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EXHIBIT 10.1
COMBINATION AGREEMENT
BY AND AMONG
OIL STATES INTERNATIONAL, INC.,
HWC ENERGY SERVICES, INC.,
MERGER SUB-HWC, INC.
SOONER INC.,
MERGER SUB-SOONER, INC.
AND
PTI GROUP INC.
DATED AS OF JULY 31, 2000
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COMBINATION AGREEMENT
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.............................................................................................5
ARTICLE II THE HWC MERGER........................................................................................10
Section 2.1 Purchase of HWC Common Stock and HWC Preferred Stock by OSI....................................10
Section 2.2 Merger of Merger Sub-HWC into HWC..............................................................10
Section 2.3 Effect of the Merger...........................................................................11
Section 2.4 Articles of Incorporation......................................................................11
Section 2.5 Bylaws.........................................................................................11
Section 2.6 Officers and Directors.........................................................................11
Section 2.7 Merger Sub-HWC Common Stock....................................................................11
Section 2.8 HWC Common Stock...............................................................................11
Section 2.9 HWC Preferred Stock............................................................................12
Section 2.10 HWC Stock Options..............................................................................12
Section 2.11 OSI Common Stock...............................................................................12
Section 2.12 Issuance of New Certificates...................................................................13
Section 2.13 HWC Stock Transfer Books.......................................................................13
Section 2.14 Certificate Legends............................................................................13
Section 2.15 Fractional Shares..............................................................................13
ARTICLE III THE SOONER MERGER....................................................................................14
Section 3.1 Purchase of Sooner Common Stock by OSI.........................................................14
Section 3.2 Merger of Merger Sub-Sooner into Sooner........................................................14
Section 3.3 Effect of the Sooner Merger....................................................................14
Section 3.4 Certificate of Incorporation...................................................................14
Section 3.5 Bylaws.........................................................................................14
Section 3.6 Officers and Directors.........................................................................14
Section 3.7 Merger Sub-Sooner Common Stock.................................................................14
Section 3.8 Sooner Common Stock............................................................................15
Section 3.9 Sooner Stock Options...........................................................................15
Section 3.10 Sooner Warrants................................................................................15
Section 3.11 OSI Common Stock...............................................................................16
Section 3.12 Issuance of New Certificates...................................................................16
Section 3.13 Sooner Stock Transfer Books....................................................................16
Section 3.14 Certificate Legends............................................................................16
Section 3.15 Fractional Shares..............................................................................16
ARTICLE IV THE PTI ARRANGEMENT...................................................................................17
Section 4.1 Plan of Arrangement............................................................................17
Section 4.2 Adjustments to Exchange Ratio..................................................................17
Section 4.3 Dissenting Shares..............................................................................17
Section 4.4 Other Effects of the Arrangement...............................................................18
Section 4.5 Proxy Statement................................................................................18
Section 4.6 OSI ULC, PTI Holdco, PTI Amalco, PTI Holdco Sub................................................18
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Section 4.7 Support Agreement..............................................................................19
Section 4.8 Voting and Exchange Trust Agreement............................................................19
Section 4.9 Certificate Legends............................................................................19
ARTICLE V CLOSING................................................................................................20
Section 5.1 Time and Place.................................................................................20
Section 5.2 Deliveries at Closing..........................................................................20
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF HWC.................................................................20
Section 6.1 Organization; Qualification....................................................................20
Section 6.2 Subsidiaries...................................................................................21
Section 6.3 Capitalization.................................................................................21
Section 6.4 Authority, Authorization and Enforceability....................................................21
Section 6.5 Financial Statements...........................................................................22
Section 6.6 No Violation...................................................................................22
Section 6.7 Accuracy of Information........................................................................22
Section 6.8 Fairness Opinion...............................................................................23
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF SOONER.............................................................23
Section 7.1 Organization; Qualification....................................................................23
Section 7.2 Subsidiaries...................................................................................23
Section 7.3 Capitalization.................................................................................23
Section 7.4 Authority, Authorization and Enforceability....................................................24
Section 7.5 Financial Statements...........................................................................24
Section 7.6 No Violation...................................................................................25
Section 7.7 Accuracy of Information........................................................................25
Section 7.8 Fairness Opinion...............................................................................25
ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF PTI...............................................................26
Section 8.1 Organization; Qualification....................................................................26
Section 8.2 Subsidiaries...................................................................................26
Section 8.3 Capitalization.................................................................................26
Section 8.4 Authority, Authorization and Enforceability....................................................27
Section 8.5 Financial Statements...........................................................................27
Section 8.6 No Violation...................................................................................28
Section 8.7 Accuracy of Information........................................................................28
Section 8.8 Fairness Opinion...............................................................................28
ARTICLE IX REPRESENTATIONS AND WARRANTIES OF OSI.................................................................28
Section 9.1 Organization; Qualification....................................................................28
Section 9.2 Subsidiaries...................................................................................29
Section 9.3 Capitalization.................................................................................29
Section 9.4 Authority, Authorization and Enforceability....................................................29
Section 9.5 Financial Statements...........................................................................30
Section 9.6 No Violation...................................................................................30
Section 9.7 Accuracy of Information........................................................................31
Section 9.8 Fairness Opinion...............................................................................31
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Section 9.9 Status as a Foreign Investment Entity.........................................................31
ARTICLE X REGISTRATION RIGHTS....................................................................................31
ARTICLE XI COVENANTS.............................................................................................31
Section 11.1 Ordinary Course of Business....................................................................31
Section 11.2 Restricted Activities and Transactions.........................................................32
Section 11.3 Insurance......................................................................................33
Section 11.4 Confidentiality................................................................................34
Section 11.5 HSR and Other Regulatory Matters...............................................................34
Section 11.6 Commercially Reasonable Efforts................................................................34
Section 11.7 Access to Information..........................................................................35
Section 11.8 Section 351 Reporting..........................................................................35
Section 11.9 OSI Registration Statement.....................................................................35
Section 11.10 Blue Sky; Canadian Securities Laws.............................................................39
Section 11.11 Agreements.....................................................................................39
Section 11.12 Notification of Certain Matters................................................................39
Section 11.13 Further Assurances.............................................................................39
Section 11.14 Payment of Indebtedness........................................................................40
ARTICLE XII CONDITIONS...........................................................................................40
Section 12.1 Conditions to Obligations of Each Party........................................................40
ARTICLE XIII TERMINATION.........................................................................................42
Section 13.1 Termination....................................................................................42
Section 13.2 Effect of Termination..........................................................................43
Section 13.3 Fees and Expenses..............................................................................43
ARTICLE XIV MISCELLANEOUS........................................................................................44
Section 14.1 Waiver and Amendment...........................................................................44
Section 14.2 Nonsurvival of Representations and Warranties..................................................44
Section 14.3 Assignment.....................................................................................44
Section 14.4 Notices........................................................................................44
Section 14.5 Governing Law..................................................................................46
Section 14.6 Severability...................................................................................46
Section 14.7 Counterparts...................................................................................46
Section 14.8 Headings.......................................................................................46
Section 14.9 Enforcement of the Agreement...................................................................46
Section 14.10 Entire Agreement; Third Party Beneficiaries..................................................47
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EXHIBITS AND SCHEDULES
Exhibit A PTI Plan of Arrangement
Exhibit B intentionally omitted
Exhibit C Support Agreement
Exhibit D Voting and Exchange Trust Agreement
Exhibit E Form of Amended and Restated Registration Rights
Agreement
Exhibit F Summary of Tax Opinion of Ernst & Young LLP (HWC,
Sooner, OSI)
Exhibit G Summary of Tax Opinion of Ernst & Young LLP (PTI)
Exhibit H Form of Omnibus Consent, Waiver and Agreement of
Shareholders of HWC
Exhibit I Form of Omnibus Consent, Waiver and Agreement of
Stockholders of Sooner
Exhibit J Form of Omnibus Voting, Waiver and Investment Agreement of
U.S. Shareholders of PTI
Exhibit K Form of Omnibus Voting, Waiver and Investment Agreement of
Certain Canadian Shareholders of PTI
Exhibit L Form of Omnibus Consent, Waiver and Agreement of
Stockholders of OSI
Schedule 11.11 Agreements to be Terminated
Schedule 11.14 Indebtedness and Preferred Stock to be Retired
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COMBINATION AGREEMENT
This Combination Agreement, dated as of July 31, 2000 (the "Combination
Agreement"), by and among Oil States International, Inc., a Delaware corporation
("OSI"), HWC Energy Services, Inc., a Texas corporation ("HWC"), Merger Sub-HWC,
Inc., a Texas corporation, Sooner Inc., a Delaware corporation ("Sooner"),
Merger Sub-Sooner, Inc., a Delaware corporation, and PTI Group Inc., an Alberta
corporation ("PTI").
WITNESSETH:
WHEREAS, the parties to this Combination Agreement desire to effect a
combination of the businesses conducted by OSI, HWC, Sooner and PTI;
WHEREAS, pursuant to such business combination the outstanding shares
of HWC Common Stock shall be converted into shares of OSI Common Stock (other
than the shares of HWC Common Stock held by the HWC Non-Accredited Holders,
which shall be purchased by OSI in accordance with Section 2.1 hereof); the
outstanding shares of HWC Preferred Stock shall be converted into shares of OSI
Common Stock (other than the shares of HWC Preferred Stock held by the HWC
Non-Accredited Holders, which shall be purchased by OSI in accordance with
Section 2.1 hereof); the outstanding shares of Sooner Common Stock shall be
converted into shares of OSI Common Stock (other than the shares of Sooner
Common Stock held by the Sooner Non-Accredited Holders, which shall be purchased
by OSI in accordance with Section 3.1 hereof); and the outstanding PTI Common
Shares shall be exchanged for PTI Exchangeable Shares, other than (a) the PTI
Common Shares held by holders in the United States, which shall be exchanged for
shares of OSI Common Stock (other than the PTI Common Shares held by the PTI
Non-Accredited Holders, which shall be purchased by OSI in accordance with
Section 2.1 of the PTI Plan of Arrangement), and (b) the PTI Common Shares held
by the Dissenting Shareholders; and
WHEREAS, it is contemplated that OSI will effect a reverse three for
one split of the OSI Common Stock prior to the Effective Time, in which case the
exchange ratios set forth herein shall be adjusted according to the provisions
hereof;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
The terms set forth below in this Article I shall have the meanings
ascribed to them below or in the part of this Combination Agreement referred to
below:
"ABCA" shall mean the Business Corporations Act (Alberta), as amended.
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"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the general rules and regulations under the Exchange Act, as in effect on the
date of this Combination Agreement.
"Alberta Court" shall mean the Court of Queen's Bench of Alberta.
"Associate" shall have the meaning ascribed to such term in Rule 12b-2
of the general rules and regulations under the Exchange Act, as in effect on the
date of this Combination Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday or
any other day when banks are not open for business in either or both of Houston,
Texas and Edmonton, Alberta.
"Closing" shall have the meaning set forth in Section 5.1.
"Closing Date" shall have the meaning set forth in Section 5.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Combination Agreement" shall have the meaning specified in the opening
paragraph hereof.
"Commission" shall mean the Securities and Exchange Commission.
"DGCL" shall mean the General Corporation Law of the State of Delaware,
as amended.
"Dissenters" or "Dissenting Stockholders" shall have the meaning set
forth in Section 4.3 hereof.
"Effective Time" shall mean (a) when used in the context of the HWC
Merger, the time and date of the issuance of a certificate of merger by the
Texas Secretary of State with respect to the HWC Merger or such later date as is
specified in such certificate of merger, (b) when used in the context of the
Sooner Merger, the filing of a certificate of merger with the Delaware Secretary
of State with respect to the Sooner Merger or such later date as is specified in
such certificate of merger, (c) when used in the context of the PTI Arrangement,
the "Effective Time" as defined in the PTI Plan of Arrangement and (d) when used
in the context of the Mergers collectively, the latest time and date of the
foregoing times and dates specified in clauses (a), (b) and (c).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Final Order" shall mean the final order of the Alberta Court approving
the PTI Arrangement, as such order may be amended by the Court at any time and
from time to time prior to the Effective Time.
"Governmental Authorities" shall mean the country, state, province,
county, city and political subdivisions in which any property of OSI, HWC,
Sooner or PTI, respectively, is located or which exercises jurisdiction over any
such property or entity, and any agency, department, commission, board, bureau
or instrumentality of any of them which exercises jurisdiction over any such
property or entity.
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"Holders" shall have the meaning set forth in the Registration Rights
Agreement.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"HWC Common Stock" shall mean the common stock, par value $.01 per
share, of HWC.
"HWC Disclosure Schedule" shall have the meaning set forth in Article
VII.
"HWC Merger" shall mean the merger of Merger Sub-HWC into HWC, as
contemplated by Article III hereof.
"HWC Non-Accredited Holders" shall mean Don Cobb, the Chad Parkhill
Trust and the Shelly Parkhill Trust and any other holder of shares of HWC Common
Stock or HWC Preferred Stock who indicates that such holder is a "non-accredited
investor" in the Omnibus Consent, Waiver and Agreement of Shareholders of HWC
executed by such holder, the form of which is attached hereto as Exhibit H, each
of which is a holder of shares of HWC Common Stock or HWC Preferred Stock as of
the date of this Combination Agreement.
"HWC Option" shall have the meaning set forth in Section 2.10 hereof.
"HWC Option Plan" shall mean the HWC Energy Services, Inc. 1997 Stock
Option Plan.
"HWC Preferred Stock" shall mean the preferred stock, par value $.01
per share, of HWC.
"HWC Surviving Corporation" shall have the meaning set forth in Section
2.2 hereof.
"Interim Order" shall have the meaning set forth in Section 4.1 hereof.
"Merger Entities" shall mean HWC, Sooner and New PTI.
"Merger Sub-HWC" shall mean Merger Sub-HWC, Inc., a Texas corporation
and wholly-owned subsidiary of OSI.
"Merger Sub-HWC Common Stock" shall mean the common stock, par value
$.01 per share, of Merger Sub-HWC.
"Merger Sub-Sooner" shall mean Merger Sub-Sooner, Inc., a Delaware
corporation and wholly-owned subsidiary of OSI.
"Merger Sub-Sooner Common Stock" shall mean the common stock, par value
$.01 per share, of Merger Sub-Sooner.
"Merger Subs" shall mean Merger Sub-HWC, Merger Sub-Sooner and PTI
Amalco.
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"Mergers" shall mean the HWC Merger, the Sooner Merger and the PTI
Arrangement.
"New PTI" shall mean PTI Group, Inc., a corporation amalgamated under
the ABCA pursuant to the PTI Amalgamation.
"OSI Common Stock" shall mean the Class A common stock of OSI, par
value $.01 per share (the name of which will be changed by amendment to "Common
Stock").
"OSI Disclosure Schedule" shall have the meaning set forth in Article
X.
"OSI Initial Public Offering" shall mean the initial public offering of
the OSI Common Stock contemplated by the OSI Registration Statement.
"OSI Material Adverse Effect" shall mean a material adverse effect on
the combined business, operations, prospects, properties (including intangible
properties), assets, operating results or condition (financial or otherwise),
liabilities or reserves of OSI, HWC, Sooner, PTI and their subsidiaries, taken
as a whole; provided, however, that a general decline in the business or
prospects of the oilfield services industry as a whole shall not be deemed to be
an OSI Material Adverse Effect.
"OSI Preferred Stock" shall mean the preferred stock of OSI, par value
$.0001 per share.
"OSI Registration Statement" shall mean the Registration Statement on
Form S-1 relating to the OSI Common Stock to be filed with the Commission by OSI
in accordance with Section 11.9.
"OSI ULC" shall have the meaning set forth in Section 4.6 hereof.
"Piggyback Registration" shall have the meaning set forth in the
Registration Rights Agreement.
"Preliminary OSI Registration Statement" shall mean the draft
Registration Statement of OSI dated August 2, 2000, together with the
Confidential Information Memorandum of even date therewith.
"Proxy Statement" shall have the meaning set forth in Section 4.5
hereof.
"PTI Amalco" shall have the meaning set forth in Section 4.6 hereof.
"PTI Amalgamation" shall mean the amalgamation of PTI and PTI Amalco
provided for in Section 2.1(f) of the PTI Plan of Arrangement.
"PTI Arrangement" shall have the meaning set forth in Section 4.1
hereof.
"PTI Articles of Arrangement" shall mean the articles of arrangement
filed with the Registrar under the ABCA giving effect to the PTI Arrangement.
"PTI Common Shares" shall mean the common shares in the capital of PTI.
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"PTI Disclosure Schedule" shall have the meaning set forth in Article
VIII.
"PTI Exchangeable Shares" shall have the meaning set forth in the PTI
Plan of Arrangement.
"PTI Holdco" shall have the meaning set forth in Section 4.6 hereof.
"PTI Holdco Sub" shall have the meaning set forth in Section 4.6
hereof.
"PTI Option" shall have the meaning set forth in Section 4.4 hereof.
"PTI Plan of Arrangement" shall have the meaning set forth in Section
4.1 hereof.
"PTI Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
"PTI Shareholders Meeting" shall have the meaning set forth in Section
4.5 hereof.
"Registrable Securities" shall have the meaning set forth in the
Registration Rights Agreement.
"Registration Rights Agreement" shall have the meaning set forth in
Article X hereof.
"Registration Rights Holders" shall mean those holders of OSI Common
Stock, HWC Common Stock and Sooner Common Stock who, as of the date hereof, have
registration rights with respect to such shares owned by them.
"Registration Rights Representatives" shall mean Douglas E. Swanson and
Cindy B. Taylor, each of whom has been granted a power of attorney by certain or
all of the Registration Rights Holders to execute the Registration Rights
Agreement on behalf of such Registration Rights Holders.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Sooner Common Stock" shall mean the common stock, par value $.01 per
share, of Sooner.
"Sooner Disclosure Schedule" shall have the meaning set forth in
Article VI.
"Sooner Merger" shall mean the merger of Merger Sub-Sooner into Sooner,
as contemplated by Article III hereof.
"Sooner Non-Accredited Holders" shall mean Joseph C. Ottaviani and any
other holder of shares of Sooner Common Stock who indicates that such holder is
a "non-accredited investor" in the Omnibus Consent, Waiver and Agreement of
Stockholders of Sooner executed by such holder, the form of which is attached
hereto as Exhibit I, each of which is a holder of shares of Sooner Common Stock
as of the date of this Combination Agreement.
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"Sooner Option" shall have the meaning set forth in Section 3.9 hereof.
"Sooner Option Plan" shall mean the Sooner Inc. 1998 Stock Option Plan.
"Sooner Warrants" shall have the meaning set forth in Section 3.10
hereof.
"Special Committee" shall mean a committee composed of one
representative from the Boards of Directors of each of OSI, HWC, Sooner and PTI.
The initial representatives designated by the Boards of Directors of OSI, HWC,
Sooner and PTI, are Douglas E. Swanson, Gary Rosenthal, Andrew L. Waite and
Robert J. MacLean, respectively. If a vacancy occurs on the Special Committee,
the board of directors of the company with respect to which such vacancy relates
shall have the right to appoint a replacement.
"subsidiary" shall mean, when used with reference to any entity, any
corporation or other entity a majority of the outstanding voting securities of
which are owned directly or indirectly by such entity.
"TBCA" shall mean the Business Corporation Act of the State of Texas,
as amended.
ARTICLE II
THE HWC MERGER
SECTION 2.1 PURCHASE OF HWC COMMON STOCK AND HWC PREFERRED STOCK BY
OSI.
(a) Immediately prior to the Effective Time, OSI shall purchase
from the HWC Non-Accredited Holders each share of HWC Common Stock held
by such holders for an aggregate purchase price equal to (x) the
initial public offering price of the OSI Common Stock in the OSI
Initial Public Offering, less underwriters' discounts and commissions
applicable to the OSI Initial Public Offering, multiplied by (y) that
number of shares of OSI Common Stock into which such shares of HWC
Common Stock would be convertible in accordance with the provisions of
Section 2.8 hereof.
(b) Immediately prior to the Effective Time, OSI shall purchase
from the HWC Non-Accredited Holders each share of HWC Preferred Stock
held by such holders for an aggregate purchase price equal to (x) the
per share initial public offering price of the OSI Common Stock in the
OSI Initial Public Offering, less underwriters' discounts and
commissions applicable to the OSI Initial Public Offering, multiplied
by (y) that number of shares of OSI Common Stock into which such shares
of HWC Preferred Stock would have been convertible in accordance with
the provisions of Section 2.9 hereof, plus the amount of accrued but
unpaid dividends on such HWC Preferred Stock subsequent to June 30,
2000 (with dividends deemed to have accrued on a per diem basis).
SECTION 2.2 MERGER OF MERGER SUB-HWC INTO HWC. At the Effective Time,
Merger Sub-HWC shall merge with and into HWC and the separate existence of
Merger Sub-HWC shall cease. HWC shall be the surviving corporation in the HWC
Merger (hereinafter sometimes referred
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to as the "HWC Surviving Corporation") and its separate corporate existence,
with all its purposes, objects, rights, privileges, powers and franchises, shall
continue unaffected and unimpaired by the HWC Merger.
SECTION 2.3 EFFECT OF THE MERGER. The HWC Merger shall have the effects
provided for in the TBCA. The HWC Surviving Corporation shall be obligated for
the payment of the fair value for the shares held by any shareholder of HWC who
complies with the requirements of Article 5.12 of the TBCA.
SECTION 2.4 ARTICLES OF INCORPORATION. From the Effective Time until
duly amended, the Articles of Incorporation of the HWC Surviving Corporation
shall be identical to the Articles of Incorporation, as amended or restated, of
HWC immediately prior to the Effective Time.
SECTION 2.5 BYLAWS. From the Effective Time until duly amended, the
Bylaws of the HWC Surviving Corporation shall be identical to the Bylaws of HWC
immediately prior to the Effective Time.
SECTION 2.6 OFFICERS AND DIRECTORS. The duly elected officers and
directors of HWC who hold office immediately prior to the Effective Time shall
be the officers and directors of the HWC Surviving Corporation and shall
thereafter continue to hold such positions until their successors have been duly
elected.
SECTION 2.7 MERGER SUB-HWC COMMON STOCK. Each share of Merger Sub-HWC
Common Stock outstanding immediately prior to the Effective Time shall, by
virtue of the HWC Merger and without any further action by the holder thereof,
be converted into and become one share of the common stock, par value $.01 per
share, of the HWC Surviving Corporation ("HWC Surviving Corporation Common
Stock"). Each certificate which immediately prior to the Effective Time
represented shares of Merger Sub-HWC Common Stock shall be deemed for all
purposes to represent the number of shares of HWC Surviving Corporation Common
Stock into which the shares of Merger Sub-HWC Common Stock represented by such
certificate shall have been converted pursuant to this Section 2.7.
SECTION 2.8 HWC COMMON STOCK.
(a) Each share of HWC Common Stock outstanding immediately prior
to the Effective Time, other than the shares of HWC Common Stock
purchased by OSI pursuant to Section 2.1 hereof, shall by virtue of the
HWC Merger and without any further action by the holder thereof cease
to be outstanding and shall be cancelled and retired and cease to exist
and, subject to the right of stockholders to dissent from the HWC
Merger pursuant to the TBCA, shall be converted into 520.0575 shares of
OSI Common Stock, and each certificate which immediately prior to the
Effective Time represented outstanding shares of HWC Common Stock shall
at and after the Effective Time be deemed for all purposes to represent
that number of shares of OSI Common Stock into which such shares of HWC
Common Stock are convertible pursuant to this Section 2.8(a).
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(b) All shares of HWC Common Stock which immediately prior to the
Effective Time are held in the treasury of HWC or owned by OSI or by
any subsidiaries of HWC shall at the Effective Time be cancelled and
retired and cease to exist, without the payment of any consideration
therefor or any conversion thereof into OSI Common Stock.
(c) The number of shares of OSI Common Stock into which a share
of HWC Common Stock is convertible in the HWC Merger shall be adjusted
to reflect fully the effect of any stock split, reverse split, stock
dividend, merger, reorganization, recapitalization or other like
changes with respect to OSI Common Stock or HWC Common Stock occurring
after the date hereof and prior to the Effective Time.
SECTION 2.9 HWC PREFERRED STOCK.
(a) Each share of HWC Preferred Stock issued and outstanding
immediately prior to the Effective Time, other than the shares of HWC
Preferred Stock purchased by OSI pursuant to Section 2.1 hereof, shall
by virtue of the HWC Merger and without any further action by the
holder thereof cease to be outstanding and shall be cancelled and
retired and cease to exist and, subject to the right of stockholders to
dissent from the HWC Merger pursuant to the TBCA, shall be converted
into the number of shares of OSI Common Stock to which the holder of
such share would have been entitled had such share of HWC Preferred
Stock, including accrued but unpaid dividends through and including
June 30, 2000, been converted to HWC Common Stock immediately prior to
the Effective Time, plus the right to receive cash in the amount of
accrued but unpaid dividends and dividends deemed to have accrued for
any partial quarterly period calculated on a per diem basis, in each
case subsequent to June 30, 2000.
(b) All shares of HWC Preferred Stock which immediately prior to
the Effective Time are held in the treasury of HWC or owned by any
subsidiaries of HWC shall at the Effective Time be cancelled and
retired and cease to exist, without the payment of any consideration
therefor or any conversion thereof into OSI Preferred Stock.
SECTION 2.10 HWC STOCK OPTIONS. Each option outstanding under the HWC
Option Plan immediately prior to the Effective Time (each, an "HWC Option")
shall be assumed by OSI as of the Effective Time and automatically converted
into an option to purchase the number of shares of OSI Common Stock equal to the
exchange ratio reflected in Section 2.8, multiplied by the number of shares of
HWC Common Stock that could have been obtained immediately prior to the
Effective Time upon the exercise of each such option as if such options were
fully vested at such time, at an exercise price per share equal to the aggregate
exercise price for the shares of HWC Common Stock purchasable pursuant to such
HWC Option immediately prior to its conversion divided by the aggregate number
of shares of OSI Common Stock purchasable pursuant to such HWC Option
immediately after its conversion.
SECTION 2.11 OSI COMMON STOCK. All shares of OSI Common Stock issued
and outstanding immediately prior to the Effective Time shall be unaffected by
the HWC Merger.
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SECTION 2.12 ISSUANCE OF NEW CERTIFICATES. Each holder of a certificate
or certificates representing shares of HWC Common Stock or HWC Preferred Stock
immediately prior to the Effective Time may thereafter surrender such
certificate or certificates and shall be entitled, upon such surrender, to
receive in exchange therefor a certificate or certificates representing the
number of shares of OSI Common Stock into which such shares of HWC Common Stock
or HWC Preferred Stock shall have been converted in accordance with Sections 2.8
or 2.9 hereof. Until so surrendered, such certificate or certificates shall be
deemed to evidence the ownership of such shares of OSI Common Stock. If any such
certificate for OSI Common Stock is to be issued in a name other than that in
which the surrendered certificate is registered, it shall be a condition of such
exchange that the certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
exchange shall have paid any transfer and other taxes required by reason of such
issuance of certificates of OSI Common Stock in a name other than that of the
registered holder of the certificate surrendered, or shall have established to
the satisfaction of OSI and its transfer agent that such tax has been paid or is
not applicable.
SECTION 2.13 HWC STOCK TRANSFER BOOKS. As of the Effective Time, the
stock transfer books of HWC shall be deemed closed, and no transfer of shares of
HWC Common Stock or HWC Preferred Stock that were outstanding immediately prior
to the Effective Time shall thereafter be made or consummated.
SECTION 2.14 CERTIFICATE LEGENDS. The certificates evidencing the OSI
Common Stock delivered pursuant to Section 2.12 of this Combination Agreement
shall bear a legend substantially in the form set forth below and containing
such other information as OSI may deem necessary or appropriate:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR
PURSUANT TO AN EXEMPTION THEREFROM WHICH, IN THE OPINION OF COUNSEL FOR
THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO
COUNSEL FOR THIS CORPORATION, IS AVAILABLE.
SECTION 2.15 FRACTIONAL SHARES. No fractional shares of OSI Common
Stock or scrip shall be issued as a result of the HWC Merger. Instead of any
fractional share of OSI Common Stock which would otherwise be issuable as a
result of the HWC Merger, OSI shall pay a cash adjustment in respect of such
fractional interest in a per share amount equal to the initial public offering
price of the OSI Common Stock.
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ARTICLE III
THE SOONER MERGER
SECTION 3.1 PURCHASE OF SOONER COMMON STOCK BY OSI. Immediately prior
to the Effective Time, OSI shall purchase from the Sooner Non-Accredited Holders
each share of Sooner Common Stock held by such holders for a purchase price
equal to (x) the per share initial public offering price of the OSI Common Stock
in the OSI Initial Public Offering, less underwriters' discounts and commissions
applicable to the OSI Initial Public Offering, multiplied by (y) that number of
shares of OSI Common Stock into which such shares of Sooner Common Stock would
be convertible in accordance with the provisions of Section 3.8 hereof.
SECTION 3.2 MERGER OF MERGER SUB-SOONER INTO SOONER. At the Effective
Time, Merger Sub-Sooner shall merge with and into Sooner and the separate
existence of Merger Sub-Sooner shall cease. Sooner shall be the surviving
corporation in the Sooner Merger (hereinafter sometimes referred to as the
"Sooner Surviving Corporation") and its separate corporate existence, with all
its purposes, objects, rights, privileges, powers and franchises, shall continue
unaffected and unimpaired by the Sooner Merger.
SECTION 3.3 EFFECT OF THE SOONER MERGER. The Sooner Merger shall have
the effects provided for in the DGCL. The Sooner Surviving Corporation shall be
obligated for the payment of the fair value for the shares held by any
shareholder of Sooner or Merger Sub-Sooner who complies with the requirements of
Section 262 of the DGCL.
SECTION 3.4 CERTIFICATE OF INCORPORATION. From the Effective Time until
duly amended, the Certificate of Incorporation of the Sooner Surviving
Corporation shall be identical to the Certificate of Incorporation, as amended
or restated, of Sooner immediately prior to the Effective Time.
SECTION 3.5 BYLAWS. From the Effective Time until duly amended, the
Bylaws of the Sooner Surviving Corporation shall be identical to the Bylaws of
Sooner immediately prior to the Effective Time.
SECTION 3.6 OFFICERS AND DIRECTORS. The duly elected officers and
directors of Sooner who hold office immediately prior to the Effective Time,
shall be the officers and directors of the Sooner Surviving Corporation and
shall thereafter continue to hold such positions until their successors have
been duly elected.
