 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 and appoints the Trustee his attorney-in-fact for any and all such purposes. SECTION 1209. No Waiver of Subordination Provisions. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act 63 or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without impairing or releasing the subordination provided in this Article or the obligations hereunder of the Holders of the Securities to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any Person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. SECTION 1210. Notice 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 Securities. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until the Trustee shall have received written notice thereof from the Company or a holder of Senior Indebtedness or from any trustee therefor; 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, 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. 64 SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to the provisions of Section 601, and the Holders of the Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. SECTION 1212. Trustee Not Fiduciary for 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 Securities or to the Company or to any other Person cash, property or securities to which holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Article against the Trustee. SECTION 1213. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607. SECTION 1214. Article Applicable to Paying Agents. 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 shall in such case (unless the context otherwise requires) 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 in addition to or in place of the Trustee; provided, however, that Section 1213 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. 65 SECTION 1215. Certain Conversions Deemed Payment. For the purposes of this Article only, (1) the issuance and delivery of junior securities upon conversion of Securities in accordance with Article Thirteen shall not be deemed to constitute a payment or distribution on account of the principal of or interest on Securities or on account of the purchase or other acquisition of Securities, and (2) the payment, issuance or delivery of cash, property or securities (other than junior securities) upon conversion of a Security shall be deemed to constitute payment on account of the principal of such Security. For the purposes of this Section, the term "junior securities" means (a) shares of any class of capital stock of the Company and (b) securities of the Company which are subordinated in right of payment to all Senior Indebtedness which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Securities are so subordinated as provided in this Article. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, the right, which is absolute and unconditional, of the Holder of any Security to convert such Security in accordance with Article Thirteen. ARTICLE THIRTEEN CONVERSION OF SECURITIES SECTION 1301. Conversion Privilege and Conversion Price. Subject to and upon compliance with the provisions of this Article, at the option of the Holder thereof, any Security or any portion of the principal amount thereof which equals $1,000,000 or any integral multiple of $1,000,000 in excess thereof, may be converted at any time after the 60th day following the date of original issuance of Securities under this Indenture at the principal amount thereof, or of such portion thereof, into fully paid and nonassessable shares (calculated as to each conversion to the nearest share) of Common Stock, at the conversion price, determined as hereinafter provided, in effect at the time of conversion. Such conversion right shall expire at the close of business on May 3, 2014. In case a Security or portion thereof is called for redemption, such conversion right in respect of the Security or portion so called shall expire at the close of business on the second business day preceding the applicable Redemption Date, unless the Company defaults in making the payment due upon redemption. The price at which shares of Common Stock shall be delivered upon conversion (herein called the "conversion price") shall be initially $22.75 per share of Common Stock. The conversion price shall be adjusted in certain instances as provided in paragraphs (a), (b), (c), (d), (e), (f) and (i) of Section 1304. 66 SECTION 1302. Exercise of Conversion Privilege. In order to exercise the conversion privilege, the Holder of any Security shall surrender such Security, duly endorsed or assigned to the Company or in blank, at any office or agency of the Company maintained pursuant to Section 1002, accompanied by written notice to the Company in the form provided in the Security (or such other notice as is acceptable to the Company) at such office or agency that the Holder elects to convert such Security or, if less than the entire principal amount thereof is to be converted, the portion thereof to be converted. Securities surrendered for conversion during the period from the opening of business on any Regular Record Date next preceding any Interest Payment Date to the close of business on such Interest Payment Date shall (except in the case of Securities or portions thereof which have been called for redemption) be accompanied by payment in New York Clearing House funds or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount being surrendered for conversion. Except as provided in the immediately preceding sentence and subject to the fourth paragraph of Section 307, no payment or adjustment shall be made upon any conversion on account of any interest accrued on the Securities surrendered for conversion or on account of any dividends on the Common Stock issued upon conversion. Securities shall be deemed to have been converted immediately prior to the close of business on the day of surrender of such Securities for conversion in accordance with the foregoing provisions, and at such time the rights of the Holders of such Securities as Holders shall cease, and the Person or Persons entitled to receive the Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Stock as and after such time. As promptly as practicable on or after the conversion date, the Company shall issue and shall deliver at such office or agency a certificate or certificates for the number of full shares of Common Stock issuable upon conversion. In the case of any Security which is converted in part only, upon such conversion the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities of authorized denominations in aggregate principal amount equal to the unconverted portion of the principal amount of such Security. Certificates for shares of Common Stock issued pursuant to this Article Thirteen prior to the Resale Restriction Termination Date shall bear the Restricted Securities Legend. SECTION 1303. Fractions of Shares. No fractional share of Common Stock shall be issued upon conversion of Securities, but, in lieu thereof, the Company shall pay to the Holder so surrendering for conversion a cash adjustment in an amount equal to the same fraction of the "Closing Price" (as defined in Section 1304(h) hereof) as such fractional interest on the date on which the Securities were duly surrendered to the Company for conversion, or, if such day is not a "Trading Day" (as defined in Section 1304(h) hereof), on the next Trading Day. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issuable 67 upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof) so surrendered. SECTION 1304. Adjustment of Conversion Price. (a) In case the Company shall pay or make a dividend or other distribution on the Common Stock exclusively in Common Stock or shall pay or make a dividend or other distribution on any other class of capital stock of the Company which dividend or distribution includes Common Stock, the conversion price in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such dividend or other distribution shall be reduced by multiplying such conversion price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purpose of this paragraph (a), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. The Company shall not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. (b) Subject to paragraph (g) of this Section, in case the Company shall pay or make a dividend or other distribution on the Common Stock consisting exclusively of, or shall otherwise issue to all holders of the Common Stock, rights or warrants entitling the holders thereof (for a period expiring within 45 days after the record date mentioned in this Section 1304(b)) to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price (determined as provided in paragraph (h) of this Section) on the date fixed for the determination of shareholders entitled to receive such rights or warrants, the conversion price in effect at the opening of business on the day following the date fixed for such determination shall be reduced by multiplying such conversion price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such Current Market Price and the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the aggregate number of shares of Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (b), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. The Company shall not issue any rights or warrants in respect of shares of Common Stock held in the treasury of the Company. In case any rights or warrants referred to in this subsection in respect of which an adjustment shall have been made shall expire unexercised within 45 days after the same shall have been distributed or issued by the Company, the Conversion Price shall be readjusted at the time of such expiration to the Conversion Price that would have been in effect if no adjustment had been made on account of the distribution or issuance of such expired rights or warrants. 68 (c) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the conversion price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and, conversely, in case outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the conversion price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which subdivision or combination becomes effective. (d) Subject to the last sentence of this paragraph (d) and to paragraph (g) of this Section, in case the Company shall, by dividend or otherwise, distribute to all holders of the Common Stock evidences of its indebtedness, shares of any class of its capital stock or other assets (including securities, but excluding any rights or warrants referred to in paragraph (b) of this Section, excluding any dividend or distribution paid exclusively in cash and excluding any dividend or distribution referred to in paragraph (a) of this Section), the conversion price shall be reduced by multiplying the conversion price in effect immediately prior to the close of business on the date fixed for the determination of shareholders entitled to such distribution by a fraction of which the numerator shall be the Current Market Price (determined as provided in paragraph (h) of this Section) on such date less the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) on such date of the portion of the evidences of indebtedness, shares of capital stock and other assets to be distributed applicable to one share of Common Stock and the denominator shall be such Current Market Price, such reduction to become effective immediately prior to the opening of business on the day following such date. In the event that such dividend or distribution is not so paid or made, the conversion price shall again be adjusted to be the conversion price that would then be in effect if such dividend or distribution had not occurred. If the Board of Directors determines the fair market value of any distribution for purposes of this paragraph (d) by reference to the actual or when-issued trading market for any securities comprising part or all of such distribution, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price pursuant to paragraph (h) of this Section, to the extent possible. For purposes of this paragraph (d), any dividend or distribution that includes shares of Common Stock, rights or warrants to subscribe for or purchase shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock shall be deemed to be (x) a dividend or distribution of the evidences of indebtedness, assets or shares of capital stock other than such shares of Common Stock, such rights or warrants or such convertible or exchangeable securities (making any conversion price reduction required by this paragraph (d)) immediately followed by (y) in the case of such shares of Common Stock or such rights or warrants, a dividend or distribution thereof (making any further conversion price reduction required by paragraph (a) and (b) of this Section, except any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of paragraph (a) of this Section), or (z) in the case of such convertible or exchangeable securities, a dividend or distribution of the number of shares of Common Stock as would then be issuable upon the conversion or exchange thereof, whether or not the conversion or exchange of such 69 securities is subject to any conditions (making any further conversion price reduction required by paragraph (a) of this Section, except the shares deemed to constitute such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of paragraph (a) of this Section). (e) In case the Company shall, by dividend or otherwise, at any time distribute to all holders of the Common Stock cash (excluding any cash that is distributed as part of a distribution resulting in an adjustment pursuant to paragraph (d) of this Section or in connection with a transaction to which Section 1311 applies) in an aggregate amount that, together with (i) the aggregate amount of any other distributions to all holders of the Common Stock of cash within the 12 months preceding the date fixed for the determination of shareholders entitled to such distribution and in respect of which no conversion price adjustment pursuant to this paragraph (e) has been made previously and (ii) the aggregate amount of cash and other consideration paid in respect of any tender offer by the Company or a Subsidiary for all or any portion of the Common Stock consummated within the 12 months preceding the date fixed for the determination of shareholders entitled to such distribution and in respect of which no conversion price adjustment pursuant to paragraph (f) of this Section has been made previously, exceeds 20.0% of the product of the Current Market Price (determined as provided in paragraph (h) of this Section) on such date of determination times the number of shares of Common Stock outstanding on such date, the conversion price shall be reduced by multiplying the conversion price in effect immediately prior to the close of business on such date of determination by a fraction of which the numerator shall be the Current Market Price (determined as provided in paragraph (h) of this Section) on such date less the amount of cash to be distributed at such time applicable to one share of Common Stock and the denominator shall be such Current Market Price, such reduction to become effective immediately prior to the opening of business on the day after such date. (f) In case a tender offer made by the Company or any Subsidiary for all or any portion of the Common Stock shall be consummated and such tender offer shall involve an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) as of the last time (the "Expiration Time") that tenders may be made pursuant to such tender offer (as it shall have been amended) that, together with (i) the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) as of the Expiration Time of the other consideration paid in respect of any other tender offer by the Company or a Subsidiary for all or any portion of the Common Stock consummated within the 12 months preceding the Expiration Time and in respect of which no conversion price adjustment pursuant to this paragraph (f) has been made previously and (ii) the aggregate amount of any distributions to all holders of the Common Stock made exclusively in cash within the 12 months preceding the Expiration Time and in respect of which no conversion price adjustment pursuant to paragraph (e) of this Section has been made previously, exceeds 20.0% of the product of the Current Market Price 70 (determined as provided in paragraph (h) of this Section) immediately prior to the Expiration Time times the number of shares of Common Stock outstanding (including any tendered shares) at the Expiration Time, the conversion price shall be reduced by multiplying the conversion price in effect immediately prior to the Expiration Time by a fraction of which the numerator shall be (x) the product of the Current Market Price (determined as provided in paragraph (h) of this Section) immediately prior to the Expiration Time times the number of shares of Common Stock outstanding (including any tendered shares) at the Expiration Time minus (y) the fair market value (determined as aforesaid) of the aggregate consideration payable to shareholders upon consummation of such tender offer and the denominator shall be the product of (A) such Current Market Price times (B) such number of outstanding shares at the Expiration Time minus the number of shares accepted for payment in such tender offer (the "Purchased Shares"), such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time; provided, that if the number of Purchased Shares or the aggregate consideration payable therefor have not been finally determined by such opening of business, the adjustment required by this paragraph (f) shall, pending such final determination, be made based upon the preliminarily announced results of such tender offer, and, after such final determination shall have been made, the adjustment required by this paragraph (f) shall be made based upon the number of Purchased Shares and the aggregate consideration payable therefor as so finally determined. (g) The reclassification of Common Stock into securities which include securities other than Common Stock (other than any reclassification upon a consolidation or merger to which Section 1311 applies) shall be deemed to involve (i) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of shareholders entitled to such distribution" within the meaning of paragraph (d) of this Section), and (ii) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision becomes effective" or "the day upon which such combination becomes effective", as the case may be, and "the day upon which such subdivision or combination becomes effective" within the meaning of paragraph (c) of this Section). Rights or warrants issued by the Company to all holders of the Common Stock entitling the holders thereof to subscribe for or purchase shares of Common Stock (either initially or under certain circumstances), which rights or warrants (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case in clauses (i) through (iii) until the occurrence of a specified event or events (" Trigger Event"), shall for purposes of this Section 1304 not be deemed issued until the occurrence of the earliest Trigger Event. If any such rights or warrants, including any such existing rights or warrants distributed prior to the date of this Indenture are subject to subsequent events, upon the occurrence of each of which such rights or warrants shall become exercisable to purchase different securities, evidences of indebtedness or other assets, then the occurrence of each such event shall be deemed to be such date of issuance and record date with respect to new rights or warrants (and a termination or expiration of the existing rights or warrants without exercise by the holder thereof). In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event with respect thereto, that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Price under this Section 1304 was made, (1) in the case of any such rights or warrant which shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Price 71 shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of such rights or warrants which shall have expired or been terminated without exercise by any holders thereof, the Conversion Price shall be readjusted as if such rights and warrants had not been issued. Notwithstanding any other provision of this Section 1304 to the contrary, rights, warrants, evidences of indebtedness, other securities, cash or other assets (including, without limitation, any rights distributed pursuant to any stockholder rights plan) shall be deemed not to have been distributed for purposes of this Section 1304 if the Company makes proper provision so that each holder of Securities who converts a Security (or any portion thereof) after the date fixed for determination of stockholders entitled to receive such distribution shall be entitled to receive upon such conversion, in addition to the shares of Common Stock issuable upon such conversions, the amount and kind of such distributions that such holder would have been entitled to receive if such holder had, immediately prior to such determination date, converted such Security into Common Stock. (h) For the purpose of any computation under this paragraph and paragraphs (b), (d) and (e) of this Section, the current market price per share of Common Stock (the "Current Market Price") on any date shall be deemed to be the average of the daily Closing Prices for the ten (10) consecutive Trading Days preceding the date in question; provided, however, that (i) if the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after the 10th Trading Day prior to the date in question and prior to the "ex" date for the issuance or distribution requiring such computation, the Closing Price for each Trading Day prior to the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the same fraction by which the conversion price is so required to be adjusted as a result of such other event, (ii) if the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after the "ex" date for the issuance or distribution requiring such computation and on or prior to the date in question, the Closing Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the conversion price is so required to be adjusted as a result of such other event, and (iii) if the "ex" date for the issuance or distribution requiring such computation is on or prior to the date in question, after taking into account any adjustment required pursuant to clause (ii) of this proviso, the Closing Price for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the fair market value on the date in question (as determined by the Board of Directors in a manner consistent with any determination of such value for purposes of paragraph (d) or (e) of this Section, whose determination shall be conclusive and described in a Board Resolution) of the evidences of indebtedness, shares of capital stock or assets being distributed applicable to one share of Common Stock as of the close of business on the day before 72 such "ex" date. For the purpose of any computation under paragraph (f) of this Section, the Current Market Price on any date shall be deemed to be the average of the daily Closing Prices for the ten (10) consecutive Trading Days preceding the latest (the "Commencement Date") of (i) the date 10 Trading Days before the date in question, (ii) the date of commencement of the tender offer requiring such computation and (iii) the date of the last amendment, if any, of such tender offer involving a change in the maximum number of shares for which tenders are sought or a change in the consideration offered, and ending not later than the Expiration Time of such tender offer; provided, however, that if the "ex" date for any event (other than the tender offer requiring such computation) that requires an adjustment to the conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after the Commencement Date and prior to the Expiration Time for the tender offer requiring such computation, the Closing Price for each Trading Day prior to the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the same fraction by which the conversion price is so required to be adjusted as a result of such other event. The closing price for any Trading Day (the "Closing Price") shall be the last reported sales price regular way or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way, in either case on the New York Stock Exchange or, if the Common Stock is not listed or admitted to trading on such exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the Nasdaq Stock Market's National Market or, if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted on such National Market, the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose. For purposes of this paragraph, the term "Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which securities are generally not traded on the applicable securities exchange or in the applicable securities market and the term "'ex' date," (i) when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Prices were obtained without the right to receive such issuance or distribution, (ii) when used with respect to any subdivision or combination of shares of Common Stock, means the first date on which the Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective, and (iii) when used with respect to any tender offer means the first date on which the Common Stock trades regular way on such exchange or in such market after the last time that tenders may be made pursuant to such tender offer (as it shall have been amended). (i) The Company may make such reductions in the conversion price, in addition to those required by paragraphs (a), (b), (c), (d), (e) and (f) of this Section, as it considers to be advisable (as evidenced by a Board Resolution) in order that any event treated for federal income tax purposes as a dividend of stock or stock rights shall not be taxable to the recipients or, if that is not possible, to diminish any income taxes that are otherwise payable because of such event. (j) No adjustment in the conversion price shall be required unless such adjustment (plus any other adjustments not previously made by reason of this paragraph (j) would require an increase or decrease of at least 1% in the conversion price; provided, however, that any 73 adjustments which by reason of this paragraph (j) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. (k) Notwithstanding any other provision of this Section 1304, no adjustment to the conversion price shall reduce the conversion price below the then par value per share of the Common Stock, and any such purported adjustment shall instead reduce the conversion price to such par value. The Company hereby covenants not to take any action to increase the par value per share of the Common Stock. SECTION 1305. Notice of Adjustments of Conversion Price. Whenever the conversion price is adjusted as herein provided: (a) the Company shall compute the adjusted conversion price in accordance with Section 1304 and shall prepare an Officers' Certificate signed by the Treasurer of the Company setting forth the adjusted conversion price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed (with a copy to the Trustee) at each office or agency maintained for the purpose of conversion of Securities pursuant to Section 1002; and (b) a notice stating that the conversion price has been adjusted and setting forth the adjusted conversion price shall forthwith be prepared, and as soon as practicable after it is prepared, such notice shall be mailed by the Company to all Holders at their last addresses as they shall appear in the Security Register. SECTION 1306. Notice of Certain Corporate Action. In case: (a) the Company shall declare a dividend (or any other distribution) on its Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively in cash in an amount that would require a conversion price adjustment pursuant to paragraph (e) of Section 1304; or (b) the Company shall authorize the granting to the holders of its Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights (excluding shares of capital stock or option for capital stock issued pursuant to a benefit plan for employees, officers or directors of the Company); or (c) of any reclassification of the Common Stock (other than a subdivision or combination of the outstanding shares of Common Stock), or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any shareholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or 74 (d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or (e) the Company or any Subsidiary shall commence a tender offer for all or a portion of the outstanding shares of Common Stock (or shall amend any such tender offer to change the maximum number of shares being sought or the amount or type of consideration being offered therefor); then the Company shall cause to be filed at each office or agency maintained pursuant to Section 1002, and shall cause to be mailed to all Holders at their last addresses as they shall appear in the Security Register, at least 21 days (or 11 days in any case specified in clause (a), (b) or (e) above) prior to the applicable record, effective or expiration date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record who will be entitled to such dividend, distribution, rights or warrants are to be determined, (y) the date on which such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up, or (z) the date on which such tender offer commenced, the date on which such tender offer is scheduled to expire unless extended, the consideration offered and the other material terms thereof (or the material terms of any amendment thereto). Neither the failure to give any such notice nor any defect therein shall affect the legality or validity of any action described in clauses (a) through (e) of this Section 1306. SECTION 1307. Company to Reserve Common Stock. The Company shall at all times reserve and keep available, free from preemptive rights, out of the authorized but unissued Common Stock or out of the Common Stock held in treasury, for the purpose of effecting the conversion of Securities, the full number of shares of Common Stock then issuable upon the conversion of all outstanding Securities. Shares of Common Stock issuable upon conversion of outstanding Securities shall be issued out of the Common Stock held in Treasury to the extent available. SECTION 1308. Taxes on Conversions. The Company will pay any and all documentary, stamp or similar issue or transfer taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Securities pursuant hereto. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the Holder of the Security or Securities to be converted, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid. 75 SECTION 1309. Covenant as to Common Stock. The Company covenants that all shares of Common Stock which may be issued upon conversion of Securities will upon issue be fully paid and nonassessable and, except as provided in Section 1308, the Company will pay all taxes, liens and charges with respect to the issue thereof. SECTION 1310. Cancellation of Converted Securities. All Securities delivered for conversion shall be delivered to the Trustee to be canceled by or at the direction of the Trustee, which shall dispose of the same as provided in Section 309. SECTION 1311. Effect of Consolidation, Merger or Sale of Assets. In case of any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock) or any sale or transfer of all or substantially all of the assets of the Company, the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, shall execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Security then Outstanding shall have the right thereafter, during the period such Security shall be convertible as specified in Section 1301, to convert such Security only into the kind and amount of securities, cash and other property, if any, receivable upon such consolidation, merger, sale or transfer by a holder of the number of shares of Common Stock into which such Security might have been converted immediately prior to such consolidation, merger, sale or transfer, assuming such holder of Common Stock (i) is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be (a "Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer is not the same for each share of Common Stock held immediately prior to such consolidation, merger, sale or transfer by other than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("nonelecting share"), then for the purpose of this Section the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by each nonelecting share shall be deemed to be the kind and amount so receivable per share by a plurality of the nonelecting shares). Such supplemental indenture shall provide for adjustments which, for events subsequent to the effective date of such supplemental indenture, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article. The above provisions of this Section shall similarly apply to successive consolidations, mergers, sales or transfers. 76 SECTION 1312. Trustee's Disclaimer. The Trustee has no duty to determine when an adjustment under this Article 13 should be made, how it should be made or what such adjustment should be, but may accept as conclusive evidence of the correctness of any such adjustment, and shall be protected in relying upon, the Officers' Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 1305. The Trustee makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities, and the Trustee shall not be responsible for the Company's failure to comply with any provisions of this Article 13. The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture executed pursuant to Section 1311, but may accept as conclusive evidence of the correctness thereof, and shall be protected in relying upon, the Officers' Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 1311. This instrument may be executed in any number of counterparts, each of which when 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. HILB, ROGAL AND HAMILTON COMPANY By: /s/ Timothy J. Korman ----------------------------------------- Name: Timothy J. Korman Title: Executive Vice President - Finance Attest: /s/ Walter L. Smith - ----------------------------------- Walter L. Smith Secretary 77 CRESTAR BANK, as Trustee By: /s/ L. B. Bedell ----------------------------------------- Name: L. B. Bedell Title: Vice President Attest: /s/ Dennis Paul Smith - ----------------------------------- Dennis Paul Smith Assistant Secretary Commonwealth of Virginia ) City of Richmond ) On the 3rd day of May, 1999, before me personally came Timothy J. Korman, to me known, who, being by me duly sworn, did depose and say that he is Executive Vice President - Finance of Hilb, Rogal and Hamilton Company, a Virginia corporation, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of the corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority by the Board of Directors of said corporation; and that he signed his name thereto by like authority. /s/ Bonnie O. Cross ----------------------------------------- Notary Public My commission expires: 02/28/2002 Commonwealth of Virginia ) City of Richmond ) On the 3rd day of May, 1999, before me personally came L. B. Bedell, to me known, who, being by me duly sworn, did depose and say that she is Vice President of Crestar Bank, a duly organized banking institution existing under the laws of the Commonwealth of Virginia, one of the corporations described in and which executed the foregoing instrument; that she knows the seal of the 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 she signed her name thereto by like authority. /s/ Margaret L. Walker ----------------------------------------- Notary Public My commission expires Aug. 31, 2001 78 EXHIBIT A FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM GLOBAL SECURITY OR CERTIFICATED SECURITY TO CERTIFICATED SECURITY (Transfers pursuant to ss. 304(a)(ii) or ss. 304(a)(iii) of the Indenture) [Name and address of trustee] Attention: Corporate Trust Administration Re: Hilb, Rogal and Hamilton Company 5 1/4% Convertible Subordinated Debentures due 2014 (the "Securities") Reference is hereby made to the Indenture dated as of _________ __, 1999 (the "Indenture") between Hilb, Rogal and Hamilton Company, as Issuer, and _____________________, as Trustee. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture. This letter relates to U.S. $_________________ aggregate principal amount of Securities which are held [in the form of the [Rule 144A Global] [Certificated] Security (CUSIP No. ________________________ with the Depositary]1 in the name of _____________________ [name of transferor] (the "Transferor") to effect the transfer of the Securities. In connection with such request, and in respect of such Securities, the Transferor does hereby certify that such Securities are being transferred (i) in accordance with the transfer restrictions set forth in the Securities and (ii) to a transferee that the Transferor reasonably believes is an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of 1933) and is acquiring at least $1,000,000 principal amount of Securities for its own account or for one or more accounts as to which the transferee exercises sole investment discretion and (iii) in accordance with applicable securities laws of any state of the United States or any other jurisdiction. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. [Name of Transferor] By: ___________________________________ Name: Title: Date: ___________________ 1 Insert, if appropriate. 79 EXHIBIT B FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE (Transfers pursuant to ss. 304(a)(ii) and ss. 304(a)(iii)) [Insert name and address of trustee] Attention: Corporate Trust Administration Re: Hilb, Rogal and Hamilton Company 5 1/4% Convertible Subordinated Debentures due 2014 (the "Securities") Reference is hereby made to the Indenture dated as of _________ __, 1999 (the "Indenture") between Hilb, Rogal and Hamilton Company, as Issuer, and ____________________________, as Trustee. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture. This letter relates to U.S. $_________________ aggregate principal amount of Securities which are held [in the form of the [Rule 144A Global] [Certificated] Security (CUSIP No.____________) with the Depositary] 1 in the name of ______________________ [name of transferor] (the "Transferor") to effect the transfer of the Securities to the undersigned. In connection with such request, and in respect of such Securities we confirm that: 1. We understand that the Securities were originally offered in a transaction not involving any public offering in the United States within the meaning of the United States Securities Act of 1933, as amended (the "Securities Act"), that the Securities have not been registered under the Securities Act and that (A) the Securities may be offered, resold, pledged or otherwise transferred only (i) to a person who the seller reasonably believes is a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in a transaction meeting the requirements of Rule 144A under the Securities Act, outside the United States to a foreign person in a transaction meeting the requirements of Rule 904 under the Securities Act or in accordance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Company so requests), (ii) to the Company or (iii) pursuant to an effective registration statement, and, in each case, in accordance with any applicable securities laws of any State of the United States or any other applicable jurisdiction and (B) the purchaser will, and each subsequent holder is required to, notify any subsequent purchaser from it of the resale restrictions set forth in (A) above. 2. We are a corporation, partnership or other entity having such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities, and we are (or any account for which we are purchasing under ______________________ 1 Insert and modify, if appropriate. 80 paragraph 4 below is) an institutional accredited investor as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, able to bear the economic risk of our proposed investment in the Securities. 3. We are acquiring the Securities for our own account (or for accounts as to which we exercise sole investment discretion and have authority to make, and do make, the statements contained in this letter) and not with a view to any distribution of the Securities, subject, nevertheless, to the understanding that the disposition of our property shall at all times be and remain within our control. 4. We are, and each account (if any) for which we are purchasing Securities is, purchasing Securities having an aggregate principal amount of not less than $1,000,000. 5. We understand that (a) the Securities will be delivered to us in registered form only and that the certificate delivered to us in respect of the Securities will bear a legend substantially to the following effect: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER 81 INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE. and (b) such certificates will be reissued without the foregoing legend only in accordance with the terms of the Indenture. 6. We agree that in the event that at some future time we wish to dispose of any of the Securities, we will not do so unless: (a) the Securities are sold to the Company or any Subsidiary thereof; (b) the Securities are sold to a qualified institutional buyer in compliance with Rule 144A under the Securities Act; (c) the Securities are sold to an institutional accredited investor, as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, acquiring at least $1,000,000 principal amount of the Securities that, prior to such transfer, furnishes to the Trustee a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Securities (the form of which letter can be obtained from such Trustee); (d) the Securities are sold to non-U.S. persons outside the United States in compliance with Rule 903 or Rule 904 under the Securities Act; (e) the Securities are sold by us pursuant to Rule 144 under the Securities Act; or (f) the Securities are sold pursuant to an effective registration statement under the Securities Act. Very truly yours, [PURCHASER] By: ________________________________ Name:_______________________________ Title:______________________________ Date: EX-10 3 EXHIBIT 10.3 Exhibit 10.3 RISK MANAGEMENT AGREEMENT THIS RISK MANAGEMENT AGREEMENT (this "Agreement") is made and entered into this 3rd day of May, 1999, by and between PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY, a New York life insurance company ("PHL"), and HILB, ROGAL AND HAMILTON COMPANY, a Virginia corporation ("HRH"). Recitals: WHEREAS, PHL desires to engage HRH to perform certain insurance brokerage and related services in connection with PHL's insurance coverages; and WHEREAS, HRH desires to perform such services for PHL on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and promises made by the parties herein, the parties agree as follows: 1. Appointment. PHL hereby appoints and designates HRH as its agent, and HRH hereby accepts such appointment and designation subject to the terms and conditions of this Agreement. 2. Services. During the term of this Agreement, HRH shall provide to PHL, with respect to those insurance coverages and programs maintained by PHL that are listed on Schedule A attached hereto (collectively, with such other coverages and programs as PHL or its subsidiaries may from time to time elect to place through HRH or its affiliates, the "Insurance Coverages"), those services customarily provided by an insurance broker (collectively, the "Services"), including, without limitation, the following: (a) At least annually, analyzing PHL's Insurance Coverages and making recommendations to PHL for improvements therein; (b) Working with PHL to update underwriting data concerning exposures relative to the Insurance Coverages; (c) Assisting PHL in the preparation of underwriting submissions from data gathered pursuant to paragraph (b) above, with such submissions being reviewed and approved by PHL prior to submission to underwriters; (d) Working with PHL prior to coverage placement or renewal to develop a strategy for negotiations with underwriters, such strategy to address markets to be solicited, insurance coverage requirements, insurance limits and pricing of coverage; (e) Conducting policy placement and renewal negotiations on behalf of PHL with underwriters, in which negotiations PHL may be involved at its discretion; (f) Preparing comparative analyses of all quotations and proposals submitted by underwriters and properly providing such to PHL; (g) Placing coverages with underwriters as requested and approved by PHL; (h) Meeting with PHL when reasonably requested by PHL to describe coverages placed by HRH; (i) Receiving and transmitting claims information as directed by PHL and providing those claims processing and administrative services currently provided by PHL's current primary broker; (j) Identifying, assessing and analyzing risks of PHL; (k) Working with PHL to develop risk and loss control programs; (l) Implementing an account servicing plan satisfactory to PHL, including coverage interpretation, certificates of insurance, claims tracking and analysis and related services; (m) Providing premium/claim cost projections for budgeting purposes; (n) Monitoring the effectiveness of each Insurance Coverage and making appropriate recommendations with respect thereto to PHL; and (o) Maintaining appropriate records as described below. HRH will maintain, for six (6) years, the written records customarily maintained in the brokerage business, including, but not limited to, records and copies of policies, premium payments, premium audits, correspondence, loss data, underwriting submissions, coverage interpretations provided by HRH, and risk analysis, evaluations and identification. All such records will be the property of PHL and will, unless otherwise directed in writing by PHL, be delivered to PHL, at PHL's expense, at the earlier of the end of six (6) years, or within twenty (20) days of termination of this Agreement. HRH shall be permitted to retain copies of such records, subject to the confidentiality provisions of this Agreement. The foregoing notwithstanding, PHL shall have the right to obtain and retain the originals of all policies issued to it or its subsidiaries, all related forms, and all related correspondence addressed to it or such subsidiaries. 3. Standard of Care. In providing the Services hereunder, HRH shall perform in a fashion that at least meets the standard of care exercised by PHL's current insurance broker. 2 4. Responsibilities of PHL. In addition to its other obligations contained herein, PHL agrees as a condition to the performance by HRH of its obligations hereunder, to be responsible for: (a) Making final decisions with respect to underwriting submissions and all matters relating to the Insurance Coverages and risk management; (b) Rendering to HRH promptly complete and accurate information as to PHL's loss experience, risk exposures (including any changes in the analysis or scope of PHL's risk exposures) and any other information in PHL's possession reasonably requested by HRH except that loss experience reports for PHL's workers compensation, property and general liability coverages shall be promptly prepared by HRH and provided to PHL; (c) Advising HRH promptly of any changes in PHL's business operations that may affect the Services provided or the Insurance Coverages procured hereunder; (d) Promptly paying all invoices for premiums, fees, charges and taxes due on any Insurance Coverages placed by HRH for PHL; and (e) Designating one or more representatives to be responsible for providing all instructions, data, information and assistance reasonably required of PHL by HRH hereunder. 5. Compensation. (a) In consideration for the Services to be provided by HRH hereunder with respect to the Insurance Coverages, compensation will be targeted at PHL's current payments for agency services (which are described in Schedule 5 hereto) plus inflation costs. Whenever reasonably possible, the compensation shall be fee-based. All commissions and fees shall be disclosed in writing to PHL on or before the time of billing. (b) The parties agree to renegotiate the compensation provided in paragraph (a) above in the event of any merger, acquisition, consolidation, divestiture or dissolution involving PHL or any of its subsidiaries or such other substantial change in PHL's or such subsidiaries' businesses as results in a material increase or decrease in the responsibilities of and time required by HRH in the performance of the Services hereunder. (c) Any sales, use, excise, value added or similar taxes incurred in connection with this Agreement shall be the responsibility of PHL, whether or not billed by HRH. (d) PHL acknowledges and agrees that unaffiliated wholesalers, intermediaries and other parties may be used by HRH in the placement and servicing of Insurance Coverages for PHL, provided, however, that no such use by HRH of wholesalers, intermediaries or other parties shall relieve HRH of any liability under this Agreement for performance of the Services in accordance with the terms and conditions of this Agreement. PHL acknowledges that such persons' compensation for Services will sometimes be separate and not included in the 3 compensation of HRH provided for in paragraph (a) above or otherwise governed by the terms of this Agreement. HRH agrees that to the extent such persons are so compensated, PHL will not also be required to compensate HRH for provision of such Services. 