SECTION 3.7 MERGER SUB-SOONER COMMON STOCK. Each share of Merger
Sub-Sooner Common Stock outstanding immediately prior to the Effective Time
shall, by virtue of the Sooner Merger and without any further action by the
holder thereof, be converted into and become one share of the common stock, par
value $.01 per share, of the Sooner Surviving Corporation ("Sooner Surviving
Corporation Common Stock"). Each certificate which immediately prior to the
Effective Time represented shares of Merger Sub-Sooner Common Stock shall be
deemed for all purposes to represent the number of shares of Sooner Surviving
Corporation Common Stock into which the
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shares of Merger Sub-Sooner Common Stock represented by such certificate shall
have been converted pursuant to this Section 3.7.
SECTION 3.8 SOONER COMMON STOCK.
(a) Each share of Sooner Common Stock outstanding immediately
prior to the Effective Time, other than the shares of Sooner Common
Stock purchased by OSI pursuant to Section 3.1 hereof, shall by virtue
of the Sooner Merger and without any further action by the holder
thereof cease to be outstanding and shall be cancelled and retired and
cease to exist and, subject to the right of appraisal of stockholders
pursuant to the DGCL, shall be converted into 529.4871 shares of OSI
Common Stock, and each certificate which immediately prior to the
Effective Time represented outstanding shares of Sooner Common Stock
shall at and after the Effective Time be deemed for all purposes to
represent that number of shares of OSI Common Stock.
(b) All shares of Sooner Common Stock which immediately prior to
the Effective Time are held in the treasury of Sooner or owned by OSI
or by any subsidiaries of Sooner shall at the Effective Time be
cancelled and retired and cease to exist, without the payment of any
consideration therefor or any conversion thereof into OSI Common Stock.
(c) The number of shares of OSI Common Stock into which a share
of Sooner Common Stock is convertible in the Sooner Merger shall be
adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend, merger, reorganization, recapitalization or other like
changes with respect to OSI Common Stock or Sooner Common Stock
occurring after the date hereof and prior to the Effective Time.
SECTION 3.9 SOONER STOCK OPTIONS. Each option outstanding under the
Sooner Option Plan immediately prior to the Effective Time (each, a "Sooner
Option") shall be assumed by OSI as of the Effective Time and automatically
converted into an option to purchase the number of shares of OSI Common Stock
equal to the exchange ratio reflected in Section 3.8, multiplied by the number
of shares of Sooner Common Stock that could have been obtained immediately prior
to the Effective Time upon the exercise of each such option as if such options
were fully vested at such time, at an exercise price per share equal to the
aggregate exercise price for the shares of Sooner Common Stock purchasable
pursuant to such Sooner Option immediately prior to its conversion divided by
the aggregate number of shares of OSI Common Stock purchasable pursuant to such
Sooner Option immediately after its conversion.
SECTION 3.10 SOONER WARRANTS. Each warrant to purchase shares of Sooner
Common Stock ("Sooner Warrants") outstanding immediately prior to the Effective
Time shall by virtue of the Sooner Merger and without any further action by the
holder thereof cease to be outstanding and shall be cancelled and retired and
cease to exist and shall be converted into 379.4871 shares of OSI Common Stock,
and the holders of the Sooner Warrants shall be entitled to receive certificates
representing the number of shares of OSI Common Stock into which the Sooner
Warrants held by such holders shall have been converted in accordance with this
Section 3.10.
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SECTION 3.11 OSI COMMON STOCK. All shares of OSI Common Stock issued
and outstanding immediately prior to the Effective Time shall be unaffected by
the Sooner Merger.
SECTION 3.12 ISSUANCE OF NEW CERTIFICATES. Each holder of a certificate
or certificates representing shares of Sooner Common Stock immediately prior to
the Effective Time may thereafter surrender such certificate or certificates and
shall be entitled, upon such surrender, to receive in exchange therefor a
certificate or certificates representing the number of shares of OSI Common
Stock into which such shares of Sooner Common Stock shall have been converted in
accordance with Section 3.8 hereof. Until so surrendered, such certificate or
certificates shall be deemed to evidence the ownership of such shares of OSI
Common Stock. If any such certificate for OSI Common Stock is to be issued in
the name other than that in which the surrendered certificate is registered, it
shall be a condition of such exchange that the certificate so surrendered shall
be properly endorsed or otherwise in proper form for transfer and that the
person requesting such exchange shall have paid any transfer and other taxes
required by reason of such issuance of certificates of OSI Common Stock in a
name other than that of the registered holder of the certificate surrendered, or
shall have established to the satisfaction of OSI and its transfer agent that
such tax has been paid or is not applicable.
SECTION 3.13 SOONER STOCK TRANSFER BOOKS. As of the Effective Time, the
stock transfer books of Sooner shall be deemed closed, and no transfer of shares
of Sooner Common Stock that were outstanding immediately prior to the Effective
Time shall thereafter be made or consummated.
SECTION 3.14 CERTIFICATE LEGENDS. The certificates evidencing the OSI
Common Stock delivered pursuant to Section 3.12 of this Combination Agreement
will bear a legend substantially in the form set forth below and containing such
other information as OSI may deem necessary or appropriate:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR
PURSUANT TO AN EXEMPTION THEREFROM WHICH, IN THE OPINION OF COUNSEL FOR
THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO
COUNSEL FOR THIS CORPORATION, IS AVAILABLE.
SECTION 3.15 FRACTIONAL SHARES. No fractional shares of OSI Common
Stock or scrip shall be issued as a result of the Sooner Merger. Instead of any
fractional share of OSI Common Stock which would otherwise be issuable as a
result of the Sooner Merger, OSI shall pay a cash adjustment in respect of such
fractional interest in a per share amount equal to the initial public offering
price of the OSI Common Stock.
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ARTICLE IV
THE PTI ARRANGEMENT
SECTION 4.1 PLAN OF ARRANGEMENT.
As promptly as practicable after the date hereof, PTI, on a joint basis
with PTI Holdco and PTI Amalco, will apply to the Alberta Court pursuant to
Section 186 of ABCA for an interim order in form and substance reasonably
satisfactory to OSI (the "Interim Order") providing for, among other things, the
calling and holding of the PTI Shareholders Meeting for the purpose of
considering and, if deemed advisable, approving the arrangement (the "PTI
Arrangement") under Section 186 of the ABCA and pursuant to this Combination
Agreement and the PTI Plan of Arrangement substantially in the form of Exhibit A
attached hereto (the "PTI Plan of Arrangement"). If the PTI securityholders
approve the PTI Arrangement, PTI, on a joint basis with PTI Holdco and PTI
Amalco, will take the necessary steps to submit the PTI Arrangement to the
Alberta Court and apply for a final order of the Alberta Court approving the PTI
Arrangement in such fashion as the Alberta Court may direct (the "Final Order").
On the Closing Date, the PTI Articles of Arrangement shall be filed with the
Registrar under the ABCA. At the Effective Time, the PTI Arrangement and the
other transactions set out in clauses (a) through (s), inclusive, of Section 2.1
of the PTI Plan of Arrangement shall occur and shall be deemed to occur in the
order set out therein without any further act or formality.
SECTION 4.2 ADJUSTMENTS TO EXCHANGE RATIO.
The PTI Exchange Ratio (as defined in the PTI Plan of Arrangement)
shall be adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities convertible
into OSI Common Stock or PTI Common Shares), merger, reorganization,
recapitalization or other like change with respect to OSI Common Stock or PTI
Common Shares occurring after the date hereof and prior to the Effective Time.
SECTION 4.3 DISSENTING SHARES.
Holders of PTI Common Shares may exercise rights of dissent with
respect to such shares in connection with the PTI Arrangement pursuant to and in
the manner set forth in Section 184 of the ABCA and Section 3.1 of the PTI Plan
of Arrangement to the extent such holders have not previously waived their
rights of dissent (such holders referred to as "Dissenters" or as "Dissenting
Shareholders" when referring exclusively to holders of PTI Common Shares). PTI
shall give OSI (i) prompt notice of any written objection to the resolution
approving the PTI Arrangement and any written demands of a right of dissent,
withdrawals of such objections or demands, and any other instruments served
pursuant to the ABCA and received by PTI in respect of the exercise or purported
exercise of rights of dissent and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such rights. Without the prior
written consent of OSI, except as required by applicable law, PTI shall not make
any payment with respect to any such rights or offer to settle or settle any
such rights.
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SECTION 4.4 OTHER EFFECTS OF THE ARRANGEMENT.
At the Effective Time: (a) each PTI Common Share and each option to
acquire PTI Common Shares ("PTI Option") outstanding immediately prior to the
Effective Time will be exchanged as provided in the PTI Plan of Arrangement; and
(b) the PTI Arrangement will, from and after the Effective Time, have all of the
effects provided by applicable law, including the ABCA.
SECTION 4.5 PROXY STATEMENT.
(a) As soon as practicable following the issuance of the Interim
Order, PTI shall mail to the holders of PTI Common Shares and PTI
Options a management information circular of PTI (the "Proxy
Statement") with respect to the meeting of holders of PTI Common
Shares and PTI Options relating to the PTI Arrangement and the
approval of certain matters in connection therewith (the "PTI
Shareholders Meeting").
(b) Each party shall promptly furnish to the other parties all
information concerning such party and its securityholders as may
be reasonably required in connection with any action contemplated
by this Section 4.5 and shall otherwise cooperate in the
preparation of the Proxy Statement. The Proxy Statement shall
comply in all material respects with all applicable requirements
of law.
(c) OSI and PTI shall take any action required to be taken under any
applicable provincial securities laws in connection with the
issuance of the PTI Exchangeable Shares and the OSI Common Stock
and with the PTI Arrangement and shall use their reasonable best
efforts to cause the issuance of the PTI Exchangeable Shares to
comply with the requirements of Regulation S promulgated under
the Securities Act and otherwise to be effected in a manner
exempt from registration under the Securities Act and from the
prospectus requirements of applicable Canadian securities laws;
provided, however, that with respect to Canadian provincial
qualifications, neither OSI nor PTI shall be required to register
or qualify as a foreign corporation or reporting issuer where any
such entity is not now so registered or qualified or consent to
service of legal process in any jurisdiction, except as to
matters and transactions arising solely from the issuance of the
OSI Common Stock or the issuance of the PTI Exchangeable Shares.
SECTION 4.6 OSI ULC, PTI HOLDCO, PTI AMALCO, PTI HOLDCO SUB.
(a) On or prior to the Closing Date, OSI shall incorporate or cause
to be incorporated a new unlimited liability corporation wholly
owned by OSI under the Companies Act Nova Scotia ("OSI ULC").
(b) On or prior to the Closing Date, OSI shall incorporate or cause
to be incorporated a new corporation wholly owned by OSI ULC
under the ABCA ("PTI Holdco") and shall provide in its articles
of incorporation for a class of common voting shares, unlimited
in number.
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(c) On or prior to the Closing Date, OSI shall incorporate or cause
to be incorporated a new corporation wholly owned by PTI Holdco
under the ABCA ("PTI Amalco") and shall provide for the following
in its articles of incorporation:
(i) a class of common voting shares unlimited in number and
designated as Class A;
(ii) a class of common voting shares unlimited in number and
designated as Class B;
(iii) a class of common voting shares unlimited in number and
designated as Class C; and
(iv) a class of common voting shares unlimited in number and
designated as Class D,
each class having the same rights, privileges and restrictions
and conditions attached thereto.
(d) On or prior to the Closing Date, OSI shall incorporate or cause
to be incorporated a new corporation wholly owned by PTI Holdco
under the ABCA ("PTI Holdco Sub").
(e) OSI shall cause OSI ULC, PTI Holdco, PTI Amalco and PTI Holdco
Sub to complete the transactions contemplated in this Article IV
and in the PTI Plan of Arrangement.
SECTION 4.7 SUPPORT AGREEMENT. At or prior to the Effective Time OSI
and PTI Holdco will enter into a Support Agreement in the form and containing
the terms and conditions set forth in Exhibit C attached hereto.
SECTION 4.8 VOTING AND EXCHANGE TRUST AGREEMENT. At or prior to the
Effective Time OSI and PTI Holdco will enter into a Voting and Exchange Trust
Agreement in the form and containing the terms and conditions set forth in
Exhibit D attached hereto.
SECTION 4.9 CERTIFICATE LEGENDS. The certificates evidencing the PTI
Exchangeable Shares delivered pursuant to the PTI Arrangement shall bear a
legend, substantially in the form set forth below and containing such other
information as OSI or PTI Holdco may deem necessary or appropriate:
Legend for PTI Exchangeable Shares issued to Canadian Persons
ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
STRICTLY PROHIBITED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
PURSUANT TO REGISTRATION UNDER THE ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION. THE HOLDER OF THIS CERTIFICATE MAY NOT
ENGAGE IN ANY HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED
HEREBY EXCEPT IN COMPLIANCE WITH THE ACT.
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Legend for PTI Exchangeable Shares issued to U.S. Persons
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR
PURSUANT TO AN EXEMPTION THEREFROM, WHICH, IN THE OPINION OF COUNSEL
FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE.
ARTICLE V
CLOSING
SECTION 5.1 TIME AND PLACE. The closing of the transactions
contemplated hereby (the "Closing") shall be held at the offices of Vinson &
Elkins L.L.P., 1001 Fannin, Houston, Texas 77002 at 10:00 a.m., Houston time,
immediately following the satisfaction or waiver of the conditions contained in
Article XII or at such other place or time as the parties hereto may mutually
agree. The date of the Closing is referred to herein as the "Closing Date."
SECTION 5.2 DELIVERIES AT CLOSING. Subject to the provisions of Article
XII hereof, at the Closing there shall be delivered the opinions, certificates
and other documents required to be delivered pursuant to Article XII hereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF HWC
HWC represents and warrants to OSI, Sooner and PTI that the statements
contained in this Article VI are correct and complete as of the date of this
Combination Agreement, except as set forth in the disclosure schedule delivered
by HWC to OSI, Sooner and PTI on the date hereof (the "HWC Disclosure
Schedule").
SECTION 6.1 ORGANIZATION; QUALIFICATION. HWC is a corporation duly
organized under the TBCA and is validly existing and in good standing under the
laws of the State of Texas. HWC has all requisite corporate power and authority
to own, operate or lease its properties and to carry on its business as now
being conducted. HWC is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of its
properties owned, operated or leased, or the nature of its activities, makes
such qualifications necessary, except where the failure to be so qualified and
in good standing will not have a material adverse effect on the business,
operations, prospects, properties, assets, operating results or condition
(financial or otherwise) of HWC and its subsidiaries, taken as a whole.
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SECTION 6.2 SUBSIDIARIES. Each subsidiary of HWC is a corporation duly
organized under the jurisdiction of its incorporation and is validly existing
and in good standing under the laws of such jurisdiction. Each subsidiary of HWC
has all requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as now being conducted. Each subsidiary
of HWC is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of its properties owned,
operated or leased, or the nature of its activities, makes such qualifications
necessary, except where the failure to be so qualified and in good standing will
not have a material adverse effect on the business, operations, prospects,
properties, assets, operating results or condition (financial or otherwise) of
HWC and its subsidiaries, taken as a whole. Except as set forth in Section 6.2
of the HWC Disclosure Schedule, all of the issued and outstanding shares of
capital stock of each subsidiary of HWC are owned (directly or indirectly) by
HWC, free and clear of all liens, pledges, charges, security interests or other
encumbrances ("Lien").
SECTION 6.3 CAPITALIZATION. The authorized capital stock of HWC
consists of 100,000 shares of HWC Common Stock, of which 33,568 shares are
issued and outstanding, and 100,000 shares of HWC Preferred Stock, of which
4,862 shares are issued and outstanding. The issued and outstanding shares of
HWC Common Stock and HWC Preferred Stock are owned of record by the persons and
in the amounts set forth in Section 6.3 of the HWC Disclosure Schedule. All of
the outstanding shares of HWC Common Stock and HWC Preferred Stock and all of
the outstanding shares of the capital stock of each subsidiary of HWC are duly
authorized, validly issued, fully paid, nonassessable, and were not issued in
violation of the preemptive rights of any person. Except as set forth in Section
6.3 of the HWC Disclosure Schedule, as of the date hereof, there are no
outstanding subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights or variants, including any
right of conversion or exchange under any outstanding security, instrument or
other agreement obligating HWC or any subsidiary of HWC to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the capital
stock of HWC or any subsidiary of HWC or obligating HWC or any subsidiary of HWC
to grant, extend or enter into any such agreement or commitment.
SECTION 6.4 AUTHORITY, AUTHORIZATION AND ENFORCEABILITY. HWC has all
requisite corporate power and authority to execute and deliver this Combination
Agreement and each instrument required hereby to be executed and delivered by it
at the Closing, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by HWC of this Combination Agreement and each instrument required
hereby to be executed and delivered by it at the Closing and the performance of
its obligations hereunder and thereunder have been duly and validly authorized
by the board of directors of HWC, and no other corporate proceedings of HWC,
other than the approval of the shareholders of HWC contemplated by Section
12.1(n) hereof, are necessary to authorize the execution and delivery of this
Combination Agreement or the consummation of the transactions contemplated
hereby. This Combination Agreement and each instrument required hereby have been
duly executed and delivered by HWC and (assuming due authorization, execution
and delivery hereof and thereof by the other parties hereto and thereto)
constitute the valid and legally binding obligations of HWC, enforceable against
HWC in accordance with their terms, except that (A) such enforceability may be
subject to bankruptcy, insolvency, reorganization, moratorium or other laws,
decisions or equitable principles now or hereafter in effect relating to or
affecting the enforcement of creditors'
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rights or debtors' obligations generally, and to general equity principles, and
(B) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
SECTION 6.5 FINANCIAL STATEMENTS.
(a) The financial statements of HWC (including the related notes)
appearing in the Preliminary OSI Registration Statement have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis and fairly present the consolidated
financial position of HWC and its subsidiaries as of the respective
dates thereof and the consolidated results of operations and changes in
financial position of HWC and its subsidiaries for the periods
indicated.
(b) Except as reflected or reserved against in the financial
statements referred to in (a) above, or in the HWC Disclosure Schedule,
neither HWC nor any of its subsidiaries has any liabilities of any
nature (whether accrued, absolute, contingent or otherwise) which in
the aggregate could reasonably be expected to have an OSI Material
Adverse Effect. Since March 31, 2000, neither HWC nor any of its
subsidiaries has incurred any liabilities material to HWC and its
subsidiaries, taken as a whole, except liabilities incurred in the
ordinary course of business and consistent with past practice. Since
March 31, 2000, there has been no material adverse change in the
business, operations, prospects, properties, assets, operating results
or condition (financial or otherwise) or liabilities of HWC and its
subsidiaries, taken as a whole.
SECTION 6.6 NO VIOLATION. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all permits and orders of Governmental Authorities
required in connection with the consummation of the transactions contemplated by
this Combination Agreement, and the receipt of all approvals or consents
required to be obtained from third parties disclosed in Section 6.6 of the HWC
Disclosure Schedule, neither the execution and delivery by HWC of this
Combination Agreement or any instrument required hereby to be executed and
delivered by it at the Closing nor the performance by HWC of its obligations
hereunder or thereunder will (i) violate or breach the terms of or cause a
default under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination, cancellation or acceleration
of any obligation under, or result in the creation of any Lien upon any of the
properties or assets of HWC or any of its subsidiaries under (A) any law,
regulation or order of any Governmental Authority applicable to HWC or any of
its subsidiaries, (B) HWC's or any of its subsidiary's organizational documents,
including its articles of incorporation and bylaws, each as amended or restated,
or (C) any contract, agreement or other instrument or obligation to which HWC or
any of its subsidiaries is a party or by which it or any of its properties or
assets is bound, or (ii) with the passage of time, the giving of notice or the
taking of any action by a third party, have any of the effects set forth in
clause (i) of this Section 6.6, except in any such case for any matters
described in this Section 6.6 that would not have an OSI Material Adverse
Effect.
SECTION 6.7 ACCURACY OF INFORMATION. None of the information
included in the Preliminary OSI Registration Statement concerning the business,
operations, financial results or
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condition, assets or liabilities of HWC and its subsidiaries is false or
misleading with respect to any material fact, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein not misleading.
SECTION 6.8 FAIRNESS OPINION. HWC has received the written opinion of
Houlihan Lokey Howard & Zuken Financial Advisors, Inc. that the percentage of
shares of OSI Common Stock to be held by the stockholders of each of HWC, OSI,
PTI and Sooner as a result of the consummation of the transactions contemplated
by this Combination Agreement is fair to the stockholders of each of HWC, OSI,
PTI and Sooner from a financial point of view.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF SOONER
Sooner represents and warrants to OSI, HWC and PTI that the statements
contained in this Article VII are correct and complete as of the date of this
Combination Agreement, except as set forth in the disclosure schedule delivered
by Sooner to OSI, HWC and PTI on the date hereof (the "Sooner Disclosure
Schedule").
SECTION 7.1 ORGANIZATION; QUALIFICATION. Sooner is a corporation duly
organized under the DGCL and is validly existing and in good standing under the
laws of the State of Delaware. Sooner has all requisite corporate power and
authority to own, operate or lease its properties and to carry on its business
as now being conducted. Sooner is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
its properties owned, operated or leased, or the nature of its activities, makes
such qualifications necessary, except where the failure to be so qualified and
in good standing will not have a material adverse effect on the business,
operations, prospects, properties, assets, operating results or condition
(financial or otherwise) of Sooner and its subsidiaries, taken as a whole.
SECTION 7.2 SUBSIDIARIES. Each subsidiary of Sooner is a corporation
duly organized under the jurisdiction of its incorporation and is validly
existing and in good standing under the laws of such jurisdiction. Each
subsidiary of Sooner has all requisite corporate power and authority to own,
operate or lease its properties and to carry on its business as now being
conducted. Each subsidiary of Sooner is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of its properties owned, operated or leased, or the nature of its
activities, makes such qualifications necessary, except where the failure to be
so qualified and in good standing will not have a material adverse effect on the
business, operations, prospects, properties, assets, operating results or
condition (financial or otherwise) of Sooner and its subsidiaries, taken as a
whole. All of the issued and outstanding shares of capital stock of each
subsidiary of Sooner are owned (directly or indirectly) by Sooner, free and
clear of all Liens.
SECTION 7.3 CAPITALIZATION. The authorized capital stock of Sooner
consists of 100,000 shares of Sooner Common Stock, of which 26,178 shares are
issued and outstanding. The issued and outstanding shares of Sooner Common Stock
are owned of record by the persons and in the amounts set forth in Section 7.3
of the Sooner Disclosure Schedule. All of the outstanding shares of Sooner
Common Stock and all of the outstanding shares of the capital stock of each
subsidiary
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of Sooner are duly authorized, validly issued, fully paid, nonassessable and
were not issued in violation of the preemptive rights of any person. Except as
set forth in Section 7.3 of the Sooner Disclosure Schedule, as of the date
hereof, there are no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or variants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating Sooner or any subsidiary of Sooner to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of Sooner or any subsidiary of Sooner or obligating
Sooner or any subsidiary of Sooner to grant, extend or enter into any such
agreement or commitment.
SECTION 7.4 AUTHORITY, AUTHORIZATION AND ENFORCEABILITY. Sooner has all
requisite corporate power and authority to execute and deliver this Combination
Agreement and each instrument required hereby to be executed and delivered by it
at the Closing, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by Sooner of this Combination Agreement and each instrument required
hereby to be executed and delivered by it at the Closing and the performance of
its obligations hereunder and thereunder have been duly and validly authorized
by the board of directors of Sooner, and no other corporate proceedings of
Sooner, other than the approval of the stockholders of Sooner contemplated by
Section 12.1(o) hereof are necessary to authorize the execution and delivery of
this Combination Agreement or the consummation of the transactions contemplated
hereby. This Combination Agreement and each instrument required hereby have been
duly executed and delivered by Sooner and (assuming due authorization, execution
and delivery hereof and thereof by the other parties hereto and thereto)
constitute the valid and legally binding obligations of Sooner, enforceable
against Sooner in accordance with their terms, except that (A) such
enforceability may be subject to bankruptcy, insolvency, reorganization,
moratorium or other laws, decisions or equitable principles now or hereafter in
effect relating to or affecting the enforcement of creditors' rights or debtors'
obligations generally, and to general equity principles, and (B) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
SECTION 7.5 FINANCIAL STATEMENTS.
(a) The financial statements of Sooner (including the related
notes) and its predecessor Sooner Pipe & Supply Corporation appearing
in the Preliminary OSI Registration Statement have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis and fairly present the consolidated financial position
of Sooner and Sooner Pipe & Supply Corporation and their subsidiaries,
as applicable, as of the respective dates thereof and the consolidated
results of operations and changes in financial position of Sooner and
Sooner Pipe & Supply Corporation and their subsidiaries, as applicable,
over the periods indicated.
(b) Except as reflected or reserved against in the financial
statements referred to in (a) above, or in the Sooner Disclosure
Schedule, neither Sooner nor any of its subsidiaries have any
liabilities of any nature (whether accrued, absolute, contingent or
otherwise) which in the aggregate could reasonably be expected to have
an OSI Material Adverse Effect. Since March 31, 2000, neither Sooner
nor any of its subsidiaries has incurred any liabilities
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material to Sooner except liabilities incurred in the ordinary course
of business and consistent with past practice. Since March 31, 2000,
there has been no material adverse change in the business, operations,
prospects, properties, assets, operating results or condition
(financial or otherwise) or liabilities of Sooner and its
subsidiaries, taken as a whole.
SECTION 7.6 NO VIOLATION. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all permits and orders of Governmental Authorities
required in connection with the consummation of the transactions contemplated by
this Combination Agreement, and the receipt of all approvals or consents
required to be obtained from third parties disclosed in Section 7.6 of the
Sooner Disclosure Schedule, neither the execution and delivery by Sooner of this
Combination Agreement or any instrument required hereby to be executed and
delivered by it at the Closing nor the performance by Sooner of its obligations
hereunder or thereunder will (i) violate or breach the terms of or cause a
default under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination, cancellation or acceleration
of any obligation under, or result in the creation of any Lien upon any of the
properties or assets of Sooner or any of its subsidiaries under (A) any law,
regulation or order of any Governmental Authority applicable to Sooner or any of
its subsidiaries, (B) Sooner's or any of its subsidiary's organizational
documents, including its articles of incorporation and bylaws, each as amended
or restated, or (C) any contract, agreement or other instrument or obligation to
which Sooner or any of its subsidiaries is a party or by which it or any of its
properties or assets is bound, or (ii) with the passage of time, the giving of
notice or the taking of any action by a third party, have any of the effects set
forth in clause (i) of this Section 7.6, except in any such case for any matters
described in this Section 7.6 that would not have an OSI Material Adverse
Effect.
SECTION 7.7 ACCURACY OF INFORMATION. None of the information included
in the Preliminary OSI Registration Statement concerning the business,
operations, financial results or condition, assets or liabilities of Sooner and
its subsidiaries is false or misleading with respect to any material fact,
contains any untrue statement of any material fact or omits to state a material
fact necessary in order to make the statements therein not misleading.
SECTION 7.8 FAIRNESS OPINION. Sooner has received the written opinion
of Houlihan Lokey Howard & Zuken Financial Advisors, Inc. that the percentage of
shares of OSI Common Stock to be held by the stockholders of each of HWC, OSI,
PTI and Sooner as a result of the consummation of the transactions contemplated
by this Combination Agreement is fair to the stockholders of each of HWC, OSI,
PTI and Sooner from a financial point of view.
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF PTI
PTI represents and warrants to OSI, HWC and Sooner that the statements
contained in this Article VIII are correct and complete as of the date of this
Combination Agreement, except as set forth in the disclosure schedule delivered
by PTI to OSI, HWC and Sooner on the date hereof (the "PTI Disclosure
Schedule").
SECTION 8.1 ORGANIZATION; QUALIFICATION. PTI is a corporation duly
organized under the ABCA and is validly existing and in good standing under the
laws of the Province of Alberta. PTI has all requisite corporate power and
authority to own, operate or lease its properties and to carry on its business
as now being conducted. PTI is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
its properties owned, operated or leased, or the nature of its activities, makes
any such qualification necessary, except where the failure to be so qualified
and in good standing will not have a material adverse effect on the business,
operations, prospects, properties, assets, operating results or condition
(financial or otherwise) of PTI and its subsidiaries, taken as a whole.
SECTION 8.2 SUBSIDIARIES. Each subsidiary of PTI is a corporation duly
organized under the jurisdiction of its incorporation and is validly existing
and in good standing under the laws of such jurisdiction. Each subsidiary of PTI
has all requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as now being conducted. Each subsidiary
of PTI is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of its properties owned,
operated or leased, or the nature of its activities, makes such qualifications
necessary, except where the failure to be so qualified and in good standing will
not have a material adverse effect on the business, operations, prospects,
properties, assets, operating results or condition (financial or otherwise) of
PTI and its subsidiaries, taken as a whole. Except as set forth in Section 8.2
of the PTI Disclosure Schedule, all of the issued and outstanding shares in the
capital of each subsidiary of PTI are owned (directly or indirectly) by PTI,
free and clear of all Liens.
SECTION 8.3 CAPITALIZATION. The authorized share capital of PTI
consists of an unlimited number of common shares, of which 7,798,900 shares are
issued and outstanding. The issued and outstanding PTI Common Shares are owned
of record by the persons and in the amounts set forth in Section 8.3 of the PTI
Disclosure Schedule. Except for Peter McEwen, William Nungesser and SCF-III,
L.P., all of the holders of record of issued and outstanding PTI Common Shares
are domiciled outside of the United States, and, to the best of PTI's knowledge,
none of such holders of PTI Common Shares are United States persons. All of the
outstanding PTI Common Shares and all of the outstanding shares in the capital
of each subsidiary of PTI are duly authorized, validly issued, fully paid,
nonassessable and were not issued in violation of the preemptive rights of any
person. Except as set forth in Section 8.3 of the PTI Disclosure Schedule, as of
the date hereof, there are no outstanding subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements, rights or
variants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement obligating PTI or any subsidiary of PTI
to issue,
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deliver or sell, or cause to be issued, delivered or sold, additional shares of
the share capital of PTI or any subsidiary of PTI or obligating PTI or any
subsidiary of PTI to grant, extend or enter into any such agreement or
commitment.