6. Certain Limitations. (a) The Services to be provided by HRH are not of a legal nature, and HRH shall in no event give, or be required to give, any legal opinions or provide any legal representation to PHL. (b) With PHL's prior approval, HRH may assign performance of the Services under this Agreement to any of its personnel and to assign to its subsidiaries any part or all of HRH's rights and duties hereunder. HRH reserves the right to subcontract to any third party where such subcontracting is necessary to comply with any state insurance or other applicable law. The foregoing notwithstanding, no such assignment or subcontract shall relieve HRH of liability hereunder for performance of the Services or otherwise. Furthermore, HRH shall cause such subsidiaries and third parties to abide by the terms of this Agreement to the same extent as if they were parties hereto and HRH shall be liable to PHL for all actions by such persons which, if they were parties hereto, would constitute breaches of this Agreement. (c) PHL acknowledges and agrees that HRH is not the insurer of any exposure, and that HRH does not guarantee the availability of any form of insurance coverage, the reasonableness of any terms and conditions thereof nor the financial solvency of the insurer. (d) The Services provided by HRH hereunder are provided for the exclusive use of PHL and its subsidiaries, and such Services, data, recommendations, proposals, reports and similar information provided by HRH, are not to be distributed to, used or relied upon by other parties. (e) Nothing in this Agreement or any other document shall be construed to require PHL to place the following coverages through HRH: (i) any coverages now or hereafter obtained for any subsidiary in which PHL owns, directly or indirectly, shares representing less than eighty percent (80%) of the voting power held by all shareholders of such entity; (ii) those coverages for agents of PHL or its affiliates which are currently obtained through AON Financial Group; or (iii) any coverages now or hereafter maintained with respect to any real property owned by a separate account of PHL or any of its Subsidiaries. The foregoing notwithstanding, PHL will encourage those of its subsidiaries encompassed under clause (i) to place their insurance through HRH. 7. Confidentiality. (a) HRH acknowledges that in the course of performance of this Agreement, it will acquire Confidential Information (as defined below) regarding the business of PHL and its subsidiaries and that unauthorized disclosure of such Confidential Information could irreparably harm PHL or its subsidiaries. As used in this Agreement, the term "Confidential 4 Matters" includes, but is not limited to, the following items, whether existing now or created in the future: (i) all knowledge or information concerning the business, operations and assets of PHL or its subsidiaries which is not readily available to the public such as: internal operating procedures; investment strategies; sales data and customer lists; financial plans, projections and reports; and insurance and investment company programs, plans and products; (ii) all property owned, licensed and/or developed by or for PHL or its subsidiaries and not readily available to the public, such as computer systems, programs, software devices, plus information about the design, methodology and documentation therefor; (iii) information about or personal to PHL's or its subsidiaries' insureds, clients and investors, as well as applicants; (iv) information, materials, product or any other tangible or intangible assets in PHL's or its subsidiaries' possession or under its control which is proprietary to, or confidential about, any other person or entity; and (v) records and repositories of all of the foregoing, in whatever form maintained. The foregoing notwithstanding, the following shall not be considered Confidential Matters: (aa) general skills and experience gained by HRH in providing Services to PHL or its subsidiaries; (bb) information publicly available or generally known within the insurance or data processing industries; (cc) information known to HRH prior to disclosure hereunder; (dd) information independently developed by HRH; and (ee) information which becomes available to HRH on a non-confidential basis from sources other than PHL or its subsidiaries, provided HRH does not know or have reason to know that such sources are prohibited by contractual, legal or fiduciary obligation from transmitting the information. Failure to mark any material or information "confidential" shall not affect the confidential nature thereof. (b) Notwithstanding anything herein to the contrary, HRH shall not be deemed to be in breach of the provisions of this Section 7 in the event it is legally required to disclose any Confidential Information pursuant to an order or other legal process issued by any governmental or judicial authority having jurisdiction over it. In the event HRH, its subsidiaries or any of its permitted subcontractors is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or process) to disclose any Confidential Matters, HRH agrees that it will provide PHL with prompt notice of any such request or requirement (written, if applicable) so PHL may seek an appropriate protective order or waive compliance with the provisions of this Agreement. If, failing the entry of a protective order or the receipt of a waiver hereunder, HRH, any of its subsidiaries or any of its permitted subcontractors is, in the opinion of its counsel, compelled to disclose Confidential Matters, HRH, such subsidiary or such permitted subcontractor, as the case may be, may disclose that portion of the Confidential Matters which its counsel advises that it is compelled to disclose and will exercise reasonable efforts to obtain assurance that confidential treatment will be accorded to that portion of the Confidential Matters which is being disclosed. In any event, HRH and its subsidiaries will not oppose any action by PHL to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Confidential Matters. 5 (c) HRH stipulates that breach of the provisions of this Agreement concerning Confidential Matters could cause PHL, or the rightful owner or subject of such matters, irreparable injury inadequately compensable through monetary damages, and accordingly, agrees that PHL shall be entitled to injunctive relief against any such breach or threatened breach in addition to any other available remedies. (d) The obligations of HRH under this Section 7 shall survive any termination of this Agreement and shall remain in full force and effect thereafter. 8. Exclusion of Liability. HRH shall at all times act in good faith use its reasonable commercial efforts to ensure the accuracy and completeness of all Services performed under this Agreement, but assumes no responsibility and shall not be liable for any loss or damage incurred by PHL and its affiliates due to errors or omissions unless such errors or omissions are caused by the gross negligence, bad faith or reckless or willful misconduct of HRH or its employees, subcontractors and agents. Notwithstanding anything herein to the contrary, neither HRH nor PHL shall be liable to the other for any consequential, incidental, exemplary, indirect, punitive or special damages, including, without limitation, loss of anticipated profits. 9. Relationship of Parties. The parties hereto agree that the relationship between them is one between independent contractors and that all personnel supplied by HRH in providing the Services to PHL shall at all times be employees of HRH, under its supervision and control, and shall not be deemed employees of PHL for any purposes whatsoever. 10. Term and Termination. (a) General. The term of this Agreement shall be for a period commencing on the date of this Agreement and ending, as to each Insurance Coverage then maintained by PHL or its subsidiaries through HRH, on such coverages' respective dates of termination in 2005 (such period being the "Initial Term"), unless sooner terminated as provided hereunder. Upon the expiration of the Initial Term, this Agreement may be renewed by PHL for additional one (1) year periods upon written notice given to HRH not less than ninety (90) days prior to the expiration of the Initial Term or any renewal term, each of which renewal terms will, unless further renewed, end in their years of termination with respect to each coverage separately, as provided above for the Initial Term. HRH's compensation for Services rendered during any renewal term shall be as agreed upon in writing by the parties. (b) By PHL for Cause. If HRH shall: (i) breach Section 7(a) of this Agreement; (ii) breach any material provision of this Agreement, and shall fail to cure such breach within fifteen (15) days after receipt of written notice from PHL; or (iii) make an assignment for the benefit of creditors or file, or have filed against it, a petition in bankruptcy, or petition or apply to any tribunal for any receiver, custodian or any trustee of any substantial part of its property, or commence any proceeding relating to it under any reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect, then PHL may terminate this Agreement immediately. In the event of such termination under this paragraph (b) by PHL, PHL shall pay all sums earned by HRH hereunder through the 6 date of termination. Upon PHL's payment of all such sums earned, if any, PHL shall have no further obligation hereunder. (c) By HRH for Cause. If PHL shall (i) breach any material provision of this Agreement, and shall fail to cure such breach within fifteen (15) days after receipt of written notice from HRH, or (ii) make an assignment for the benefit of creditors or file, or have filed against it, a petition in bankruptcy, or petition or apply to any tribunal for any receiver, custodian or any trustee of any substantial part of its property, or commence any proceeding relating to it under any reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect, then HRH may terminate this Agreement. In such event, PHL shall pay to HRH on the effective date of such termination, in full settlement of all claims by HRH hereunder, one lump sum payment in an amount equal to [To be discussed], and any other accrued charges in accordance with this Agreement. 11. Entire Agreement. This Agreement expresses the entire understanding of the parties with respect to the subject matter hereof and there are no oral or written agreements or understandings with respect to such subject matter which are not set forth herein. 12. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, without giving effect to any choice or conflict of law provision or rule that would cause the application of the law of any other jurisdiction. 13. Name, Captions. The name assigned to this Agreement and the section captions used herein are for convenience of reference only and shall not affect the interpretation or construction thereof. 14. No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. 15. Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if in writing (including telecopy or similar teletransmission), addressed as follows: 7 If to HRH, to it at: Hilb, Rogal and Hamilton Company 4235 Innslake Drive P.O. Box 1220 Glen Allen, Virginia 23060 Telecopier: (804) 747- 3138 Attn: Walter L. Smith, Esquire With a copy to: Williams Mullen Christian & Dobbins 1021 East Cary Street, 16th Floor Richmond, Virginia 23219 Telecopier: (804) 783-6507 Attention: Theodore L. Chandler, Jr., Esquire If to PHL, Phoenix Home Life Mutual Insurance Company to it at: One American Row Hartford, Connecticut 06102-5056 Telecopier: (860) 403-7116 Attention: Dorothy K. Dropick With a copy to: Phoenix Home Life Mutual Insurance Company One American Row Hartford, Connecticut 06102-5056 Telecopier: (860) 403-5182 Attention: Carole A. Masters, Esquire Unless otherwise specified herein, such notices or other communications shall be deemed received (a) in the case of any notice or communication sent other than by mail, on the date actually delivered to such address (evidenced, in the case of delivery by overnight courier, by confirmation of delivery from the overnight courier service making such delivery, and in the case of a telecopy, by receipt of a transmission confirmation form or the addressee's confirmation of receipt), or (b) in the case of any notice or communication sent by mail, three (3) business days after being sent, if sent by registered or certified mail, with first-class postage prepaid. Each of the parties hereto shall be entitled to specify a different address by giving notice as aforesaid to each of the other parties hereto. 16. Successors and Assigns; Assignment. Except as otherwise provided in this Agreement, this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties and their respective permitted successors and assigns. Neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the prior written consent of the other party hereto. 17. Cumulative Remedies. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not 8 preclude the simultaneous or later exercise of any other such right, power or remedy by such party. 18. Third Party Beneficiaries. Except as otherwise provided in Section 7, this Agreement is not intended to be for the benefit of and shall not be enforceable by any person or entity who or which is not a party hereto. 19. Consent to Jurisdiction. Each party to this Agreement, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction of the federal courts located either in the City of Richmond, Virginia, or in the City of Hartford Connecticut, and in the event that such federal courts shall not have subject matter jurisdiction over the relevant proceeding, then of the state courts located in the City of Richmond, Virginia, or in the City of Hartford, Connecticut, for the purpose of any claim, action, cause of action or suit (in contract or tort or otherwise), arbitration, proceeding or investigation by or before any governmental ("Action") arising out of or based upon this Agreement or relating to the subject matter hereof, (ii) hereby waives, to the extent not prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is improper, or that this Agreement or the subject matter hereof, may not be enforced in or by such court and (iii) hereby agrees not to commence any Action arising out of or based upon this Agreement or relating to the subject matter hereof other than before one of the above-named courts nor to make any motion or take any other Action seeking or intending to cause the transfer or removal of any such Action to any court other than one of the above-named courts whether on the grounds of inconvenient forum or otherwise. Each party hereby consents to service of process in any such proceeding in any manner permitted by Virginia or Connecticut law, as the case may be, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 11.7 hereof is reasonably calculated to give actual notice. 20. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies each signed by less than all, but together signed by all, the parties hereto. 21. Expenses. Each of the parties hereto shall bear its own expenses incurred in connection with this Agreement, except that in the event of a dispute concerning the terms or enforcement of this Agreement, the prevailing party in any such dispute shall be entitled to reimbursement of reasonable legal fees and disbursements from the other party or parties to such dispute. 9 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first above written. HILB, ROGAL AND HAMILTON COMPANY By: /s/ Andrew L. Rogal --------------------------------------- Name: Andrew L. Rogal Its: President and Chief Executive Officer PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY By: /s/ David W. Searfoss --------------------------------------- Name: David W. Searfoss Its: Executive Vice President and Chief Financial Officer 10 SCHEDULE 5 Compensation In consideration of HRH's provision of the Services, as described in Section 2, compensation to HRH will be targeted at a ten percent (10%) commission rate. PHL's and its subsidiaries' current coverages are as described in the exhibit hereto [omitted]. Compensation will be earned and billed on a pro rata basis. The property-casualty program will be downsized upon the sale of American Phoenix Corporation; PHL anticipates a corresponding decrease in premiums and fees. EX-10 4 EXHIBIT 10.4 Exhibit 10.4 EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into this 29th day of March, 1999, by and between MARTIN L. VAUGHAN, III, an individual residing in Deland, Florida (the "Executive"), and HILB, ROGAL AND HAMILTON COMPANY, a Virginia corporation with corporate offices located at 4235 Innslake Drive, Glen Allen, Virginia (the "Company"). WHEREAS, the Company and the Executive, among others, have entered into that certain Stock Purchase Agreement of even date herewith (the "Stock Purchase Agreement"), pursuant to which the Company acquired all of the capital stock of American Phoenix Corporation from PM Holdings, Inc. and the Executive; and WHEREAS, upon the closing of the transactions contemplated by the Stock Purchase Agreement, the Board of Directors of the Company (the "Board") desires that the Company employ the Executive as the Chief Operating Officer of the Company, and the Executive desires to accept such position with the Company, all on the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows: I. Term Of Employment. (A) The term of the employment of the Executive under this Agreement shall commence on the date of the closing of the transactions contemplated by the Stock Purchase Agreement, and shall continue thereafter for a three (3) year period. Notwithstanding anything in this Agreement to the contrary, this Agreement shall, automatically and without further action by the parties hereto being required, have no effect, and neither party shall have any liability or obligation hereunder, in the event that the Stock Purchase Agreement is terminated. (B) Upon the commencement of this Agreement as set forth above, and notwithstanding the three (3) year term provided in provision (A) of this Section I, the term of employment of the Executive under this Agreement shall be subject to earlier termination by: (1) the determination of disability of the Executive pursuant to Section IV; or (2) the dismissal of the Executive from his position as Chief Operating Officer pursuant to resolution by the Board, or failure or refusal of the Board to re-elect the Executive to the position of Chief Operating Officer; or (3) the death of the Executive; provided, however, that (i) in the event of termination for determination of disability pursuant to Paragraph (1) above, Section IV shall apply; (ii) in the event of termination pursuant to Paragraph (2) above for "Proper Cause" (as defined in Section V(A)), Section V(B) shall apply; (iii) in the event of termination pursuant to Paragraph (2) above without "Proper Cause" (as defined in Section V(A)), Section VI shall apply; and (iv) in the event of termination due to the death of the Executive pursuant to Paragraph (3) above, Section VII shall apply. II. Services To Be Rendered. The Company agrees to employ the Executive as the Chief Operating Officer of the Company, subject to the terms, conditions and provisions of this Agreement, and the Executive hereby accepts such employment. The Executive shall report to and be subject to the direction of the Board. The Executive agrees that his employment as Chief Operating Officer of the Company pursuant to this Agreement is a full time position. Notwithstanding the foregoing, the Executive may devote a reasonable amount of his time to serving as an officer and director of other companies affiliated with the Company; to his personal investments and business affairs, including service as a director of unaffiliated companies; and to civic, political and charitable activities; provided however, the Executive shall not accept any position as a director of any unaffiliated for-profit business organization, other than positions presently held by him, without prior approval of the Board (which approval will not be unreasonably withheld). III. Compensation. In consideration for the services rendered to the Company under this Agreement, the Company shall pay and provide to the Executive the following compensation and benefits: (A) Salary. The Company shall pay the Executive an annual base salary of $350,000.00, payable in twelve (12) equal monthly installments on the last business day of each calendar month. This annual base salary shall be reviewed annually by the Compensation Committee of the Board (the "Compensation Committee") to consider appropriate increases, but in no event shall the amount of the base salary be reduced. (B) Annual Incentive Bonus. In addition to the base salary to be paid to the Executive under Section III(A), the Executive may also be entitled to an annual incentive bonus as established and modified, from time to time, by the Compensation Committee. (C) Ancillary Benefits. The Executive shall also be entitled to vacations, participation in the Company's Profit Sharing Savings Plan (401K) and Supplemental Executive Retirement Plan, sick leave benefits, post-retirement benefit plan, and all other ancillary benefits provided by the Company, including, but not limited to, group life, health and disability insurance coverages, consistent with the compensation policies and practices of the Company from time to time prevailing with respect to persons who are executive officers of the Company. (D) The Executive shall receive such stock option awards each year as determined by the Compensation Committee in its sole discretion. -2- IV. Disability. (A) The term of employment of the Executive may be terminated at the election of the Company upon a determination by the Board, made based upon a qualified medical opinion, that the Executive will be unable, by reason of physical or mental incapacity, to perform the reasonably expected or customary duties of Chief Operating Officer of the Company on a full-time basis for a period longer than three (3) consecutive months or more than six (6) months in any consecutive twelve (12)-month period. In the exercise of its determination, the Board shall give due consideration to the opinion of the Executive's personal physician or physicians and to the opinion of any physician or physicians selected by the Board for these purposes. If the Executive's personal physician disagrees with the physician retained by the Company, the Board will retain an impartial physician selected by the Executive's personal physician and the Company's physician and the opinion of the impartial physician shall be binding upon the Company and the Executive. The Executive shall submit to examination by any physician or physicians so selected by the Board, and shall otherwise cooperate with the Board in making the determination contemplated hereunder, such cooperation to include, without limitation, consenting to the release of information by any such physician(s) to the Board. (B) In the event of such termination for disability, the Company shall thereupon be relieved of its obligations to pay any compensation and benefits under Section III, except for accrued and unpaid items, but shall, in addition, pay to the Executive such disability compensation as set forth in any disability plan established by the Company for its executive officers. V. Termination For Proper Cause. (A) The occurrence of any of the following events shall constitute "Proper Cause" for termination of the employment of the Executive under this Agreement, at the election of the Board: (1) the Executive shall voluntarily resign as a director, officer or employee of the Company or any of its affiliates without the written consent of the Board; (2) the Executive shall breach this Agreement in any material respect and fail to cure such breach within sixty (60) calendar days after receiving written notice of such breach from the Company; (3) the commission of a fraud, or other criminal act, by the Executive directly involving the Company or any of its affiliates which would constitute a felony if prosecuted under criminal law; or (4) the Executive fails to resign from the Board upon the terms and conditions of Section 2.5(b) of the Voting and Standstill Agreement (as defined in the Stock Purchase Agreement); provided, however, the inability of the Executive to achieve favorable results of operations shall clearly not be deemed Proper Cause for termination hereunder. (B) In the event of termination of the Executive's employment pursuant to Section I(B)(2) for Proper Cause, the Company shall thereupon be relieved of its obligations to pay any compensation and benefits under Section III, except for accrued and unpaid items. -3- VI. Termination Without Proper Cause. (A) In the event of termination of the Executive pursuant to Section I(B)(2) without Proper Cause (as defined in Section V(A) above), the Company shall thereafter be and remain obligated to pay to the Executive (or his estate or designated beneficiary), on a prorated basis if such termination is mid-month or mid-year, the compensation and benefits provided under Section III(A) and III(B) and such benefits under III(C) as are payable to a terminated employee until expiration of the three (3) year term of employment established by Section I(A). In the event of a dispute as to whether the Executive was terminated for or without "Proper Cause," or regarding the amount of compensation the Executive is entitled to receive under this Section VI, the Company shall be obligated to continue to pay to the Executive (or his estate or designated beneficiary) all of the compensation and benefits reserved under Section III until the dispute is resolved by an arbitrator pursuant to Section XVIII hereof. (B) For purposes of calculating the annual incentive bonus payable under Section III(B), for the remainder of the term of this Agreement, the Company shall make to the Executive (or his estate or designated beneficiary) an annual (prorated on a calendar year basis for any partial year) payment equal to the greater of the (i) highest annual incentive bonus payment received by Executive pursuant to Section III(B) during the term of this Agreement, or (ii) fifty percent (50%) of his annual base salary. VII. Death. In the event of termination of the Executive's employment pursuant to Section I(B)(3) above, the Company shall pay the Executive's estate or designated beneficiary such death benefits as may be set forth in any life insurance plan established by the Company for its executive officers, and shall have no further obligation hereunder thereafter. VIII. Confidentiality. For purposes of this Agreement, "Confidential Information" shall mean any information of a proprietary or confidential nature and trade secrets of the Company and its affiliates relating to the business of the Company and its affiliates that have not previously been publicly released by duly authorized representatives of the Company. The Executive agrees to regard and preserve as confidential all Confidential Information pertaining to the Company's business that has been or may be obtained by the Executive in the course of his employment with the Company, whether he has such information in his memory or in writing or other physical form. The Executive shall not, without written authority from the Company to do so, use for his personal benefit or his personal purposes, unrelated to business of the Company, nor disclose to others, either during the term of his employment hereunder or for three (3) years thereafter, except as required by the conditions of his employment hereunder, any Confidential Information of the Company. This provision shall not apply after the Confidential Information has been voluntarily disclosed to the public by a duly authorized representative of the Company, independently developed and disclosed by others, or otherwise enters the public domain through lawful means. IX. Removal Of Documents Or Objects. The Executive agrees not to remove from the premises of the Company, except as an employee of the Company in pursuit of the business of the Company or any of its affiliates, or except as specifically permitted in writing by the Company, any document or object containing or reflecting any Confidential -4- Information of the Company. The Executive recognizes that all documents or material containing Confidential Information developed by him or by someone else in the course of employment by the Company, are the exclusive property of the Company. X. Nonpiracy Covenants. (A) For the purpose of this Agreement, the following terms shall have the following meanings: (1) "Customers" shall be limited to those customers of the Company or its affiliates for whom there is an insurance policy or bond in force or to or for whom the Company or its affiliates are rendering services as of the date of termination of the Executive's employment; (2) "Affiliates of the Company" shall mean each of the direct and indirect subsidiary corporations of Hilb, Rogal and Hamilton Company as of the date of termination of the Executive's employment; (3) "Prohibited Services" shall mean services in the fields of insurance performed by the Company or its affiliates, their agents or employees, and services in any other business engaged in by the Company or its affiliates on the date of termination of the Executive's employment. "Fields of Insurance" does not include title insurance, but does include all lines of insurance sold by the Company or its affiliates, including, without limitation, property and casualty, life, group, accident, health, disability, and annuities, and premium financing related thereto; (4) "Prospective Customers" shall be limited to those persons and entities known by the Executive to have been solicited for business with respect to any Prohibited Service within the twelve (12) month period preceding the date of termination of the Executive's employment, and with or from whom, within the twelve (12) month period preceding the date of termination of the Executive's employment, someone acting on behalf of the Company or its affiliates either had met for the purpose of offering any Prohibited Service or had received a written response to an earlier solicitation to provide a Prohibited Service; and (5) "Restricted Period" shall mean the period of three (3) years immediately following the date of termination of the Executive's employment. (B) The Executive recognizes that over a period of many years the Company has developed, at considerable expense, relationships with, and knowledge about, Customers and Prospective Customers which constitute a major part of the value of the Company. During the course of his employment by the Company, the Executive will have substantial contact with, and/or obtain substantial knowledge about, these Customers and Prospective Customers. In order to protect the value of the Company's business, the Executive covenants and agrees that, in the event of the termination of his employment, but only if said termination is voluntary or for Proper Cause, he shall not, directly or indirectly, for his own account or for the account of any other person or entity, as an owner, stockholder, director, employee, partner, agent, broker, consultant or other participant during the Restricted Period: (1) solicit a Customer for the purpose of providing Prohibited Services to such Customer; -5- (2) accept an invitation from a Customer for the purpose of providing Prohibited Services to such Customer; (3) solicit a Prospective Customer for the purpose of providing Prohibited Services to such Prospective Customer; and (4) accept an invitation from a Prospective Customer for the purpose of providing Prohibited Services to such Prospective Customer. Subsections (1), (2), (3), and (4) are separate and divisible covenants; if for any reason any one covenant is held to be illegal, invalid or unenforceable, in whole or in part, the remaining covenants shall remain valid and enforceable and shall not be affected thereby. Further, the periods and scope of the restrictions set forth in any such subsection shall be reduced by the minimum amount necessary to reform such subsection to the maximum level of enforcement permitted to the Company by the law governing this Agreement. Additionally, the Executive agrees that no separate geographic limitation is needed for the foregoing nonpiracy covenants as such are not a prohibition on the Executive's employment in the insurance agency business and are already limited to only those entities which are included within the definition of "Customer" and "Prospective Customer." XI. Nonraiding of Employees. The Executive covenants that during his employment hereunder and the Restricted Period specified in Section X hereof, but only if said termination is voluntary or for Proper Cause, he will not solicit, induce or encourage for the purposes of employing or offering employment to any individuals who, as of the date of termination of the Executive's employment, are employees of the Company or its affiliates, nor will he directly or indirectly solicit, induce or encourage any of the Company's or its affiliates' employees to seek employment with any other business, whether or not the Executive is then affiliated with such business. XII. Noncompetition Covenant. The Executive agrees that, for the five (5) year period immediately following the closing of the Stock Purchase Agreement, but only if the Executive's termination of employment is voluntary or for Proper Cause, without the prior written consent of the Company, the Executive shall not, directly or indirectly through a corporation, partnership, limited liability company, consulting arrangement or any other form of business entity, in any capacity, engage in or have any interest in whatsoever, the Prohibited Services (other than ownership of less than three percent (3%) of the outstanding capital stock of a publicly traded company) within a twenty-five (25) mile radius of any office of American Phoenix Corporation. The Executive acknowledges that the Company and its affiliates will be irrevocably damaged if all of the provisions of this Section XII are not specifically enforced. Accordingly, the Executive agrees that, in addition to any other relief to which the Company and its affiliates may be entitled, the Company and its affiliates will be entitled to seek and obtain injunctive relief in accordance with the arbitration provisions of Section XVII below for the purpose of restraining the Executive from any actual or threatened breach of this Section XII. The Executive agrees that all of the covenants contained in this Section XII are reasonably necessary to protect the legitimate interests of the Company, are reasonable with respect to time and territory and do not interfere with the interests of the public and that the descriptions of the covenants contained in this Section XII are sufficiently accurate and definite to inform the Executive of the scope of the covenants. The Executive agrees that the consideration to be received by the Executive hereunder and under the Stock Purchase Agreement will be full, fair and adequate to support the obligations of the Executive hereunder. -6- XIII. Remedies Upon Employee Breach of Agreement. (A) If the Executive materially breaches any provision of this Agreement and fails to cure any such material breach within thirty (30) days after written notice of said material breach is received from the Company, the Company reserves the right to avail itself of any reasonable remedy available to it at law or in equity; provided that, such thirty (30)-day notice period shall not be required under a breach by the Executive of Section XII hereof. Further, if the Executive fails to cure any such material breach after thirty (30) days (except with respect to Section XII) from receipt of written notice of the material breach, the Company may, at its sole option, employ reasonable disciplinary procedures against the Executive for any material breach, up to and including discharge. The Executive acknowledges and agrees that the Company shall be entitled to injunctive relief against the Executive for any material violation by the Executive of Sections VIII, IX, X, XI, or XII of this Agreement. The Executive agrees that the foregoing remedies shall be cumulative and not exclusive, shall not be waived by any partial exercise or nonexercise thereof and shall be in addition to any other remedies available to the Company at law or in equity. (B) Notwithstanding the foregoing, if the Executive materially breaches Section X of this Agreement, the Company may, at its sole option, seek liquidated damages with respect to each Customer or Prospective Customer procured by or through the Executive, directly or indirectly, in violation of Section X of this Agreement (with such Customers being hereafter referred to as "Lost Customers" and with such Prospective Customers being hereafter referred to as "Lost Prospects"). The Executive acknowledges that it would be difficult to calculate damages incurred by the Company in the event of such a material breach and that the following liquidated damages clause, when so elected by the Company, is necessary and reasonable for the protection of the Executive. The Company agrees that, if it elects to exercise the liquidated damages provision with respect to a Lost Customer or Lost Prospect, it shall not seek an injunction with respect thereto if the Executive pays such liquidated damages. The Executive also acknowledges that the Company may or may not choose to exercise this liquidated damages provision and that the Company may, at its sole option, seek injunctive relief with respect to some Lost Customers and Lost Prospects and liquidated damages with respect to other Lost Customers and Lost Prospects. Finally, the Executive acknowledges that he has no right whatsoever to force the Company to exercise this liquidated damages provision, and that such choice remains entirely the Company's. Liquidated damages shall be calculated as follows: (1) A Lost Customer shall be valued at 150% of the gross revenue to the Company in the most recent twelve (12) month period preceding the date of loss of such account. If such Lost Customer had not been a Customer of the Company for an entire twelve (12) month period, such liquidated damages shall be 150% of the gross revenue which would have been, in the absence of a material breach by the Executive, realized by the Company in the initial twelve (12) month period of such Customer being served by the Company. A Lost Prospect shall be valued at 150% of the gross revenue realized in the initial twelve (12) month period of such Lost Prospect being served by any one or more persons or entities receiving such revenue as a direct result of the Executive's material breach. (2) The Executive acknowledges that the foregoing damage amounts are fair and reasonable, that an industry rule of thumb for the valuation of any agency is 150% of revenue and that, on the margin, selected accounts may be worth much more than 150% of their annual revenue to an agency. -7- (C) The Executive shall pay such liquidated damages to the Company within ninety (90) calendar days after a final order is entered by an arbitrator and received by the Executive ordering the Executive to make such payment. Thereafter, such liquidated damages shall bear interest at the prime rate of interest in effect at NationsBank, N.A. The Executive acknowledges that a broker of record letter granted during the Restricted Period, if applicable, by a Customer or Prospective Customer in favor of the Executive or any person or entity with whom or which the Executive is directly affiliated shall be prima facie evidence of violations of Sections X and XII (if applicable) of this Agreement and establishes a rebuttable presumption in favor of the Company that Sections X and XII (if applicable) of this Agreement have been violated by the Executive. Further, the Executive acknowledges that if the Restricted Period is applicable to him, he has an affirmative duty to inform such Customer or Prospective Customer that he cannot accept its business until after the Restricted Period and that he must minimize all contact with such Customer or Prospective Customer. XIV. Tolling of Restrictive Covenants During Violation. If a material breach by the Executive of any of the restrictive covenants of this Agreement occurs, the Executive agrees that the restrictive period of each such covenant so materially violated shall be extended by a period of time equal to the period of such material violation by the Executive. It is the intent of this Section that the running of the restricted period of a restrictive covenant shall be tolled during any period of material violation of such covenant so that the Company shall get the full and reasonable protection for which it contracted and so that the Executive may not profit by his material breach. XV. Notices. All notices and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid: (A) If to the Company, to it at the following address: 4235 Innslake Drive Glen Allen, Virginia 23060 Attn: Chairman of the Board (B) If to the Executive, to him at the following address: 1450 Lakeview Drive Deland, Florida 32720 or to such other place as either party shall have specified by notice in writing to the other. A copy of any notice or other communication given under this Agreement shall also be sent to the Secretary and the Treasurer of the Company addressed to such officers at the then principal office of the Company. XVI. Governmental Regulation. Nothing contained in this Agreement shall be construed so as to require commission of any act contrary to law and whenever there is any conflict between any provision of this Agreement and any statute, law, ordinance, order or regulation, the latter shall prevail, but in such event any such provision of -8- this Agreement shall be curtailed and limited only to the extent necessary to bring it within the legal requirements. XVII. Arbitration. Any dispute or controversy as to the interpretation, construction, application or enforcement of, or otherwise arising under or in connection with this Agreement, shall be submitted at the request of either party hereto for mandatory, final and binding arbitration in the City of Richmond, Virginia, in accordance with the commercial arbitration rules then prevailing of the American Arbitration Association. The Company and Executive waive the right to submit any controversy or dispute to a court and/or a jury. The arbitrator shall have the authority to grant any equitable, including, without limitation, injunctive relief, and any other legal remedies that would be available in any judicial proceeding, and any award rendered therein shall be final and binding on each of the parties hereto and their heirs, executors, administrators, successors and assigns and judgment may be entered thereon in any court having jurisdiction. The prevailing party in any such arbitration shall be entitled to an award by the arbitrator of all reasonable attorneys' fees and expenses incurred in connection with the arbitration. The arbitration provisions of this Agreement shall survive any termination or expiration of this Agreement. XVIII. Indemnification by the Company. The Company shall defend, indemnify and hold harmless the Executive against any and all claims, causes of actions, damages and expenses (including all legal fees and expenses) in any threatened, pending or completed action arising out of or relating in any way to action or conduct by the Executive by reason of the fact that he was a representative of the Company or was serving at the request of the Company or acts or conduct within the course of his employment pursuant to this Agreement or in his capacity as a director of the Company. If the Company contends that any action or conduct by the Executive was not within the course of his employment or is otherwise not subject to this provision, the Company shall pay to the Executive all defense costs and expenses to defend such an action and shall only be entitled to reimbursement of such fees and expenses if after a final adjudication, including all available appeals, there is a holding that the Executive was not entitled to the defense and indemnification under this provision. IX. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia. XX. Severability. Should an arbitrator declare any provision of this Agreement to be invalid, such declaration shall not affect the validity of the remaining portion of any such provision or the validity of any other term or provision of this Agreement as a whole or any part thereof, other than the specific portion declared to be invalid. XXI. Headings. The headings to the Sections and Paragraphs of this Agreement are for convenience of reference only and in case of any conflict, the text of this Agreement, rather than the headings, shall control. -9- XXII. Successors and Assigns. This Agreement is binding upon and shall inure to the benefit of the successors and assigns of the Company and the heirs, executors and legal representatives of the Executive. XXIII. Entire Agreement. This Agreement and the Stock Purchase Agreement contain the entire understanding of the parties with respect to the subject matter contained herein and supersedes all prior agreements, arrangements and understandings relating to the subject matter and may only be amended by a written agreement signed by the parties hereto or their duly authorized representatives. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. WITNESS: /s/ Theodore L. Chandler, Jr. /s/ Martin L. Vaughan, III - ------------------------------------ ------------------------------------ Martin L. Vaughan, III ATTEST: HILB, ROGAL and HAMILTON COMPANY /s/ Theodore L. Chandler, Jr. By: /s/ Andrew L. Rogal - ------------------------------------ -------------------------------- Andrew L. Rogal Its: President and Chief Executive Officer -10- EX-10 5 EXHIBIT 10.5 Exhibit 10.5 VOTING AND STANDSTILL AGREEMENT THIS VOTING AND STANDSTILL AGREEMENT (the "Agreement"), dated as of May 3, 1999, is made by and among Hilb, Rogal and Hamilton Company, a Virginia corporation (the "Company"), PM Holdings, Inc., a Connecticut corporation ("Holdings"), and Phoenix Home Life Mutual Insurance Company, a New York life insurance company ("PHL"). W I T N E S S E T H: WHEREAS, the Company, Holdings, PHL and Martin L. Vaughan, III entered into a Stock Purchase Agreement dated March 29, 1999 (the "Stock Purchase Agreement"), under which the Company agreed to acquire from Holdings and Martin L. Vaughan, III all of the issued and outstanding shares of the capital stock of American Phoenix Corporation, a Connecticut corporation ("APC"); and WHEREAS, pursuant to the Stock Purchase Agreement, (i) Holdings acquired 865,042 shares of the Company's Common Stock (as hereinafter defined) and $22,000,000 principal amount of the Company's Subordinated Debentures (as hereinafter defined), and (ii) PHL acquired $10,000,000 principal amount of the Company's Subordinated Debentures; and WHEREAS, the Subordinated Debentures acquired by Holdings and PHL pursuant to the Stock Purchase Agreement are convertible into shares of Common Stock pursuant to the terms of the Subordinated Debentures; and WHEREAS, the parties to this Agreement desire to establish certain rights and obligations in connection with the relationship of Holdings and PHL to the Company. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and in the Stock Purchase Agreement, the Company, Holdings and PHL hereby agree as follows: ARTICLE I Definitions; Representations and Warranties Section 1.1. Definitions. Except as otherwise specified herein, capitalized terms used in this Agreement shall have the respective meanings assigned to such terms in the Stock Purchase Agreement. For purposes of this Agreement, the following terms have the following meanings: (a) "Adjusted Outstanding Shares" shall mean, at any time and with respect to the determination of (i) the Holdings Ownership Percentage as it relates to Holdings and its Affiliates, (ii) the Standstill Percentage as it relates to Holdings and its Affiliates, and (iii) any other percentage of the beneficial ownership of Common Stock as it relates to a Person or Group, the total number of shares of Common Stock then issued and outstanding together with the total number of shares of Common Stock not then issued and outstanding that would be outstanding if all then existing Subordinated Debentures had been converted. (b) "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date of this Agreement, and shall include, with respect to a determination of the Affiliates of Holdings, any Affiliate of PHL; provided, however, that (i) PXP and its subsidiaries and (ii) any Person registered as an investment company under the Investment Company Act of 1940, as amended, which might otherwise be deemed to be an "affiliate" of Holdings or PHL within the meaning of Rule 12b-2 under the Exchange Act (a "Related Investment Company"), shall not be deemed to be Affiliates of Holdings or PHL for purposes of this Agreement to the extent their respective businesses consist principally of investing in securities, investment management and/or advisory services, and any shares of Common Stock or other equity securities of the Company acquired, or caused to be acquired, by PXP and its subsidiaries or such Related Investment Company in the conduct of their respective businesses in the ordinary course for the account of, or for the benefit of, clients of PXP or its subsidiaries, policyholders or investors (other than Holdings, PHL or their Affiliates), and not with the purpose of avoiding the provisions of Section 3.1 below, shall not be deemed, for purposes of this Agreement, to be beneficially owned by Holdings, PHL or their Affiliates. (c) "Beneficial ownership," "beneficial owner" and "beneficially own" shall have the meanings ascribed to such terms in Rule 13d-3 under the Exchange Act as in effect on the date of this Agreement; provided that Holdings and each of its Affiliates and any Person or Group shall be deemed to be the beneficial owners of any shares of Common Stock that Holdings or such Affiliate, Person and/or Group, as the case may be, has the right to acquire within sixty (60) days after the determination date pursuant to any other agreement, arrangement or understanding or upon the exercise of conversion or exchange rights, warrants, options or otherwise, including but not limited to any right to acquire shares of Common Stock through the conversion of the Subordinated Debentures. (d) "Board of Directors" shall mean the Board of Directors of the Company. (e) "Business Day" shall mean any day on which banking institutions in New York, New York are customarily open for the purpose of transacting business. (f) "Common Stock" shall mean the Common Stock, without par value, of the Company. (g) "Continuing Directors" shall mean the members of the Board of Directors of the Company immediately prior to the Closing Date and any future members of the Board of Directors nominated by the Board of Directors; provided, however, that no Holdings Director shall constitute a Continuing Director or be counted in determining the presence of a quorum of Continuing Directors. (h) "Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. -2- (i) "Group" shall have the meaning comprehended by Section 13(d)(3) of the Exchange Act as in effect on the date of this Agreement. (j) "Holdings Designee" shall mean a member of the Board of Directors of the Company who was designated by Holdings for nomination pursuant to this Agreement, but shall not include Robert W. Fiondella or Martin L. Vaughan, III. (k) "Holdings Directors" shall mean Robert W. Fiondella and the Holdings Designee. (l) "Holdings Ownership Percentage" shall mean, at any time, the percentage of the Adjusted Outstanding Shares that is beneficially owned in the aggregate by Holdings, PHL and their Affiliates. Immediately following the consummation of the transactions contemplated by the Stock Purchase Agreement, the Holdings Ownership Percentage was 15.6%. (m) "Holdings Securities" shall mean collectively (i) the 865,042 shares of Common Stock that Holdings acquired pursuant to the terms of the Stock Purchase Agreement, (ii) the Subordinated Debentures acquired by Holdings and PHL pursuant to the terms of the Stock Purchase Agreement, (iii) the shares of Common Stock into which the Subordinated Debentures are convertible pursuant to the terms of the Subordinated Debentures and (iv) any other shares of Common Stock that Holdings, PHL and their Affiliates may acquire from time to time, including without limitation such additional shares of Common Stock that the Company may issue with respect to such shares pursuant to any stock splits, stock dividends, recapitalizations, restructurings, reclassifications or similar transactions. (n) "HRH Designee" shall mean a member of the Board of Directors of the Company who was designated by the Continuing Directors for appointment or nomination pursuant to this Agreement. (o) "Indenture" shall mean the Indenture, dated May 3, 1999, executed by the Company and Crestar Bank, as Trustee, in connection with the issuance of the Subordinated Debentures. (p) "NYSE Rules" shall mean the rules and regulations of the New York Stock Exchange as in effect from time to time. (q) "Person" shall have the meaning set forth in Section 3(a)(9) of the Exchange Act as in effect on the date of this Agreement, and shall include, without limitation, corporations, partnerships, limited liability companies and trusts. (r) "PXP" shall mean Phoenix Investment Partners, Ltd., a Delaware corporation, approximately 60% of the common stock of which is currently owned by Holdings. (s) "Registration Rights Agreement" shall mean the Registration Rights Agreement, dated May 3, 1999, executed by the Company, Holdings and PHL in connection with the Stock Purchase Agreement. -3- (t) "Subordinated Debentures" shall mean the Company's 5.25% Convertible Subordinated Debentures (Due 2014), in the aggregate principal amount of $32,000,000, acquired by Holdings and PHL pursuant to the Stock Purchase Agreement. (u) "Standstill Percentage" shall mean, at any time, 20.0% of the Adjusted Outstanding Shares. (v) "Transfer" shall mean sell, transfer, assign, pledge, hypothecate, give away or in any manner dispose of any Common Stock or Subordinated Debentures. Section 1.2. Representations and Warranties of Holdings. Holdings represents and warrants to the Company as follows: (a) Holdings is a corporation duly organized, validly existing and in good standing under the laws of the State of Connecticut. (b) Except for the Holdings Securities, neither Holdings nor any of its Affiliates beneficially owns any Common Stock or any options, warrants or rights of any nature (including conversion and exchange rights) to acquire beneficial ownership of any Common Stock. (c) Holdings has full legal right, power and authority to enter into and perform this Agreement, and the execution and delivery of this Agreement by Holdings have been duly authorized by all necessary corporate action on behalf of Holdings. This Agreement is enforceable against Holdings in accordance with its terms, subject to bankruptcy, reorganization, insolvency and other similar laws affecting the enforcement of creditors' rights generally and to general principles of equity (regardless of whether considered in a proceeding in equity or an action at law). (d) The execution, delivery and performance of this Agreement by Holdings does not and will not conflict with or constitute a violation of or default under the Charter or Bylaws (or comparable documents) of Holdings, or any statute, law, regulation, order or decree applicable to Holdings, or any contract, commitment, agreement, arrangement or restriction of any kind to which Holdings is a party or by which Holdings is bound, other than such violations as would not prevent or materially delay the performance by Holdings of its obligations hereunder or otherwise subject the Company to any material claim or liability. Section 1.3. Representations and Warranties of PHL. PHL represents and warrants to the Company as follows: (a) PHL is a life insurance company duly organized, validly existing and in good standing under the laws of the State of New York. (b) PHL has full legal right, power and authority to enter into and perform this Agreement, and the execution and delivery of this Agreement by PHL have been duly authorized by all necessary corporate action on behalf of PHL. This Agreement is enforceable against PHL in accordance with its terms, subject to bankruptcy, reorganization, insolvency and other similar -4- laws affecting the enforcement of creditors' rights generally and to general principles of equity (regardless of whether considered in a proceeding in equity or an action at law). (c) The execution, delivery and performance of this Agreement by PHL does not and will not conflict with or constitute a violation of or default under the Charter or Bylaws (or comparable documents) of PHL, or any statute, law, regulation, order or decree applicable to PHL, or any contract, commitment, agreement, arrangement or restriction of any kind to which PHL is a party or by which PHL is bound, other than such violations as would not prevent or materially delay the performance by PHL of its obligations hereunder or otherwise subject the Company to any material claim or liability. Section 1.4. Representations and Warranties of the Company. The Company hereby represents and warrants to Holdings and PHL as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia. (b) The Company has full legal right, power and authority to enter into and perform this Agreement, and the execution and delivery of this Agreement by the Company have been duly authorized by all necessary corporate action on behalf of the Company. This Agreement is enforceable against the Company in accordance with its terms, subject to bankruptcy, reorganization, insolvency and other similar laws affecting the enforcement of creditors' rights generally and to general principles of equity (regardless of whether considered in a proceeding in equity or an action at law). (c) The execution, delivery and performance of this Agreement by the Company does not and will not conflict with or constitute a violation of or default under the Charter or Bylaws of the Company, or any statute, law, regulation, order or decree applicable to the Company, or any contract, commitment, agreement, arrangement or restriction of any kind to which the Company is a party or by which the Company is bound, other than such violations as would not prevent or materially delay the performance by the Company of its obligations hereunder or otherwise subject Holdings or PHL to any material claim or liability. ARTICLE II Board Representation Section 2.1. Initial Board Representation. On the later of the Closing Date or the date of the Company's 1999 annual meeting of shareholders, the Company will (a) take such action as may be necessary to increase the size of the Board of Directors from nine (9) to thirteen (13) directors, (b) upon receipt of executed letter agreements regarding resignation in the form attached to this Agreement as Exhibit A, fill two (2) of the vacancies created thereby with Martin L. Vaughan, III and the Holdings Designee in accordance with the applicable provisions of the Charter and Bylaws of the Company, and (c) fill the remaining two (2) vacancies created thereby with Robert W. -5- Fiondella and the HRH Designee in accordance with the applicable provisions of the Company's Charter and Bylaws. With respect to the four (4) directors appointed to the Board of Directors pursuant to this Section 2.1, the Company will (i) appoint Robert W. Fiondella and Martin L. Vaughan, III to the Class whose current term expires in 2000, the Holdings Designee to the Class whose current term expires in 2001 and the HRH Designee to the Class whose current term expires in 2002, and (ii) subject to the right of Holdings to designate a new Holdings Designee as a substitute for the initial Holdings Designee, nominate and recommend each for election as a director to the respective Class designated above at the next annual meeting of the Company's shareholders following such appointments; provided that, if any such director is not elected by the shareholders of the Company, the Company shall have no further obligations under this Section 2.1 for the applicable year; and provided further that the Company shall be under no obligation to appoint or recommend for election the Holdings Designee or Martin L. Vaughan, III to the Board of Directors unless and until it has received from such director an executed letter agreement regarding resignation in the form attached to this Agreement as Exhibit A. The HRH Designee shall be an executive officer of the Company at the time of appointment or nomination by the Company. Any person designated by Holdings to be the Holdings Designee shall be reasonably acceptable to the Continuing Directors, and, if found unacceptable by the Continuing Directors (i) the Company shall not be obligated to appoint or recommend for election any such person to the Board of Directors and (ii) Holdings shall be entitled to designate a replacement that is reasonably acceptable to the Continuing Directors. Section 2.2. Continuing Board Representation. (a) Except as otherwise expressly provided by the provisions of this Article II, the Company agrees that, during the term of this Agreement, it will not take or recommend to its shareholders any action that would cause the Board of Directors to consist of any number of directors other than thirteen (13) directors; provided, however, that the Company may increase the number of directors on the Board of Directors (i) in connection with the consummation of business combination transactions wherein the Company has agreed to increase the size of the Board of Directors or (ii) with the consent of Holdings, which will not be unreasonably withheld; and provided further, that the Company may reduce the number of directors on the Board of Directors in the event of the death, resignation or removal of any director pursuant to the Company's Bylaws or this Agreement (unless such death, resignation or removal relates to the Holdings Designee and Holdings has the right under this Article II to designate a replacement). (b) Subject to the provisions of Sections 2.2(a), 2.2(c) and 2.5 hereof regarding reductions in the size of the Board of Directors and any required resignation of the Holdings Designee, during the term of this Agreement the Company will nominate and recommend the Holdings Directors for election in the applicable year in which their respective Class terms expire; provided that, if any such Holdings Director is not elected by the shareholders of the Company, the Company shall have no further obligations under this Section 2.2(b) for the applicable year; and provided further that the Company shall be under no obligation to nominate or recommend for election the Holdings Designee to the Board of Directors unless and until it has received from such director an executed letter agreement regarding resignation in the form attached to this Agreement as Exhibit A. Any person designated by Holdings to be a Holdings Designee shall be reasonably acceptable to the Continuing Directors, and, if found unacceptable by the Continuing Directors (i) the Company shall not be obligated to appoint or recommend for election any such person to the Board of Directors and (ii) Holdings shall be entitled to designate a replacement that is reasonably acceptable to the Continuing Directors. -6- (c) The Company shall have no obligation to nominate or recommend a Holdings Director for election to the Board of Directors after the termination of this Agreement pursuant to Article VI hereof or upon the occurrence of the following events: (i) With respect to the Holdings Designee, upon the earlier of (x) the date when the Holdings Ownership Percentage is less than ten percent (10%), or (y) subject to the right of Holdings to designate a replacement Holdings Designee pursuant to Section 2.7 hereof, his death, disability or attainment of the age of seventy (70) years; or (ii) With respect to Robert W. Fiondella, upon the earlier of his death, disability or attainment of the age of seventy (70) years; or (iii) With respect to each of the Holdings Directors, upon a final determination by a court of competent jurisdiction that this Agreement has been breached by PHL, Holdings or their Affiliates. For purposes of this Section 2.2(c) and Section 2.5(b) below, the term "disability" shall mean the inability to perform the duties of a director as a result of a physical or mental incapacity (or combination thereof) for a period longer than three (3) consecutive months or for more than six (6) months in any consecutive twelve (12) month period, in each case determined by the written opinion of such director's regular attending physician. The Company may take such action as may be necessary to reduce the size of the Board of Directors upon the occurrence of the events set forth in (c)(i) and (c)(iii) above or in the event of Mr. Fiondella's death or disability. Upon attaining the age of seventy (70) years, Mr. Fiondella may continue to serve as a director for the remainder of his then current term on the Board of Directors and thereafter the Company may take such action as may be necessary to reduce the size of the Board of Directors by one director. (d) Until the earlier to occur of (i) the date on which there are no Holdings Directors serving on the Board of Directors pursuant to this Agreement or (ii) the expiration of this Agreement, the Company agrees that it will not take or recommend to its shareholders any action that would result in any amendment to the Company's Bylaws in effect on the date hereof that would impose any qualifications on the eligibility of directors of the Company to serve on any committee of the Board of Directors, except as may be required by the NYSE Rules, the rules and regulations under the Internal Revenue Code of 1986, as amended, relating to the qualification of employee stock benefit plans and the deductibility of compensation paid to executive officers, the rules and regulations under Section 16(b) of the Exchange Act, including Rule 16b-3 thereunder or any successor rule, and the Company's Bylaws. Section 2.3. Committee Representation. Until the earlier to occur of (i) the date on which there are no Holdings Directors serving on the Board of Directors pursuant to this Agreement or (ii) the expiration of this Agreement, to the extent that, and for so long as, but only insofar as required by applicable law or NYSE Rules, any of the Holdings Directors is qualified under the then-current NYSE Rules, the rules and regulations under the Internal Revenue Code of 1986, as amended, relating to the qualification of employee stock benefit plans and the deductibility of compensation paid to executive officers, the rules and regulations under Section 16(b) -7- of the Exchange Act, including Rule 16b-3 thereunder or any successor rule, the Board of Directors shall designate, as it deems appropriate, each of the Holdings Directors to serve on at least one committee of the Board of Directors (whether existing on the date hereof or formed or constituted after the date hereof). Section 2.4. Resignations at the Request of Holdings; Vacancies. Holdings shall have the right to request the resignation from the Board of Directors of the Holdings Designee pursuant to the terms of Exhibit A. In the event that the Holdings Designee for any reason ceases to serve as a member of the Board of Directors during his or her term of office and at such time Holdings would have the right to a designation hereunder if an election for the resulting vacancy were to be held, Holdings may designate a person to fill such vacancy (a "Holdings Designee Vacancy"); provided that, the person so designated shall be reasonably acceptable to the Continuing Directors. Subject to the foregoing and Section 2.2 hereof, the Company agrees to (i) appoint Holdings' designee to the Board of Directors to fill the Holdings Designee Vacancy and to serve until the next annual meeting of the Company's shareholders and (ii) nominate and recommend the Holdings' designee for election to the Board of Directors at the next annual meeting of the Company's shareholders to fill the remaining term of the class of directors to which such designee was appointed; provided further that the Company shall be under no obligation to appoint, nominate or recommend for election any such designee to fill an Holdings Designee Vacancy unless and until it has received from such designee an executed letter agreement regarding resignation in the form attached to this Agreement as Exhibit A. Other than with respect to the foregoing provisions relating to a Holdings Designee Vacancy, the Board of Directors shall have the sole and exclusive right to designate a replacement director in the event of any vacancy on the Board of Directors. Section 2.5. Required Resignations. (a) On the earlier of (i) the date when the Holdings Ownership Percentage is less than ten percent (10%), or (ii) the date of any final determination by a court of competent jurisdiction that this Agreement has been breached by PHL, Holdings or their Affiliates, Holdings shall, within five (5) Business Days, use its best efforts to cause the Holdings Designee to resign from the Board of Directors. In the event of any decrease in the Holdings Ownership Percentage to below such ten percent (10%) threshold, any subsequent increase in the Holdings Ownership Percentage to or above such ten percent (10%) threshold shall not entitle Holdings to reinstate, elect or designate any Holdings Designee to the Board of Directors. If Holdings does not cause the resignation of the Holdings Designee within such five (5) Business Day period, the Company may seek such resignation or, in the alternative, the Continuing Directors may seek the removal of the Holdings Designee. (b) In the event of the disability or termination of employment of Martin L. Vaughan, III under the Employment Agreement between the Company and Martin L. Vaughan, III dated May 3, 1999, the Company may request Martin L. Vaughan, III to resign from the Board of Directors. If such resignation is not received by the Company within five (5) Business Days from the date of the Company's request for resignation, the Company may seek his removal in accordance with the letter agreement attached hereto as Exhibit A. -8- (c) Upon any shareholder vote relating to the removal of a director for failure to resign pursuant to this Section 2.5, Holdings and its Affiliates shall (i) attend any meeting either in person or by proxy and (ii) vote in favor of such removal. At such time as a director becomes subject to resignation pursuant to this Section 2.5, the Board of Directors may amend its Bylaws or take such other action as it deems appropriate to reduce the number of directors constituting the Board of Directors proportionately or fill the vacancy caused by such resignation(s) with its own nominee in accordance with the applicable provisions of the Charter and Bylaws of the Company. Section 2.6. No Voting Trust. This Agreement does not create or constitute, and shall not be construed as creating or constituting, a voting trust agreement under the Virginia Stock Corporation Act or any other applicable corporation law. Section 2.7. Notification of Designation. Holdings shall notify the Company in writing not later than March 1st of the year in which the Holdings Designee's term on the Board of Directors expires as to the designation of the person to be nominated for election as the Holdings Designee at the annual meeting of the Company's shareholders for such year; provided that, if Holdings should fail to so notify the Company of its Holdings Designee by such date, Holdings shall be deemed to have designated the then current Holdings Designee for nomination to the Board of Directors at the next annual meeting of shareholders. Holdings shall cause the Holdings Designee to provide promptly information that may be required under the Exchange Act for inclusion in the Company's proxy statement for such annual meeting and shall cooperate with the Company in obtaining any such information, including but not limited to the prompt completion of any director questionnaires applicable to the directors generally. Holdings shall have the sole and exclusive right to designate the Holdings Designee under this Article II and the Company shall not be required to accept a designation from any Person other than Holdings; provided, however, that to the extent that Holdings Transfers all of the Holdings Securities beneficially owned by Holdings to (i) an Affiliate of Holdings or PHL in compliance with Section 4.1(g) hereof or (ii) a Person surviving a merger or formed by a consolidation pursuant to Section 4.1(h) hereof, such Affiliate or Person shall have the sole and exclusive right to designate the Holdings Designee under this Article II from and after the date of such Transfer. Section 2.8. No Duty to Designate; Reduction of Board Representation. Nothing contained in this Article II shall be construed as requiring Holdings to designate any Holdings Designee or as requiring any Holdings Director, once elected, to continue to serve in office if such Holdings Director elects to resign. Until the earlier to occur of (i) the date on which there are no Holdings Directors serving on the Board of Directors pursuant to this Agreement or (ii) the expiration of this Agreement, in the event of any vacancy created by the death, resignation or removal of the Holdings Designee or the failure of Holdings to designate an Holdings Designee, other than a vacancy created by the resignation or removal of an Holdings Designee pursuant to Section 2.5 above, Holdings may notify the Company in writing that it does not intend to designate a person to fill such vacancy, and the Company thereafter may take such action as may be necessary either to reduce the size of the Board of Directors by one director or fill the vacancy with its own designee. ARTICLE III -9- Standstill Restrictions; Voting Matters Section 3.1. Standstill Restrictions. (a) During the term of this Agreement, PHL and Holdings covenant and agree that PHL and Holdings shall not, and shall not permit any of their Affiliates to, either individually or as part of a Group, directly or indirectly: (i) acquire (other than acquisitions resulting from corporate action taken by the Board of Directors with respect to any pro rata distribution of shares of Common Stock in connection with any stock split, stock dividend, recapitalization, reclassification or similar transaction), propose to acquire (or publicly announce or otherwise disclose an intention to propose to acquire), offer to acquire, or agree to acquire any Common Stock (or any options, warrants, rights or other