SECTION 8.4 AUTHORITY, AUTHORIZATION AND ENFORCEABILITY. PTI has all
requisite corporate power and authority to execute and deliver this Combination
Agreement and each instrument required hereby to be executed and delivered by it
at the Closing, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by PTI of this Combination Agreement and each instrument required
hereby to be executed and delivered by it at the Closing and the performance of
its obligations hereunder and thereunder have been duly and validly authorized
by the board of directors and, subject to the affirmative vote of the holders of
at least two-thirds of the outstanding PTI Common Shares in favor of the PTI
Arrangement and the issuance of the Interim Order and the Final Order, no other
corporate proceedings of PTI, other than the approvals of the shareholders of
PTI contemplated by Section 12.1(j), Section 12.1(p) and Section 12.1(q) hereof,
are necessary to authorize the execution and delivery of this Combination
Agreement or the consummation of the transactions contemplated hereby. This
Combination Agreement and each instrument required hereby have been duly
executed and delivered by PTI and (assuming due authorization, execution and
delivery hereof and thereof by the other parties hereto and thereto) constitute
the valid and legally binding obligations of PTI, enforceable against PTI in
accordance with their terms, except that (A) such enforceability may be subject
to bankruptcy, insolvency, reorganization, moratorium or other laws, decisions
or equitable principles now or hereafter in effect relating to or affecting the
enforcement of creditors' rights or debtors' obligations generally, and to
general equity principles, and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
SECTION 8.5 FINANCIAL STATEMENTS.
(a) The financial statements of PTI (including the related notes)
appearing in the Preliminary OSI Registration Statement have been
prepared in accordance with generally accepted accounting principles in
the United States applied on a consistent basis and fairly present the
consolidated financial position of PTI and its subsidiaries as of the
respective dates thereof and the consolidated results of operations and
changes in financial position of PTI and its subsidiaries over the
periods indicated.
(b) Except as reflected or reserved against in the financial
statements referred to in (a) above, or in the PTI Disclosure Schedule,
neither PTI nor any of its subsidiaries has any liabilities of any
nature (whether accrued, absolute, contingent or otherwise) which in
the aggregate could reasonably be expected to have an OSI Material
Adverse Effect. Since March 31, 2000, neither PTI nor any of its
subsidiaries has incurred any liabilities material to PTI except
liabilities incurred in the ordinary course of business and consistent
with past practice. Since March 31, 2000, there has been no material
adverse change in the business, operations, prospects, properties,
assets, operating results or condition (financial or otherwise) or
liabilities of PTI and its subsidiaries, taken as a whole.
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SECTION 8.6 NO VIOLATION. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all permits and orders of Governmental Authorities
required in connection with the consummation of the transactions contemplated by
this Combination Agreement, and the receipt of all approvals or consents
required to be obtained from third parties disclosed in Section 8.6 of the PTI
Disclosure Schedule, neither the execution and delivery by PTI of this
Combination Agreement or any instrument required hereby to be executed and
delivered by it at the Closing nor the performance by PTI of its obligations
hereunder or thereunder will (i) violate or breach the terms of or cause a
default under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination, cancellation or acceleration
of any obligation under, or result in the creation of any Lien upon any of the
properties or assets of PTI or any of its subsidiaries under (A) any law,
regulation or order of any Governmental Authority applicable to PTI or any of
its subsidiaries, (B) PTI's or any of its subsidiary's organizational documents,
including its articles of amalgamation and bylaws, each as amended or restated,
or (C) any contract, agreement or other instrument or obligation to which PTI is
a party or by which it or any of its properties or assets is bound, or (ii) with
the passage of time, the giving of notice or the taking of any action by a third
party, have any of the effects set forth in clause (i) of this Section 8.6,
except in any such case for any matters described in this Section 8.6 that would
not have an OSI Material Adverse Effect.
SECTION 8.7 ACCURACY OF INFORMATION. None of the information included
in the Preliminary OSI Registration Statement concerning the business,
operations, financial condition, assets or liabilities of PTI and its
subsidiaries is false or misleading with respect to any material fact, contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein not misleading.
SECTION 8.8 FAIRNESS OPINION. PTI has received the written opinion of
Houlihan Lokey Howard & Zuken Financial Advisors, Inc. that the percentage of
shares of OSI Common Stock to be held by the stockholders of each of HWC, OSI,
PTI and Sooner as a result of the consummation of the transactions contemplated
by this Combination Agreement is fair to the stockholders of each of HWC, OSI,
PTI and Sooner from a financial point of view.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF OSI
OSI represents and warrants to HWC, Sooner and PTI that the statements
contained in this Article IX are correct and complete as of the date of this
Combination Agreement, except as set forth in the disclosure schedule delivered
by OSI to HWC, Sooner and PTI on the date hereof (the "OSI Disclosure
Schedule").
SECTION 9.1 ORGANIZATION; QUALIFICATION. OSI is a corporation duly
organized under the DGCL and is validly existing and in good standing under the
laws of the State of Delaware. OSI has all requisite corporate power and
authority to own, operate or lease its properties and to carry on its business
as now being conducted. OSI is duly qualified to do business as a foreign
corporation and
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is in good standing in each jurisdiction where the character of its properties
owned, operated or leased, or the nature of its activities, makes such
qualifications necessary, except where the failure to be so qualified and in
good standing will not have a material adverse effect on the business,
operations, prospects, properties, assets, operating results or condition
(financial or otherwise) of OSI and its subsidiaries, taken as a whole.
SECTION 9.2 SUBSIDIARIES. Each subsidiary of OSI is a corporation duly
organized under the jurisdiction of its incorporation and is validly existing
and in good standing under the laws of such jurisdiction. Each subsidiary of OSI
has all requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as now being conducted. Each subsidiary
of OSI is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of its properties owned,
operated or leased, or the nature of its activities, makes such qualifications
necessary, except where the failure to be so qualified and in good standing will
not have a material adverse effect on the business, operations, prospects,
properties, assets, operating results or condition (financial or otherwise) of
OSI and its subsidiaries, taken as a whole. Except as set forth in Section 9.2
of the OSI Disclosure Schedule, all of the issued and outstanding shares of
capital stock of each subsidiary of OSI are owned (directly or indirectly) by
OSI, free and clear of all Liens.
SECTION 9.3 CAPITALIZATION. The authorized capital stock of OSI
consists of 30,000,000 shares of OSI Common Stock, of which 27,154,672 shares
are issued and outstanding, 1,150,000 shares of Class B common stock, par value
$.01 per share, of which there are no shares issued and outstanding and 16,250
shares of OSI Preferred Stock, of which 16,250 shares are issued and
outstanding. The issued and outstanding shares of OSI Common Stock and OSI
Preferred Stock are owned of record by the persons and in the amounts set forth
in Section 9.3 of the OSI Disclosure Schedule. All of the outstanding shares of
OSI Common Stock and OSI Preferred Stock and all of the outstanding shares of
the capital stock of each subsidiary of OSI are duly authorized, validly issued,
fully paid, nonassessable, and were not issued in violation of the preemptive
rights of any person. Except as set forth in Section 9.3 of the OSI Disclosure
Schedule, as of the date hereof, there are no outstanding subscriptions,
options, calls, contracts, commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement obligating OSI or
any subsidiary of OSI to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of OSI or any
subsidiary of OSI or obligating OSI or any subsidiary of OSI to grant, extend or
enter into any such agreement or commitment.
SECTION 9.4 AUTHORITY, AUTHORIZATION AND ENFORCEABILITY. OSI has all
requisite corporate power and authority to execute and deliver this Combination
Agreement and each instrument required hereby to be executed and delivered by it
at the Closing, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by OSI of this Combination Agreement and each instrument required
hereby to be executed and delivered by it at the Closing and the performance of
its obligations hereunder and thereunder have been duly and validly authorized
by the board of directors of OSI, and no other corporate proceedings of OSI,
other than the approval of the stockholders of OSI contemplated by Section
12.1(r) hereof, are necessary to authorize the execution and delivery of this
Combination Agreement or the consummation of the transactions contemplated
hereby. This
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Combination Agreement and each instrument required hereby have been duly
executed and delivered by OSI and (assuming due authorization, execution and
delivery hereof and thereof by the other parties hereto and thereto) constitute
the valid and legally binding obligations of OSI, enforceable against OSI in
accordance with their terms, except that (A) such enforceability may be subject
to bankruptcy, insolvency, reorganization, moratorium or other laws, decisions
or equitable principles now or hereafter in effect relating to or affecting the
enforcement of creditors' rights or debtors' obligations generally, and to
general equity principles, and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
SECTION 9.5 FINANCIAL STATEMENTS.
(a) The historical financial statements of OSI (including the
related notes) appearing in the Preliminary OSI Registration Statement
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis and fairly present the
consolidated financial position of OSI and its subsidiaries as of the
respective dates thereof and the consolidated results of operations and
changes in financial position of OSI and its subsidiaries over the
periods indicated, except that the unaudited interim financial
statements are subject to normal and recurring year-end adjustments
which are not expected to be material in amount.
(b) Except as reflected or reserved against in the financial
statements referred to in (a) above, or in the OSI Disclosure Schedule,
neither OSI nor any of its subsidiaries has any liabilities of any
nature (whether accrued, absolute, contingent or otherwise) which in
the aggregate could reasonably be expected to have an OSI Material
Adverse Effect. Since March 31, 2000, neither OSI nor any of its
subsidiaries has incurred any liabilities material to OSI and its
subsidiaries, taken as a whole, except liabilities incurred in the
ordinary course of business and consistent with past practice. Since
March 31, 2000, there has been no material adverse change in the
business, operations, prospects, properties, assets, operating results
or condition (financial or otherwise) or liabilities of OSI and its
subsidiaries, taken as a whole.
SECTION 9.6 NO VIOLATION. Assuming effectuation of all filings
and registrations with, termination or expiration of any applicable waiting
periods imposed by and receipt of all permits and orders of, Governmental
Authorities required in connection with the consummation of the transactions
contemplated by this Combination Agreement, and the receipt of all approvals or
consents required to be obtained from third parties disclosed in Section 9.6 of
the OSI Disclosure Schedule, neither the execution and delivery by OSI of this
Combination Agreement or any instrument required hereby to be executed and
delivered by it at the Closing nor the performance by OSI of its obligations
hereunder or thereunder will (i) violate or breach the terms of or cause a
default under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination, cancellation or acceleration
of any obligation under, or result in the creation of any Lien upon any of the
properties or assets of OSI or any of its subsidiaries under (A) any law,
regulation or order of any Governmental Authority applicable to OSI or any of
its subsidiaries, (B) OSI's or any of its subsidiary's organizational documents,
including its articles of incorporation and bylaws, each as amended or restated,
or (C) any contract, agreement or other instrument or
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obligation to which OSI or any of its subsidiaries is a party or by which it or
any of its properties or assets is bound, or (ii) with the passage of time, the
giving of notice or the taking of any action by a third party, have any of the
effects set forth in clause (i) of this Section 9.6, except in any such case for
any matters described in this Section 9.6 that would not have an OSI Material
Adverse Effect.
SECTION 9.7 ACCURACY OF INFORMATION. None of the information included
in the Preliminary OSI Registration concerning the business, operations,
financial results or condition, assets or liabilities of OSI and its
subsidiaries is false or misleading with respect to any material fact, contain
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein not misleading.
SECTION 9.8 FAIRNESS OPINION. OSI has received the written opinion of
Houlihan Lokey Howard & Zuken Financial Advisors, Inc. that the percentage of
shares of OSI Common Stock to be held by the stockholders of each of HWC, OSI,
PTI and Sooner as a result of the consummation of the transactions contemplated
by this Combination Agreement is fair to the stockholders of each of HWC, OSI,
PTI and Sooner from a financial point of view.
SECTION 9.9 STATUS AS A FOREIGN INVESTMENT ENTITY. Should the Proposed
Foreign Investment Entity Rules (as defined below) be enacted in their current
form, OSI would not at the date hereof be a foreign investment entity for
purposes of such rules. OSI is not presently aware of any circumstances which
would cause it to become a foreign investment entity within the next five years
from the date hereof. For purposes of this Section 9.9, "Proposed Foreign
Investment Entity Rules" means the draft legislation released by the Minister of
Finance (Canada) on June 22, 2000 in respect of foreign investment entities.
ARTICLE X
REGISTRATION RIGHTS
On or prior to the Effective Time, OSI, HWC and Sooner and the
Registration Rights Representatives, on behalf of and pursuant to powers of
attorney granted by the Registration Rights Holders, shall enter into an Amended
and Restated Registration Rights Agreement (the "Registration Rights Agreement")
in the form attached hereto as Exhibit E, to be effective upon the consummation
of the OSI Initial Public Offering.
ARTICLE XI
COVENANTS
SECTION 11.1 ORDINARY COURSE OF BUSINESS. Except as otherwise consented
to in writing by a majority of the members of the Special Committee, excluding
the designee of the party requesting such consent, or as otherwise contemplated
herein, between the date of this Combination Agreement and the earlier to occur
of the Effective Time or the termination of this Combination Agreement, each of
HWC, Sooner, PTI and OSI will, and will cause its subsidiaries to, carry on its
business diligently and in the ordinary and usual course and consistent with
past practice, and,
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without limiting the generality of the foregoing, each of HWC, Sooner, PTI and
OSI will, and will cause its subsidiaries to, use commercially reasonable
efforts to preserve its business organization intact, keep available the
services of its present executive officers and employees and preserve its
present relationships with persons having business dealings with it.
SECTION 11.2 RESTRICTED ACTIVITIES AND TRANSACTIONS. Except as
otherwise contemplated herein or in the Preliminary OSI Registration Statement
or in connection with the OSI Initial Public Offering or as set forth in the
respective disclosure schedule of the parties hereto or as otherwise consented
to in writing by a majority of the members of the Special Committee, excluding
the designee of the party requesting such consent, between the date of this
Combination Agreement and the earlier to occur of the Effective Time or the
termination of this Combination Agreement, neither OSI, HWC, Sooner nor PTI
will, nor will each such corporation allow any of its subsidiaries to:
(a) Issue or commit to issue any of its capital stock or other
ownership or equity interests other than in connection with the
exercise of options, warrants or convertible securities existing on the
date hereof and listed in their respective Disclosure Schedule;
(b) Grant or commit to grant any options, warrants, convertible
securities or other rights to subscribe for, purchase or otherwise
acquire any shares of its capital stock or other ownership or equity
interests other than pursuant to existing stock option plans to new
employees consistent with past practice;
(c) Declare, set aside, or pay any dividend or distribution or
make any other payment with respect to its capital stock or other
ownership interests, except for preferred stock dividends payable in
accordance with the terms of such preferred stock;
(d) Directly or indirectly redeem, purchase or otherwise acquire
or commit to acquire any of its capital stock or other ownership or
equity interests;
(e) Effect a split or reclassification of any of its capital
stock or a recapitalization or other reorganization;
(f) Amend or otherwise alter its articles of incorporation or
amalgamation, by-laws, or other governing instruments;
(g) Enter into or make any change in any of its employee benefit
plans or grant any increase in compensation (other than increases in
compensation in the ordinary course of business for field and office
personnel who are not managers or executives), or provide any special
severance arrangement involving any of its employees, officers or
directors;
(h) Acquire control or ownership in any other corporation,
association, joint venture, partnership, business trust or other
business entity, or acquire control or ownership of all or a
substantial portion of the assets of any of the foregoing for a
purchase price (including any assumed liabilities) in excess of
$10,000,000;
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(i) Except in the ordinary course of business or as otherwise
permitted under this Combination Agreement and except for budgeted
capital expenditures, enter into or agree to enter into any agreement
or transaction involving the incurrence of an obligation to pay an
amount in excess of an aggregate of $2,500,000 prior to December 1,
2000 or an aggregate of $5,000,000 prior to May 31, 2001;
(j) Create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance on any of its assets, tangible or intangible,
except (i) as permitted under its existing credit facilities with banks
and any renewals, modifications or rearrangements thereof on terms and
conditions not materially less favorable to the respective borrower or
(ii) in the ordinary course of business consistent with past practice;
(k) Except as provided in the respective disclosure schedule or
in the ordinary and usual course of business and consistent with past
practice or as otherwise contemplated or permitted herein, (i) borrow,
or agree to borrow any funds or voluntarily incur, assume or become
subject to, whether directly or by way of guaranty or otherwise, any
obligation or liability (absolute or contingent) in excess of
$5,000,000, except as permitted under its existing credit facilities
and in connection with any renewal, modification or rearrangement
thereof which is on terms and conditions not materially less favorable
to the respective borrower and which does not provide for an increase
in the maximum borrowing amount, (ii) cancel or agree to cancel any
debts or claims, (iii) lease, sublease, sell or transfer, agree to
sublease, sell or transfer, or grant or agree to grant any preferential
rights to lease or acquire, any of its assets, property or rights
having a fair market value in excess of $2,500,000 or (iv) make or
permit any amendment or termination of any contract, agreement, license
or other right to which it is a party;
(l) Settle any threatened or pending litigation that is not fully
covered by insurance other than for immaterial consideration or for an
amount less than that reserved as of the date hereof for such
litigation on its books and records;
(m) Enter into or agree to be bound by any agreement or permit an
Affiliate to enter into or agree to be bound by any agreement with any
of its directors, officers, employees or Affiliates that will continue
subsequent to the Effective Time, other than as contemplated by this
Combination Agreement or in the ordinary course of business consistent
with past practice; or
(n) Commit itself to do any of the foregoing.
SECTION 11.3 INSURANCE. Except as otherwise consented to in writing by
a majority of the members of the Special Committee, between the date of this
Combination Agreement and the earlier to occur of the Effective Time or the
termination of this Combination Agreement, each of OSI, HWC, Sooner and PTI will
use commercially reasonable efforts to maintain in full force and effect all
policies of insurance which are currently in effect (or policies with comparable
coverage and comparable amounts of coverage).
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SECTION 11.4 CONFIDENTIALITY. Except as contemplated by Section 11.9,
each of the parties hereto will keep strictly confidential any and all
information furnished to one of them or their representatives by another or
their representatives in connection with the transactions contemplated by this
Combination Agreement, and the business and financial reviews and investigations
referred to in Section 11.7, except for information, if any, that (i) is or
becomes generally available to the public in a manner other than as a result of
a disclosure by the party receiving the information; (ii) was available to the
receiving party on a non-confidential basis prior to its disclosure to the
receiving party by the party providing the information; or (iii) is or becomes
available to the receiving party on a non-confidential basis from a source other
than the informing party unless that source is bound by a confidentiality
agreement with the informing party. If this Combination Agreement is terminated
pursuant to Section 13.1 hereof, each of the parties hereto will promptly
deliver to the others or destroy (and certify as to such delivery or
destruction) all originals and copies of documents, work papers and other
written material concerning the others and obtained from the others, their
agents, employees or representatives in connection with such negotiations and
such business and financial reviews and investigations.
SECTION 11.5 HSR AND OTHER REGULATORY MATTERS. Each of the parties
hereto agrees to make all necessary filings on a timely basis with respect to
the HSR Act, the Investment Canada Act, the Competition Act (Canada) and other
applicable laws and will use its best efforts to obtain any other regulatory
approvals which may be required to consummate the transactions contemplated
herein. If a shareholder of OSI, HWC, Sooner or PTI is required to make a filing
under any such acts in connection with the transactions contemplated by this
Combination Agreement, the filing fees of such shareholder shall be borne by the
party whose stock ownership gave rise to such filing obligation.
SECTION 11.6 COMMERCIALLY REASONABLE EFFORTS. Upon the terms and
subject to the conditions hereof, each of the parties hereto agrees to use its
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and to do or cause to be done, all things necessary, proper or advisable
to consummate and make effective the transactions as contemplated by this
Combination Agreement and to cooperate in connection with the foregoing,
including commercially reasonable efforts:
(a) to obtain any necessary waivers, consents and approvals from
other parties to material notes, licenses, agreements and other
instruments and obligations;
(b) to obtain any material consents, approvals, authorizations
and permits required to be obtained under any federal, state,
provincial or local statute, rule or regulation;
(c) to defend all lawsuits or other legal proceedings challenging
this Combination Agreement or the consummation of the transactions as
contemplated hereby; and
(d) to effect promptly all necessary filings and notifications
including, but not limited to, filings under the HSR Act, the
Investment Canada Act and the Competition Act (Canada) and prompt
submissions of information requested by Governmental Authorities.
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SECTION 11.7 ACCESS TO INFORMATION. From the date hereof to the
Effective Time, each of the parties hereto shall cause its respective officers,
directors, employees and agents to afford the officers, employees and
representatives of the others, complete access at all reasonable times to its
respective officers, employees, agents, properties, books and records, and shall
furnish the others all financial, operating and other data and information as
the others, through their officers, employees or representatives, may reasonably
request.
SECTION 11.8 SECTION 351 REPORTING. The parties hereto that are located
in the United States agree to report the transactions contemplated herein in a
manner consistent with Section 351 of the Code.
SECTION 11.9 OSI REGISTRATION STATEMENT.
(a) Each of the parties hereto shall cooperate in the preparation
and filing of the OSI Registration Statement. As promptly as is
practicable following the execution of this Combination Agreement, HWC,
Sooner and PTI shall cooperate with OSI to cause such OSI Registration
Statement to be filed with the Commission under and pursuant to the
provisions of the Securities Act for the purpose of registering OSI
Common Stock for sale to the public in the OSI Initial Public Offering.
(b) Each of HWC, Sooner and PTI agree to provide promptly to OSI
such information concerning its business and financial statements and
affairs as may be required or appropriate for inclusion in the OSI
Registration Statement, or in any amendments or supplements thereto,
and shall cause its counsel and auditors to cooperate with OSI's
counsel and auditors in the preparation of the OSI Registration
Statement. OSI agrees to use commercially reasonable efforts to have
the OSI Registration Statement declared effective under the Securities
Act as soon as may be practicable.
(c) Each of the parties hereto represents and warrants to the
others that the OSI Registration Statement, insofar as it contains or
incorporates by reference information pertaining to such party, will
comply in all material respects with the requirements of the Securities
Act and the applicable rules and regulations adopted thereunder, and
that such information will not contain any untrue statement of material
fact and will not omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
Each party will promptly advise the others in writing if at any time
prior to the Effective Time it shall obtain knowledge of any facts that
might make it necessary or appropriate to amend or supplement the OSI
Registration Statement in order to make the statements contained or
incorporated by reference therein not misleading or to comply with
applicable law.
(d) (i) If the gross proceeds to OSI from the OSI Initial Public
Offering are expected to be greater than $150,000,000 (including any
proceeds upon the exercise of any over-allotment option granted to the
underwriters of the OSI Initial Public Offering in connection
therewith), OSI agrees to consult in good faith with the managing
underwriters
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for the OSI Initial Public Offering and their counsel, and its own
counsel and advisors, regarding the feasibility of including shares of
OSI Common Stock having a value of up to $25,000,000 in the OSI
Registration Statement for sale by the securityholders of each of:
(A) HWC, as set forth in Appendix 1 and 2 to the HWC
Disclosure Schedule (other than the HWC Non-Accredited
Holders);
(B) OSI, as set forth in Section 9.3(1) of the OSI
Disclosure Schedule (excluding stockholders of OSI who fail
to execute and deliver to OSI the Omnibus Consent, Waiver
and Agreement referred to in Section 12.1(r) hereof prior to
the initial filing of the OSI Registration Statement with
the Commission);
(C) PTI, as set forth in Appendix I to the PTI
Disclosure Schedule (other than the PTI Non-Accredited
Holders); and
(D) Sooner, as set forth in Section 7.3 of the Sooner
Disclosure Schedule (other than the Sooner Non-Accredited
Holders)
(such eligible securityholders described in (A)-(D) above, the
"Eligible Secondary Stockholders"); provided, however, that (x)
SCF-III, L.P., (y) SCF-IV, L.P., and (z) stockholders who are expected
by OSI to be directors, officers or employees of HWC, OSI, PTI or
Sooner or any of their subsidiaries after the Effective Time shall be
deemed not to be Eligible Secondary Stockholders for purposes of this
Section 11.9(d).
(ii) Any such shares so included in the OSI Initial Public
Offering would be allocated for sale by the Eligible Secondary
Stockholders pro rata in accordance with their pro forma share
ownership in OSI taking into account the consummation of the Mergers;
provided, however, that any shares not included in the OSI Initial
Public Offering at the election of any of the Eligible Secondary
Stockholders shall be made available for inclusion in the OSI Initial
Public Offering, pro rata as provided above, to the other Eligible
Secondary Stockholders who have fully exercised their right to
participate.
(iii) If the Eligible Secondary Stockholders may be entitled
to include OSI Common Stock in the OSI Initial Public Offering, OSI
shall give written notice to each of the Eligible Secondary
Stockholders, at the address indicated in the records of HWC, Sooner,
PTI, or OSI, as applicable, and each Eligible Secondary Stockholder
must notify OSI in writing within 15 days of the giving of such notice
if such Eligible Secondary Stockholder desires to so include shares and
the maximum number of shares of OSI Common Stock to be included. No
Eligible Secondary Stockholder may participate in the OSI Initial
Public Offering unless such Eligible Secondary Stockholder timely
completes, executes and delivers all questionnaires, powers of
attorney, underwriting agreements, custody agreements and other
documents in customary form that OSI or the underwriters reasonably
request. Any Eligible Secondary Stockholder shall be permitted to
withdraw all or part of such Eligible Secondary Stockholder's OSI
Common Stock from the OSI Registration Statement at any time prior to
the effective time thereof unless OSI has previously given written
notice to the
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Eligible Secondary Stockholders of the initial public offering price
range included, or to be included (provided that such range is the
range ultimately included), in the "red herring" and indicated that
the Eligible Secondary Stockholders may not withdraw their OSI Common
Stock after five days after the giving of such notice if the initial
public offering price of OSI Common Stock in the OSI Initial Public
Offering equals or exceeds the lowest price in such initial public
offering price range, in which case the Eligible Secondary Stockholder
may not withdraw OSI Common Stock from the OSI Registration Statement
after such fifth day unless the initial public offering price is below
such lowest price.
(iv) OSI shall not, and shall not be entitled to, issue and
sell OSI Common Stock in the OSI Initial Public Offering for aggregate
proceeds in excess of $150,000,000, including any proceeds received
upon the exercise of any over-allotment option granted to the
underwriters of the OSI Initial Public Offering in connection
therewith, unless the Eligible Secondary Stockholders have first been
given the right and opportunity to sell OSI Common Stock in the OSI
Initial Public Offering having aggregate gross proceeds of at least
$25,000,000, except as set forth in subparagraph (v) below.
(v) Counsel to OSI, in consultation with counsel to the
Eligible Secondary Stockholder of the greatest number of shares of OSI
Common Stock (the "Largest Eligible Secondary Stockholder"), may
determine that shares of OSI Common Stock to be held as a result of the
transactions contemplated in this Combination Agreement are not
eligible for inclusion in the OSI Registration Statement because of
applicable law. In the event that it is determined that no shares of
OSI Common Stock held by the Eligible Secondary Stockholders are
eligible for inclusion in the OSI Initial Public Offering or that the
number of shares of OSI Common Stock held by the Eligible Secondary
Stockholders eligible for inclusion in the OSI Initial Public Offering
is such that the aggregate gross proceeds to the Eligible Secondary
Stockholders shall be less than $25,000,000, the reference to
"$25,000,000" in subparagraph (iv) above shall be read as a reference
to the maximum aggregate gross proceeds, if any, to the Eligible
Secondary Stockholders as so determined.
(vi) The underwriters and the public offering price and,
subject to the foregoing provisions of this Section 11.9(d), the number
of shares and any over-allotment option will be determined by the Board
of Directors of OSI in its sole discretion; provided, however, that:
(A) OSI shall, and shall require the underwriters to,
consult with the Largest Eligible Secondary Stockholder
expeditiously and in good faith prior to determining (1)
that the gross proceeds of the OSI Initial Public Offering
(including any proceeds to OSI upon the exercise of any
over-allotment option granted in connection therewith) are
not expected to be greater than $150,000,000 and,
accordingly, that no shares of OSI Common Stock held by the
Eligible Secondary Stockholders are to be included in the
OSI Initial Public Offering or (2) that the gross proceeds
of the OSI Initial Public Offering (including any proceeds
upon the exercise of any over-allotment option granted in
connection therewith) are expected to be greater than
$150,000,000 but less than $175,000,000 and, accordingly,
that the
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number of shares of OSI Common Stock held by the Eligible
Secondary Stockholders to be included in the OSI Initial
Public Offering shall be such that the aggregate gross
proceeds to the Eligible Secondary Stockholders shall be
less than $25,000,000 and
(B) the Largest Eligible Selling Stockholder shall be
entitled to be present at the time that the public offering
price, the number of shares and the over-allotment option
are determined by OSI and the underwriters,
it being acknowledged with respect to each of clauses (A) and (B) above
that such determination shall ultimately be made by the board of
directors of OSI and the underwriters acting in good faith and shall
not require the consent or approval of the Eligible Secondary
Stockholders or any of them and it being further acknowledged that the
board of directors of OSI shall be entitled to reduce the size of the
OSI Initial Public Offering (and thereby reduce or eliminate the shares
of OSI Common Stock otherwise eligible to be sold by the Eligible
Secondary Stockholders) if it believes in good faith that such action
will increase the initial public offering price per share of the OSI
Common Stock in the OSI Initial Public Offering.
(vii) Subject to the foregoing provisions of this Section
11.9(d), OSI is under no obligation to include any shares of OSI Common
Stock held by the Eligible Secondary Stockholders in the OSI
Registration Statement.
(viii) If any shares of OSI Common Stock owned by the
stockholders of OSI or to be owned by the stockholders of HWC, Sooner
or PTI are included in the OSI Registration Statement, the stockholders
of OSI and the former stockholders of HWC, Sooner and PTI, as the case
may be, shall be required to provide, and shall be entitled to receive,
indemnification customarily provided for in public offerings with
selling stockholders.
(ix) For purposes of this section 11.9(d), all references to
OSI Common Stock (including the relative ownership of the holders of
OSI Common Stock) shall include OSI Common Stock issuable pursuant to
the exchange, redemption, retraction, call or purchase of PTI
Exchangeable Shares and all references to stockholders of OSI shall
include holders of such PTI Exchangeable Shares. The parties
acknowledge and agree that in the event that any shareholder of PTI is
determined to be eligible to participate in the secondary offering
contemplated by this section 11.9(d), either (A) the parties shall
amend this Combination Agreement and the exhibits hereto such that such
eligible PTI shareholders shall receive OSI Common Stock rather than
PTI Exchangeable Shares to the extent of their participation in such
secondary offering or (B) OSI shall waive, and shall cause each of OSI
ULC and PTI Holdco to waive, all time periods provided for the giving
of notice in connection with the exchange, redemption, retraction, call
or purchase of such PTI Exchangeable Shares in order to permit the
holder of such PTI Exchangeable Shares to receive the underlying OSI
Common Stock in sufficient time to deliver such OSI Common Stock at or
prior to the closing of such secondary offering.