securities exercisable for, or convertible or exchangeable into, Common Stock, including without limitation the Subordinated Debentures) if the effect of such acquisition would cause the Holdings Ownership Percentage to equal or exceed the Standstill Percentage (other than as a result of any stock purchases or repurchases by the Company); provided that this Section 3.1(a)(i) shall not apply to (a) any acquisition of Common Stock or of options, warrants, rights or other securities exercisable for, or convertible or exchangeable into, Common Stock granted to any Person, including without limitation Holdings Directors, pursuant to any benefit plan of the Company or any of its Affiliates or the exercise, conversion or exchange of any such option, warrant, right or other security or (b) any acquisition of Common Stock upon the exercise by PHL, Holdings or their Affiliates of rights pursuant to any Rights Agreement that may be adopted by the Company for the purpose of deterring coercive takeover activities with respect to the Company, provided that all of the shares of Common Stock so acquired upon the exercise of the rights shall be subject to all of the terms of this Agreement; (ii) propose (or publicly announce or otherwise disclose an intention to propose), solicit, offer, seek or take any action to effect, negotiate with or provide any confidential information relating to the Company or its business to any other Person with respect to, any tender or exchange offer, merger, consolidation, share exchange, business combination, restructuring, recapitalization or similar transaction involving the Company (other than (x) any of the foregoing that has been approved by the Board of Directors or (y) in connection with any tender or exchange offer in which the Board of Directors has (a) recommended that its shareholders accept such offer or (b) after ten (10) business days (as defined in Rule 14d-1 under the Exchange Act as in effect on the date of this Agreement) from the date of commencement of such offer, expressed no opinion, remained neutral, was unable to take a position or otherwise did not oppose or recommend that its shareholders reject such offer); (iii) make, or in any way participate in, any "solicitation" of "proxies" to vote (as such terms are defined in Rule 14a-1 under the Exchange Act), solicit any consent or communicate with or seek to advise or influence any person or entity with respect to the voting of any Common Stock or become a "participant" in any "election contest" (as such terms are defined or used in Rule 14a-11 under the Exchange Act) with respect to the Company; provided that nothing in this Section 3.1(a)(iii) shall apply to any deemed solicitation of proxies by the Holdings Directors that may result from such Holdings Directors' position or status as a director -10- of the Company at the time of any general solicitation of proxies by the management of the Company; (iv) form, participate in or join any Person or Group with respect to any Common Stock or Subordinated Debentures, or otherwise act in concert with any Person for the purpose of (x) acquiring beneficial ownership of any Common Stock or Subordinated Debentures or (y) holding or disposing of Common Stock or Subordinated Debentures for any purpose prohibited by this Section 3.1(a); (v) except as specifically provided in Section 3.2 below, deposit any Common Stock or Subordinated Debentures into a voting trust or subject any Common Stock or Subordinated Debentures to any arrangement or agreement with respect to the voting thereof; (vi) initiate, propose or otherwise solicit shareholders for the approval of any shareholder proposal with respect to the Company as described in Rule 14a-8 under the Exchange Act, or induce or attempt to induce any other Person to initiate, propose or otherwise solicit any such shareholder proposal; (vii) except as specifically provided in Article II of this Agreement, seek election to or seek to place a representative on the Board of Directors, or seek the removal of any member of the Board of Directors (other than a Holdings Director); (viii) call or seek to have called any meeting of the shareholders of the Company for any purpose; (ix) take any other action to seek to Control the management or policies of the Company; (x) demand, request or propose to amend, waive or terminate the provisions of this Section 3.1(a); or (xi) agree to do any of the foregoing, or advise, assist, encourage or persuade any third party to take any action with respect to any of the foregoing. (b) PHL and Holdings agree that they will notify the Company promptly if any inquiries or proposals are received by, any information is exchanged with respect to, or any negotiations or discussions are initiated or continued by or with, PHL, Holdings or any of their Affiliates regarding any matter described in Section 3.1(a) above. PHL and the Company shall mutually agree upon an appropriate response to be made to any such proposals received by PHL, Holdings or any of their Affiliates. (c) Nothing contained in this Article III shall be deemed to restrict the manner in which the Holdings Directors may participate in deliberations or discussions of the Board of Directors or individual consultations with any member of the Board of Directors, so long as such actions do not otherwise violate any provision of Section 3.1(a) above. -11- (d) Each of Holdings and PHL covenants and agrees that, during the term of this Agreement and so long as Holdings, PHL or their Affiliates Control (i) PXP and its subsidiaries (or any successor of PXP and its subsidiaries) or (ii) any Person registered as an investment company under the Investment Company Act of 1940, as amended, which might otherwise be deemed to be an "affiliate" of Holdings or PHL within the meaning of Rule 12b-2 under the Exchange Act (a "Related Investment Company"), it will not, and will not permit any of its Affiliates to, cause or permit PXP and its subsidiaries (or any such successor of PXP and its subsidiaries) or such Related Investment Company, directly or indirectly, to (i) attempt to exercise Control or influence over the business and affairs of the Company, (ii) act in concert with Holdings, PHL or their Affiliates to violate the provisions of this Agreement or (iii) act in concert with any other Person for the purposes of violating the provisions of this Agreement or otherwise effecting a change of Control of the Company. Each of Holdings and PHL also covenants and agrees that, during the term of this Agreement, it will not direct or influence, or attempt to direct or influence, the voting or disposition of shares of Common Stock owned of record or beneficially by PXP and its subsidiaries (or any successor of PXP and its subsidiaries). Section 3.2. Voting Matters. (a) During the term of this Agreement, PHL and Holdings will take all such action as may be required so that the Common Stock beneficially owned and entitled to be voted by PHL, Holdings and their Affiliates, as a Group, are voted or caused to be voted (in person or by proxy): (i) with respect to the Continuing Director's nominees to the Board of Directors, in accordance with the recommendation of the Board of Directors, or a nominating or similar committee of the Board of Directors, if any such committee exists and makes a recommendation; and (ii) in accordance with the recommendation of the Board of Directors with respect to any transaction to be effected with the Company or its Affiliates in connection with an unsolicited tender or exchange offer, any "election contest" (as such term is defined or used in Rule 14a-11 under the Exchange Act as in effect on the date of this Agreement) with respect to the Board of Directors of the Company or any other attempt to acquire Control of the Company or the Board of Directors. (b) For a period of five (5) years from the date of this Agreement, PHL and Holdings will take all such action as may be required so that the Common Stock beneficially owned and entitled to be voted by PHL, Holdings and their Affiliates, as a Group, are voted or caused to be voted (in person or by proxy) in accordance with the recommendation of the Board of Directors of the Company with respect to negotiated mergers, acquisitions, divestitures, consolidations, sale of assets, share exchanges or other similar transactions for which shareholder approval is sought. (c) With respect to all matters brought before the Company's shareholders for a vote not otherwise provided for in Section 2.5(c) or Section 3.2(a) and (b) above, PHL, Holdings and their Affiliates may vote in accordance with their independent judgment without regard to any request or recommendation of the Board of Directors. -12- (d) PHL, Holdings and their Affiliates who beneficially own any of the Common Stock shall be present, in person or by proxy, at all duly held meetings of shareholders of the Company so that the Common Stock held by PHL, Holdings and their Affiliates may be counted for the purposes of determining the presence of a quorum at such meetings. ARTICLE IV Transfers of Holdings Securities Section 4.1. Transfer Restrictions. During the term of this Agreement, PHL, Holdings and their Affiliates, shall not, directly or indirectly, Transfer any of the Holdings Securities beneficially owned by PHL, Holdings and their Affiliates to any Person or Group without the prior written consent of the Company (which consent may be withheld in the Company's sole discretion), if (i) as a result of such Transfer, such Person or Group would have beneficial ownership of Common Stock representing in the aggregate more than 9.9% of the issued and outstanding shares of Common Stock, such determination to be based upon (x) the most recent publicly available information as to the number of shares of Common Stock beneficially owned by such Person or Group (to the extent such information is available) or the transferor's actual knowledge, after due inquiry, as to such beneficial ownership, (y) the number or amount of Holdings Securities proposed to be Transferred and (z) the number of issued and outstanding shares of Common Stock on the date of Transfer (as adjusted pursuant to Rule 13d-3(d)(1)(i) under the Exchange Act), or (ii) prior to such Transfer, such Person or Group has beneficial ownership of Common Stock representing in the aggregate more than 9.9% of the issued and outstanding shares of Common Stock, such determination to be based upon (x) the most recent publicly available information as to the number of shares of Common Stock beneficially owned by such Person or Group (to the extent such information is available) or the transferor's actual knowledge, after due inquiry, as to such beneficial ownership and (y) the number of issued and outstanding shares of Common Stock on the date of Transfer (as adjusted pursuant to Rule 13d-3(d)(1)(i) under the Exchange Act). Subject to the foregoing limitation (except in the case of subparagraphs (g) and (h) of this Section 4.1) and, with respect to any Transfer of the Subordinated Debentures, the provisions of the Indenture, PHL, Holdings and their Affiliates may Transfer the Holdings Securities beneficially owned by PHL, Holdings and their Affiliates in the following manner: (a) to the Company or any Affiliate of the Company; (b) pursuant to an effective registration statement under the Securities Act as provided in the Registration Rights Agreement; provided that such registration statement shall apply only to sales of the Common Stock of the Company and not to sales of the Subordinated Debentures; (c) pursuant to Rule 144, Rule 144A, Regulation S or any other applicable exemption from registration under the Securities Act; (d) pursuant to a distribution (including any such distribution pursuant to any liquidation or dissolution) by PHL or Holdings to its shareholders; provided that, upon a change -13- in Control of PHL or Holdings occurring after the date of this Agreement, PHL or Holdings shall not distribute any of the Holdings Securities to its Affiliates pursuant to this Section 4.1(d) or otherwise unless PHL or Holdings has received the prior written consent of the Company (which consent may be withheld in the Company's sole discretion) and obtained an agreement in writing by the distributee to be bound by the terms and conditions of this Agreement, such agreement to be substantially in the form of Exhibit B attached hereto; (e) pursuant to a merger or consolidation of the Company or pursuant to a plan of liquidation of the Company, which has been approved by the affirmative vote of a majority of the members of the Board of Directors then in office; (f) pursuant to a tender or exchange offer in which more than 67% of the issued and outstanding shares of Common Stock have been tendered by Persons who are not Affiliates of Holdings, PHL or its Affiliates or in which the Board of Directors has (i) recommended that its shareholders accept such offer or (ii) after ten (10) business days (as defined in Rule 14d-1 under the Exchange Act as in effect on the date of this Agreement) from the date of commencement of such offer, expressed no opinion, remained neutral, was unable to take a position or otherwise did not oppose or recommend that its shareholders reject such offer; (g) to any Affiliate of Holdings or PHL; provided that such Affiliate has delivered to the Company an agreement in writing by such Affiliate to be bound by the terms and conditions of this Agreement, such agreement to be substantially in the form of Exhibit B attached hereto; (h) pursuant to a merger or consolidation of Holdings or PHL or any Affiliate to which the Holdings Securities have theretofore been Transferred; provided that the Person surviving such merger or formed by such consolidation shall have delivered to the Company an agreement in writing by such Person to be bound by the terms and conditions of this Agreement, such agreement to be substantially in the form of Exhibit B attached hereto. In connection with any permitted Transfer pursuant to this Section 4.1, the rights of PHL and Holdings under this Agreement shall not transfer to any transferee(s) of the Holdings Securities, except to the extent provided in Section 2.7 hereof or upon express assignment of such rights to the extent permitted by Section 7.3 hereof. Section 4.2. Transfers to Affiliates. In the event of any Transfer of the Holdings Securities to an Affiliate of PHL or Holdings under Section 4.1 above, or such Affiliate otherwise becomes the beneficial owner of any of the Holdings Securities, PHL shall use its best efforts to cause such Affiliate to comply with all of the provisions of this Agreement, including without limitation this Article IV. Section 4.3. Confidential Information. In connection with any permitted Transfer of the Holdings Securities pursuant to this Article IV, neither PHL, Holdings nor their Affiliates shall disclose any confidential information relating to the Company or its business to any Person except as required by applicable law, including without limitation Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, but only to the extent that any required disclosure of such confidential information has been preceded by the execution of a confidentiality agreement by PHL, Holdings or their Affiliates, as the case may be, and such Person substantially in the form -14- attached hereto as Exhibit C. Such confidentiality agreement shall be promptly forwarded to the Company for its execution, which execution by the Company may be subsequent to the permitted Transfer or disclosure to such Person; provided that the failure of the Company to so execute such confidentiality agreement shall in no way be construed to be a failure on the part of PHL, Holdings or their Affiliates, as the case may be, to fulfill its obligations under this paragraph or to limit or affect the validity of such confidentiality agreement as between PHL, Holdings or their Affiliates, as the case may be, and such Person. ARTICLE V Further Assurances Each party shall execute and deliver such additional instruments and other documents and shall take such further actions as may be necessary or appropriate to effectuate, carry out and comply with all of its respective obligations under this Agreement. Holdings shall deliver to the Company, concurrently with the filing thereof with the Securities and Exchange Commission, copies of all Forms 3, 4 and 5, Form 144 and Schedules 13D or 13G, and each amendment thereto, filed by Holdings, PHL or its Affiliates pursuant to the Exchange Act. Holdings and PHL agree to provide any additional information requested by the Company regarding Transfers of the Holdings Securities for the purpose of determining compliance with this Agreement. Holdings shall notify the Company promptly of any proposed Transfer of the Holdings Securities pursuant to Sections 4.1(g) and (h) hereof. If reasonably requested by the Company at any time during the term of this Agreement, Holdings agrees to confirm in writing to the Company the number of Holdings Securities held, beneficially and of record, by Holdings and its Affiliates as of the latest practicable date. ARTICLE VI Termination Unless earlier terminated by written agreement of the parties hereto, this Agreement shall terminate on the expiration of ten (10) years from the date hereof. Any termination of this Agreement as provided herein shall be without prejudice to the rights of any party arising out of the breach by any other party of any provisions of this Agreement that occurred prior to the termination. ARTICLE VII Miscellaneous Section 7.1. Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if in writing (including telecopy or similar teletransmission), addressed as follows: If to the Company, Hilb, Rogal and Hamilton Company to it at: 4235 Innslake Drive Glen Allen, Virginia 23060 -15- Telecopier: (804) 747-3138 Attention: Andrew L. Rogal With a copy to: Williams Mullen Christian & Dobbins 1021 East Cary Street, 16th Floor Richmond, Virginia 23219 Telecopier: (804) 783-6507 Attention: Theodore L. Chandler, Jr., Esquire If to Holdings PM Holdings, Inc. or PHL, One American Row to them at: Hartford, Connecticut 06115 Telecopier: (860) 403-5182 Attention: Carole A. Masters, Esquire Phoenix Home Life Mutual Insurance Company One American Row Hartford, Connecticut 06115 Telecopier: (860) 403-5182 Attention: David W. Searfoss Executive Vice President and Chief Financial Officer With a copy to: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038-4982 Telecopier: (212) 806-6006 Attention: David L. Finkelman, Esquire Unless otherwise specified herein, such notices or other communications shall be deemed received (a) in the case of any notice or communication sent other than by mail, on the date actually delivered to such address (evidenced, in the case of delivery by overnight courier, by confirmation of delivery from the overnight courier service making such delivery, and in the case of a telecopy, by receipt of a transmission confirmation form or the addressee's confirmation of receipt), or (b) in the case of any notice or communication sent by mail, three (3) Business Days after being sent, if sent by registered or certified mail, with first-class postage prepaid. Each of the parties hereto shall be entitled to specify a different address by giving notice as aforesaid to each of the other parties hereto. Section 7.2. Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated except by an instrument in writing signed by Holdings, PHL and the Company following approval thereof by a majority of the Continuing Directors. Section 7.3. Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties and their respective successors and assigns, including without limitation in the case of -16- any corporate party hereto any corporate successor by merger or otherwise; provided that no party may assign this Agreement without the other party's prior written consent, which consent will not be required in the event of the Transfer of the Holdings Securities in accordance with Sections 4.1(g) or 4.1(h) hereof. Notwithstanding the foregoing, during the term of this Agreement, as long as Holdings, PHL or any of their Affiliates beneficially own any of the Holdings Securities, no assignment of this Agreement by Holdings, PHL or any of their Affiliates shall relieve the assignor from its obligation to fully perform or comply with the terms of this Agreement and, unless otherwise expressly agreed in writing by the Company, such assignor shall remain bound by all of the provisions hereof. Section 7.4. Entire Agreement. This Agreement, the Stock Purchase Agreement, the Indenture and the Registration Rights Agreement embody the entire agreement and understanding among the parties relating to the subject matter hereof and supersede all prior agreements and understandings relating to such subject matter. There are no covenants by the parties hereto relating to such subject matter other than those expressly set forth in this Agreement, the Stock Purchase Agreement, the Indenture and the Registration Rights Agreement. Section 7.5. Specific Performance. The parties acknowledge that money damages are not an adequate remedy for violations of this Agreement and that any party may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable law, each party waives any objection to the imposition of such relief. Section 7.6. Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. Section 7.7. No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. Section 7.8. No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of and shall not be enforceable by any Person who or which is not a party hereto. Section 7.9. Consent to Jurisdiction. Each party to this Agreement, by its execution hereof, hereby (i) irrevocably submits, and agrees to cause each of its Affiliates to submit, to the jurisdiction of the federal courts located either in the City of Richmond, Virginia, or in the City of Hartford, Connecticut, and in the event that such federal courts shall not have subject matter jurisdiction over the relevant proceeding, then of the state courts located either in the City of Richmond, Virginia, or in the City of Hartford, Connecticut, for the purpose of any Action -17- arising out of or based upon this Agreement or relating to the subject matter hereof or the transactions contemplated hereby, (ii) waives, and agrees to cause each of its Affiliates to waive, to the extent not prohibited by applicable law, and agrees not to assert, and agrees not to allow any of its Affiliates to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is improper, or that this Agreement or the subject matter hereof may not be enforced in or by such court and (iii) hereby agrees not to commence or to permit any of its Affiliates to commence any Action arising out of or based upon this Agreement or relating to the subject matter hereof other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such Action to any court other than one of the above-named courts whether on the grounds of inconvenient forum or otherwise. Each party hereby consents to service of process in any such proceeding in any manner permitted by Virginia or Connecticut law, as the case may be, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 7.1 above is reasonably calculated to give actual notice. Notwithstanding anything contained in this Section 7.9 to the contrary with respect to the parties' forum selection, if an Action is filed against a party to this Agreement, including its Affiliates, by a Person who or which is not a party to this Agreement, an Affiliate of a party to this Agreement, or an assignee thereof (a "Third Party Action"), in a forum other than the federal district court or a state court located in the City of Richmond, Virginia, or in the City of Hartford, Connecticut, and such Third Party Action is based upon, arises from, or implicates rights, obligations or liabilities existing under this Agreement or acts or omissions pursuant to this Agreement, then the party to this Agreement, including its Affiliates, joined as a defendant in such Third Party Action shall have the right to file cross-claims or third-party claims in the Third Party Action against the other party to this Agreement, including its Affiliates, and even if not a defendant therein, to intervene in such Third Party Action with or without also filing cross-claims or third-party claims against the other party to this Agreement, including its Affiliates. Section 7.10. Governing Law. This Agreement shall be governed by and construed in accordance with the domestic substantive law of the Commonwealth of Virginia, without giving effect to any choice or conflict of law provision or rule that would cause the application of the law of any other jurisdiction. Section 7.11. Name, Captions. The name assigned to this Agreement and the section captions used herein are for convenience of reference only and shall not affect the interpretation or construction hereof. Section 7.12. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies each signed by fewer than all, but together signed by all, the parties hereto. Section 7.13. Expenses. Each of the parties hereto shall bear their own expenses incurred in connection with this Agreement and the transactions contemplated hereby, except that in the event of a dispute concerning the terms or enforcement of this Agreement, the -18- prevailing party in any such dispute shall be entitled to reimbursement of reasonable legal fees and disbursements reasonably incurred from the other party or parties to such dispute. Section 7.14. Severability. In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such provision shall (to the extent permitted under applicable law) be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law. The provisions hereof are severable, and in the event any provision hereof should be held invalid or unenforceable in any respect, it shall not invalidate, render unenforceable or otherwise affect any other provision hereof. [SIGNATURES ON NEXT PAGE] -19- IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Voting and Standstill Agreement to be executed, as of the date first above written by their respective officers thereunto duly authorized. HILB, ROGAL AND HAMILTON COMPANY By: /s/ Andrew L. Rogal --------------------------------------------- Name: Andrew L. Rogal Title: President and Chief Executive Officer PM HOLDINGS, INC. By: /s/ David W. Searfoss -------------------------------------------- Name: David W. Searfoss Title: Vice President/Chief Financial Officer PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY By: /s/ David W. Searfoss -------------------------------------------- Name: David W. Searfoss Title: Executive Vice President and Chief Financial Officer -20- Exhibit A Form of Resignation Agreement Hilb, Rogal and Hamilton Company 4235 Innslake Drive Glen Allen, Virginia 23060 Ladies and Gentlemen: I hereby acknowledge that my position on the Board of Directors of Hilb, Rogal and Hamilton Company ("the Company") is subject to the provisions of a Voting and Standstill Agreement (the "Agreement"), dated May 3, 1999, between the Company, PM Holdings, Inc., a Connecticut corporation ("Holdings"), and Phoenix Home Life Mutual Insurance Company, a New York life insurance company ("PHL"). Accordingly, I hereby agree to resign immediately from such Board of Directors under the terms of Article II of the Agreement in the event that the Company or Holdings (with respect to the Holdings Designee) requests such resignation in accordance with such terms. I understand that, if I do not resign as requested within five (5) Business Days (as defined in the Agreement), the Company may seek specific performance of this letter agreement through court proceedings or otherwise may seek to remove me from office. I agree that any failure to resign upon request shall be deemed to be "cause" for my removal from the Board of Directors. Date: May 3, 1999 _________________________________ Name Agreed to and Accepted: Hilb, Rogal and Hamilton Company By:_____________________________ Name: Title: Exhibit B Form of Assumption Agreement Hilb, Rogal and Hamilton Company 4235 Innslake Drive Glen Allen, Virginia 23060 Ladies and Gentlemen: Pursuant to Section 4.1[(d), (g) or (h)] of the Voting and Standstill Agreement (the "Agreement"), dated May 3, 1999, between Hilb, Rogal and Hamilton Company ("the Company"), PM Holdings, Inc., a Connecticut corporation ("Holdings"), and Phoenix Home Life Mutual Insurance Company, a New York life insurance company ("PHL"), the undersigned hereby agrees to be bound by all of the terms and conditions of the Agreement to the same extent as if it were a party thereto and assumes all of the obligations of [Holdings, PHL or their Affiliate] under the Agreement with respect to the Holdings Securities (as defined in the Agreement). [HOLDINGS, PHL or AFFILIATE] Date: _________________ By: _______________________________ Name: Title: [TRANSFEREE] Date: _________________ By: _______________________________ Name: Title: Agreed to and Accepted: Hilb, Rogal and Hamilton Company By:___________________________ Name: Title: Exhibit C Form of Confidentiality Agreement ________ __, 19__ CONFIDENTIAL [Name] [Address] Re: Confidentiality Agreement Ladies and Gentlemen: In connection with our [soliciting, offering, seeking to effect or negotiating] with you with respect to the [sale, transfer, assignment, pledge, etc.] of [shares of Common Stock, without par value, or 5.25% Convertible Subordinated Debentures], of Hilb, Rogal and Hamilton Company (the "Company"), we are prepared to make available to you certain confidential information relating to the Company and its business (the "Confidential Information"). As a condition to your being furnished the Confidential Information, you agree to comply with the terms and conditions of this letter agreement (this "Agreement"). For the purposes of this Agreement, the term "Representatives" shall mean your employees, agents and advisors and the directors, officers, employees and agents of any of your advisors. The term "Third Party" shall be broadly interpreted to include without limitation any corporation, company, group, partnership, other entity or individual. The term "Confidential Information" shall not include information that (i) was or becomes generally available to the public other than as a result of a disclosure by you or your Representatives, or (ii) was or becomes available to you on a non-confidential basis from a source other than the Company or its advisors. You hereby agree to treat the Confidential Information as confidential and, unless required by applicable law, you shall not, and shall direct your Representatives not to, use in any way or to disclose, directly or indirectly, the Confidential Information to any Third Party without the written consent of the Company. It is understood and agreed that money damages would not be a sufficient remedy for any breach of this Agreement by you and that the Company shall be entitled to specific performance and injunctive or other equitable relief as a remedy for any such breach, and you further agree to waive any requirement for the securing or posting of any bond in connection with such remedy. Such remedy shall not be deemed to be the exclusive remedy for your breach of this Agreement, but shall be in addition to all other remedies available at law or equity to the Company. If you are in agreement with the foregoing, please so indicate by signing and returning one copy of this Agreement, whereupon it will constitute our agreement with respect to the subject matter hereof. Very truly yours, [Name] Officer of [Holdings or Affiliate] CONFIRMED AND AGREED as of the date first written above: [NAME] By:_________________________________ Name: Title: Hilb, Rogal and Hamilton Company By:_________________________________ Name: Title: -2- EX-10 6 EXHIBIT 10.6 Exhibit 10.6 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of May 3, 1999, is made between Hilb, Rogal and Hamilton Company, a Virginia corporation (the "Company"), PM Holdings, Inc., a Connecticut corporation ("Holdings"), and Phoenix Home Life Mutual Insurance Company, a New York life insurance company ("PHL"). W I T N E S S E T H: WHEREAS, the Company, Holdings, PHL and Martin L. Vaughan, III entered into a Stock Purchase Agreement dated March 29, 1999 (the "Stock Purchase Agreement"), under which the Company agreed to acquire from Holdings and Martin L. Vaughan, III all of the issued and outstanding shares of the capital stock of American Phoenix Corporation, a Connecticut corporation ("APC"); and WHEREAS, pursuant to the Stock Purchase Agreement, (i) Holdings acquired 865,042 shares of the Company's Common Stock (as hereinafter defined) and $22,000,000 principal amount of the Company's Subordinated Debentures (as hereinafter defined), and (ii) PHL acquired $10,000,000 principal amount of the Company's Subordinated Debentures; and WHEREAS, the Subordinated Debentures acquired by Holdings and PHL pursuant to the Stock Purchase Agreement are convertible into shares of Common Stock pursuant to the terms of the Subordinated Debentures; and WHEREAS, the Company has agreed to enter into this Agreement to provide certain registration rights to Holdings in order to facilitate the distribution of the shares of Common Stock acquired by Holdings pursuant to the Stock Purchase Agreement and any shares of Common Stock that may be acquired by Holdings, PHL or their Affiliates upon conversion of the Subordinated Debentures. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and in the Stock Purchase Agreement, the Company, Holdings and PHL hereby agree as follows: ARTICLE I Definitions Except as otherwise specified herein, capitalized terms used in this Agreement shall have the respective meanings assigned to such terms in the Stock Purchase Agreement. For purposes of this Agreement, the following terms have the following meanings: (a) "Affiliate" shall mean, as to any specified Person, each other Person directly or indirectly controlling, controlled by or under direct or indirect common control with that 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, or by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Notwithstanding the foregoing, the following shall not be deemed to be an Affiliate of Holdings or PHL for purposes of this Agreement: (i) Phoenix Investment Partners, Ltd., a Delaware corporation, and its subsidiaries (or any successor thereof), and (ii) any Person registered as an investment company under the Investment Company Act of 1940, as amended. (b) "Blue Sky Filing" shall mean a filing made in connection with the registration or qualification of the Registrable Shares under a particular state's securities or blue sky laws. (c) "Common Shares" shall mean the 865,042 shares of Common Stock that Holdings acquired from the Company pursuant to the Stock Purchase Agreement and such additional shares of Common Stock that the Company may issue with respect to such shares pursuant to any stock splits, stock dividends, recapitalizations, restructurings, reclassifications or similar transactions. (d) "Common Stock" shall mean the Common Stock, without par value, of the Company. (e) "Effective Period," with respect to the Registrable Shares, shall mean the period from the date of effectiveness of the Registration Statement relating to the Registrable Shares under Section 2.3 below to the date that is two years from the date of such effectiveness; provided, that, for each Holdback Period required by the Company under Article III of this Agreement and for each Discontinuance Period (as defined in Section 2.5(k) below), the Effective Period shall be extended by the number of days during which the applicable Holdback Period or Discontinuance Period was in effect. (f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (g) "NYSE" shall mean the New York Stock Exchange. (h) "Person" shall have the meaning set forth in Section 3(a)(9) of the Exchange Act as in effect on the date of this Agreement, and shall include, without limitation, corporations, partnerships, limited liability companies and trusts. (i) "Prospectus" shall mean the prospectus included in a Registration Statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Shares covered by such Registration Statement, and all other amendments and supplements to such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in any such prospectus. -2- (j) "Registrable Shares" shall mean collectively (i) the Common Shares and (ii) the aggregate number of shares of Common Stock into which the Subordinated Debentures are convertible pursuant to the terms of the Subordinated Debentures and such additional shares of Common Stock that the Company may issue with respect to such shares pursuant to any stock splits, stock dividends, recapitalizations, restructurings, reclassifications or similar transactions. (k) "Registration Statement" shall mean a registration statement of the Company under the Securities Act that covers the resale of the Registrable Shares pursuant to the terms of this Agreement, including the related Prospectus, all amendments and supplements to such registration statement, including pre-and post-effective amendments, all exhibits thereto and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. (l) "SEC" shall mean the Securities and Exchange Commission. (m) "Securities Act" shall mean the Securities Act of 1933, as amended. (n) "Subordinated Debentures" shall mean the Company's 5.25% Convertible Subordinated Debentures (Due 2014), in the aggregate principal amount of $32,000,000. (o) "Voting and Standstill Agreement" shall mean the Voting and Standstill Agreement, dated May 3, 1999, executed by the Company, Holdings and PHL in connection with the Stock Purchase Agreement. ARTICLE II Registration of Securities Section 2.1. Securities Subject to this Agreement. The securities entitled to the benefits of this Agreement are the Registrable Shares. For the purposes of this Agreement, one or more of the Registrable Shares will no longer be subject to this Agreement when and to the extent that (i) a Registration Statement covering such Registrable Shares has been declared effective under the Securities Act and such Registrable Shares have been sold pursuant to such effective Registration Statement, (ii) such Registrable Shares are distributed to the public pursuant to Rule 144 under the Securities Act, (iii) such Registrable Shares shall have been otherwise transferred or disposed of, new certificates therefor not bearing a legend restricting further transfer or disposition shall have been delivered by the Company and, at such time, subsequent transfer or disposition of such securities shall not require registration or qualification of such Registrable Shares under the Securities Act or any similar state law then in force, or (iv) such Registrable Shares have ceased to be outstanding. Section 2.2. Registration Rights. Holdings may exercise the demand and piggy-back registration rights to which it is entitled under this Agreement only at a time at which the Holdings Ownership Percentage (as such term is defined in the Voting and Standstill Agreement) exceeds -3- 10% or Holdings is otherwise deemed by the Company to be an Affiliate of the Company. Holdings may not exercise any such rights after May 3, 2014. Section 2.3. Demand Registration. (a) Holdings shall have the right, subject to Section 2.2 above, to make one written request to the Company for the registration of all of the Registrable Shares subject to this Agreement that are beneficially owned by Holdings, PHL and their Affiliates at the time of the request. The Company shall not be obligated to register any of the Registrable Shares held by an Affiliate of Holdings or PHL unless and until such Affiliate shall have agreed in writing to indemnify the Company pursuant to Section 4.2 of this Agreement. (b) Upon the receipt of the request described in Section 2.3(a) above, the Company shall (i) within 45 days of such request, file a Registration Statement with the SEC under the Securities Act to register the resale of the Registrable Shares as set forth in such request and (ii) use its best efforts to cause such Registration Statement to become effective as soon as practicable after the filing thereof with the SEC. On or before the Closing Date, the Company shall have listed on the NYSE, on a when issued basis, the Registrable Shares. (c) The Company shall use its best efforts to maintain the effectiveness of the Registration Statement relating to the Registrable Shares, and maintain the listing of such shares, as applicable, on the NYSE or any exchange or automated interdealer quotation system on which the Common Stock is then listed or quoted, during the Effective Period. (d) If the Company is required to effect a Registration Statement pursuant to this Section 2.3, the Company may, in its discretion, include securities, other than Registrable Shares, among the securities covered by such registration. (e) The Company shall not be required to effect more than one registration under this Section 2.3. Section 2.4 Piggy-Back Registration. (a) In the event that the Company shall propose to file a registration statement under the Securities Act relating to a public offering by or through one or more underwriters of shares of Common Stock for the Company's own account or for the account of any holder of shares of Common Stock other than Holdings, PHL or any of their Affiliates (a "Selling Shareholder") and on a form and in a manner that would permit the registration of any of the Registrable Shares for sale to the public under the Securities Act, the Company shall (i) give written notice to Holdings of its intention to do so and of the right of Holdings, subject to Section 2.2 above, to have any or all of the Registrable Shares subject to this Agreement that are beneficially owned by Holdings, PHL and their Affiliates at the time of such notice included among the securities to be covered by such registration statement and (ii) at the written request of Holdings given to the Company within 20 days after the Company provides such notice, use its best efforts to include among the securities covered by such registration statement the number of such Registrable Shares that -4- Holdings shall have requested be so included (subject, however, to reduction in accordance with Section 2.4(b) below). None of Holdings, PHL and their Affiliates, however, shall be entitled to participate in any offering pursuant to this Section 2.4(a) unless and until Holdings, PHL, if participating, and any participating Affiliate have entered into an underwriting or other agreement with such underwriter or underwriters for such offering in such customary form as such underwriter or underwriters shall reasonably determine. (b) Holdings may include Registrable Shares in any registration statement relating to any offering pursuant to Section 2.4(a) above to the extent that the inclusion of such shares shall not reduce the number of shares of Common Stock to be offered and sold by the Company or the Selling Shareholder, as the case may be. If the lead managing underwriter selected by the Company for any such offering determines that marketing factors require a limitation on the number of Registrable Shares to be offered and sold by Holdings, PHL and their Affiliates in such offering, there shall be included in such offering only that number of Registrable Shares, if any, that such lead managing underwriter reasonably and in good faith believes will not jeopardize the success of the offering of all shares of Common Stock that the Company or the Selling Shareholder, as the case may be, desires to sell for its own account. In such event and provided that the lead managing underwriter has so notified the Company in writing, the shares of Common Stock to be included in such offering shall consist of (i) the securities that the Company or the Selling Shareholder, as the case may be, proposes to sell, and (ii) the number, if any, of Registrable Shares requested to be included in such registration that, in the opinion of such lead managing underwriter, can be sold without jeopardizing the success of the offering of the shares of Common Stock that the Company or the Selling Shareholder, as the case may be, desires to sell for its own account. (c) Nothing in this Section 2.4 shall create any liability on the part of the Company to Holdings, PHL or any of their Affiliates if the Company for any reason should decide not to file a registration statement proposed to be filed under Section 2.4(a) above or to withdraw such registration statement subsequent to its filing, regardless of any action whatsoever that Holdings may have taken, whether as a result of the issuance by the Company of any notice hereunder or otherwise. Section 2.5. Registration Procedures. In order to comply with the requirements of Sections 2.3 and 2.4 above, the Company will: (a) prepare and file with the SEC a Registration Statement covering the Registrable Shares on any form or forms for which the Company then qualifies and that counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Shares (i) in connection with the registration of the Registrable Shares pursuant to Section 2.3 above, on a delayed or continuous basis in accordance with Rule 415 under the Securities Act (or any successor rule); provided, however, that the methods of distribution permitted by such Registration Statement shall not include underwritten offerings; or -5- (ii) in connection with a registration that includes any Registrable Shares pursuant to Section 2.4 above, in accordance with the intended methods of distribution thereof. (b) prepare and file with the SEC pre- and post-effective amendments to the Registration Statement and such amendments and supplements to the Prospectus used in connection therewith as may be required by the rules, regulations or instructions applicable to the registration form utilized by the Company, or by the Securities Act or the rules and regulations thereunder, and cause the Prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and otherwise comply with the provisions of the Securities Act with respect to the disposition of the Registrable Shares; (c) furnish to Holdings such number of copies of the Registration Statement and each pre- and post-effective amendment thereto, any Prospectus or Prospectus supplement and each amendment thereto and such other documents as Holdings may reasonably request in order to facilitate the transfer or disposition of the Registrable Shares by Holdings; (d) make such Blue Sky Filings, if necessary, to register or qualify the Registrable Shares under such state securities or blue sky laws of such jurisdictions as Holdings may reasonably request, and do any and all other acts that may be reasonably necessary or advisable to enable Holdings to consummate the transfer or disposition in such jurisdictions of the Registrable Shares, except that the Company shall not for any such purpose be required (i) to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this Section 2.5(d), it would not be obligated to be so qualified, (ii) to subject itself to taxation in any such jurisdiction, or (iii) to consent to general service of process in any such jurisdiction; (e) notify Holdings, at any time when a Prospectus is required to be delivered under the Securities Act with respect to one or more of the Registrable Shares, of the Company's becoming aware that a Prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and prepare and furnish to Holdings a reasonable number of copies of an amendment to such Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Shares, such Prospectus shall 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 the light of the circumstances under which they were made, not misleading; (f) notify Holdings (1) when any Prospectus or Prospectus supplement or pre- or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when such Registration Statement or post-effective amendment has become effective; -6- (2) of any request by the SEC or any other applicable regulatory authority for amendments or supplements to the Registration Statement or Prospectus or for additional information; (3) of the issuance by the SEC or any other applicable regulatory authority of any stop order of which the Company or its counsel is aware suspending the effectiveness of the Registration Statement or any order preventing the use of a related Prospectus, or the initiation or any threats of any proceedings for such purpose; and (4) of the receipt by the Company of any written notification of the suspension of the registration or qualification of any of the Registrable Shares for sale in any jurisdiction, or the initiation or any threats of any proceeding for such purpose; (g) make generally available to the Company's shareholders, as soon as reasonably practicable, an earnings statement that shall satisfy the provisions of Section 11(a) of the Securities Act, provided that the Company shall be deemed to have complied with this Section 2.5(g) if it has complied with Rule 158 under the Securities Act; (h) use its best efforts to provide a transfer agent and registrar for the Registrable Shares covered by the Registration Statement no later than the effective date of such Registration Statement; (i) cooperate with Holdings to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing the securities to be sold under the Registration Statement, and enable such securities to be in such denominations and registered in such names as Holdings may reasonably request; (j) provide Holdings and any attorney, accountant or other agent retained by Holdings (collectively, the "Inspectors") with reasonable access during normal business hours to appropriate officers of the Company and its subsidiaries to ask questions and to obtain information that any such Inspector may reasonably request and make available for inspection