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(x) If, prior to such time as the PTI
Registration Statement is declared effective, the Holders are offered
the opportunity to include any of their Registrable Securities in a
Piggyback Registration pursuant to the Registration Rights Agreement,
then the holders of PTI Exchangeable Shares shall be eligible to
participate in such Piggyback Registration to the same extent and on an
equivalent basis as such Holders are entitled to participate pursuant
to the Registration Rights Agreement. The parties acknowledge and agree
that in the event that the holders of PTI Exchangeable Shares are
entitled to participate in any Piggyback Registration as contemplated
by this section 11.9(d)(x), OSI shall waive, and shall cause each of
OSI ULC and PTI Holdco to waive, all time periods provided for the
giving of notice in connection with the exchange, redemption,
retraction, call or purchase of such PTI Exchangeable Shares as are
necessary in order to permit the holder of such PTI Exchangeable Shares
to receive the underlying OSI Common Stock in sufficient time to
deliver such OSI Common Stock at or prior to the closing of such
Piggyback Registration.
SECTION 11.10 BLUE SKY; CANADIAN SECURITIES LAWS. OSI will use
commercially reasonable efforts to obtain prior to the Effective Time all
necessary Blue Sky permits and approvals required to permit the distribution of
OSI Common Stock in accordance with the provisions of this Combination
Agreement. OSI shall or shall cause PTI Holdco to make application to the
applicable securities regulatory authorities in Canada for an order(s) declaring
that: (i) the first trade of PTI Exchangeable Shares by a holder thereof; (ii)
the issuance of OSI Common Stock on conversion of the PTI Exchangeable Shares;
(iii) the first trade of OSI Common Stock received on conversion of the PTI
Exchangeable Shares by a holder thereof; (iv) the issuance of OSI Common Stock
on exercise of the options to purchase shares of OSI Common Stock received in
exchange for PTI Options in the PTI Arrangement; and (v) the first trade of OSI
Common Stock received on exercise of the options to purchase shares of OSI
Common Stock received in exchange for PTI Options in the PTI Arrangement by a
holder thereof is not a distribution subject to the registration and prospectus
requirements of applicable securities laws in Canada.
SECTION 11.11 AGREEMENTS. Each of HWC, Sooner, PTI and OSI shall
terminate prior to the Effective Time the agreements listed on Schedule 11.11
hereto.
SECTION 11.12 NOTIFICATION OF CERTAIN MATTERS. Each of HWC, Sooner, PTI
and OSI shall give prompt notice of (i) the occurrence or non-occurrence of any
event, the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty of such company contained herein to be untrue or
inaccurate in any material respect at or prior to the Effective Time, (ii) any
material failure of any such company to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such person hereunder
and (iii) any material adverse change in the business, operations, operating
results or condition (financial or otherwise) of such party and its
subsidiaries, taken as a whole. The delivery or deemed delivery of any notice
pursuant to this Section 11.12 shall not be deemed to (i) modify the
representations or warranties hereunder of the party delivering such notice,
(ii) modify the conditions set forth in Article XII, or (iii) limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
SECTION 11.13 FURTHER ASSURANCES. The parties hereto agree to execute
and deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or convenient
to carry out the transactions contemplated hereby.
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SECTION 11.14 PAYMENT OF INDEBTEDNESS. As promptly as practicable
following the Effective Time, OSI will pay, or cause to be paid, all of the
outstanding liabilities, obligations and indebtedness, and will redeem all of
the preferred stock, in each case as identified on Schedule 11.14 hereto, except
as otherwise provided pursuant to Schedule 11.14. In connection with such
repayment of indebtedness, all associated guaranties of the stockholders of each
of HWC, Sooner, PTI and OSI shall be terminated and canceled.
ARTICLE XII
CONDITIONS
SECTION 12.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. Notwithstanding
any other provision of this Agreement, the respective obligations of each party
to effect the Mergers and the other transactions contemplated hereby shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) The waiting period (and any extension thereof) applicable to
the consummation of the Mergers and the other transactions contemplated
herein under the HSR Act shall have expired or been terminated; the
applicable waiting periods and any extensions thereof under Part IX of
the Competition Act (Canada) (if any) shall have expired or the parties
shall have received an advance ruling certificate pursuant to Section
102 of the Competition Act (Canada) setting out that the Commissioner
of Competition under such act is satisfied he would not have sufficient
grounds on which to apply for an order under Part VIII of such act in
respect of the PTI Arrangement; and the PTI Arrangement shall have been
determined or deemed to have been determined by the responsible
minister under the Investment Canada Act to be of net benefit to Canada
if such transaction is reviewable under such act;
(b) No order shall have been entered and remained in effect in
any action or proceeding before any federal, foreign, state or
provincial court or governmental agency or other federal, foreign,
state or provincial regulatory or administrative agency or commission
that would prevent or make illegal the consummation of the Mergers;
(c) The OSI Registration Statement shall be effective on the
Closing Date and all post-effective amendments filed shall have been
declared effective or shall have been withdrawn, and no stop order
suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the
knowledge of the parties, threatened by the Commission;
(d) OSI and the underwriters named in the OSI Registration
Statement shall have executed an underwriting agreement for a firm
commitment underwriting as described in the OSI Registration Statement;
(e) All other approvals of Governmental Authorities and of
non-governmental persons or entities shall have been obtained (i) the
granting of which is necessary for the
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consummation of the Mergers or the transactions contemplated in
connection therewith and (ii) the non-receipt of which will have an
OSI Material Adverse Effect;
(f) The representations and warranties of OSI, HWC, Sooner and
PTI contained in this Combination Agreement shall have been true and
correct as of the date of execution of this Combination Agreement,
except for such failures to be true which (i) have been cured prior to
the Closing Date or (ii) do not, in the aggregate, constitute an OSI
Material Adverse Effect;
(g) The agreements and covenants of OSI, HWC, Sooner and PTI to
be complied with or performed on or before the Closing Date pursuant to
the terms hereof shall have been duly complied with or performed,
except for such failures to comply or perform which do not, in the
aggregate, constitute an OSI Material Adverse Effect;
(h) No OSI Material Adverse Effect shall have occurred since the
date of this Agreement;
(i) HWC, Sooner and OSI shall have received the opinion of Ernst
& Young, LLP covering the matters summarized in Exhibit F attached
hereto, and PTI shall have received and be entitled to include in the
Proxy Statement the opinion of Ernst & Young LLP covering the matters
summarized in Exhibit G attached hereto;
(j) The PTI Arrangement and the other transactions contemplated
hereby shall have been approved by the holders of PTI Common Shares and
PTI Options in accordance with applicable law and PTI's articles of
amalgamation and bylaws, and as at the Closing Date, the holders of not
more than four percent of the issued and outstanding PTI Common Shares,
in the aggregate, shall have validly exercised their rights of dissent
under the PTI Plan of Arrangement;
(k) The Alberta Court shall have issued its final order approving
the PTI Arrangement in form and substance reasonably satisfactory to
OSI and PTI (such approvals not to be unreasonably withheld or delayed
by OSI or PTI) and reflecting the terms hereof;
(l) The Support Agreement and the Voting and Exchange Trust
Agreement shall have been executed and delivered as contemplated by
Sections 4.7 and 4.8;
(m) The Registration Rights Agreement shall have been executed
and delivered as contemplated by Article X;
(n) Each of the shareholders of HWC shall have executed the
omnibus consent, waiver and agreement substantially in the form
attached as Exhibit H hereto prior to the initial filing of the OSI
Registration Statement with the Commission;
(o) Each of the stockholders of Sooner shall have executed the
omnibus consent, waiver and agreement substantially in the form
attached as Exhibit I hereto prior to the initial filing of the OSI
Registration Statement with the Commission;
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(p) Each of the shareholders of PTI that resides in the United
States shall have executed the Omnibus Voting, Waiver and Investment
Agreement substantially in the form attached as Exhibit J hereto prior
to the initial filing of the OSI Registration Statement with the
Commission;
(q) Each of the shareholders of PTI that resides in Canada and
that owns greater than 1% of the outstanding PTI Common Shares and the
current Chief Executive Officer and Chief Financial Officer of PTI
shall have executed the Omnibus Voting, Waiver and Investment Agreement
substantially in the form attached as Exhibit K hereto prior to the
initial filing of the OSI Registration Statement with the Commission;
(r) The holders of at least 92.5% of the issued and outstanding
OSI Common Stock shall have executed the omnibus consent, waiver and
agreement substantially in the form attached as Exhibit L hereto prior
to the initial filing of the OSI Registration Statement with the
Commission; and
(s) All actions shall have been taken and all conditions
necessary to effect each of the Mergers shall have been satisfied other
than the filings with Governmental Authorities required to effect the
Mergers.
ARTICLE XIII
TERMINATION
SECTION 13.1 TERMINATION. This Combination Agreement may be terminated
and the Mergers and the other transactions contemplated herein may be abandoned
at any time prior to the Effective Time, whether prior to or after approval by
the applicable stockholders:
(a) By any party hereto in the event of an OSI Material Adverse
Effect that is incapable of being cured, remedied or reversed within 90
days of such event, provided that such party or its operations are not
responsible for the occurrence of such OSI Material Adverse Effect;
(b) By any party hereto if the Effective Time shall not have
occurred on or before May 31, 2001 (unless the Effective Time has not
occurred as the result of a breach of the terms hereof by the party
desiring to exercise the termination right);
(c) By any party hereto if a final unappealable order to
restrain, enjoin or otherwise prevent, or awarding substantial damages
in connection with, consummation of this Combination Agreement or the
transactions contemplated in connection herewith shall have been
entered;
(d) By the Board of Directors of any two of OSI, HWC, Sooner or
PTI.
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SECTION 13.2 EFFECT OF TERMINATION. In the event of any termination of
this Combination Agreement pursuant to Section 13.1, the parties hereto shall
have no obligation or liability to any other party hereto except the provisions
of this Section and Sections 11.4, 13.3, 14.5, 14.6, 14.8, 14.9 and 14.10 hereof
shall survive any such termination and, except as provided in this Section 13.2,
all documents executed in connection with this Combination Agreement shall be
null and void.
SECTION 13.3 FEES AND EXPENSES. The aggregate costs and expenses
incurred by all parties hereto in connection with this Combination Agreement and
the transactions contemplated herein shall be paid or reimbursed, as the case
may be, by the parties hereto in accordance with the following percentages: OSI
-- 26.2%; HWC -- 22.8%; Sooner -- 22.6% and PTI -- 28.4%.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 WAIVER AND AMENDMENT. Any provision of this
Combination Agreement may be waived at any time by the party that is, or whose
stockholders are, entitled to the benefits thereof by action of the board of
directors of such party. This Combination Agreement may not be amended or
supplemented at any time, except by an instrument in writing signed on behalf of
each party hereto; provided, that after this Combination Agreement has been
approved and adopted by the respective shareholders of the parties hereto, this
Combination Agreement may be amended only as may be permitted by applicable
provisions of the TBCA, the DGCL and the ABCA.
SECTION 14.2 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. No
representation and warranty made in this Combination Agreement shall survive the
Effective Time. This Section 14.2 shall not limit the term of any covenant or
agreement which by its terms contemplates performance after the Effective Time.
SECTION 14.3 ASSIGNMENT. This Combination Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, heirs, devisees and assigns.
Except as set forth in this Combination Agreement, this Combination Agreement
shall not be assignable until after the Closing Date (except by inheritance or
devise) by the parties hereto, except with the prior written consent of the
other parties.
SECTION 14.4 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered if delivered in person, by cable, telegram,
telex, or telecopy and shall be deemed to have been duly given three business
days after deposit with a United States post office if delivered by registered
or certified mail (postage prepaid, return receipt requested) to the respective
parties as follows:
if to OSI:
Oil States International, Inc.
Three Allen Center
333 Clay Street, Suite 333460
Houston, Texas 77002
Attention: Cindy B. Taylor
Telephone: (713) 652-0588
Facsimile: (713) 652-0499
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with a copy to:
Locke Liddell & Sapp LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas, 75201
Attention: Maury Purnell
Telephone: (214) 740-8000
Facsimile: (214) 740-8800
if to HWC:
HWC Energy Services, Inc.
811 Dallas, Suite 1322
Houston, Texas 77002
Attention: Rob Hampton
Telephone: (713) 750-0600
Facsimile: (713) 750-0058
with a copy to:
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P
201 St. Charles Avenue
New Orleans, Louisiana 70170
Attention: Bill Masters
Telephone: (504) 582-8000
Facsimile: (504) 582-8549
if to Sooner:
Sooner Inc.
1221 Lamar Street, Suite 1010
Houston, Texas 77010
Attention: Chris Cragg
Telephone: (713) 759-1200
Facsimile: (713) 759-0442
with a copy to:
Scott F. Zarrow
900 Mid-Continent Tower
401 S. Boston
Tulsa, Oklahoma 74103
Telephone: (918) 295-8054
Facsimile: (918) 295-8048
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if to PTI:
PTI Group Inc.
3050 Parsons Road NW
Edmonton, Alberta T6N 1B1
Canada
Attention: Ian Morris
Telephone: (780) 463-8872
Facsimile: (780) 463-3109
with a copy to:
Fraser Milner Casgrain
2900 Manulife Place 10180 101 Street
Edmonton, Alberta T5J 3V5
Canada
Attention: Rich Miller
Telephone: (780) 423-7242
Facsimile: (780) 423-7276
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
SECTION 14.5 GOVERNING LAW. This Combination Agreement shall be
governed by and construed in accordance with the provisions of the ABCA, TBCA
and DGCL, as appropriate, with respect to the Mergers and, with respect to other
matters, in accordance with the substantive law of the State of Texas without
giving effect to the principles of conflicts of law thereof.
SECTION 14.6 SEVERABILITY. If any term or other provisions of this
Combination Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Combination Agreement shall nevertheless remain in full force and effect so long
as the economic or legal substance of the transactions contemplated hereby is
not affected in any manner material to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Combination
Agreement so as to effect the original intent of the parties as closely as
possible.
SECTION 14.7 COUNTERPARTS. This Combination Agreement may be executed
in counterparts, each of which shall be an original document, but all of which
together shall constitute one and the same agreement.
SECTION 14.8 HEADINGS. The Section headings herein are for convenience
only and are not intended to be part of or to affect the meaning or
interpretation of the Agreement.
SECTION 14.9 ENFORCEMENT OF THE AGREEMENT. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Combination Agreement were not
46
<PAGE> 48
performed in accordance with their specific terms or otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to any injunction
or injunctions to prevent breaches of this Combination Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedies to which they are entitled at law or in equity. In addition, each
of the parties hereto consents to submit itself to the personal jurisdiction of
any federal or state court sitting in the State of Texas in the event any
dispute arises out of this Combination Agreement and agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court.
SECTION 14.10 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This
Combination Agreement, including the exhibits hereto and the documents,
information supplied in writing, and instruments referred to herein, constitute
the entire agreement and supersedes all other prior agreements, and
understandings, both oral and written, among the parties or any of them, with
respect to the subject matter hereof. This Combination Agreement shall be
binding upon and inure solely to the benefit of the parties hereto, and nothing
in this Combination Agreement, including the exhibits hereto and the documents,
information supplied in writing, and instruments referred to herein, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Combination Agreement.
47
<PAGE> 49
IN WITNESS WHEREOF, the parties to this Combination Agreement have
caused it to be duly executed as of the date first above written.
OIL STATES INTERNATIONAL, INC.
By: /s/ Douglas E. Swanson
---------------------------------------
Name: Douglas E. Swanson
-------------------------------------
Title: President & CEO
------------------------------------
HWC ENERGY SERVICES, INC.
By: /s/ Jay Trahan
---------------------------------------
Name: Jay Trahan
-------------------------------------
Title: President
------------------------------------
MERGER SUB-HWC, INC.
By: /s/ Douglas E. Swanson
---------------------------------------
Name: Douglas E. Swanson
-------------------------------------
Title: President
------------------------------------
SOONER INC.
By: /s/ Mike Chaddick
---------------------------------------
Name: Mike Chaddick
-------------------------------------
Title: COO
------------------------------------
MERGER SUB-SOONER, INC.
By: /s/ Douglas E. Swanson
---------------------------------------
Name: Douglas E. Swanson
-------------------------------------
Title: President
------------------------------------
PTI GROUP INC.
By: /s/ Sandy Slator
---------------------------------------
Name: R. A. (Sandy) Slator
-------------------------------------
Title: President & CEO
------------------------------------
48
<PAGE> 50
EXHIBIT A
PTI PLAN OF ARRANGEMENT
<PAGE> 51
EXHIBIT A
TO THE COMBINATION AGREEMENT
PLAN OF ARRANGEMENT PROPOSED BY PTI
UNDER SECTION 186
OF THE BUSINESS CORPORATIONS ACT (ALBERTA)
INVOLVING AND AFFECTING
PTI AND THE HOLDERS OF ITS COMMON SHARES AND OPTIONS
AND PTI AMALCO AND THE HOLDERS OF ITS SHARES
AND PTI HOLDCO AND THE HOLDERS OF ITS SHARES
AND OSI
AND OSI ULC
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Plan of Arrangement, unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
"ABCA" means the Business Corporations Act (Alberta), as amended;
"Amalgamation" means the amalgamation of PTI and PTI Amalco provided
for in Section 2.1(b) hereof;
"Amalgamation Agreement" means the agreement attached hereto as
Appendix A, setting forth the terms and conditions of the Amalgamation;
"Arrangement" means the arrangement under section 186 of the ABCA on
the terms and subject to the conditions set out in this Plan of Arrangement,
subject to any amendments thereto made (i) in accordance with Section 14.1 of
the Combination Agreement; (ii) in accordance with Section 5.1 hereof or (iii)
at the direction of the Court in the Final Order;
"Arrangement Resolution" means the special resolution passed by the
Shareholders and the Optionholders at the Meeting or a resolution in writing
signed by all of the Shareholders and Optionholders in lieu of the Meeting;
"Automatic Redemption Date" has the meaning provided in the
Exchangeable Share Provisions;
"Business Day" has the meaning provided in the Exchangeable Share
Provisions;
"Class A Common Shares" means Class A Common Shares in the capital of
New PTI;
"Class B Common Shares" means Class B Common Shares in the capital of
New PTI;
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"Class C Common Shares" means Class C Common Shares in the capital of
New PTI;
"Class D Common Shares" means Class D Common Shares in the capital of
New PTI;
"Combination Agreement" means the combination agreement by and among
OSI, HWC Energy Services, Inc., Merger Sub-HWC, Inc., Sooner Inc., Merger
Sub-Sooner, Inc. and PTI dated as of July o, 2000, as amended and restated from
time to time, providing for, among other things, this Plan of Arrangement and
the Arrangement;
"Court" means the Court of Queen's Bench of Alberta;
"Depositary" means Montreal Trust Company of Canada at its principal
transfer offices in Calgary, Alberta;
"Dissent Procedures" has the meaning provided in Section 3.1;
"Effective Date" means the registration date shown on the registration
statement issued upon the filing of the Articles of Arrangement under the ABCA
giving effect to the Arrangement;
"Effective Time" means 6:00 a.m. (Edmonton time) on the Effective Date;
"Eligible Holders" has the meaning in Section 2.2(a);
"Exchange Ratio" means 3.7731 Exchangeable Shares for each whole PTI
Common Share, subject to adjustment as provided in accordance with Section 4.2
of the Combination Agreement;
"Exchangeable Share Provisions" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares as set forth in
Appendix B hereto;
"Exchangeable Shares" means the Exchangeable Shares in the capital of
PTI Holdco;
"Final Order" means the final order of the Court approving the
Arrangement, as such order may be amended by the Court at any time and from time
to time prior to the Effective Time;
"Interim Order" means the interim order of the Court in relation to the
Arrangement, as such order may be amended by the Court at any time and from time
to time;
"ITA" means the Income Tax Act (Canada), as amended;
"Measurement Period" means the period of 10 consecutive Business Days
ending on the third trading day prior to the OSI IPO Date;
"Meeting" means the special meeting of the Shareholders and of the
Optionholders of PTI to be held, if required, to consider this Plan of
Arrangement;
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<PAGE> 53
"New PTI" means PTI Group Inc. a corporation amalgamated under the ABCA
pursuant to the Arrangement;
"New PTI Shares" means the Class A Common Shares, the Class B Common
Shares, the Class C Common Shares and the Class D Common Shares;
"Non-Accredited U.S. PTI Shareholder" means Peter McEwen, a
Shareholder;
"Option Agreements" mean the agreements between PTI and certain
directors and officers of PTI governing the Options;
"Optionholders" means holders of Options;
"Options" means all options to purchase PTI Common Shares outstanding
immediately prior to the Effective Date;
"OSI" means Oil States International, Inc., a corporation organized and
existing under the laws of Delaware and any successor corporation;
"OSI Common Stock" has the meaning provided in the Exchangeable Share
Provisions;
"OSI IPO" means the initial public offering of OSI Common Stock;
"OSI IPO Date" means the date the OSI IPO is completed;
"OSI IPO Price" means the price per share at which OSI Common Stock is
initially offered for sale to the public under the OSI IPO;
"OSI ULC" means o, an unlimited liability company organized and
existing under the laws of Nova Scotia and any successor corporation;
"PTI" means PTI Group Inc., a corporation organized and existing under
the laws of Alberta;
"PTI Amalco" means o, a corporation organized and existing under the
laws of Alberta and a wholly-owned subsidiary of PTI Holdco;
"PTI Amalco Common Shares" means the common shares in the capital of
PTI Amalco;
"PTI Common Shares" means the common shares in the capital of PTI;
"PTI Holdco" means o, a corporation organized and existing under the
laws of Alberta and a wholly-owned subsidiary of OSI ULC prior to giving effect
to the Arrangement, and any successor corporation;
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<PAGE> 54
"PTI Holdco Sub" means o, a corporation organized and existing under
the laws of Alberta and a wholly-owned subsidiary of PTI Holdco, and any
successor corporation;
"Proxy Statement" means the Management Information Circular and Proxy
Statement of PTI prepared in connection with the Arrangement;
"RJM" means R.J.M. Equities Inc., a Shareholder;
"Shareholders" means holders of PTI Common Shares;
"Support Agreement" means the agreement so entitled between OSI and PTI
Holdco to be dated as of the Effective Date and provided for in the Combination
Agreement;
"Transfer Agent" means the duly appointed transfer agent for the time
being of the Exchangeable Shares, and, if there is more than one such transfer
agent, then the principal Canadian transfer agent;
"Unanimous Shareholder Agreement" means the Unanimous Shareholder
Agreement dated January 8, 1997 made among the Shareholders and PTI, as amended;
"U.S. PTI Shareholders" means SCF-III, L.P. and William Nungesser, each
a Shareholder.
"Voting and Exchange Trust Agreement" means the agreement so entitled
between OSI, PTI Holdco and the Trustee named therein to be dated as of the
Effective Date and provided for in the Combination Agreement;
"Voting Share" has the meaning ascribed to such term in the Voting and
Exchange Trust Agreement; and
"812375" means 812375 Alberta Ltd., a Shareholder.
1.2 SECTIONS, HEADINGS AND APPENDICES
The division of this Plan of Arrangement into sections and the
insertion of headings are for reference purposes only and shall not affect the
interpretation of this Plan of Arrangement. Unless otherwise indicated, any
reference in this Plan of Arrangement to a section refers to the specified
section of this Plan of Arrangement. Appendix A is incorporated into and forms
an integral part of this Plan of Arrangement.
1.3 NUMBER, GENDER AND PERSONS
In this Plan of Arrangement, unless the context otherwise requires,
words importing the singular number include the plural and vice versa, words
importing any gender include all genders and words importing persons include
individuals, bodies corporate, partnerships, associations, trusts,
unincorporated organizations, governmental bodies and other legal or business
entities of any kind.
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<PAGE> 55
1.4 DATE FOR ANY ACTION
In the event that any date on or by which any action is required or
permitted to be taken hereunder is not a Business Day, such action shall be
required or permitted to be taken on or by the next succeeding day which is a
Business Day.
1.5 CURRENCY
Unless otherwise expressly stated herein, all references to currency
and payments in cash or money in this Plan of Arrangement are to United States
dollars.
1.6 STATUTORY REFERENCES
Any reference in this Plan of Arrangement to a statute includes such
statute as amended, consolidated or re-enacted from time to time, all
regulations made thereunder, all amendments to such regulations from time to
time, and any statute or regulation which supersedes such statute or
regulations.
ARTICLE 2
ARRANGEMENT
2.1 ARRANGEMENT
At the Effective Time, the following transactions shall occur and shall
be deemed to occur in the following order without any further act or formality:
(a) each Shareholder who has duly exercised the right of dissent as
set forth in Article 3 shall be deemed to have transferred the
PTI Common Shares held by such holder to PTI for cancellation and
such shares shall be cancelled and any Options held by such
Shareholder which have not been exercised prior to the time such
Shareholder exercises such right of dissent shall be deemed to be
transferred to PTI for no consideration and shall be cancelled
and shall no longer be outstanding and in no case shall PTI or
OSI be required to recognize such holders as Optionholders on and
after the Effective Time and the names of such persons shall be
deleted from the registers of Optionholders at the Effective
Time;
(b) the Unanimous Shareholder Agreement shall be terminated and of no
further force or effect;
(c) OSI shall acquire:
(i) all of the PTI Common Shares held by the Non-Accredited U.S.
PTI Shareholder in exchange for a payment, in United States
dollars, equal to the OSI IPO Price less underwriters'
discounts and commissions applicable to the OSI IPO,
multiplied by the Exchange Ratio multiplied by the number of
PTI Common Shares held by the Non-Accredited U.S. PTI
Shareholder; and
A-5
<PAGE> 56
(ii) all of the PTI Common Shares held by the U.S. PTI
Shareholders in exchange for the number of shares of OSI
Common Stock equal to the Exchange Ratio for each whole
PTI Common Share;
(d) OSI ULC shall acquire all of the PTI Common Shares acquired by
OSI pursuant to Section 2.1(c) hereof in exchange for one common
share in the capital of OSI ULC for each whole PTI Common Share;
(e) PTI Holdco shall acquire all of the PTI Common Shares acquired by
OSI ULC pursuant to Section 2.1(d) hereof in exchange for one
common share in the capital of PTI Holdco for each whole PTI
Common Share;
(f) PTI and PTI Amalco shall be amalgamated pursuant to the
Amalgamation Agreement to form New PTI;
(g) Upon the amalgamation of PTI and PTI Amalco to form New PTI:
(i) New PTI shall issue to PTI Holdco one Class A Common Share
for each of its PTI Common Shares;
(ii) New PTI shall issue to PTI Holdco one Class A Common Share
for each of its PTI Amalco Common Shares;
(iii) New PTI shall issue to 812375 one Class B Common Share for
each of its PTI Common Shares;
(iv) New PTI shall issue to RJM one Class C Common Share for
each of its PTI Common Shares;
(v) New PTI shall issue to each of the Shareholders other than
812375, RJM, PTI Holdco and holders of PTI Common Shares
in respect of which rights of dissent have been exercised
pursuant to Article 3 hereof and which have been cancelled
pursuant to Section 2.1(a) hereof one Class D Common Share
for each of their PTI Common Shares;
(vi) the amount added to the stated capital account maintained
for the Class A Common Shares with respect to the Class A
Common Shares issued pursuant to Sections 2.1(g)(i) and
(ii) shall be equal to the paid-up capital, for the
purposes of the ITA, of the PTI Common Shares and the PTI
Amalco Common Shares held by PTI Holdco;
(vii) the amount added to the stated capital account maintained
for the Class B Common Shares with respect to the Class B
Common Shares issued pursuant to Section 2.1(g)(iii) shall
be equal to the paid-up capital, for the purposes of the
ITA, of the PTI Common Shares held by 812375;
(viii) the amount added to the stated capital account maintained
for the Class C Common Shares issued pursuant to Section
2.1(g)(iv) shall be equal to the
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<PAGE> 57
paid-up capital, for the purposes of the ITA, of the PTI
Common Shares held by RJM;
(ix) the amount added to the stated capital account maintained
for the Class D Common Shares with respect to the Class D
Common Shares issued pursuant to Section 2.1(g)(v) shall
be equal to the paid-up capital, for the purposes of the
ITA, of the PTI Common Shares other than (A) the PTI
Common Shares held by PTI Holdco, 812375 and RJM and (B)
PTI Common Shares in respect of which rights of dissent
have been exercised pursuant to Article 3 hereof and which
have been cancelled pursuant to Section 2.1(a) hereof.
(h) The stated capital account maintained for (i) the Class B Common
Shares shall be increased by a portion of the amount credited to
New PTI's retained earnings account equal to [$6,794,359] and
(ii) the Class C Common Shares shall be increased by a portion of
the amount credited to New PTI's retained earnings account equal
to [$3,903,303];
(i) The Articles of Incorporation of PTI Holdco shall be amended to
add (i) the Exchangeable Shares to the authorized capital of PTI
Holdco, (ii) the Exchangeable Share Provisions and (iii) certain
other provisions, set forth in Exhibit B to the Combination
Agreement and to delete the private company provisions;
(j) OSI and PTI Holdco shall execute and deliver the Support
Agreement;
(k) OSI, PTI Holdco and the Trustee shall execute and deliver the
Voting and Exchange Trust Agreement;
(l) PTI Holdco shall acquire all of the issued and outstanding Class
B Common Shares from the holders thereof in exchange for the
number of Exchangeable Shares equal to the Exchange Ratio for
each whole Class B Common Share;
(m) PTI Holdco shall acquire all of the issued and outstanding Class
C Common Shares from the holders thereof in exchange for the
number of Exchangeable Shares equal to the Exchange Ratio for
each whole Class C Common Share;
(n) PTI Holdco shall acquire all of the issued and outstanding Class
D Common Shares from the holders thereof in exchange for the
number of Exchangeable Shares equal to the Exchange Ratio for
each whole Class D Common Share;
(o) The amount added to the stated capital account maintained for the
Exchangeable Shares with respect to the Exchangeable Shares
issued pursuant to Section 2.1(l) shall be equal to the paid up
capital, for the purposes of the ITA, of the Class B Common
Shares;
(p) The amount added to the stated capital account maintained for the
Exchangeable Shares with respect to the Exchangeable Shares
issued pursuant to Section 2.1(m)
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<PAGE> 58
shall be equal to the paid up capital, for the purposes of the
ITA, of the Class C Common Shares;
(q) The amount added to the stated capital account maintained for the
Exchangeable Shares with respect to the Exchangeable Shares
issued pursuant to Section 2.1(n) shall be equal to the paid up
capital, for the purposes of the ITA, of the Class D Common
Shares;
(r) Upon the transfer of New PTI Shares referred to in paragraphs
(l), (m) and (n) above:
(i) each holder of New PTI Shares shall cease to be such a
holder, shall have his name removed from the register of
holders of New PTI Shares and shall become a holder of the
number of fully paid Exchangeable Shares to which he is
entitled as a result of the transfer referred to above and
such holder's name shall be added to the register of holders
of Exchangeable Shares accordingly; and
(ii) PTI Holdco shall become the legal and beneficial owner of
all of the New PTI Shares so transferred.