all financial and other records, pertinent corporate documents and properties of any of the Company and its subsidiaries (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibility; provided, however, that the Records that the Company determines, in good faith, to be confidential and that it notifies the Inspectors in writing are confidential shall not be disclosed to any Inspector unless such Inspector signs or is otherwise bound by a confidentiality agreement reasonably satisfactory to the Company; and (k) in the event of the issuance of any stop order of which the Company or its counsel is aware suspending the effectiveness of the Registration Statement or any order suspending or preventing the use of any related Prospectus or suspending the registration or qualification of any Registrable Shares for sale in any jurisdiction, the Company promptly will use its best efforts to obtain its withdrawal. -7- Holdings shall furnish to the Company in writing such information regarding Holdings, PHL and their Affiliates as is required to be disclosed pursuant to the Securities Act. Holdings agrees to notify the Company promptly of any inaccuracy or change in information previously furnished by Holdings to the Company or of the happening of any event in either case as a result of which the Registration Statement, a Prospectus, or any amendment or supplement thereto contains an untrue statement of a material fact regarding Holdings, PHL or any of their Affiliates or omits to state a material fact regarding Holdings, PHL or any of their Affiliates required to be stated therein or necessary to make the statements therein not misleading and to furnish promptly to the Company any additional information required to correct and update any previously furnished information or required so that such Registration Statement, Prospectus, or amendment or supplement, shall not contain, with respect to Holdings, PHL or any of their Affiliates, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Holdings agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Sections 2.5(e) or (k) above, Holdings will forthwith discontinue (and cause any Affiliate, and PHL and any of its Affiliates, to discontinue) the transfer or disposition of any Registrable Shares pursuant to the Prospectus relating to the Registration Statement covering such Registrable Shares until Holdings' receipt of the copies of the amended or supplemented Prospectus contemplated by Section 2.5(e) or the withdrawal of any order contemplated by Section 2.5(k), and, if so directed by the Company, Holdings will deliver to the Company all copies, other than permanent file copies then in Holdings' possession, of the Prospectus covering such Registrable Shares at the time of receipt of such notice. The period during which any discontinuance under this paragraph is in effect is referred to herein as a "Discontinuance Period." Section 2.6. Registration Expenses. (a) In connection with the registration of the Registrable Shares pursuant to Section 2.3 above, the Company will pay any and all out-of-pocket expenses incident to the Company's performance of or compliance with this Agreement, including, without limitation, (i) all registration and filing fees with the SEC relating to the shares of Common Stock into which the Subordinated Debentures are convertible pursuant to the terms of the Subordinated Debentures, (ii) all fees and expenses of complying with state securities or blue sky laws, (iii) all printing and delivery expenses, (iv) all fees and expenses incurred in connection with the listing of the Registrable Shares on the NYSE, or any other exchange or automated interdealer quotation system as then applicable, (v) the fees and disbursements of the Company's counsel and of its independent public accountants, and (vi) the fees and expenses of any special experts retained by the Company in connection with the requested registration, and Holdings shall pay any and all out-of-pocket expenses incurred by Holdings, including, without limitation, (x) all registration and filing fees with the SEC relating to the Common Shares, (y) all fees or disbursements of counsel to Holdings and (z) all brokerage commissions, fees and expenses and all transfer taxes and documentary stamp taxes, if any, relating to the sale or disposition of the Registrable Shares. -8- (b) In connection with a registration that includes any Registrable Shares pursuant to Section 2.4 above, Holdings will pay any and all out-of-pocket expenses attributable to such Registrable Shares, including, without limitation, (i) all registration and filing fees with the SEC and the National Association of Securities Dealers, Inc., (ii) all fees and expenses associated with qualifying the Registrable Shares with state securities or blue sky laws, (iii) any fees or disbursements of counsel to Holdings, and (iv) any brokerage commissions and fees, underwriting discounts and commissions, transfer taxes and documentary stamp taxes, if any, relating to the sale or disposition of the Registrable Shares. ARTICLE III Holdback Period If one or more underwritten public offerings of shares of Common Stock (other than the Registrable Shares) by the Company occur during the Effective Period, then, in connection with each such public offering, the Company may require Holdings, PHL and their Affiliates to refrain from, and Holdings, PHL and their Affiliates will refrain from, selling any of the Registrable Shares for a period determined by the Company but not to exceed 120 days (or such lesser period as the Company may require its officers and directors or other holders of shares of Common Stock to so refrain) (each such period referred to as a "Holdback Period") so long as the Company delivers written notice to Holdings of the Company's requirement of a Holdback Period and the length of such Holdback Period prior to commencement of the Holdback Period. ARTICLE IV Indemnification; Contribution Section 4.1. Indemnification by the Company. The Company will, and hereby agrees to, indemnify and hold harmless, to the fullest extent permitted by law, and, subject to Section 4.3 below, defend Holdings, PHL, each of their Affiliates (i) to whom Holdings or PHL transferred Registrable Shares in a manner permitted by the Voting and Standstill Agreement and (ii) who is listed as a selling shareholder in the Prospectus, and their respective officers, directors, employees, agents, representatives and each other Person, if any, who controls Holdings within the meaning of the Securities Act (each, a "Company Indemnitee"), against any and all losses, claims, damages, liabilities and expenses, joint or several, to which they or any of them may become subject under the Securities Act or any other statute or common law, including any amount paid in settlement of any action or proceeding, commenced or threatened, and to reimburse them for any reasonable legal or other expenses incurred by them in connection with investigating any claims and defending any actions (collectively, "Losses"), with respect to sales of Registrable Shares under the Registration Statement, insofar as any Losses arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any pre- or post-effective amendment thereto or in any Blue Sky Filing, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in the Prospectus or any amendment or supplement -9- thereto, or the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the indemnification agreement contained herein shall not (i) apply to Losses arising out of, or based upon, any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by such Company Indemnitee from time to time specifically for use in the Registration Statement, the Prospectus or any such amendment or supplement thereto or any Blue Sky Filing or (ii) inure to the benefit of any Person, to the extent that any such Loss arises out of such Person's failure to send or give a copy of the Prospectus, as the same may be then supplemented or amended, to the Person asserting an untrue statement or alleged untrue statement, or omission or alleged omission, at or prior to the written confirmation of the sale of the Registrable Shares to such Person if such statement or omission was corrected in the Prospectus or any amendment or supplement thereto prior to the written confirmation of the sale. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Company Indemnitee or any other Person and shall survive the transfer of such securities by such Company Indemnitee. Section 4.2. Indemnification by Holdings. Holdings and PHL will, and hereby agree to, indemnify and hold harmless and, subject to Section 4.3 below, defend (in the same manner and to the same extent as set forth in Section 4.1 above), and cause each of their Affiliates who is listed as a selling shareholder in the Prospectus to so indemnify, hold harmless and defend, the Company and the Company's officers, directors, employees, agents, representatives and each other Person, if any, who controls the Company within the meaning of the Securities Act, with respect to any such untrue statement or alleged untrue statement in, or any such omission or alleged omission from, the Registration Statement, any Prospectus, or any amendment or supplement thereto, if such statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by Holdings, PHL or any of their Affiliates from time to time specifically for use in the Registration Statement, the Prospectus, and any such amendment or supplement thereto. Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or any other Person and shall survive the transfer of such securities by Holdings and PHL. The liability of an indemnifying party under this Section 4.2 shall be limited to the amount of the net proceeds received by such indemnifying party upon the resale of any Registrable Shares pursuant to the Registration Statement creating such liability. Section 4.3. Notices of Claims. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Sections 4.1 and 4.2 above, such indemnified party will give, if a claim in respect thereof is to be made against an indemnifying party, written notice to the latter of the commencement of such action, provided that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Article IV, except to the extent that the indemnifying party is actually prejudiced in any material respect by such failure to give notice. In case any such action is brought against an indemnified party, the indemnifying party shall be entitled to participate in and, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, to -10- assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of reasonable investigation. If the indemnifying party advises an indemnified party that it will contest a claim for indemnification hereunder, or fails, within 30 days of receipt of any indemnification notice to notify, in writing, such Person of its election to defend, settle or compromise, at its sole cost and expense, any action, proceeding or claim (or discontinues its defense at any time after it commences such defense), then the indemnified party may, at its option, defend, settle or otherwise compromise or pay such action or claim in each case at the indemnifying party's expense. In any event, unless and until the indemnifying party elects in writing to assume and does so assume the defense of any such claim, proceeding or action, the indemnified party's reasonable costs and expenses arising out of the defense, settlement or compromise of any such action, claim or proceeding shall be losses subject to indemnification hereunder. The indemnified party shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the indemnified party that relates to such action or claim. The indemnifying party shall keep the indemnified party fully informed at all times as to the status of the defense or any settlement negotiations with respect thereto. If the indemnifying party elects to defend any such action or claim, then the indemnified party shall be entitled to participate in such defense with counsel of its choice at its sole cost and expense, except that the indemnifying party shall be liable for such reasonable costs and expenses if, in such indemnified party's reasonable judgment, a conflict of interest between such indemnified and indemnifying parties may exist as described above. If the indemnifying party does not assume such defense, the indemnified party shall keep the indemnifying party informed at all times as to the status of the defense; provided, however, that the failure to keep the indemnifying party so informed shall not affect the obligations of the indemnifying party hereunder. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent; provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the written consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a general written release from all liability with respect to such claim or litigation. Section 4.4. Indemnification Payments. The indemnification required by this Article IV shall be made by periodic payments of the amount thereof during the course of the investigation or defense as and when bills are received or Losses are incurred, subject to the receipt of such documentary support therefor as the indemnifying party may reasonably request. Section 4.5. Contribution. If the indemnification provided for in this Article IV is unavailable to or insufficient to hold harmless a party otherwise entitled to be indemnified thereunder in respect to any Losses referred to therein, then the parties required to provide indemnification under this Article IV shall contribute to the amount paid or payable by such party -11- as a result of Losses in such proportion as is appropriate to reflect the relative fault of each such indemnifying party in connection with the statements or omissions that resulted in such Losses. The relative fault of each indemnifying party shall be determined by reference to whether the untrue statement 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 indemnifying party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, Holdings and PHL agree that it would not be just and equitable if contributions pursuant to this Section 4.5 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to above in this Section 4.5. 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 is not guilty of such fraudulent misrepresentation. Section 4.6. Other Rights and Liabilities. The indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of the indemnified party against the indemnifying party or others and (ii) any liabilities the indemnifying party may be subject to pursuant to the law. ARTICLE V Rule 144 Representations The Company covenants that, for the time that the Holdings Ownership Percentage (as such term is defined in the Voting and Standstill Agreement) exceeds 10% or Holdings is otherwise deemed by the Company to be an Affiliate of the Company, it will use its best efforts to: (i) file with the SEC all reports and other documents required to be filed by the Company under the Exchange Act and the rules and regulations promulgated thereunder; (ii) if not required to file such reports and documents referred to in subsection (i) above, keep publicly available certain information regarding the Company, as contemplated by Rule 144(c)(2) under the Securities Act; and (iii) take all other actions reasonably necessary to enable Holdings, PHL and their Affiliates to sell the Registrable Shares without registration under the Securities Act within the limitation of the exemption provided by Rule 144 under the Securities Act. -12- ARTICLE VI Miscellaneous Section 6.1. Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if in writing (including telecopy or similar teletransmission), addressed as follows: If to the Company, Hilb, Rogal and Hamilton Company to it at: 4235 Innslake Drive Glen Allen, Virginia 23060 Telecopier: (804) 747-3138 Attention: Andrew L. Rogal With a copy to: Williams Mullen Christian & Dobbins 1021 East Cary Street, 16th Floor Richmond, Virginia 23219 Telecopier: (804) 783-6507 Attention: Theodore L. Chandler, Jr., Esquire If to Holdings PM Holdings, Inc. or PHL, to them at: One American Row Hartford, Connecticut 06115 Telecopier: (860) 403-5182 Attention: Carole A. Masters, Esquire Phoenix Home Life Mutual Insurance Company One American Row Hartford, Connecticut 06115 Telecopier: (860) 403-5182 Attention: David W. Searfoss Executive Vice President and Chief Financial Officer With a copy to: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038-4982 Telecopier: (212) 806-6006 Attention: David L. Finkelman, Esquire -13- Unless otherwise specified herein, such notices or other communications shall be deemed received (a) in the case of any notice or communication sent other than by mail, on the date actually delivered to such address (evidenced, in the case of delivery by overnight courier, by confirmation of delivery from the overnight courier service making such delivery, and in the case of a telecopy, by receipt of a transmission confirmation form or the addressee's confirmation of receipt), or (b) in the case of any notice or communication sent by mail, three Business Days after being sent, if sent by registered or certified mail, with first-class postage prepaid. Each of the parties hereto shall be entitled to specify a different address by giving notice as aforesaid to each of the other parties hereto. Section 6.2. Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated except by an instrument in writing signed by Holdings and by the Company following approval thereof by a majority of the Continuing Directors (as such term is defined in the Voting and Standstill Agreement). Section 6.3. Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties and their respective successors and assigns, including without limitation in the case of any corporate party hereto any corporate successor by merger or otherwise; provided that no party may assign this Agreement without the other party's prior written consent, which consent will not be required in the event of the transfer of all of the Registrable Shares beneficially owned by Holdings in accordance with Sections 4.1(g) or 4.1(h) of the Voting and Standstill Agreement. Section 6.4. Entire Agreement. This Agreement embodies the entire agreement and understanding among the parties relating to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter. There are no representations, warranties or covenants by the parties hereto relating to such subject matter other than those expressly set forth in this Agreement and the Stock Purchase Agreement. Section 6.5. Specific Performance. The parties acknowledge that money damages are not an adequate remedy for violations of this Agreement and that any party may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable law, each party waives any objection to the imposition of such relief. Section 6.6. Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. Section 6.7. No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and -14- any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. Section 6.8. No Third Party Beneficiaries. Except as provided in Article IV above, this Agreement is not intended to be for the benefit of and shall not be enforceable by any Person who or which is not a party hereto. Section 6.9. Consent to Jurisdiction. Each party to this Agreement, by its execution hereof, (i) hereby irrevocably submits, and agrees to cause each of its Affiliates to submit, to the jurisdiction of the federal courts located either in the City of Richmond, Virginia, or in the City of Hartford, Connecticut, and in the event that such federal courts shall not have subject matter jurisdiction over the relevant proceeding, then of the state courts located either in the City of Richmond, Virginia, or in the City of Hartford, Connecticut, for the purpose of any Action (as such term is defined in the Stock Purchase Agreement) arising out of or based upon this Agreement or relating to the subject matter hereof or the transactions contemplated hereby, (ii) hereby waives, and agrees to cause each of its Affiliates to waive, to the extent not prohibited by applicable law, and agrees not to assert, and agrees not to allow any of its Affiliates to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is improper, or that this Agreement or the subject matter hereof may not be enforced in or by such court and (iii) hereby agrees not to commence or to permit any of its Affiliates to commence any Action arising out of or based upon this Agreement or relating to the subject matter hereof other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such Action to any court other than one of the above-named courts whether on the grounds of inconvenient forum or otherwise. Each party hereby consents to service of process in any such proceeding in any manner permitted by Virginia or Connecticut law, as the case may be, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 6.1 above is reasonably calculated to give actual notice. Notwithstanding anything contained in this Section 6.9 to the contrary with respect to the parties' forum selection, if an Action is filed against a party to this Agreement, including its Affiliates, by a person who or which is not a party to this Agreement, an Affiliate of a party to this Agreement, or an assignee thereof (a "Third Party Action"), in a forum other than the federal district court or a state court located in the City of Richmond, Virginia, or in the City of Hartford, Connecticut, and such Third Party Action is based upon, arises from, or implicates rights, obligations or liabilities existing under this Agreement or acts or omissions pursuant to this Agreement, then the party to this Agreement, including its Affiliates, joined as a defendant in such Third Party Action shall have the right to file cross-claims or third-party claims in the Third Party Action against the other party to this Agreement, including its Affiliates, and even if not a defendant therein, to intervene in such Third Party Action with or without also filing cross-claims or third-party claims against the other party to this Agreement, including its Affiliates. -15- Section 6.10. Governing Law. This Agreement shall be governed by and construed in accordance with the domestic substantive law of the Commonwealth of Virginia, without giving effect to any choice or conflict of law provision or rule that would cause the application of the law of any other jurisdiction. Section 6.11. Name, Captions. The name assigned to this Agreement and the section captions used herein are for convenience of reference only and shall not affect the interpretation or construction hereof. Section 6.12. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies each signed by less than all, but together signed by all, the parties hereto. Section 6.13. Expenses. Each of the parties hereto shall bear their own expenses incurred in connection with this Agreement and the transactions contemplated hereby, except that in the event of a dispute concerning the terms or enforcement of this Agreement, the prevailing party in any such dispute shall be entitled to reimbursement of reasonable legal fees and disbursements from the other party or parties to such dispute. Section 6.14. Severability. In the event that any provision of this Agreement would, under applicable law, be invalid or unenforceable in any respect, such provision shall (to the extent permitted under applicable law) be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law. The provisions of this Agreement are severable, and in the event that any provision hereof should be held invalid or unenforceable in any respect, it shall not invalidate, render unenforceable or otherwise affect any other provision hereof. [SIGNATURES ON NEXT PAGE] -16- IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Registration Rights Agreement to be executed, as of the date first above written by their respective officers thereunto duly authorized. HILB, ROGAL AND HAMILTON COMPANY By: /s/ Andrew L. Rogal -------------------------------------------- Name: Andrew L. Rogal Title: President and Chief Executive Officer PM HOLDINGS, INC. By: /s/ David W. Searfoss --------------------------------------------- Name: David W. Searfoss Title: Vice President/Chief Financial Officer PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY By: /s/ David W. Searfoss --------------------------------------------- Name: David W. Searfoss Title: Executive Vice President and Chief Financial Officer EX-27 7 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q FOR HILB, ROGAL AND HAMILTON COMPANY FOR THE QUARTER ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS DEC-31-1999 MAR-31-1999 24,044,251 5,094,983 47,913,316 1,334,953 0 78,778,842 34,567,575 21,752,884 190,096,709 83,988,608 43,112,139 0 0 4,596,353 47,370,847 190,096,709 0 50,253,615 0 0 37,015,468 0 686,323 12,551,824 5,114,868 7,436,956 0 0 0 7,436,956 0.61 0.60
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