(s) OSI shall issue to and deposit with the Depositary the Voting
Share in consideration of the payment to OSI of US$1, to be
thereafter held by the Depositary as trustee for and on behalf
of, and for the use and benefit of, the holders of the
Exchangeable Shares, in accordance with the Voting and Exchange
Trust Agreement.
(t) The then outstanding Options will, without any further action on
the part of any Optionholder: (i) if applicable, vest in
accordance with the terms and conditions of the Option
Agreements, and (ii) be converted into or exchanged for an option
to purchase the number of shares of OSI Common Stock determined
by multiplying the number of PTI Common Shares subject to such
Option at the Effective Time by the Exchange Ratio, at an
exercise price per share of OSI Common Stock equal to the
exercise price per share of such Option immediately prior to the
Effective Time divided by the Exchange Ratio, and expressed in
U.S. dollars. For the purposes of determining the exercise price
per share of OSI Common Stock, the exercise price per share of
PTI Common Shares subject to such Option shall be adjusted using
the Canadian dollar exchange rate based upon the average of the
noon buying rate expressed to the fourth decimal place for each
of the Business Days in the Measurement Period as reported by the
Bank of Canada. If the foregoing calculation results in a
converted Option being exercisable for a fraction of a share of
OSI Common Stock, then the number of shares of OSI Common Stock
subject to such Option will be rounded down to the nearest whole
number of shares, and the exercise price per whole share of OSI
Common Stock will be as determined above. The obligations of PTI
under the Options as so converted shall be assumed by OSI and OSI
shall be substituted for PTI under the Option Agreements. Except
as provided in this paragraph (d), the
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<PAGE> 59
term and all other terms and conditions of the Options in effect
immediately prior to giving effect to the Arrangement shall
govern the Options.
(u) PTI Holdco Sub shall acquire all of the issued and outstanding
New PTI Shares from PTI Holdco in exchange for an equal number of
common shares in the capital of PTI Holdco Sub.
2.2 TAX MATTERS
(a) Holders of Exchangeable Shares who acquired them pursuant to the
transfers referred to above (the "Eligible Holders") shall be
entitled to make an election pursuant to subsection 85(1) of the
ITA and any corresponding applicable provincial legislation with
respect to the transfer of their New PTI Shares to PTI Holdco as
provided above by providing two signed copies of the necessary
election forms to PTI Holdco within 90 days following the
Effective Date, duly completed with the details of the number of
shares transferred, the adjusted cost base of those shares and
such agreed amounts as shall be determined by the Eligible
Holders for the purposes of such elections. Thereafter, subject
to the election forms complying with the provisions of the ITA
and any corresponding applicable provincial legislation, the
forms will be signed by PTI Holdco and returned to the Eligible
Holders within 30 days of receipt of such elections by PTI Holdco
for filing with Canada Customs and Revenue Agency or any
corresponding applicable provincial agency.
(b) The applicable agreed amount for the purposes of any election to
be made in accordance with Section 2.2(a) must comply with the
following rules:
(i) the agreed amount may not be less than the fair market
value, on the Effective Date, of the consideration (other
than Exchangeable Shares) received by an Eligible Holder
for the disposition to PTI Holdco of the New PTI Shares to
which the election applies;
(ii) the agreed amount may not be less than the lesser of (A)
the adjusted cost base to the Eligible Holder of the New
PTI Shares to which the election applies, determined
immediately before the time of the exchange, and (B) the
fair market value of such New PTI Shares at that time;
(iii) the agreed amount may not exceed the fair market value of
the New PTI Shares to which the election applies at the
time of the exchange.
ARTICLE 3
RIGHTS OF DISSENT
3.1 RIGHTS OF DISSENT
Registered Shareholders may exercise rights of dissent with respect to
their PTI Common Shares pursuant to and in the manner set forth in section 184
of the ABCA (as modified by the
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<PAGE> 60
Interim Order) and this Section 3.1 (the "Dissent Procedures") in connection
with the Arrangement, and holders who duly exercise such rights of dissent and
who:
(a) are ultimately entitled to be paid fair value for the PTI Common
Shares shall be deemed to have transferred such PTI Common Shares
to PTI for cancellation on the Effective Date; or
(b) are ultimately not entitled, for any reason, to be paid the fair
value for their PTI Common Shares shall be deemed to have
participated in the Arrangement on the same basis as any
nondissenting Shareholder, as the case may be,
but in no case shall PTI be required to recognize such holders as Shareholders
on and after the Effective Time, and the names of such persons shall be deleted
from the registers of Shareholders at the Effective Time.
ARTICLE 4
CERTIFICATES AND FRACTIONAL SHARES
4.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES
At or promptly after the Effective Time, PTI Holdco shall deposit with
the Depositary, for the benefit of the Shareholders who ultimately exchanged
their PTI Common Shares for Exchangeable Shares pursuant to the Arrangement,
certificates representing the Exchangeable Shares issued pursuant to the
Arrangement upon the exchange. Upon surrender to the Depositary of a certificate
which immediately prior to the Effective Time represented outstanding PTI Common
Shares, and such additional documents and instruments as the Depositary may
reasonably require, the holder of such surrendered certificate shall be entitled
to receive in exchange therefor, and the Depositary shall forthwith deliver to
such holder, a certificate representing that number (rounded down to the nearest
whole number) of Exchangeable Shares which such holder has the right to receive
pursuant to the Arrangement (together with any dividends or distributions with
respect thereto pursuant to Section 4.2 and any cash in lieu of fractional
Exchangeable Shares pursuant to Section 4.3), and any certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of PTI
Common Shares which is not registered in the transfer records of PTI, a
certificate representing the proper number of Exchangeable Shares (together with
any dividends or distributions with respect thereto pursuant to Section 4.2 and
any cash in lieu of fractional Exchangeable Shares pursuant to Section 4.3)
shall be delivered to a transferee if the certificate representing such PTI
Common Shares is presented to the Depositary, accompanied by all documents
required to evidence and effect such transfer. Until surrendered as contemplated
by this Section 4.1, each certificate which immediately prior to the Effective
Time represented outstanding PTI Common Shares shall be deemed at any time after
the Effective Time, but subject to Section 4.8, to represent only the right to
receive upon such surrender (a) the certificate representing Exchangeable Shares
as contemplated by this Section 4.1, (b) a cash payment in lieu of any
fractional Exchangeable Shares as contemplated by Section 4.3 and (c) any
dividends or distributions with a record date after the Effective Time
theretofore paid or payable with respect to Exchangeable Shares as contemplated
by Section 4.2.
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4.2 DIVIDENDS AND OTHER DISTRIBUTIONS
No dividends or other distributions declared or made after the
Effective Time with respect to the Exchangeable Shares with a record date after
the Effective Time shall be paid to the holder of any formerly outstanding PTI
Common Shares which were not exchanged pursuant to Section 2.1, and no cash
payment in lieu of fractional shares shall be paid to any such holder pursuant
to Section 4.3 (and no interest will be earned and payable thereon), unless and
until the certificate representing such PTI Common Shares shall be surrendered
in accordance with Section 4.1. Subject to applicable law and to Section 4.8, at
the time of such surrender of any such certificate (or, in the case of clause
(c) below, at the appropriate payment date), there shall be paid to the holder
of the Exchangeable Shares resulting from such exchange, in all cases without
interest, (a) the amount of any cash payable in lieu of a fractional
Exchangeable Share to which such holder is entitled pursuant to Section 4.3, (b)
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such Exchangeable Shares, and
(c) the amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such Exchangeable Shares.
4.3 NO FRACTIONAL SHARES
No certificates or scrip representing fractional Exchangeable Shares
shall be issued upon the surrender for exchange of certificates pursuant to
Section 4.1, and such fractional interests shall not entitle the owner thereof
to vote or to possess or exercise any rights as a security holder of PTI Holdco.
In lieu of any such fractional interests, each person entitled thereto will
receive an amount of cash (rounded to the nearest whole cent), without interest,
equal to the product of (a) such fractional interest, multiplied by (b) the OSI
IPO Price, such amount to be provided to the Depositary by PTI Holdco upon
request.
4.4 ISSUANCE OF CERTIFICATES REPRESENTING OSI COMMON STOCK
At or promptly after the Effective Time, OSI shall deposit with the
Depositary, for the benefit of the U.S. PTI Shareholders who ultimately
exchanged their PTI Common Shares for shares of OSI Common Stock pursuant to
Section 2.1(c) of the Arrangement, certificates representing the shares of OSI
Common Stock issued pursuant to the Arrangement upon the exchange. Upon
surrender to the Depositary of a certificate which immediately prior to the
Effective Time represented outstanding PTI Common Shares, and such additional
documents and instruments as the Depositary may reasonably require, the holder
of such surrendered certificate shall be entitled to receive in exchange
therefor, and the Depositary shall forthwith deliver to such holder, a
certificate representing that number (rounded down to the nearest whole number)
of shares of OSI Common Stock which such holder has the right to receive
pursuant to Section 2.1(c) of the Arrangement (together with any dividends or
distributions with respect thereto pursuant to Section 4.5 and any cash in lieu
of fractional Exchangeable Shares pursuant to Section 4.6), and any certificate
so surrendered shall forthwith be canceled. Until surrendered as contemplated by
this Section 4.4, each certificate held by a U.S. PTI Shareholder which
immediately prior to the Effective Time represented outstanding PTI Common
Shares shall be deemed at any time after the Effective Time, but subject to
Section 4.8, to represent only the right to receive upon such surrender (a) the
certificate representing shares of OSI Common Stock as contemplated by this
Section 4.4, (b) a cash payment in lieu of any fractional share of OSI Common
Stock
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as contemplated by Section 4.6 and (c) any dividends or distributions with a
record date after the Effective Time theretofore paid or payable with respect to
OSI Common Stock as contemplated by Section 4.5.
4.5 DIVIDENDS AND OTHER DISTRIBUTIONS
No dividends or other distributions declared or made after the
Effective Time with respect to the OSI Common Stock with a record date after the
Effective Time shall be paid to the U.S. PTI Shareholder of any formerly
outstanding PTI Common Shares which were not exchanged pursuant to Section 2.1,
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 4.6 (and no interest will be earned and payable
thereon), unless and until the certificate representing such PTI Common Shares
shall be surrendered in accordance with Section 4.4. Subject to applicable law
and to Section 4.8, at the time of such surrender of any such certificate (or,
in the case of clause (c) below, at the appropriate payment date), there shall
be paid to the holder of the shares of OSI Common Stock resulting from such
exchange, in all cases without interest, (a) the amount of any cash payable in
lieu of a fractional share of OSI Common Stock to which such holder is entitled
pursuant to Section 4.6, (b) the amount of dividends or other distributions with
a record date after the Effective Time theretofore paid with respect to such OSI
Common Stock, and (c) the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such OSI Common Stock.
4.6 NO FRACTIONAL SHARES
No certificates or scrip representing fractional shares of OSI Common
stock shall be issued upon the surrender for exchange of certificates pursuant
to Section 4.4, and such fractional interests shall not entitle the owner
thereof to vote or to possess or exercise any rights as a security holder of
OSI. In lieu of any such fractional interests, each U.S. PTI Shareholder
entitled thereto will receive an amount of cash (rounded to the nearest whole
cent), without interest, equal to the product of (a) such fractional interest,
multiplied by (b) the OSI IPO Price, such amount to be provided to the
Depositary by OSI upon request.
4.7 LOST CERTIFICATES
If any certificate which immediately prior to the Effective Time
represented outstanding PTI Common Shares which were exchanged pursuant to
Section 2.1 has been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such certificate to be lost, stolen or
destroyed, the Depositary will issue in exchange for such lost, stolen or
destroyed certificate, certificates representing Exchangeable Shares (together
with any dividends or distributions with respect thereto pursuant to Section 4.2
and any cash in lieu of a fractional Exchangeable Share pursuant to Section 4.3)
or, in the case of a U.S. PTI Shareholder, certificates representing shares of
OSI Common Stock (together with any dividends or distributions with respect
thereto pursuant to Section 4.5 and any cash in lieu of a fractional share of
OSI Common Stock pursuant to Section 4.6) deliverable in respect thereof as
determined in accordance with Section 2.1. When seeking such certificate and
payment in exchange for any lost, stolen or destroyed certificate, the person to
whom certificates
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representing Exchangeable Shares are to be issued shall, as a condition
precedent to the issuance thereof, give a bond satisfactory to PTI Holdco, OSI
and the Transfer Agent, as the case may be, in such sum as PTI Holdco or OSI may
direct or otherwise indemnify PTI Holdco, OSI and the Transfer Agent in a manner
satisfactory to PTI Holdco, OSI and the Transfer Agent against any claim that
may be made against PTI Holdco, OSI or the Transfer Agent with respect to the
certificate alleged to have been lost, stolen or destroyed.
4.8 EXTINGUISHMENT OF RIGHTS
Any certificate which immediately prior to the Effective Time
represented outstanding PTI Common Shares which were exchanged pursuant to
Section 2.1 and has not been deposited, with all other instruments required by
Section 4.1, on or prior to the sixth anniversary of the Effective Date shall
cease to represent a claim or interest of any kind or nature as a Shareholder or
a holder of Exchangeable Shares or shares of OSI Common Stock. On such date, (a)
the Exchangeable Shares (and any dividends or distributions with respect thereto
and any cash pursuant to Section 4.3) to which the former registered holder of
the certificate referred to in the preceding sentence (other than a U.S. PTI
Shareholder) was ultimately entitled (or, if the Automatic Redemption Date has
occurred, the resulting shares of OSI Common Stock) shall be deemed to have been
surrendered to PTI Holdco (or, in the event that the Automatic Redemption Date
has occurred, OSI), together with all entitlements to dividends, distributions,
cash and interest thereon held for such former registered holder, for no
consideration and such shares shall thereupon be canceled and the name of the
former registered holder shall be removed from the register of holders of such
shares; (b) the shares of OSI Common Stock (and any dividends or distributions
with respect thereto and any cash pursuant to Section 4.6) to which the former
U.S. PTI Shareholder referred to in the preceding sentence was ultimately
entitled shall be deemed to have been surrendered to OSI, together with all
entitlements to dividends, distributions, cash and interest thereon held for
such former U.S. PTI Shareholder for no consideration and such shares shall
thereupon be cancelled and the name of the former U.S. PTI Shareholder shall be
removed from the register of holders of such shares.
ARTICLE 5
AMENDMENT
5.1 PLAN OF ARRANGEMENT AMENDMENT
PTI reserves the right to amend, modify and/or supplement this Plan of
Arrangement from time to time at any time prior to the Effective Time provided
that any such amendment, modification or supplement must be contained in a
written document that is (a) agreed to by OSI and PTI Holdco, (b) filed with the
Court and, if made following the Meeting, approved by the Court and (c)
communicated to Shareholders and Optionholders in the manner required by the
Court (if so required).
Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by PTI at any time prior to or at the Meeting (provided that OSI
and PTI Holdco shall have consented thereto) with or without any other prior
notice or communication, and if so proposed and accepted by the persons voting
at the Meeting (other than as may be required under the Interim Order), shall
become part of this Plan of Arrangement for all purposes.
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Any amendment, modification or supplement to this Plan of Arrangement
which is approved by the Court following the Meeting shall be effective only (a)
if it is consented to by PTI, (b) if it is consented to by OSI and PTI Holdco
and (c) if required by the Court or applicable law, it is consented to by the
Shareholders, Optionholders or the holders of Exchangeable Shares, as the case
may be.
Notwithstanding the foregoing, this Plan of Arrangement may be amended
in the manner contemplated by Section 11.9(d) of the Combination Agreement prior
to, at or following the Meeting and prior to or following the approval of this
Plan of Arrangement by the Court without notice to or the consent or approval of
the Shareholders, Optionholders, holders of Exchangeable Shares, or the Court.
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APPENDIX A
TO THE PLAN OF ARRANGEMENT
THIS AGREEMENT OF AMALGAMATION is made this o day of o, 2000
AMONG:
PTI GROUP INC., a corporation, amalgamated under the laws of
the Province of Alberta (herein called "PTI")
OF THE FIRST PART
- and -
o ALBERTA INC., a corporation incorporated under the laws of
the Province of Alberta (herein called "PTI Amalco")
OF THE SECOND PART.
RECITALS:
A. As part of an arrangement involving PTI, PTI Amalco and PTI Holdco Inc.
("PTI Holdco") (the "Arrangement") under Section 186 of the Business
Corporations Act (Alberta) being Chapter B-15 of the Statutes of
Alberta, 1981 (the "Act") pursuant to a Plan of Arrangement (the
"Plan") which was approved by an order of the Court of Queen's Bench of
Alberta on the o day of o, 2000, PTI and PTI Amalco (herein sometimes
referred to jointly as the "Amalgamating Corporations" and either one
of which may hereinafter be referred to as an "Amalgamating
Corporation"), each being a valid and subsisting corporation in good
standing under the Act, have agreed to amalgamate upon the terms and
conditions and in accordance with the mode of carrying the amalgamation
into effect, as set out in the Plan and in this Agreement;
B. PTI was amalgamated under the laws of Alberta the 8th day of January,
1997;
C. PTI is authorized to issue an unlimited number of common shares (the
"PTI Common Shares"), of which 7,798,900 PTI Common Shares are
presently issued and outstanding as fully paid and non-assessable
shares in the capital of PTI;
D. PTI Amalco was incorporated under the laws of the Province of Alberta
on the o day of o, 2000 and is a wholly owned subsidiary of PTI Holdco;
E. PTI Amalco is authorized to issue an unlimited number of Common Voting
Shares of which o Common Voting Shares are presently issued and
outstanding as fully paid and non-assessable shares in the capital of
PTI Amalco;
F. Each of the Amalgamating Corporations has made full disclosure to the
other of all their respective assets and liabilities.
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NOW THEREFORE THIS AGREEMENT WITNESSETH that for and in consideration of the
mutual promises herein contained and other good and valuable consideration, the
parties agree each with the other as follows:
1. The Amalgamating Corporations shall amalgamate and continue as one
corporation (herein sometimes referred to as the "Amalgamated
Corporation") under the provisions of the Act upon the terms and
conditions, and in accordance with the mode of carrying the
amalgamation into effect, as hereinafter set out;
2. The name of the Amalgamated Corporation shall be "PTI Group Inc.";
3. The Registered Office of the Amalgamated Corporation shall be 2900,
10180 - 101 Street, Edmonton, Alberta, T5J 3V5;
4. The Amalgamated Corporation shall be authorized to issue an unlimited
number of Class A Common Shares, an unlimited number of Class B Common
Shares, an unlimited number of Class C Common Shares and an unlimited
number of Class D Common Shares of which o Class A Common Shares, o
Class B Common Shares, o Class C Common Shares and o Class D Common
Shares shall be issued and outstanding on the basis hereinafter set
out;
5. There shall be no restrictions on the business the Amalgamated
Corporation may carry on or on the powers of the Amalgamated
Corporation may exercise;
6. The right to transfer shares of the Amalgamated Corporation shall be
restricted in that no shares shall be transferred without the approval
of the Board of Directors;
7. The number of shareholders of the Amalgamated Corporation exclusive of
persons who are in its employment and exclusive of persons who, having
been formerly in the employment of the Amalgamated Corporation, were,
while in that employment, and have continued after the termination of
that employment to be shareholders of the Amalgamated Corporation, is
limited to not more than fifty, two or more persons who are the joint
registered owners of one or more shares being counted as one
shareholder;
8. Any invitation to the public to subscribe for any securities of the
Amalgamated Corporation shall be prohibited;
9. Upon the amalgamation of the Amalgamating Corporations and their
continuance as one corporation becoming effective:
(a) the Amalgamating Corporations' property shall continue to be
the property of the Amalgamated Corporation;
(b) the Amalgamated Corporation shall continue to be liable for
the Amalgamating Corporations' obligations;
(c) an existing cause of action, claim or liability to the
prosecution relating to one or both of the Amalgamating
Corporations shall be unaffected;
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(d) a civil, criminal or administrative action or proceeding
pending by or against one or both of the Amalgamating
Corporations may be continued to be prosecuted by or against
the Amalgamated Corporation;
(e) a conviction against, or ruling, order or judgment in favour
of or against, one or both of the Amalgamating Corporations
may be enforced by or against the Amalgamated Corporation; and
(f) the Amalgamated Corporation's articles of amalgamation shall
be deemed to be its articles of incorporation and the
Amalgamated Corporation's certificate of amalgamation shall be
deemed to be its certificate of incorporation;
10. The names, occupations and places of residence of the first directors
and officers of the Amalgamated Corporation shall be:
<TABLE>
<CAPTION>
NAME AND OCCUPATION ADDRESS OFFICE HELD
------------------- ------- -----------
<S> <C> <C>
o o Director, President and Secretary
o o Director
</TABLE>
11. The foregoing first directors shall hold office until the first meeting
of shareholders of the Amalgamated Corporation, or until their
successors are elected or appointed. Subject to the provisions of the
Act and any unanimous shareholder agreement, the Board of Directors
shall manage the business and affairs of the Amalgamated Corporation;
12. The Articles of Amalgamation of the Amalgamated Corporation shall be
those attached hereto as Schedule "A";
13. Until repealed, amended, altered or added to, so far as applicable, the
by-laws of PTI at the time of the Amalgamation becomes effective shall
be the by-laws of the Amalgamated Corporation, a copy of which is
attached hereto as Schedule "B";
14. The manner of converting the authorized and issued capital of each of
the Amalgamating Corporations into that of the Amalgamated Corporation
shall be as follows:
(a) the Amalgamated Corporation shall issue to PTI Holdco one
Class A Common Share for each of its PTI Common Shares;
(b) the Amalgamated Corporation shall issue to PTI Holdco one
Class A Common Share for each of its common shares in the
capital of PTI Amalco;
(c) the Amalgamated Corporation shall issue to 812375 Alberta Ltd.
("812375") one Class B Common Share for each of its PTI Common
Shares;
(d) the Amalgamated Corporation shall issue to R.J.M. Equities
Inc. ("RJM") one Class C Common Share for each of its PTI
Common Shares;
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(e) the Amalgamated Corporation shall issue to each of the holders
of PTI Common Shares, other than 812375, RJM and PTI Holdco
and holders of PTI Common Shares in respect of which rights of
dissent have been exercised pursuant to Article 3 of the Plan
and which have been cancelled pursuant to Section 2.1(a)
thereof, one Class D Common Share for each of their PTI Common
Shares;
15. The Arrangement has been considered and ratified by the holders of the
shares of the Amalgamating Corporations and of PTI at special meetings
called for this purpose or by resolutions in writing signed by all
shareholders entitled to vote on that resolution, as the case may be;
and
16. To the extent that there is any conflict or inconsistency between the
terms of this Agreement and the Plan the terms of the Plan shall
prevail and the terms of this Agreement shall be amended accordingly.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as
of the day and year first written above.
PTI GROUP INC.
Per:
-----------------------------------
o ALBERTA INC.
Per:
-----------------------------------
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SCHEDULE "A"
ARTICLES OF AMALGAMATED CORPORATION
A. The Corporation is authorized to issue an unlimited number of Class A
Common Shares, Class B Common Shares, Class C Common Shares and Class D
Common Shares having attached thereto the following rights, privileges,
restrictions and conditions:
I. CLASS A COMMON SHARES
1.1 Dividends
(i) Subject to the rights attaching to any other classes
of shares ranking prior to the Class A Common Shares,
holders of Class A Common Shares have a right to
receive dividends when declared by the Board of
Directors out of property of the Corporation legally
available therefor.
1.2 Liquidation
(i) Subject to the rights attaching to any other classes
of shares ranking prior to the Class A Common Shares,
the holders of Class A Common Shares shall, upon any
liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or
other distribution of the assets of the Corporation
for the purpose of winding-up its affairs, be
entitled to receive the remaining property and assets
of the Corporation pro rata with the Class B Common,
Class C Common and Class D Common Shares.
1.3 Voting
(i) The holders of the Class A Common Shares shall be
entitled to receive notice of and to attend all
meetings of shareholders (other than separate
meetings of other classes or series of shares), and
shall be entitled to one vote for each Class A Common
Share held.
II. CLASS B COMMON SHARES
1.1 Dividends
(i) Subject to the rights attaching to any other classes
of shares ranking prior to the Class B Common Shares,
holders of Class B Common Shares have a right to
receive dividends when declared by the Board of
Directors out of property of the Corporation legally
available therefor.
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1.2 Liquidation
(i) Subject to the rights attaching to any other classes
of shares ranking prior to the Class B Common Shares,
the holders of Class B Common Shares shall, upon any
liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or
other distribution of the assets of the Corporation
for the purpose of winding-up its affairs, be
entitled to receive the remaining property and assets
of the Corporation pro rata with the Class A Common,
Class C Common and Class D Common Shares.
1.3 Voting
(i) The holders of the Class B Common Shares shall be
entitled to receive notice of and to attend all
meetings of shareholders (other than separate
meetings of other classes or series of shares), and
shall be entitled to one vote for each Class B Common
Share held.
III. CLASS C COMMON SHARES
1.1 Dividends
(i) Subject to the rights attaching to any other classes
of shares ranking prior to the Class C Common Shares,
holders of Class C Common Shares have a right to
receive dividends when declared by the Board of
Directors out of property of the Corporation legally
available therefor.
1.2 Liquidation
(i) Subject to the rights attaching to any other classes
of shares ranking prior to the Class C Common Shares,
the holders of Class C Common Shares shall, upon any
liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or
other distribution of the assets of the Corporation
for the purpose of winding-up its affairs, be
entitled to receive the remaining property and assets
of the Corporation pro rata with the Class A Common,
Class B Common and Class D Common Shares.
1.3 Voting
(i) The holders of the Class C Common Shares shall be
entitled to receive notice of and to attend all
meetings of shareholders (other than separate
meetings of other classes or series of shares), and
shall be entitled to one vote for each Class C Common
Share held.
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IV. CLASS D COMMON SHARES
1.1 Dividends
(i) Subject to the rights attaching to any other classes
of shares ranking prior to the Class D Common Shares,
holders of Class D Common Shares have a right to
receive dividends when declared by the Board of
Directors out of property of the Corporation legally
available therefor.
1.2 Liquidation
(i) Subject to the rights attaching to any other classes
of shares ranking prior to the Class D Common Shares,
the holders of Class D Common Shares shall, upon any
liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or
other distribution of the assets of the Corporation
for the purpose of winding-up its affairs, be
entitled to receive the remaining property and assets
of the Corporation pro rata with the Class A Common,
Class B Common and Class C Common Shares.
1.3 Voting
(i) The holders of the Class D Common Shares shall be
entitled to receive notice of and to attend all
meetings of shareholders (other than separate
meetings of other classes or series of shares), and
shall be entitled to one vote for each Class D Common
Share held.
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SCHEDULE "B"
BY-LAW NUMBER 1
A BY-LAW RELATING GENERALLY
TO THE TRANSACTION OF THE
BUSINESS AND AFFAIRS OF
PTI GROUP INC.
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PART I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS
In the By-laws, unless the context otherwise requires:
(a) "Act" means the Business Corporations Act (Alberta), .as amended, and
all regulations under the Act in force from time to time;
(b) "appoint" includes elect and vice versa;
(c) "Articles" includes the original or restated articles of incorporation,
articles of amendment, articles of amalgamation, articles of
continuance, articles of reorganization, articles of arrangement,
articles of dissolution and articles of revival of the Corporation, and
any amendment to any of them;
(d) "Board" means the board of directors of the Corporation;
(e) "By-laws" means this by-law and all other by-laws of the Corporation
from time to time in force;
(f) "Corporation" means PTI Group Inc.;
(g) "Director" means an individual who is duly elected or appointed as a
director of the Corporation;
(h) "Indemnified Party" has the meaning set out in section 5.2 for purposes
of that section;
(i) "Officer" means any officer of the Corporation appointed by the Board;
and
(j) "Shareholder" means a shareholder of the Corporation.
SECTION 1.2 INTERPRETATION
In the By-laws, except if defined in section 1.1 or the context does not permit:
(a) words and expressions defined in the Act have the meaning given to them
in the Act;
(b) words importing the singular include the plural and vice versa;
(c) words importing gender include masculine, feminine and neuter genders;
and
(d) words importing persons include bodies corporate.
SECTION 1.3 HEADINGS
The headings used in the By-laws are inserted for convenience of reference only.
The headings are not to be considered or taken into account in construing the
terms of the By-laws nor are they to be deemed in any way to clarify, modify or
explain the effect of any term of the By-laws.
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SECTION 1.4 BY-LAWS SUBJECT TO THE ACT, ETC.
The By-laws are subject to the Act, any unanimous shareholder agreement relating
to the Corporation and the Articles, in that order.
PART II
SHAREHOLDERS
SECTION 2.1 PLACE AND TIME OF MEETINGS
Meetings of Shareholders may be held at the place within Alberta and at the time
the Board determines. A meeting of Shareholders may be held outside Alberta if
all the Shareholders entitled to vote at that meeting agree to holding the
meeting outside Alberta. A Shareholder who attends a meeting of Shareholders
held outside Alberta is deemed to have agreed to holding the meeting outside
Alberta, except when the Shareholder attends the meeting for the express purpose
of objecting to the transaction of any business on the grounds that the meeting
is not lawfully held.
SECTION 2.2 CALLING OF MEETINGS
The Board must call an annual meeting of Shareholders not later than 15 months
after holding the last preceding annual meeting and may at any time call a
special meeting of Shareholders to be held at the place within Alberta and at
the time the Board determines.
SECTION 2.3 NOTICE OF MEETINGS
Notice of the time and place of a meeting of Shareholders must be sent not less
than 21 days and not more than 50 days before the meeting:
(a) to each Shareholder entitled to vote at the meeting;
(b) to each Director; and
(c) to the auditor of the Corporation.
SECTION 2.4 NOTICE TO JOINT SHAREHOLDERS
If two or more persons are registered as joint holders of any share, notice to
one of those persons is sufficient notice to all of them. A notice must be
addressed to all those joint holders and the address to be used by the
Corporation must be the address appearing in the securities register of the
Corporation in respect of that joint holding or the first address appearing if
there is more than one address.
SECTION 2.5 FAILURE TO GIVE NOTICE
The accidental failure to give notice of a meeting of Shareholders to any person
entitled to a notice or any error in a notice not affecting its substance does
not invalidate any action taken at the meeting to which the notice relates.
SECTION 2.6 WAIVER OF NOTICE
A Shareholder or any other person entitled to attend a meeting of Shareholders
may waive, in any manner, notice of a meeting of Shareholders. Attendance of a
Shareholder or other person at a
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meeting of Shareholders is a waiver of notice of the meeting, except when the
Shareholder or other person attends the meeting for the express purpose of
objecting to the transaction of any business on the grounds that the meeting is
not lawfully called.
SECTION 2.7 NOTICE OF ADJOURNED MEETINGS
With the consent of the Shareholders present at a meeting of Shareholders, the
chairperson may adjourn that meeting to another fixed time and place. If a
meeting of Shareholders is adjourned by one or more adjournments for an
aggregate of less than 30 days, it is not necessary to give notice of the
adjourned meeting, other than by verbal announcement at the time of the
adjournment. If a meeting of Shareholders is adjourned by one or more
adjournments for an aggregate of 30 days or more, notice of the adjourned
meeting must be given as for the original meeting.
SECTION 2.8 PERSONS ENTITLED TO BE PRESENT
The only persons entitled to be present at a meeting of Shareholders are:
(a) the Shareholders entitled to vote at the meeting;
(b) any individual authorized by a resolution of the directors or governing
body of a body corporate or association which is a Shareholder entitled to
vote at the meeting;
(c) the Directors and Officers;
(d) the auditor of the Corporation; and
(e) any others who, although not entitled to vote, are entitled or required
under any provision of the Act, any unanimous shareholder agreement, the
Articles or the By-laws to be present at the meeting.
Any other person may be admitted only on the invitation of the chairperson of
the meeting or with the consent of the meeting.
SECTION 2.9 MEETING BY TELEPHONE
Any person described in paragraphs (a) through (e) of section 2.8 may
participate in a meeting of the Shareholders by means of telephone or other
communication facilities that permit all persons participating in the meeting to
hear each other. A Shareholder participating in a meeting by means of telephone
or other communication facilities is deemed to be present at the meeting.
SECTION 2.10 QUORUM
A quorum of Shareholders is present at a meeting of Shareholders if the holders
of a majority of the shares entitled to vote at the meeting are present in
person or represented by proxy.
SECTION 2.11 LOSS OF QUORUM
If a quorum is present at the opening of a meeting of Shareholders, the
Shareholders present may proceed with the business of the meeting, even if a
quorum is not present throughout the meeting.
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SECTION 2.12 CHAIRPERSON
The chairperson of any meeting of Shareholders will be the first mentioned of
the following Officers (if appointed) present at the meeting: Chairman of the
Board, President, Senior Vice-President or any other Vice-President. If none of
the Chairman of the Board, President or Senior Vice-President is present at the
meeting, and if more than one Vice-President is present, the first
Vice-President to arrive will be chairperson of the meeting. If none of the
foregoing Officers is present, the Shareholders present and entitled to vote at
the meeting may choose a chairperson from among those individuals present.
SECTION 2.13 PROCEDURE AT MEETINGS
The chairperson of any meeting of Shareholders will conduct the proceedings at
the meeting in all respects. The chairperson's decision on any matter or thing
relating to procedure, including, without limiting the generality of the
foregoing, any question regarding the validity of any instrument of proxy, is
conclusive and binding upon the Shareholders.
SECTION 2.14 VOTING
Voting at a meeting of Shareholders must be by a show of hands of those present
in person or represented by proxy or by a verbal poll of those present by
telephone or other communication facilities. If a ballot is required by the
chairperson of the meeting or is demanded by a Shareholder or proxy entitled to
vote at the meeting, either before or on. the declaration of the result of a
vote by a show of hands or verbal poll, voting must be by ballot. A demand for a
ballot may be withdrawn at any time before the ballot is taken. If a ballot is
taken on a question, a prior vote on that question by show of hands or verbal
poll has no effect. At every meeting a Shareholder present in person or
represented by proxy or present by telephone or other communication facilities
and entitled to vote has one vote on a show of hands and, subject to the
Articles, one vote on a ballot for each share held.
SECTION 2.15 DECISION ON QUESTIONS
At every meeting of Shareholders all questions proposed for the consideration of
Shareholders must be decided by the majority of votes, unless otherwise required
by the Act or the Articles. In the case of an equality of votes, the chairperson
does not, either on a show of hands or verbal poll or on a ballot, have a
casting vote in addition to the vote or votes to which the chairperson may be
entitled as a Shareholder or proxy.
SECTION 2.16 RESOLUTION IN LIEU OF MEETING
A resolution in writing signed by all the Shareholders entitled to vote on that
resolution is as valid as if it had been passed at a meeting of the
Shareholders. A resolution in writing may be signed in one or more counterparts,
all of which together constitute the same resolution. A facsimile of a signed
counterpart of a resolution in writing is as valid as an originally signed
counterpart.
PART III
DIRECTORS
SECTION 3.1 NUMBER OF DIRECTORS
The Board consists of that number of Directors as the Shareholders may determine
from time to time by ordinary resolution, but there must not be less than the
minimum and not more than the maximum number of Directors permitted by the
Articles at any one time.
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SECTION 3.2 ELECTION AND TERM OF OFFICE
At each annual meeting of Shareholders at which an election of Directors is
required, the Shareholders, by ordinary resolution, must elect Directors to hold
office for a term expiring not later than the close of the next annual meeting
of Shareholders following the election.
SECTION 3.3 CALLING OF MEETINGS
The Chairman of the Board, if any, the President or any Director may call a
meeting of Directors. A meeting of Directors may be held at any place within the
municipality in which the registered office of the Corporation is located or at
any other place determined by the Board.
SECTION 3.4 NOTICE OF MEETINGS
Notice in writing of the time and place of a meeting of Directors must be sent
to each Director not less than 48 hours before the time fixed for that meeting.
SECTION 3.5 FAILURE TO GIVE NOTICE
The accidental failure to give notice of a meeting of Directors to any Director
entitled to a notice or any error in a notice not affecting its substance does
not invalidate any action taken at the meeting to which the notice relates.
SECTION 3.6 WAIVER OF NOTICE
A Director may waive, in any manner, notice of a meeting of Directors.
Attendance of a Director at a meeting of Directors is a waiver of notice of the
meeting, except when the Director attends the meeting for the express purpose of
objecting to the transaction of any business on the grounds that the meeting is
not lawfully called.
SECTION 3.7 MEETINGS WITHOUT NOTICE
No notice of meeting need be given:
(a) to a newly elected Board following its election at an annual or special
meeting of Shareholders; or
(b) for a meeting of Directors at which a Director is appointed to fill a
vacancy in the Board,
if a quorum is present.
SECTION 3.8 MEETING BY TELEPHONE
If all the Directors consent, a Director may participate in a meeting of
Directors or of a committee of Directors by means of telephone or other
communication facilities that permit all persons participating in the meeting to
hear each other. A Director participating in a meeting by means of telephone or
other communication facilities is deemed to be present at the meeting.
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SECTION 3.9 QUORUM
From time to time the Directors may fix the quorum for meetings of Directors or
of a committee of Directors, but unless so fixed, a majority of the Directors or
of a committee of Directors constitutes a quorum and, to the extent required by
the Act, no business may be transacted unless at least one-half of the Directors
present are resident Canadians.
SECTION 3.10 CHAIRPERSON OF MEETINGS
The chairperson of any meeting of Directors will be the first mentioned of the
following Officers (if appointed) who is a Director and is present at the
meeting: Chairman of the Board, President, Senior Vice-President or any other
Vice-President. If none of the Chairman of the Board, President or Senior
Vice-President is present at the meeting, and if more than one Vice-President is
present, the first Vice-President to arrive will be chairperson of the meeting.
If none of the foregoing Officers is present, the Directors present may choose
one of their number to be chairperson of the meeting.
SECTION 3.11 DECISION ON QUESTIONS
At every meeting of Directors all questions proposed for the consideration of
the Directors must be decided by the majority of votes. In the case of an
equality of votes, the chairperson does not have a casting vote.
SECTION 3.12 RESOLUTION IN LIEU OF MEETING
A resolution in writing signed by all the Directors entitled to vote on that
resolution at a meeting of Directors or committee of Directors is as valid as if
it had been passed at a meeting of Directors or committee of Directors. A
resolution in writing may be signed in one or more counterparts, all of which
together constitute the same resolution. A facsimile of a signed counterpart of
a resolution in writing is as valid as an originally signed counterpart.
SECTION 3.13 BORROWING POWER
Without authorization of the Shareholders, the Directors may authorize the
Corporation to:
(a) borrow money on the credit of the Corporation;
(b) issue, reissue, sell or pledge debt obligations of the Corporation;
(c) subject to section 42 of the Act, give a guarantee on behalf of the
Corporation to secure performance of an obligation of any person; and
(d) mortgage, hypothecate, pledge or otherwise create a security interest
in all or any property of the Corporation, owned or subsequently
acquired, to secure any obligation of the Corporation.
The Directors, by resolution, may delegate to a Director, a committee of
Directors or an Officer all or any of the powers conferred on them by this
section.
SECTION 3.14 COMPENSATION
The Corporation may pay to the Directors the remuneration fixed by the Board and
may reimburse the Directors in respect of transportation and other expenses
actually incurred in attending meetings of the Directors or in otherwise
performing the duties of their office.
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PART IV
OFFICERS
SECTION 4.1 APPOINTMENT OF OFFICERS
The Directors may designate offices of the Corporation and appoint individuals
to those offices as they consider advisable. No Officer need be a Director. The
same individual may hold two or more offices of the Corporation.
SECTION 4.2 TERM OF OFFICE
All Officers are subject to removal by the Directors, with or without cause. An
Officer may resign at any time by giving notice to the Board.
SECTION 4.3 DUTIES OF OFFICERS
Subject to any limitations imposed by the Act, any unanimous shareholder
agreement or the Articles, an Officer has all the powers and authority and must
perform all the duties usually incident to, or specified by the By-laws or the
Board for, the office held.
PART V
LIABILITY AND INDEMNIFICATION
SECTION 5.1 LIMITATION OF LIABILITY
Every Director and Officer in exercising the powers and discharging the duties
of office must act honestly and in good faith with a view to the best interests
of the Corporation and must exercise the care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances. No
Director or Officer is liable for:
(a) the acts, omissions or defaults of any other Director or Officer or an
employee of the Corporation,
(b) any loss, damage or expense incurred by the Corporation through the
insufficiency or deficiency of title to any property acquired for or on
behalf of the Corporation,
(c) the insufficiency or deficiency of any security in or upon which any of
the money of the Corporation is invested,
(d) any loss or damage arising from the bankruptcy, insolvency or tortious
or criminal acts of any person with whom any of the Corporation's money
is, or securities or other property are, deposited,
(e) any loss occasioned by any error of judgment or oversight, or
(f) any other loss, damage or misfortune which occurs in the execution of
the duties of office or in relation to it,
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unless occasioned by the wilful neglect or default of that Director or Officer.
Nothing in this By-law relieves any Director or Officer of any liability imposed
by the Act or otherwise by law.
SECTION 5.2 INDEMNITY
Subject to the Act, the Corporation indemnifies a Director or Officer, a former
Director or Officer and a person who acts or acted at the Corporation's request
as a director or officer of a body corporate of which the Corporation is or was
a shareholder or creditor (the "Indemnified Parties") and the heirs and legal
representatives of each of them, against all costs, charges and expenses, which
includes, without limiting the generality of the foregoing, the fees, charges
and disbursements of legal counsel on an
as-between-a-solicitor-and-his-own-client basis and an amount paid to settle an
action or satisfy a judgment, reasonably incurred by an Indemnified Party, or
the heirs or legal representatives of an Indemnified Party, or both, in respect
of any action or proceeding to which any of them is made a party by reason of an
Indemnified Party being or having been a director or officer of the Corporation
or that body corporate, if:
(a) the Indemnified Party acted honestly and in good faith with a view to
the best interests of the Corporation; and
(b) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, the Indemnified Party had reasonable
grounds for believing that the Indemnified Party's conduct was lawful.
The Corporation indemnifies an Indemnified Party and the heirs and legal
representatives of an Indemnified Party in any other circumstances that the Act
permits or requires. Nothing in this By-law limits the right of a person
entitled to indemnity to claim indemnity apart from the provisions of this
By-law.
SECTION 5.3 INSURANCE
The Corporation may purchase and maintain insurance for the benefit of a person
referred to in section 5.2 against the liabilities and in the amounts the Act
permits and the Board approves.
ENACTED by the board the _____ day of ______________, 2000.
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APPENDIX B
TO THE PLAN OF ARRANGEMENT
SHARE CAPITAL AND OTHER PROVISIONS
TO BE INCLUDED IN THE
RESTATED ARTICLES OF INCORPORATION OF PTI HOLDCO
A. SHARE CAPITAL
PROVISIONS ATTACHING TO THE COMMON SHARES
The common shares ("Common Shares") in the capital of the Corporation
shall have attached thereto the following rights, privileges, restrictions and
conditions:
DIVIDENDS
Subject to the prior rights of the Exchangeable Shares and any other
shares ranking prior to the Common Shares, holders of Common Shares have a right
to receive dividends when declared by the Board of Directors out of property of
the Corporation legally available therefor.
LIQUIDATION
Subject to the prior rights of the Exchangeable Shares and any other
shares ranking prior to the Common Shares, the holders of Common Shares shall,
upon any liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, or other distribution of the assets of the Corporation
for the purpose of winding-up its affairs, be entitled to receive the remaining
property and assets of the Corporation.
VOTING
The holders of the Common Shares shall be entitled to receive notice of
and to attend all meetings of shareholders (other than separate meetings of
other classes or series of shares), and shall be entitled to one vote for each
Common Share held.
PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES
The Exchangeable Shares in the capital of the Corporation shall have
the following rights, privileges, restrictions and conditions:
ARTICLE 1
INTERPRETATION
1.1 For the purposes of these rights, privileges, restrictions and
conditions:
"Act" means the Business Corporations Act (Alberta), as amended,
consolidated or reenacted from time to time.
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"Aggregate Equivalent Vote Amount" means, with respect to any matter,
proposition or question on which holders of OSI Common Stock are entitled to
vote, consent or otherwise act, the product of (i) the number of Exchangeable
Shares then issued and outstanding and held by holders (other than OSI and its
Subsidiaries) multiplied by (ii) the number of votes to which a holder of one
share of OSI Common Stock is entitled with respect to such matter, proposition
or question.
"Automatic Redemption Date" means the date for the automatic redemption
by the Corporation of Exchangeable Shares pursuant to Article 7 of these share
provisions, which date shall be the first to occur of (a) the date, if any,
selected pursuant to this clause (a) by the Board of Directors of the
Corporation, such date to be no earlier than the fifth anniversary of the
Effective Date, (b) the date selected by the Board of Directors of the
Corporation (such date to be no earlier than the third or fourth anniversary of
the Effective Date of the Arrangement) at a time when less than 10% or 20%,
respectively, of the number of Exchangeable Shares issuable on the Effective
Date (other than Exchangeable Shares held by OSI and its Subsidiaries, and as
such number of shares may be adjusted as deemed appropriate by the Board of
Directors to give effect to any subdivision or consolidation of or stock
dividend on the Exchangeable Shares, any issuance or distribution of rights to
acquire Exchangeable Shares or securities exchangeable for or convertible into
or carrying rights to acquire Exchangeable Shares, any issue or distribution of
other securities or rights or evidences of indebtedness or assets, or any other
capital reorganization or other transaction involving or affecting the
Exchangeable Shares), are outstanding, (c) the date the Board of Directors of
the Corporation selects if an OSI Control Transaction occurs and the Board of
Directors determines, in good faith and in its sole discretion, that it is not
reasonable to substantially replicate the terms and conditions of the
Exchangeable Shares in connection with such OSI Control Transaction and that the
redemption of all but not less than all of the outstanding Exchangeable Shares
is commercially or legally necessary to enable the completion of such OSI
Control Transaction in accordance with its terms, (d) the Business Day following
the day on which the holders of Exchangeable Shares fail to pass, at any meeting
or vote, a resolution regarding any matter on which the holders of Exchangeable
Shares are entitled to vote as shareholders of the Corporation and which has
been proposed by the Board of Directors of the Corporation, provided that this
clause (d) shall not apply to any resolution to amend the Exchangeable Share
Provisions, the Support Agreement or the Voting and Exchange Trust Agreement, or
(e) the Business Day following the day on which the holders of Exchangeable
Shares fail to take the necessary action at a meeting or other vote of holders
of Exchangeable Shares, if and to the extent such action is required, to approve
or disapprove, as applicable, any change to, or in the rights of the holders of,
Exchangeable Shares, if the approval or disapproval, as applicable, of such
change would be required to maintain the economic and legal equivalence of the
Exchangeable Shares and the OSI Common Stock.
"Board of Directors" means the board of directors of the Corporation
and any committee thereof acting within its authority.
"Business Day" means any day other than a Saturday, a Sunday or a day
when banks are not open for business in either or both of Houston, Texas and
Edmonton, Alberta.
"Canadian Dollar Equivalent" means in respect of an amount expressed in
a foreign currency (the "Foreign Currency Amount") at any date the product
obtained by multiplying:
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(a) the Foreign Currency Amount by,
(b) the noon spot exchange rate on such date for such foreign
currency expressed in Canadian dollars as reported by the Bank
of Canada or, in the event such spot exchange rate is not
available, such spot exchange rate on such date for such
foreign currency expressed in Canadian dollars as may be
deemed by the Board of Directors to be appropriate for such
purpose.
"Combination Agreement" means the agreement so entitled dated as of
July o, 2000 by and among OSI, HWC Energy Services, Inc., Merger Sub-HWC, Inc.,
Sooner Inc., Merger Sub-Sooner, Inc. and PTI.
"Common Shares" means the common shares in the capital of the
Corporation.
"Current Market Price" means, in respect of a share of OSI Common Stock
on any date, the average of the closing price per share (computed and rounded to
the third decimal point) of shares of OSI Common Stock during the period of 20
consecutive trading days ending not more than five trading days before such date
on the New York Stock Exchange, or, if OSI Common Stock is not then traded on
the New York Stock Exchange, on such other principal U.S. stock exchange or
automated quotation system on which the OSI Common Stock is then listed or
quoted, as the case may be, as may be selected by the Board of Directors for
such purpose; provided, however, that if, in the opinion of the Board of
Directors the public distribution or trading activity of OSI Common Stock during
such period does not create a market which reflects the fair market value of a
share of OSI Common Stock, then the Current Market Price of a share of OSI
Common Stock shall be determined by the Board of Directors based upon the advice
of such qualified independent financial advisors as the Board of Directors may
deem to be appropriate, and provided further any such selection, opinion or
determination by the Board of Directors shall be conclusive and binding.
"Effective Date" has the meaning ascribed thereto in the Plan of
Arrangement.
"Exchangeable Share Consideration" means, with respect to each
Exchangeable Share, for any acquisition of or redemption of or distribution of
assets of the Corporation in respect of or purchase pursuant to these share
provisions, the Plan of Arrangement, the Support Agreement or the Voting and
Exchange Trust Agreement:
(a) the Current Market Price of one share of OSI Common Stock
deliverable in connection with such action;
(b) a cheque or cheques payable at par at any branch of the
bankers of the payor in the amount of all declared, payable
and unpaid, and all undeclared but payable, cash dividends
deliverable in connection with such action; and
(c) such stock or other property constituting any declared and
unpaid, and all undeclared but payable, non-cash dividends
deliverable in connection with such action,
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provided that (i) that part of the consideration which represents (a) above,
shall be fully paid and satisfied by the delivery of one share of OSI Common
Stock that is freely tradeable, such share to be duly issued as a fully paid and
non-assessable share, (ii) that part of the consideration which represents (c),
above, unpaid shall be fully paid and satisfied by delivery of such non-cash
items, and (iii) any such consideration shall be delivered free and clear of any
lien, claim, encumbrance, security interest or adverse claim or interest less
any tax required to be deducted and withheld therefrom and without interest.
"Exchangeable Share Price" means, for each Exchangeable Share, an
amount equal to the aggregate of:
(a) the Current Market Price of a share of OSI Common Stock; plus
(b) an additional amount equal to the full amount of all cash
dividends declared, payable and unpaid on such Exchangeable
Share; plus
(c) an additional amount equal to all dividends declared and
payable on OSI Common Stock which have not been declared on
Exchangeable Shares in accordance herewith; plus
(d) an additional amount representing non-cash dividends declared,
payable and unpaid on such Exchangeable Share.
"Exchangeable Shares" means the Exchangeable Shares of the Corporation
having the rights, privileges, restrictions and conditions set forth herein.
"freely tradeable", with respect to OSI Common Stock, means freely
transferable under Canadian provincial securities laws and U.S. federal and
state securities laws (pursuant to an effective resale shelf registration
statement or otherwise and assuming the reasonable cooperation of the holder or
recipient of OSI Common Stock in connection with any required resale shelf
registration statement), except to the extent restrictions arise by reason of a
person being a "control person" of OSI for the purposes of Canadian provincial
securities laws or an "affiliate" of OSI for the purposes of United States
federal or state securities laws, provided any trades in such securities are
conducted through the facilities of a stock exchange outside Canada.
"Liquidation Amount" has the meaning provided in Section 5.1.
"Liquidation Call Right" has the meaning provided in the Restated
Articles of Incorporation of the Corporation.
"Liquidation Call Purchase Price" has the meaning provided in the
Restated Articles of Incorporation of the Corporation.
"Liquidation Date" has the meaning provided in Section 5.1.
"OSI" means Oil States International, Inc., a corporation organized and
existing under the laws of the State of Delaware and includes any successor
corporation or any corporation in
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which the holders of OSI Common Stock hold securities resulting from the
application of Section 2.7 of the Support Agreement.
"OSI Call Notice" has the meaning provided in Section 6.3.
"OSI Common Stock" means the shares of common stock of OSI, with a par
value of U.S. $0.01 per share, having voting rights of one vote per share, and
any other securities resulting from the application of Section 2.7 of the
Support Agreement.
"OSI Control Transaction" means any merger or amalgamation involving
OSI, any tender offer for OSI, and any material sale of shares or rights or
interests therein or thereto by OSI or similar transactions, or any proposal to
do so, provided that upon completion of any such transaction the holders of OSI
Common Stock immediately before such transaction would hold, directly or
indirectly, less than 50% of the voting securities, or securities exchangeable
or exercisable for or convertible into voting securities, of the merged or
amalgamated corporation, the offeror or the purchaser, as the case may be.
"OSI Dividend Declaration Date" means the date on which the board of
directors of OSI declares any dividend on the OSI Common Stock.
"OSI Special Share" means the one share of Special Voting Stock of OSI,
with a par value of U.S. $0.0001, and having voting rights at meetings of
holders of OSI Common Stock equal to the Aggregate Equivalent Voting Amount.
"OSI ULC" has the meaning provided in the Voting and Exchange Trust
Agreement.
"PTI" means PTI Group Inc., a corporation organized and existing under
the Act.
"Plan of Arrangement" means the plan of arrangement involving and
affecting PTI and the holders of common shares and options, PTI Amalco and the
holders of its shares, the Corporation and the holders of its shares, OSI and
OSI ULC under section 186 of the Act contemplated in the Combination Agreement,
as further amended and restated from time to time.
"Purchase Price" has the meaning provided in Section 6.3.
"Redemption Call Purchase Price" has the meaning provided in the
Restated Articles of Incorporation of the Corporation.
"Redemption Call Right" has the meaning provided in the Restated
Articles of Incorporation of the Corporation.
"Redemption Price" has the meaning provided in Section 7.1.
"Retracted Shares" has the meaning provided in subsection 6.1 (a).
"Retraction Call Right" has the meaning provided in subsection 6.1 (c).
"Retraction Date" has the meaning provided in subsection 6.1 (b).
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"Retraction Price" has the meaning provided in Section 6. 1.
"Retraction Request" has the meaning provided in Section 6.1.
"Subsidiary", in relation to any person, means any body corporate,
partnership, joint venture, association or other entity of which more than 50%
of the total voting power of shares of stock or units of ownership or beneficial
interest entitled to vote in the election of directors (or members of a
comparable governing body) is owned or controlled, directly or indirectly, by
such person.
"Support Agreement" means the Support Agreement between OSI and the
Corporation, made as of the Effective Date.
"Transfer Agent" means the duly appointed transfer agent for the time
being of the Exchangeable Shares at its offices in each of Calgary, Alberta and
Toronto, Ontario.
"Trustee" means the Trustee appointed under the Voting and Exchange
Trust Agreement, and any successor trustee.
"Voting and Exchange Trust Agreement" means the Voting and Exchange
Trust Agreement among the Corporation, OSI and the Trustee, made as of the
Effective Date.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall be entitled to a preference over the
Common Shares and any other shares ranking junior to the Exchangeable
Shares, with respect to the payment of dividends and the distribution
of assets in the event of the liquidation, dissolution or winding-up of
the Corporation, whether voluntary or involuntary, or any other
distribution of the assets of the Corporation among its shareholders
for the purpose of winding-up its affairs.
ARTICLE 3
DIVIDENDS
3.1 Subject to Section 3.2 below, a holder of an Exchangeable Share shall
be entitled to receive and the Board of Directors shall, subject to
applicable law, on each OSI Dividend Declaration Date, declare a
dividend on each Exchangeable Share:
(a) in the case of a cash dividend declared on the OSI Common
Stock, in an amount in cash for each Exchangeable Share in
U.S. dollars, or the Canadian Dollar Equivalent thereof on the
OSI Dividend Declaration Date, in each case corresponding to
the cash dividend declared on each share of OSI Common Stock;
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(b) in the case of a stock dividend declared on OSI Common Stock
to be paid in shares of OSI Common Stock, in such number of
Exchangeable Shares for each Exchangeable Share as is equal to
the number of shares of OSI Common Stock to be paid on each
share of OSI Common Stock; or
(c) in the case of a dividend declared on the OSI Common Stock in
property other than cash or OSI Common Stock, in such type and
amount of property for each Exchangeable Share as is the same
as or economically equivalent to (to be determined by the
Board of Directors as contemplated by Section 3.6 hereof) the
type and amount of property declared as a dividend on each
share of OSI Common Stock.
Such dividends shall be paid out of money, assets or property of the
Corporation properly applicable to the payment of dividends, or out of
authorized but unissued shares of the Corporation, as applicable.
3.2 In the case of a stock dividend declared on the OSI Common Stock to be
paid in shares of OSI Common Stock, in lieu of declaring the stock
dividend contemplated by Section 3.1(b) on the Exchangeable Shares, the
Board of Directors may, in its discretion and subject to applicable
law, subdivide, redivide or change (the "subdivision") each issued and
unissued Exchangeable Share on the basis that each Exchangeable Share
before the subdivision becomes a number of Exchangeable Shares as is
equal to the sum of (i) a share of OSI Common Stock and (ii) the number
of shares of OSI Common Stock to be paid as a stock dividend on each
share of OSI Common Stock. In such instance, and notwithstanding any
other provision hereof, such subdivision shall become effective on the
effective date specified in Section 3.4 hereof without any further act
or formality on the part of the Board of Directors or of the holders of
Exchangeable Shares. For greater certainty, no approval of the holders
of Exchangeable Shares to an amendment to the articles of the
Corporation shall be required to give effect to such subdivision.
3.3 Cheques of the Corporation payable at par at any branch of the bankers
of the Corporation shall be issued in respect of any cash dividends
contemplated by subsection 3.1 (a) hereof and the sending of such a
cheque to each holder of an Exchangeable Share (less any tax required
to be deducted and withheld from such dividends paid or credited by the
Corporation) shall satisfy the cash dividends represented thereby
unless the cheque is not paid on presentation. Certificates registered
in the name of the registered holder of Exchangeable Shares shall be
issued or transferred in respect of any stock dividends contemplated by
subsections 3.1 (b) or (d) hereof and the sending of such a certificate
to each holder of an Exchangeable Share shall satisfy the stock
dividend represented thereby or dividend payable in other securities
represented thereby. Such other type and amount of property in respect
of any dividends contemplated by subsection 3.1 (c) hereof shall be
issued, distributed or transferred by the Corporation in such manner as
it shall determine and the issuance, distribution or transfer thereof
by the Corporation to each holder of an Exchangeable Share shall
satisfy the dividend represented thereby. In all cases, any such
dividends shall be subject to any reduction or adjustment for tax
required to be deducted and withheld from such dividends, and the
Corporation shall be entitled to liquidate some of the property which
would otherwise be deliverable in payment of such dividends to a
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particular holder of Exchangeable Shares to fund any statutory
withholding obligation. No holder of an Exchangeable Share shall be
entitled to recover by action or other legal process against the
Corporation any dividend which is represented by a cheque that has not
been duly presented to the Corporation's bankers for payment or which
otherwise remains unclaimed for a period of six years from the date on
which such dividend was payable.
3.4 The record date for the determination of the holders of Exchangeable
Shares entitled to receive payment of, and the payment date for, any
dividend declared on the Exchangeable Shares under Section 3.1 hereof
shall be the same dates as the record date and payment date,
respectively, for the corresponding dividend declared on the OSI Common
Stock. The record date for the determination of the holders of
Exchangeable Shares entitled to receive Exchangeable Shares in
connection with any subdivision of Exchangeable Shares under Section
3.2 hereof and the effective date of such subdivision shall be the same
dates as the record date and payment date, respectively, for the
corresponding stock dividend declared on the OSI Common Stock.
3.5 If on any payment date for any dividends declared on the Exchangeable
Shares under Section 3.1 hereof the dividends are not paid in full on
all of the Exchangeable Shares then outstanding, any such dividends
which remain unpaid shall be paid on a subsequent date or dates
determined by the Board of Directors on which the Corporation shall
have sufficient moneys, assets or property properly applicable to the
payment of such dividends.
3.6 The Board of Directors shall determine, in good faith and in its sole
discretion, economic equivalence for the purposes of Sections 3.1 and
3.2 hereof, and each such determination shall be conclusive and binding
on the Corporation and its shareholders. In making each such
determination, the following factors shall, without excluding other
factors determined by the Board of Directors to be relevant, be
considered by the Board of Directors:
(a) in the case of any stock dividend or other distribution
payable in shares of OSI Common Stock, the number of such
shares issued in proportion to the number of shares of OSI
Common Stock previously outstanding;
(b) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase shares of OSI
Common Stock (or securities exchangeable for or convertible
into or carrying rights to acquire shares of OSI Common
Stock), the relationship between the exercise price of each
such right, option or warrant and the Current Market Price of
a share of OSI Common Stock;
(c) in the case of the issuance or distribution of any other form
of property (including without limitation any shares or
securities of OSI of any class other than OSI Common Stock,
any rights, options or warrants other than those referred to
in Section 3.6(b) above, any evidences of indebtedness of OSI
or any assets of OSI), the relationship between the fair
market value (as determined by the Board of Directors in the
manner above contemplated) of such property to be issued or
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distributed with respect to each outstanding share of OSI
Common Stock and the Current Market Price of a share of OSI
Common Stock; and
(d) in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation
consequences to holders of OSI Common Stock as a result of
differences between taxation laws of Canada and the United
States (except for any differing consequences arising as a
result of differing marginal taxation rates and without regard
to the individual circumstances of holders of Exchangeable
Shares).
3.7 Except as provided in this Article 3, the holders of Exchangeable
Shares shall not be entitled to receive dividends in respect thereof.
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the
Corporation shall not at any time without, but may at any time with,
the approval of the holders of the Exchangeable Shares given as
specified in Article 9 of these share provisions:
(a) pay any dividends on the Common Shares, or any other shares
ranking junior to the Exchangeable Shares, other than stock
dividends payable in any such other shares ranking junior to
the Exchangeable Shares;
(b) redeem or purchase or make any capital distribution in respect
of Common Shares or any other shares ranking junior to the
Exchangeable Shares with respect to the payment of dividends
or on any liquidation distribution;
(c) redeem or purchase any other shares of the Corporation ranking
equally with the Exchangeable Shares with respect of the
payment of dividends or on any liquidation distribution;
(d) issue any Exchangeable Shares other than by way of stock
dividends to holders of Exchangeable Shares or as contemplated
by the Support Agreement; or
(e) amend the articles or by-laws of the Corporation, in either
case in any manner that would affect the rights or privileges
of the holders of the Exchangeable Shares.
The restrictions in subsections 4.1(a), 4.1(b) and 4.1(c) above shall
not apply if all dividends on the outstanding Exchangeable Shares corresponding
to dividends declared with a record date on or following the effective date of
the Plan of Arrangement on the OSI Common Stock shall have been declared on the
Exchangeable Shares and paid in full. Nothing herein shall be interpreted to
restrict the Corporation from issuing additional Common Shares to OSI or any
Subsidiary of OSI.
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ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation
among its shareholders for the purpose of winding-up its affairs,
provided that neither OSI nor OSI ULC shall have exercised the
Liquidation Call Right, a holder of Exchangeable Shares shall be
entitled, subject to applicable law, to receive from the assets of the
Corporation in respect of each Exchangeable Share held by such holder
on the effective date of such liquidation, dissolution or winding-up
(the "Liquidation Date"), before any distribution of any part of the
assets of the Corporation to the holders of the Common Shares or any
other shares ranking junior to the Exchangeable Shares, an amount equal
to the Exchangeable Share Price applicable on the last Business Day
prior to the Liquidation Date (the "Liquidation Amount") in accordance
with Section 5.2. In connection with payment of the Liquidation Amount,
the Corporation shall be entitled to liquidate some of the OSI Common
Stock which would otherwise be deliverable as Exchangeable Share
Consideration to the particular holder of Exchangeable Shares in order
to fund any statutory withholding tax obligation.
5.2 Within three Business Days after the Liquidation Date, and subject to
the exercise by OSI or OSI ULC of the Liquidation Call Right, the
Corporation shall cause to be delivered to the holders of the
Exchangeable Shares the Liquidation Amount for each such Exchangeable
Share upon presentation and surrender of the certificates representing
such Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable
Shares under applicable law and the by-laws of the Corporation and such
additional documents and instruments as the Transfer Agent may
reasonably require, at the registered office of the Corporation or at
any office of the Transfer Agent as may be specified by the Corporation
in Schedule A hereto or by notice to the holders of the Exchangeable
Shares (provided that such presentation and surrender shall be valid if
made at the office of the Transfer Agent, if any, in the province in
which such holder is listed on the books of the Corporation). Payment
of the total Liquidation Amount for such Exchangeable Shares shall be
made by delivery to each holder, at the address of the holder recorded
in the securities register of the Corporation for the Exchangeable
Shares or by holding for pick up by the holder at the registered office
of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation in Schedule A hereto or by notice to the
holders of Exchangeable Shares (provided that such delivery shall be
made to the holder at its address recorded in the securities register
of the Corporation or at the office of the transfer agent, if any, in
the province in which the address of the holder recorded in the
securities register of the Corporation is located), on behalf of the
Corporation of the Exchangeable Share Consideration representing the
total Liquidation Amount. On and after the Liquidation Date, the
holders of the Exchangeable Shares shall cease to be holders of such
Exchangeable Shares and shall not be entitled to exercise any of the
rights of holders in respect thereof, other than the right to receive
their proportionate part of the total Liquidation Amount, unless
payment of the total Liquidation Amount for such Exchangeable Shares
shall not be made upon presentation and surrender of share certificates
in accordance with the foregoing provisions, in which case the rights
of the
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holders shall remain unaffected until the total Liquidation Amount has
been paid in the manner hereinbefore provided. The Corporation shall
have the right at any time on or after the Liquidation Date to deposit
or cause to be deposited the Exchangeable Share Consideration in
respect of the Exchangeable Shares represented by certificates that
have not at the Liquidation Date been surrendered by the holders
thereof in a custodial account or for safe keeping, in the case of
non-cash items, with any chartered bank or trust company in Canada.
Upon such deposit being made, the of Exchangeable Shares after such
deposit shall be limited to receiving their proportionate part of the
total Liquidation Amount for such Exchangeable Shares so deposited,
against presentation and surrender of the said certificates held by
them, respectively, in accordance with the foregoing provisions. Upon
such payment or deposit of such Exchangeable Share Consideration, the
holders of the Exchangeable Shares shall thereafter be considered and
deemed for all purposes to be the holders of the OSI Common Stock
delivered to them. Notwithstanding the foregoing, until such payment or
deposit of such Exchangeable Share Consideration, the holder shall be
deemed to still be a holder of Exchangeable Shares for purposes of all
voting rights with respect thereto under the Voting and Exchange Trust
Agreement.
5.3 After the Corporation has satisfied its obligations to pay the holders
of the Exchangeable Shares the Liquidation Amount per Exchangeable
Share, such holders shall not be entitled to share in any further
distribution of the assets of the Corporation.
5.4 If OSI or OSI ULC exercises the Liquidation Call Right, each holder of
Exchangeable Shares shall be obligated to sell the Exchangeable Shares
held by such holder to OSI or OSI ULC, as the case may be, on the
Liquidation Date on payment to such holder by OSI or OSI ULC, as the
case may be, of the Exchangeable Share Consideration representing the
Liquidation Call Purchase Price for each Exchangeable Share.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time after the
effectiveness of a Registration Statement under the Securities Act of
1933 registering the issuance of shares of OSI Common Stock issuable
pursuant to the provisions attaching to the Exchangeable Shares or
prior thereto with the written consent of the Corporation, subject to
applicable law and the exercise by OSI or OSI ULC of the Retraction
Call Right (which, if exercised by OSI or OSI ULC, shall be binding on
the holder of Exchangeable Shares) and otherwise upon compliance with
the provisions of this Article 6, to require the Corporation to redeem
any or all of the Exchangeable Shares registered in the name of such
holder for an amount equal to the Exchangeable Share Price applicable
on the last Business Day prior to the Retraction Date (the "Retraction
Price") which as set forth in Section 6.4, shall be fully paid and
satisfied by the delivery by or on behalf of the Corporation of the
Exchangeable Share Consideration representing such holder's Retraction
Price. In connection with payment of the Retraction Price, the
Corporation shall be entitled to liquidate some of the OSI Common Stock
that would otherwise be deliverable as Exchangeable Share Consideration
to the particular holder of
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Exchangeable Shares in order to fund any statutory withholding tax
obligation. To effect such redemption, the holder shall present and
surrender at the registered office of the Corporation or at any office
of the Transfer Agent as may be specified by the Corporation in
Schedule A hereto or by notice to the holders of Exchangeable Shares
the certificate or certificates representing the Exchangeable Shares
which the holder desires to have the Corporation redeem, together with
such other documents and instruments as may be required to effect a
transfer of Exchangeable Shares under applicable law and the by-laws of
the Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require, and together with a duly
executed statement (the "Retraction Request") in the form of Schedule
"A" hereto or in such other form as may be acceptable to the
Corporation:
(a) specifying that the holder desires to have all or any number
specified therein of the Exchangeable Shares represented by
such certificate or certificates (the "Retracted Shares")
redeemed by the Corporation;
(b) stating the Business Day on which the holder desires to have
the Corporation redeem the Retracted Shares (the "Retraction
Date"), provided that the Retraction Date shall be not less
than three Business Days nor more than 10 Business Days after
the date on which the Retraction Request is received by the
Corporation and further provided that, in the event that no
such Business Day is specified by the holder in the Retraction
Request, the Retraction Date shall be deemed to be the tenth
Business Day after the date on which the Retraction Request is
received by the Corporation; and
(c) acknowledging the overriding right (the "Retraction Call
Right") of OSI or OSI ULC to purchase all but not less than
all the Retracted Shares directly from the holder and that the
Retraction Request shall be deemed to be a revocable offer by
the holder to sell the Retracted Shares in accordance with the
Retraction Call Right on the terms and conditions set out in
Section 6.3 below.
6.2 Subject to the exercise by OSI or OSI ULC of the Retraction Call Right,
upon receipt by the Corporation or the Transfer Agent in the manner
specified in Section 6.1 hereof of a certificate or certificates
representing the number of Exchangeable Shares which the holder desires
to have the Corporation redeem, together with a Retraction Request, and
provided that the Retraction Request is not revoked by the holder in
the manner specified in Section 6.7, the Corporation shall redeem the
Retracted Shares effective at the close of business on the Retraction
Date and shall cause to be delivered to such holder the total
Retraction Price with respect to such shares in accordance with Section
6.4 hereof. If only a part of the Exchangeable Shares represented by
any certificate are redeemed or purchased by OSI or OSI ULC pursuant to
the Retraction Call Right, a new certificate for the balance of such
Exchangeable Shares shall be issued to the holder at the expense of the
Corporation.
6.3 Upon receipt by the Corporation of a Retraction Request, the
Corporation shall immediately notify OSI and OSI ULC thereof. In order
to exercise the Retraction Call Right, OSI or OSI ULC must notify the
Corporation in writing of its determination to do
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so (the "OSI Call Notice") within two Business Days of such
notification. If OSI or OSI ULC does not so notify the Corporation
within such two Business Days, the Corporation will notify the holder
as soon as possible thereafter that neither OSI nor OSI ULC will
exercise the Retraction Call Right. If OSI or OSI ULC delivers the OSI
Call Notice within such two Business Days, and provided that the
Retraction Request is not revoked by the holder in the manner specified
in Section 6.7 hereof, the Retraction Request shall thereupon be
considered only to be an offer by the holder to sell the Retracted
Shares to OSI or OSI ULC, as the case may be, in accordance with the
Retraction Call Right. In such event, the Corporation shall not redeem
the Retracted Shares and OSI or OSI ULC, as the case may be, shall
purchase from such holder and such holder shall sell to OSI or OSI ULC,
as the case may be, on the Retraction Date the Retracted Shares for a
purchase price per share (the "Purchase Price") equal to the Retraction
Price, which as set forth in Section 6.4 hereof, shall be fully paid
and satisfied by the delivery by or on behalf of OSI or OSI ULC, as the
case may be, of the Exchangeable Share Consideration representing such
holder's Purchase Price. For the purposes of completing a purchase
pursuant to the Retraction Call Right, OSI or OSI ULC, as the case may
be, shall deposit with the Transfer Agent, on or before the Retraction
Date, the Exchangeable Share Consideration representing the total
Purchase Price. Provided that such Exchangeable Share Consideration has
been so deposited with the Transfer Agent, the closing of the purchase
and sale of the Retracted Shares pursuant to the Retraction Call Right
shall be deemed to have occurred as at the close of business on the
Retraction Date and, for greater certainty, no redemption by the
Corporation of such Retracted Shares shall take place on the Retraction
Date. In the event that OSI or OSI ULC, as the case may be, does not
deliver a OSI Call Notice within two Business Days or otherwise comply
with these Exchangeable Share provisions in respect thereto, and
provided that Retraction Request is not revoked by the holder in the
manner specified in Section 6.7 hereof, the Corporation shall redeem
the Retracted Shares on the Retraction Date and in the manner otherwise
contemplated in this Article 6.
6.4 Subject to receipt by the Corporation of the Retracted Shares, OSI or
OSI ULC, as the case may be, the Corporation, OSI or OSI ULC, as the
case may be, shall deliver or cause the Transfer Agent to deliver to
the relevant holder, at the address of the holder recorded in the
securities register of the Corporation for the Exchangeable Shares or
at the address specified in the holder's Retraction Request or by
holding for pick up by the holder at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified
by the holder in Schedule A hereto, in each case on or before two
Business Days after the Retraction Date, the Exchangeable Share
Consideration representing the total Retraction Price or the total
Purchase Price, as the case may be, and such delivery of such
Exchangeable Share Consideration to the Transfer Agent shall be deemed
to be payment of and shall satisfy and discharge all liability for the
total Retraction Price or total Purchase Price, as the case may be,
except as to any cheque included therein which is not paid on due
presentation.
6.5 On and after the close of business on the Retraction Date, the holder
of the Retracted Shares shall cease to be a holder of such Retracted
Shares and shall not be entitled to exercise any of the rights of a
holder in respect thereof, other than the right to receive such
holder's proportionate part of the total Retraction Price or total
Purchase Price, as
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the case may be, unless upon presentation and surrender of certificates
in accordance with the foregoing provisions, payment of the total
Retraction Price or the total Purchase Price, as the case may be, shall
not be made, in which case the rights of such holder shall remain
unaffected until the Exchangeable Share Consideration representing the
total Retraction Price or the total Purchase Price, as the case may be,
has been paid in the manner hereinbefore provided. On and after the
close of business on the Retraction Date, provided that presentation
and surrender of certificates and payment of the Exchangeable Share
Consideration representing the total Retraction Price or the total
Purchase Price, as the case may be, has been made in accordance with
the foregoing provisions, the holder of the Retracted Shares so
redeemed by the Corporation or purchased by OSI or OSI ULC shall
thereafter be considered and deemed for all purposes to be a holder of
the OSI Common Stock delivered to it. Notwithstanding the foregoing,
until such payment of such Exchangeable Share Consideration to the
holder, the holder shall be deemed to still be a holder of Exchangeable
Shares for purposes of all voting rights with respect thereto under the
Voting and Exchange Trust Agreement.
6.6 Notwithstanding any other provision of this Article 6, the Corporation
shall not be obligated to redeem Retracted Shares specified by a holder
in a Retraction Request to the extent that such redemption of Retracted
Shares would be contrary to liquidity or solvency requirements or other
provisions of applicable law. If the Corporation believes that on any
Retraction Date it would not be permitted by any of such provisions to
redeem the Retracted Shares tendered for redemption on such date, and
provided that neither OSI nor OSI ULC shall have exercised the
Retraction Call Right with respect to the Retracted Shares, the
Corporation shall only be obligated to redeem Retracted Shares
specified by a holder in a Retraction Request to the extent of the
maximum number that may be so redeemed (rounded down to a whole number
of shares) as would not be contrary to such provisions and shall notify
the holder as soon as is reasonably practical but in any event not
later than one Business Day prior to the Retraction Date as to the
number of Retracted Shares which will not be redeemed by the
Corporation. In any case in which the redemption by the Corporation of
Retracted Shares would be contrary to liquidity or solvency
requirements or other provisions of applicable law, the Corporation
shall redeem Retracted Shares in accordance with Section 6.2 of these
share provisions on a pro rata basis and shall issue to each holder of
Retracted Shares a new certificate, at the expense of the Corporation,
representing the Retracted Shares not redeemed by the Corporation
pursuant to Section 6.2 hereof. Provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.7
hereof, the holder of any such Retracted Shares not redeemed by the
Corporation pursuant to Section 6.2 hereof as a result of liquidity or
solvency requirements or applicable law shall be deemed by giving the
Retraction Request to require OSI or OSI ULC, as the case may be, to
purchase such Retracted Shares from such holder on the Retraction Date
or as soon as practicable thereafter on payment by OSI or OSI ULC, as
the case may be, to such holder of the Purchase Price for each such
Retracted Share, all as more specifically provided in the Voting and
Exchange Trust Agreement, and OSI or OSI ULC shall make such purchase.
6.7 A holder of Retracted Shares may, by notice in writing given by the
holder to the Corporation before the close of business on the Business
Day immediately preceding the Retraction Date, withdraw its Retraction
Request in which event such Retraction Request
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shall be null and void and, for greater certainty, the revocable offer
constituted by the Retraction Request to sell the Retracted Shares to
OSI or OSI ULC, as the case may be, shall be deemed to have been
revoked.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law, and if neither OSI or OSI ULC exercises the
Redemption Call Right (which, if exercised, shall be binding on the
holders of Exchangeable Shares), the Corporation shall on the Automatic
Redemption Date redeem the whole of the then outstanding Exchangeable
Shares for an amount equal to the Exchangeable Share Price applicable
on the last Business Day prior to the Automatic Redemption Date (the
"Redemption Price") which, as set forth in Section 7.3 hereof, shall be
fully paid and satisfied by the delivery by or on behalf of the
Corporation of the Exchangeable Share Consideration representing the
total Redemption Price. In connection with payment of the Exchangeable
Share Consideration representing the Redemption Price, the Corporation
shall be entitled to liquidate some of the OSI Common Stock which would
otherwise be deliverable as Exchangeable Share Consideration to the
particular holder of Exchangeable Shares in order to fund any statutory
withholding tax obligation.
7.2 In any case of a redemption of Exchangeable Shares under this Article
7, the Corporation, or the Transfer Agent on behalf of the Corporation,
shall, at least 60 days before an Automatic Redemption Date described
in clause (a) or (b) of the definition of Automatic Redemption Date or
at least such number of days before an Automatic Redemption Date
described in clause (c), (d) or (e) of the definition of Automatic
Redemption Date as the Board of Directors of the Corporation may
determine to be reasonably practicable in the circumstances, send or
cause to be sent to each registered holder of Exchangeable Shares a
notice in writing of the redemption or possible redemption by the
Corporation or the purchase by OSI or OSI ULC under the Redemption Call
Right, as the case may be, of the Exchangeable Shares held by such
holder. Such notice shall set out the Redemption Price or the
Redemption Call Purchase Price, as the case may be, the Automatic
Redemption Date and, if applicable, particulars of the Redemption Call
Right. In the case of any notice given in connection with a possible
Automatic Redemption Date as described in clause (c), (d) or (e) of the
definition of Automatic Redemption Date, such notice will be given
contingently and will be withdrawn if the contingency does not occur.
7.3 On or after the Automatic Redemption Date, and subject to the exercise
by OSI or OSI ULC of the Redemption Call Right, the Corporation shall
cause to be delivered to the holders of the Exchangeable Shares to be
redeemed the Exchangeable Share Consideration representing the
Redemption Price for each such Exchangeable Share upon presentation and
surrender at the registered office of the Corporation or at any office
of the Transfer Agent as may be specified by the Corporation in such
notice of the certificates representing such Exchangeable Shares,
together with such other documents and instruments as may be required
to effect a transfer of Exchangeable Shares under applicable law and
the by-laws of the Corporation and such additional documents and
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instruments as the Transfer Agent may reasonably require (provided that
such presentation and surrender shall be deemed to be valid if made at
the office of the Transfer Agent, if any, in the province in which the
address of the holder of Exchangeable Shares is recorded on the books
of the Corporation). Payment of the total Redemption Price for such
Exchangeable Shares shall be made by delivery to each holder, at the
address of the holder recorded in the securities register or at any
office of the Transfer Agent as may be specified by the Corporation in
such notice, on behalf of the Corporation, of the Exchangeable Share
Consideration representing the total Redemption Price (provided that if
payment is made by delivery of the Exchangeable share Consideration to
the Transfer Agent, such delivery shall be made at the office of the
Transfer Agent, if any, in the province in which the address of the
holder of Exchangeable Shares is recorded on the books of the
Corporation). On and after the Automatic Redemption Date, the holders
of the Exchangeable Shares called for redemption shall cease to be
holders of such Exchangeable Shares and shall not be entitled to
exercise any of the rights of holders in respect thereof, other than
the right to receive their proportionate part of the Exchangeable Share
Consideration representing the total Redemption Price, unless payment
of the Exchangeable Share Consideration representing the total
Redemption Price for such Exchangeable Shares shall not be made upon
presentation and surrender of certificates in accordance with the
foregoing provisions, in which case the rights of the holders shall
remain unaffected until the Exchangeable Share Consideration
representing the total Redemption Price has been paid in the manner
hereinbefore provided. The Corporation shall have the right at any time
after the sending of notice of its intention to redeem the Exchangeable
Shares as aforesaid to deposit or cause to be deposited the
Exchangeable Share Consideration with respect to the Exchangeable
Shares so called for redemption, or of such of the said Exchangeable
Shares represented by certificates that have not at the date of such
deposit been surrendered by the holders thereof in connection with such
redemption, in a custodial account or for safe keeping, in the case of
non-cash items, with any chartered bank or trust company in Canada
named in such notice. Upon the later of such deposit being made and the
Automatic Redemption Date, the Exchangeable Shares in respect whereof
such deposit shall have been made shall be redeemed and the rights of
the holders thereof after such deposit or Automatic Redemption Date, as
the case may be, shall be limited to receiving their proportionate part
of the Exchangeable Share Consideration representing the total
Redemption Price for such Exchangeable Shares so deposited, against
presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of such Exchangeable Share Consideration, the
holders of the Exchangeable Shares shall thereafter be considered and
deemed for all purposes to be holders of the OSI Common Stock delivered
to them. Notwithstanding the foregoing, until such payment or deposit
of such Exchangeable Share Consideration is made, the holder shall be
deemed to still be a holder of Exchangeable Shares for purposes of all
voting rights with respect thereto under the Voting and Exchange Trust
Agreement.
7.4 If OSI or OSI ULC exercises the Redemption Call Right, each holder of
Exchangeable Shares shall be obligated to sell all the Exchangeable
Shares held by such holder to OSI or OSI ULC, as the case may be, on
the Automatic Redemption Date against payment to
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such holder by OSI or OSI ULC of the Exchangeable Share Consideration
representing the Redemption Call Purchase Price for each such share.
ARTICLE 8
VOTING RIGHTS
8.1 Except as required by applicable law and the provisions hereof, the
holders of the Exchangeable Shares shall not be entitled as such to
receive notice of or to attend any meeting of the shareholders of the
Corporation or to vote at any such meeting.
ARTICLE 9
AMENDMENT AND APPROVAL
9.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but, except as
hereinafter provided, only with the approval of the holders of the
Exchangeable Shares given as hereinafter specified.
9.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition
attaching to the Exchangeable Shares or any other matter requiring the
approval or consent of the holders of the Exchangeable Shares shall be
deemed to have been sufficiently given if it shall have been given in
accordance with applicable law subject to a minimum requirement that
such approval be evidenced by resolution passed by not less than 66
2/3% of the votes cast on such resolution by persons represented in
person or by proxy at a meeting of holders of Exchangeable Shares
(excluding Exchangeable Shares beneficially owned by OSI or its
Subsidiaries) duly called and held at which the holders of at least 50%
of the outstanding Exchangeable Shares at that time are present or
represented by proxy. If at any such meeting the holders of at least
50% of the outstanding Exchangeable Shares at that time are not present
or represented by proxy within one-half hour after the time appointed
for such meeting, then the meeting shall be adjourned to such date not
less than 10 days thereafter and to such time and place as may be
designated by the Chairman of such meeting. At such adjourned meeting,
the holders of Exchangeable Shares present or represented by proxy
thereat may transact the business for which the meeting was originally
called and a resolution passed thereat by the affirmative vote of not
less than 66 2/3% of the votes cast on such resolution by persons
represented in person or by proxy at such meeting (excluding
Exchangeable Shares beneficially owned by OSI or its Subsidiaries)
shall constitute the approval or consent of the holders of the
Exchangeable Shares. For the purposes of this Section, any spoiled
votes, illegible votes, defective votes and abstinences shall be deemed
to be votes not cast.
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ARTICLE 10
RECIPROCAL CHANGES, ETC. IN RESPECT OF OSI COMMON STOCK
10.1
(a) Each holder of an Exchangeable Share acknowledges that the
Support Agreement provides, in part, that OSI will not:
(i) issue or distribute shares of OSI Common Stock (or
securities exchangeable for or convertible into or
carrying rights to acquire shares of OSI Common
Stock) to the holders of all or substantially all of
the then outstanding shares of OSI Common Stock by
way of stock dividend or other distribution; or
(ii) issue or distribute rights, options or warrants to
the holders of all or substantially all of the then
outstanding shares of OSI Common Stock entitling them
to subscribe for or to purchase shares of OSI Common
Stock (or securities exchangeable for or convertible
into or carrying rights to acquire shares of OSI
Common Stock); or
(iii) issue or distribute to the holders of all or
substantially all of the then outstanding shares of
OSI Common Stock (A) shares or securities of OSI of
any class other than OSI Common Stock (other than
shares convertible into or exchangeable for or
carrying rights to acquire shares of OSI Common
Stock), (B) rights, options or warrants other than
those referred to in subsection 11.1 (a) (ii) above,
(C) evidences of indebtedness of OSI or (D) assets of
OSI;
unless
(iv) one or both of OSI and the Corporation is permitted
under applicable law to issue or distribute the
economic equivalent on a per share basis of such
rights, options, warrants, securities, shares,
evidences of indebtedness or other assets to the
holders of the Exchangeable Shares; and
(v) one or both of OSI and the Corporation shall issue or
distribute the economic equivalent on a per share
basis of such rights, options, warrants, securities,
shares, evidences of indebtedness or other assets
simultaneously to the holders of the Exchangeable
Shares.
(b) Each holder of an Exchangeable Share acknowledges that the
Support Agreement further provides, in part, that OSI will
not:
(i) subdivide, redivide or change the then outstanding
shares of OSI Common Stock into a greater number of
shares of OSI Common Stock; or
(ii) reduce, combine or consolidate or change the then
outstanding shares of OSI Common Stock into a lesser
number of shares of OSI Common Stock; or
(iii) reclassify or otherwise change the shares of OSI
Common Stock or effect an amalgamation, merger,
reorganization or other transaction involving or
affecting the shares of OSI Common Stock;
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unless
(iv) the Corporation is permitted under applicable law to
simultaneously make the same or an economically
equivalent change to, or in the rights of the holders
of, the Exchangeable Shares; and
(v) the same or an economically equivalent change is
simultaneously made to, or in the rights of the
holders of, the Exchangeable Shares.
The Support Agreement further provides, in part, that, with the
exception of certain ministerial amendments, the aforesaid provisions of the
Support Agreement shall not be changed without the approval of the holders of
the Exchangeable Shares given in accordance with Article 9 of these share
provisions.
ARTICLE 11
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
11.1 The Corporation will take all such actions and do all such things as
shall be necessary or advisable to perform and comply with and to
ensure performance and compliance by OSI with all provisions of the
Support Agreement, the Voting Trust and Exchange Agreement and OSI's
Certificate of Incorporation applicable to the Corporation and OSI,
respectively, in accordance with the terms thereof including, without
limitation, taking all such actions and doing all such things as shall
be necessary or advisable to enforce to the fullest extent possible for
the direct benefit of the Corporation all rights and benefits in favour
of the Corporation under or pursuant thereto.
11.2 The Corporation shall not propose, agree to or otherwise give effect to
any amendment to, or waiver or forgiveness of its rights or obligations
under, the Support Agreement, the Voting Trust and Exchange Agreement
or OSI's Certificate of Incorporation without the approval of the
holders of the Exchangeable Shares given in accordance with Section 9.2
hereof other than such amendments, waivers and/or forgiveness as may be
necessary or advisable for the purpose of:
(a) adding to the covenants of the other party or parties to such
agreement for the protection of the Corporation or the holders
of Exchangeable Shares; or
(b) making such provisions or modifications not inconsistent with
such agreement or certificate as may be necessary or desirable
with respect to matters or questions arising thereunder which,
in the opinion of the Board of Directors, it may be expedient
to make, provided that the Board of Directors shall be of the
opinion, after consultation with counsel, that such provisions
and modifications will not be prejudicial to the interests of
the holders of the Exchangeable Shares; or
(c) making such changes in or corrections to such agreement or
certificate which, on the advice of counsel to the
Corporation, are required for the purpose of curing or
correcting any ambiguity or defect or inconsistent provision
or clerical omission or mistake or manifest error contained
therein, provided that the Board of
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<PAGE> 100
Directors shall be of the opinion, after consultation with
counsel, that such changes or corrections will not be
prejudicial to the interests of the holders of the
Exchangeable Shares.
ARTICLE 12
LEGEND
12.1 The certificates evidencing the Exchangeable Shares shall contain or
have affixed thereto a legend, in form and on terms approved by the
Board of Directors, with respect to the Support Agreement, the
provisions of the Articles of the Corporation relating to the
Liquidation Call Right, the Retraction Call Right and the Redemption
Call Right, and the Voting and Exchange Trust Agreement (including the
provisions with respect to the voting rights and exchange provisions
thereunder).
ARTICLE 13
MISCELLANEOUS
13.1 Any notice, request or other communication to be given to the
Corporation by a holder of Exchangeable Shares shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by
telecopy or by delivery to the registered office of the Corporation and
addressed to the attention of the President. Any such notice, request
or other communication, if given by mail, telecopy or delivery, shall
only be deemed to have been given and received upon actual receipt
thereof by the Corporation.
13.2 Any presentation and surrender by a holder of Exchangeable Shares to
the Corporation or the Transfer Agent of certificates representing
Exchangeable Shares in connection with the liquidation, dissolution or
winding-up of the Corporation or the retraction, redemption or exchange
of Exchangeable Shares shall be made by registered mail (postage
prepaid) or by delivery to the registered office of the Corporation or
to such office of the Transfer Agent as may be specified by the
Corporation, in each case addressed to the attention of the President
of the Corporation. Any such presentation and surrender of certificates
shall only be deemed to have been made and to be effective upon actual
receipt thereof by the Corporation or the Transfer Agent, as the case
may be, and the method of any such presentation and surrender of
certificates shall be at the sole risk of the holder.
13.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in
writing and shall be valid and effective if given by mail (postage
prepaid) or by delivery to the address of the holder recorded in the
securities register of the Corporation or, in the event of the address
of any such holder not being so recorded, then at the last address of
such holder known to the Corporation. Any such notice, request or other
communication, if given by mail, shall be deemed to have been given and
received on the fifth Business Day following the date of mailing and,
if given by delivery, shall be deemed to have been given and received
on the date of delivery. Accidental failure or omission to give any
notice, request or other communication to one or more holders of
Exchangeable Shares shall not invalidate or
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<PAGE> 101
otherwise alter or affect any action or proceeding to be or intended to
be taken by the Corporation.
13.4 For greater certainty, the Corporation shall not be required for any
purpose under these share provisions to recognize or take account of
persons who are not so recorded in such securities register.
13.5 All Exchangeable Shares acquired by the Corporation upon the redemption
or retraction thereof shall be cancelled.
13.6 For greater certainty, any payments to the holders of Exchangeable
Shares shall be net of applicable taxes, if any, and the payor shall
not be obliged to gross up or increase the amount of such payment which
would otherwise be made to take into account such taxes. Any such taxes
which have been withheld or deducted by the payor thereof shall be
remitted to the applicable tax authority within the time required for
such remittance.
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<PAGE> 102
SCHEDULE "A"
RETRACTION REQUEST
To the Corporation, o ("OSI") and o ("OSI ULC")
This request is given pursuant to Article 6 of the provisions (the
"Share Provisions") attaching to the Exchangeable Shares of the Corporation and
all capitalized words and expressions used in this request which are defined in
the Share Provisions have the meaning attributed to such words and expressions
in such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the
Retraction Call Right referred to below, the undersigned requests the
Corporation to redeem in accordance with Article 6 of the Share Provisions:
[ ] all share(s) represented by the accompanying certificate(s);
or
[ ] ____________ share(s) only.
The undersigned hereby notifies the Corporation that the Retraction
Date shall be ___________________. date
NOTE: The Retraction Date must be a Business Day and must not be
less than three Business Days nor more than 10 Business Days
after the date upon which this notice and the accompanying
shares are received at the registered office of the
Corporation or at any office of the Transfer Agent as may be
specified in this Retraction Request. In the event that no
such Business Day is correctly specified above, the Retraction
Date shall be deemed to be the tenth Business Day after the
date on which this request is received by the Corporation.
The undersigned acknowledges the Retraction Call Right of OSI and OSI
ULC (as defined in the Share Provisions) to purchase all but not less than all
the Retracted Shares from the undersigned and that this request shall be deemed
to be a revocable offer by the undersigned to sell the Retracted Shares to OSI
or OSI ULC, as the case may be, in accordance with the Retraction Call Right on
the Retraction Date for the Retraction Price and on the other terms and
conditions set out in Section 6.3 of the Share Provisions. If neither OSI nor
OSI ULC, as the case may be, determines to exercise the Retraction Call Right,
the Corporation will notify the undersigned of such fact as soon as possible.
This retraction request, and offer to sell the Retracted Shares to OSI or OSI
ULC, as the case may be, may be revoked and withdrawn by the undersigned by
notice in writing given to the Corporation at any time before the close of
business on the Business Date immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of liquidity or
solvency provisions of applicable law, the Corporation is unable to redeem all
Retracted Shares, the undersigned will be deemed to have exercised the Exchange
Right (as defined in the Voting and Exchange Trust Agreement) so as to require
OSI to purchase, or cause OSI ULC to purchase, the unredeemed Retracted Shares.
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<PAGE> 103
The undersigned hereby represents and warrants to the Corporation, OSI
and OSI ULC that the undersigned has good title to, and owns, the share(s)
represented by the accompanying certificate free and clear of all liens, claims,
encumbrances, security interests and adverse claims or interests.
<TABLE>
<S> <C> <C>
------------------------- ----------------------------------------- -----------------------------------------
Date Signature of Shareholder Guarantee of Signature
</TABLE>
[ ] Please check box if the legal or beneficial owner of the Retracted
Shares is a non-resident of Canada.
[ ] Please check box if the securities and any cheque(s) or other non-cash
assets resulting from the retraction of the Retracted Shares are to be
held for pick-up by the shareholder at the principal transfer offices
of Montreal Trust Company of Canada (the "Transfer Agent") in Calgary,
Alberta, failing which the securities and any cheque(s) or other
non-cash assets will be delivered to the shareholder in accordance with
the share provisions.
[ ] Please check box if the securities and any cheque(s) or other non-cash
assets resulting from the retraction of the Retracted Shares are to be
held for pick-up by the shareholder at the principal transfer offices
of Montreal Trust Company of Canada (the "Transfer Agent") in Toronto,
Ontario, failing which the securities and any cheque(s) or other
non-cash assets will be delivered to the shareholder in accordance with
the share provisions.
NOTE: This panel must be completed and the accompanying certificate,
together with such additional documents as the Transfer Agent
may require, must be deposited with the Transfer Agent at its
principal transfer offices in Calgary, Alberta or Toronto,
Ontario. The securities and any cheque(s) or other non-cash
assets resulting from the retraction or purchase of the
Retracted Shares will be issued and registered in, and made
payable to, or transferred into, respectively, the name of the
shareholder as it appears on the register of the Corporation
and the securities, cheque (s) and other non-cash assets
resulting from such retraction or purchase will be delivered
to the shareholder in accordance with the Share Provisions.
<TABLE>
<S> <C>
-------------------------------------------------------------------------- -------------------------------------
Name of Person in Whose Name Securities or Cheque(s) or Other Non-cash Date
Assets Are To Be Registered, Issued or Delivered (please print)
-------------------------------------------------------------------------- -------------------------------------
Street Address or P.O. Box Signature of Shareholder
-------------------------------------------------------------------------- -------------------------------------
City, Province Signature Guaranteed by
</TABLE>
NOTE: If this retraction request is for less than all of the
share(s) represented by the accompanying certificate, a
certificate representing the remaining shares of the
Corporation will be issued and registered in the name of the
shareholder as it appears on the register of the Corporation
or its lawful transferee.
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<PAGE> 104
B. OTHER PROVISIONS
1.1 Meetings
Meetings of shareholders of the Corporation shall be held in the
location determined by the directors of the Corporation, and may be held in
Houston, Texas, or at any location within Alberta.
1.2 Definitions
Unless there is something in the subject matter or context inconsistent
therewith in Sections 1.3, 1.4 and 1.5 below, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
"Act" means the Business Corporations Act (Alberta), as amended;
"Automatic Redemption Date" has the meaning provided in the
Exchangeable Share Provisions;
"Business Day" has the meaning provided in the Exchangeable Share
Provisions;
"Exchangeable Share Consideration" has the meaning provided in the
Exchangeable Share Provisions;
"Exchangeable Share Price" has the meaning provided in the Exchangeable
Share Provisions;
"Exchangeable Share Provisions" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares;
"Exchangeable Shares" means the Exchangeable Shares in the capital of
the Corporation;
"Liquidation Call Purchase Price" has the meaning provided in Section
1.3;
"Liquidation Call Right" has the meaning provided in Section 1.3;
"Liquidation Date" has the meaning provided in the Exchangeable Share
Provisions;
"OSI" has the meaning provided in the Exchangeable Share Provisions;
"OSI Common Stock" has the meaning provided in the Exchangeable Share
Provisions;
"Redemption Call Purchase Price" has the meaning provided in Section
1.4;
"Redemption Call Right" has the meaning provided in Section 1.4;
"Subsidiary" has the meaning provided in the Exchangeable Share
Provisions;
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<PAGE> 105
"Transfer Agent" means the duly appointed transfer agent for the time
being of the Exchangeable Shares, and, if there is more than one such transfer
agent, then the principal Canadian transfer agent; and
"Voting and Exchange Trust Agreement" has the meaning provided in the
Exchangeable Share Provisions.
1.3 Liquidation Call Right
(a) OSI or OSI ULC shall have the overriding right (the
"Liquidation Call Right"), in the event of and notwithstanding
any proposed liquidation, dissolution or winding-up of the
Corporation as referred to in Article 5 of the Exchangeable
Share Provisions, to purchase directly from all but not less
than all of the holders (other than OSI or any Subsidiary
thereof) of Exchangeable Shares on the Liquidation Date all
but not less than all of the Exchangeable Shares held by such
holders on payment by OSI or OSI ULC to each holder of the
Exchangeable Share Price applicable on the last Business Day
prior to the Liquidation Date (the "Liquidation Call Purchase
Price") in accordance with subsection 1.3(c). In the event of
the exercise of the Liquidation Call Right by OSI or OSI ULC,
each holder shall be obligated to sell all the Exchangeable
Shares held by such holder to OSI or OSI ULC on the
Liquidation Date on payment by OSI or OSI ULC to the holder of
the Liquidation Call Purchase Price for each such share.
(b) To exercise the Liquidation Call Right, OSI or OSI ULC must
notify the Corporation's Transfer Agent in writing, as agent
for the holders of Exchangeable Shares, and the Corporation of
OSI's or OSI ULC's intention to exercise such right at least
55 days before the Liquidation Date in the case of a voluntary
liquidation, dissolution or winding-up of the Corporation and
at least five Business Days before the Liquidation Date in the
case of an involuntary liquidation, dissolution or winding-up
of the Corporation. The Transfer Agent will notify the holders
of Exchangeable Shares as to whether or not OSI or OSI ULC has
exercised the Liquidation Call Right forthwith after the
expiry of the date by which the same may be exercised by OSI
or OSI ULC. If OSI or OSI ULC exercises the Liquidation Call
Right, on the Liquidation Date OSI or OSI ULC will purchase
and the holders will sell all of the Exchangeable Shares then
outstanding for a price per share equal to the Liquidation
Call Purchase Price.
(c) For the purposes of completing the purchase of the
Exchangeable Shares pursuant to the Liquidation Call Right,
OSI or OSI ULC shall deposit with the Transfer Agent, on or
before the Liquidation Date, the Exchangeable Share
Consideration representing the total Liquidation Call Purchase
Price. Provided that such Exchangeable Share Consideration has
been so deposited with the Transfer Agent, on and after the
Liquidation Date, the right of each holder of Exchangeable
Shares will be limited to receiving such holder's
proportionate part of the total Liquidation Call Purchase
Price payable by OSI or OSI ULC, without interest, upon
presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and
the holder shall, on and after the
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<PAGE> 106
Liquidation Date, be considered and deemed for all purposes to
be the holder of the OSI Common Stock delivered to such
holder. Upon surrender to the Transfer Agent of a certificate
or certificates representing Exchangeable Shares, together
with such other documents and instruments as may be required
to effect a transfer of Exchangeable Shares under the Act and
the by-laws of the Corporation and such additional documents
and instruments as the Transfer Agent may reasonably require,
the holder of such surrendered certificate or certificates
shall be entitled to receive in exchange therefor, and the
Transfer Agent on behalf of OSI shall deliver to such holder,
the Exchangeable Share Consideration to which such holder is
entitled. If OSI or OSI ULC does not exercise the Liquidation
Call Right in the manner described above, on the Liquidation
Date the holders of the Exchangeable Shares will be entitled
to receive in exchange therefor the liquidation price
otherwise payable by the Corporation in connection with the
liquidation, dissolution or winding-up of the Corporation
pursuant to Article 5 of the Exchangeable Share Provisions.
Notwithstanding the foregoing, until such Exchangeable Share
Consideration is delivered to the holder, the holder shall be
deemed to still be a holder of Exchangeable Shares for
purposes of all voting rights with respect thereto under the
Voting and Exchange Trust Agreement.
1.4 Redemption Call Right
(a) OSI and OSI ULC shall have the overriding right (the
"Redemption Call Right"), notwithstanding any proposed
redemption of the Exchangeable Shares by the Corporation
pursuant to Article 7 of the Exchangeable Share Provisions, to
purchase directly from all but not less than all of the
holders (other than OSI or any Subsidiary thereof) of
Exchangeable Shares on the Automatic Redemption Date all but
not less than all of the Exchangeable Shares held by each such
holder on payment by OSI or OSI ULC to the holder of the
Exchangeable Share Price applicable on the last Business Day
prior to the Automatic Redemption Date (the "Redemption Call
Purchase Price") in accordance with subsection 1.4(c). In the
event of the exercise of the Redemption Call Right by OSI or
OSI ULC, each holder shall be obligated to sell all the
Exchangeable Shares held by the holder to OSI or OSI ULC on
the Automatic Redemption Date on payment by OSI or OSI ULC to
the holder of the Redemption Call Purchase Price for each such
share.
(b) To exercise the Redemption Call Right, OSI or OSI ULC must
notify the Transfer Agent in writing, as agent for the holders
of Exchangeable Shares, and the Corporation of the OSI's or
OSI ULC's intention to exercise such right not later than the
date by which the Corporation is required to give notice of
the Automatic Redemption Date. The Transfer Agent will notify
the holders of the Exchangeable Shares as to whether or not
OSI or OSI ULC has exercised the Redemption Call Right
forthwith after the date by which the same may be exercised by
OSI or OSI ULC. If OSI or OSI ULC exercises the Redemption
Call Right, on the Automatic Redemption Date, OSI will
purchase and the holders will sell all of the Exchangeable
Shares then outstanding for a price per share equal to the
Redemption Call Purchase Price.
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<PAGE> 107
(c) For the purposes of completing the purchase of the
Exchangeable Shares pursuant to the Redemption Call Right, OSI
or OSI ULC shall deposit with the Transfer Agent, on or before
the Automatic Redemption Date, the Exchangeable Share
Consideration representing the total Redemption Call Purchase
Price. Provided that such Exchangeable Share Consideration has
been so deposited with the Transfer Agent, on and after the
Automatic Redemption Date, the rights of each holder of
Exchangeable Shares will be limited to receiving such holder's
proportionate part of the total Redemption Call Purchase Price
payable by OSI or OSI ULC upon presentation and surrender by
the holder of certificates representing the Exchangeable
Shares held by such holder and the holder shall on and after
the Automatic Redemption Date be considered and deemed for all
purposes to be the holder of the OSI Common Stock delivered to
such holder. Upon surrender to the Transfer Agent of a
certificate or certificates representing Exchangeable Shares,
together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the
Act and the by-laws of the Corporation and such additional
documents and instruments as the Transfer Agent may reasonably
require, the holder of such surrendered certificate or
certificates shall be entitled to receive in exchange
therefor, and the Transfer Agent on behalf of OSI or OSI ULC
shall deliver to such holder, the Exchangeable Share
Consideration to which such holder is entitled. If OSI or OSI
ULC does not exercise the Redemption Call Right in the manner
described above, on the Automatic Redemption Date, the holders
of the Exchangeable Shares will be entitled to receive in
exchange therefor the redemption price otherwise payable by
the Corporation in connection with the redemption of the
Exchangeable Shares pursuant to Article 7 of the Exchangeable
Share Provisions. Notwithstanding the foregoing, until such
Exchangeable Share Consideration is delivered to the holder,
the holder shall be deemed to still be a holder of
Exchangeable Shares for purposes of all voting rights with
respect thereto under the Voting and Exchange Trust Agreement.
1.5 Retraction Call Right
OSI or OSI ULC shall have the overriding right, notwithstanding the
proposed redemption of Exchangeable Shares by the Corporation pursuant to
Article 6 of the Exchangeable Share Provisions, to purchase directly from the
holder (other than OSI or any Subsidiary thereof) of Exchangeable Shares all but
not less than all of the Retracted Shares in accordance with Section 6.3 of the
Exchangeable Share Provisions.
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<PAGE> 108
EXHIBIT B
INTENTIONALLY OMITTED
<PAGE> 109
EXHIBIT C
SUPPORT AGREEMENT
<PAGE> 110
EXHIBIT C
TO THE COMBINATION AGREEMENT
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT is entered into as of o, 2000, between Oil
States International, Inc., a Delaware corporation ("OSI"), and o, an Alberta
corporation ("PTI Holdco").
RECITALS
A. Pursuant to a Combination Agreement dated as of July 31, 2000, by and among
OSI, HWC Energy Services, Inc., Merger Sub-HWC, Inc., Sooner Inc., Merger
Sub-Sooner Inc. and PTI Group Inc. ("PTI") (such agreement, as it may be amended
or restated, is hereinafter referred to as the "Combination Agreement"), the
parties agreed that on the Effective Date (as defined in the Combination
Agreement), OSI and PTI Holdco would execute and deliver a Support Agreement
containing the terms and conditions set forth in Exhibit C to the Combination
Agreement together with such other terms and conditions as may be agreed to by
the parties to the Combination Agreement acting reasonably;
B. Pursuant to an arrangement (the "Arrangement") effected by Articles of
Arrangement dated o, 2000 filed pursuant to the Business Corporations Act
(Alberta) (or any successor or other corporate statute by which PTI may in the
future be governed) (the "Act") each issued and outstanding common share of PTI
(a "PTI Common Share"), other than those cancelled pursuant to the Arrangement
or held by OSI, by a Subsidiary of OSI or by a U.S. shareholder of PTI, was
ultimately exchanged for Exchangeable Shares of PTI Holdco (the "Exchangeable
Shares");
C. The Articles of Incorporation of PTI Holdco set forth the rights, privileges,
restrictions and conditions (collectively, the "Exchangeable Share Provisions")
attaching to the Exchangeable Shares;
D. The parties hereto desire to make appropriate provision and to establish a
procedure whereby OSI will take certain actions and make certain payments and
deliveries necessary to ensure that PTI Holdco will be able to make certain
payments and to deliver or cause to be delivered shares of OSI Common Stock in
satisfaction of the obligations of PTI Holdco under the Exchangeable Share
Provisions with respect to the payment and satisfaction of dividends,
Liquidation Amounts, Retraction Prices and Redemption Prices, all in accordance
with the Exchangeable Share Provisions and to ensure that the shares of OSI
Common Stock are freely tradable in accordance with the provisions set out
herein;
NOW, THEREFORE, in consideration of the respective covenants and
agreements provided in this agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
C-1
<PAGE> 111
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS
Each term used but not otherwise defined herein shall have the meaning
attributed thereto in the Exchangeable Share Provisions, unless the context
requires otherwise.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this agreement into articles, sections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this agreement.
1.3 NUMBER, GENDER, ETC.
Words importing the singular number only shall include the plural and
vice versa. Words importing the use of any gender shall include all genders.
1.4 DATE FOR ANY ACTION
If any date on which any action is required to be taken under this
agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.
ARTICLE 2
COVENANTS OF OSI AND PTI HOLDCO
2.1 COVENANTS OF OSI REGARDING EXCHANGEABLE SHARES
So long as any Exchangeable Shares are outstanding, OSI will:
(a) not declare or pay any dividend on the OSI Common Stock unless
(i) PTI Holdco shall (w) simultaneously declare or pay, as the
case may be, an equivalent dividend (as provided for in the
Exchangeable Share Provisions) on the Exchangeable Shares (an
"Equivalent Dividend"), and (x) have sufficient money or other
assets or authorized but unissued securities available to enable
the due declaration and the due and punctual payment, in
accordance with applicable law, of any Equivalent Dividend, or
(ii) PTI Holdco shall (y) subdivide the Exchangeable Shares in
lieu of stock dividend thereon (as provided for in the
Exchangeable Share Provisions) (an "Equivalent Stock
Subdivision"), and (z) have sufficient authorized but unissued
securities available to enable the Equivalent Stock Subdivision;
(b) advise PTI Holdco sufficiently in advance of the declaration by
OSI of any dividend on OSI Common Stock and take all such other
actions as are reasonably necessary in co-operation with PTI
Holdco, to ensure that (i) the respective declaration date,
record date and payment date for an Equivalent Dividend shall be
the same as the declaration date, record date and payment date
for the
C-2
<PAGE> 112
corresponding dividend on the OSI Common Stock or, (ii) the
record date and effective date for an Equivalent Stock
Subdivision shall be the same as the record date and payment date
for the corresponding stock dividend on the OSI Common Stock;
(c) ensure that the record date for any dividend declared on OSI
Common Stock is not less than ten Business Days after the
declaration date for such dividend;
(d) take all such actions and do all such things as are necessary or
desirable to enable and permit PTI Holdco, in accordance with
applicable law, to pay and otherwise perform its obligations with
respect to the satisfaction of the Liquidation Amount in respect
of each issued and outstanding Exchangeable Share upon the
liquidation, dissolution or winding-up of PTI Holdco or any other
distribution of the assets of PTI Holdco for the purpose of
winding-up its affairs, including without limitation all such
actions and all such things as are necessary or desirable to
enable and permit PTI Holdco to cause to be delivered shares of
OSI Common Stock to the holders of Exchangeable Shares in
accordance with the provisions of Article 5 of the Exchangeable
Share Provisions;
(e) take all such actions and do all such things as are necessary or
desirable to enable and permit PTI Holdco, in accordance with
applicable law, to pay and otherwise perform its obligations with
respect to the satisfaction of the Retraction Price and the
Redemption Price, including without limitation all such actions
and all such things as are necessary or desirable to enable and
permit PTI Holdco to cause to be delivered shares of OSI Common
Stock to the holders of Exchangeable Shares, upon the retraction
or redemption of the Exchangeable Shares in accordance with the
provisions of Article 6 or Article 7 of the Exchangeable Share
Provisions, as the case may be; and
(f) not exercise its vote as a direct or indirect shareholder to
initiate the voluntary liquidation, dissolution or winding-up of
PTI Holdco nor take any action that, or omit to take any action
the omission of which, is designed to or would result in the
liquidation, dissolution or winding-up of PTI Holdco.
2.2 SEGREGATION OF FUNDS
OSI will cause PTI Holdco to deposit a sufficient amount of funds in a
separate account and segregate a sufficient amount of such assets and other
property as is necessary to enable PTI Holdco to pay or otherwise satisfy the
applicable dividends, Liquidation Amount, Retraction Price or Redemption Price,
in each case for the benefit of holders from time to time of the Exchangeable
Shares, and PTI Holdco will use such funds, assets and other property so
segregated exclusively for the payment of dividends and the payment or other
satisfaction of the Liquidation Amount, the Retraction Price or the Redemption
Price, as applicable, net of any corresponding withholding tax obligations and
for the remittance of such withholding tax obligations.
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<PAGE> 113
2.3 RESERVATION OF SHARES OF OSI COMMON STOCK
OSI hereby represents, warrants and covenants that it has irrevocably
reserved for issuance and will at all times keep available, free from
pre-emptive and other rights, out of its authorized and unissued capital stock
such number of shares of OSI Common Stock (or other shares or securities into
which OSI Common Stock may be reclassified or changed as contemplated by section
2.7 hereof) (i) as is equal to the sum of (A) the number of Exchangeable Shares
issued and outstanding from time to time and (B) the number of Exchangeable
Shares issuable upon the exercise of all rights to acquire Exchangeable Shares
outstanding from time to time and (ii) as are now and may hereafter be required
to enable and permit PTI Holdco to meet its obligations hereunder, under the
Voting and Exchange Trust Agreement, under the Exchangeable Share Provisions and
under any other security or commitment pursuant to the Arrangement with respect
to which OSI may now or hereafter be required to issue shares of OSI Common
Stock.
2.4 NOTIFICATION OF CERTAIN EVENTS
In order to assist OSI to comply with its obligations hereunder, PTI
Holdco will give OSI notice of each of the following events at the time set
forth below:
(a) immediately, in the event of any determination by the Board of
Directors of PTI Holdco to take any action which would require a
vote of the holders of Exchangeable Shares for approval;
(b) immediately, upon the earlier of (i) receipt by PTI Holdco of
notice of, and (ii) PTI Holdco otherwise becoming aware of, any
threatened or instituted claim, suit, petition or other
proceedings with respect to the involuntary liquidation,
dissolution or winding-up of PTI Holdco or to effect any other
distribution of the assets of PTI Holdco among its shareholders
for the purpose of winding-up its affairs;
(c) immediately, upon receipt by PTI Holdco of a Retraction Request
(as defined in the Exchangeable Share Provisions);
(d) at least 45 days prior to any Automatic Redemption Date
determined by the Board of Directors of PTI Holdco in accordance
with clause (b) of the definition of Automatic Redemption Date in
the Exchangeable Share Provisions; and
(e) in the event of any determination by the Board of Directors of
PTI Holdco to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to PTI Holdco or to effect
any other distribution of the assets of PTI Holdco among its
shareholders for the purpose of winding-up its affairs, at least
30 days prior to the proposed effective date of such liquidation,
dissolution, winding-up or other distribution.
C-4
<PAGE> 114
2.5 DELIVERY OF SHARES OF OSI COMMON STOCK
In furtherance of its obligations hereunder, upon notice of any event
which requires PTI Holdco to cause to be delivered shares of OSI Common Stock to
any holder of Exchangeable Shares, OSI shall forthwith issue and deliver the
requisite shares of OSI Common Stock to or to the order of the former holder of
the surrendered Exchangeable Shares, as PTI Holdco shall direct. All such shares
of OSI Common Stock shall be duly issued as fully paid and non-assessable and
shall be free and clear of any lien, claim, encumbrance, security interest or
adverse claim or interest.
2.6 QUALIFICATION OF SHARES OF OSI COMMON STOCK
OSI covenants that if any shares of OSI Common Stock (or other shares
or securities into which OSI Common Stock may be reclassified or changed as
contemplated by Section 2.7 hereof) to be issued and delivered hereunder
(including for greater certainty, pursuant to the Exchangeable Share Provisions,
or pursuant to the Exchange Right or the Automatic Exchange Rights (all as
defined in the Voting and Exchange Trust Agreement)) require registration or
qualification with or approval of or the filing of any document including any
prospectus or similar document, the taking of any proceeding with or the
obtaining of any order, ruling or consent from any governmental or regulatory
authority under any Canadian or United States federal, provincial or state law
or regulation or pursuant to the rules and regulations of any regulatory
authority, or the fulfillment of any other legal requirement (collectively, the
"Applicable Laws") before such shares (or other shares or securities into which
OSI Common Stock may be reclassified or changed as contemplated by Section 2.7
hereof) may be issued and delivered by OSI to the initial holder thereof (other
than PTI Holdco) or in order that such shares may be freely tradeable thereafter
(other than any restrictions on transfer by reason of a holder being a "control
person" of OSI for purposes of Canadian federal or provincial securities law or
an "affiliate" of OSI for purposes of United States federal or state securities
law and provided such trade is conducted through facilities of a stock exchange
outside Canada), OSI will in good faith expeditiously take all such actions and
do all such things as are necessary and permitted by Applicable Laws to cause
such shares of OSI Common Stock (or other shares or securities into which OSI
Common Stock may be reclassified or changed as contemplated by Section 2.7
hereof) to be and remain duly registered, qualified or approved at all times in
order that such shares may be issued and delivered by OSI to the initial holder
thereof (other than PTI Holdco) and in order that such shares or securities may
be freely tradeable thereafter (other than any restrictions on transfer by
reason of a holder being a "control person" of OSI for purposes of Canadian
provincial securities law or an "affiliate" of OSI for purposes of United States
federal or state securities law provided such trade is conducted through
facilities of a stock exchange outside Canada) including, without limitation,
the filing and maintenance of a registration statement under the Securities Act
of 1933; provided, however, that notwithstanding the foregoing, OSI will not be
required to take any action, including, without limitation, the filing of a
registration statement, under any United States federal or state securities law
in respect of the OSI Common Stock (or other shares or securities into which OSI
common stock may be reclassified or changed as contemplated by Section 2.7
hereof) to be issued and delivered hereunder (including, for greater certainty,
pursuant to the Exchangeable Share Provisions, or pursuant to the Exchange Right
and the Automatic Exchange Rights) until the first anniversary of the Effective
Date unless such shares or securities are being, or are to be, delivered
pursuant to Articles 5 or 7 of the Exchangeable Share Provisions, pursuant to
the Exchange Rights or the Automatic Exchange Rights, or pursuant to the
Liquidation Call Right or the Redemption Call Right. From and after the first
anniversary of the Effective Date (or such earlier date as such shares or
securities may be issued and delivered pursuant to
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Articles 5 or 7 of the Exchangeable Share Provisions, pursuant to the Exchange
Rights or the Automatic Exchange Rights or pursuant to the Liquidation Call
Right or the Redemption Call Right), OSI will in good faith expeditiously take
all such actions and do all such things as are necessary to cause all shares of
OSI Common Stock (or other shares or securities into which OSI Common Stock may
be reclassified or changed as contemplated by Section 2.7 hereof) to be
delivered hereunder (including, for greater certainty, pursuant to Exchangeable
Share Provisions, or pursuant to the Exchange Right or the Automatic Exchange
Rights) to be listed, quoted or posted for trading on all stock exchanges and
quotation systems on which such shares are listed, quoted or posted for trading
at such time immediately upon their issuance.
2.7 EQUIVALENCE
(a) OSI will not:
(i) issue or distribute shares of OSI Common Stock (or
securities exchangeable for or convertible into or carrying
rights to acquire shares of OSI Common Stock) to the
holders of all or substantially all of the then outstanding
shares of OSI Common Stock by way of stock dividend or
other distribution; or
(ii) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then outstanding
shares of OSI Common Stock entitling them to subscribe for
or to purchase shares of OSI Common Stock (or securities
exchangeable for or convertible into or carrying rights to
acquire shares of OSI Common Stock); or
(iii) issue or distribute to the holders of all or substantially
all of the then outstanding shares of OSI Common Stock (A)
shares or securities of OSI of any class other than OSI
Common Stock (other than shares convertible into or
exchangeable for or carrying rights to acquire shares of
OSI Common Stock), (B) rights, options or warrants other
than those referred to in subsection 2.7 (a) (ii) above,
(C) evidences of indebtedness of OSI or (D) assets of OSI;
unless
(iv) one or both of OSI and PTI Holdco is permitted under
applicable law to issue or distribute the economic
equivalent on a per share basis of such rights, options,
warrants, securities, shares, evidences of indebtedness or
other assets to the holders of the Exchangeable Shares; and
(v) one or both of OSI and PTI Holdco shall issue or distribute
the economic equivalent on a per share basis of such
rights, options, warrants, securities,
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shares, evidences of indebtedness or other assets
simultaneously to the holders of the Exchangeable Shares.
(b) OSI will not:
(i) subdivide, redivide or change the then outstanding shares
of OSI Common Stock into a greater number of shares of OSI
Common Stock; or
(ii) reduce, combine or consolidate or change the then
outstanding shares of OSI Common Stock into a lesser number
of shares of OSI Common Stock; or
(iii) reclassify or otherwise change the shares of OSI Common
Stock or effect an amalgamation, merger, reorganization or
other transaction involving or affecting the shares of OSI
Common Stock;
unless
(iv) PTI Holdco is permitted under applicable law to
simultaneously make the same or an economically equivalent
change to, or in the rights of the holders of, the
Exchangeable Shares; and
(v) the same or an economically equivalent change is
simultaneously made to, or in the rights of the holders of,
the Exchangeable Shares.
(c) OSI will ensure that the record date for any event referred to in
section 2.7(a) or 2.7(b) above, or (if no record date is
applicable for such event) the effective date for any such event,
is not less than 10 Business Days after the date on which such
event is declared or announced by OSI (with simultaneous notice
thereof to be given by OSI to PTI Holdco).
(d) The Board of Directors of PTI Holdco shall determine, in good
faith and in its sole discretion, economic equivalence for the
purposes of any event referred to in Section 2.7(a) or 2.7(b)
above and each such determination shall be conclusive and binding
on OSI. In making each such determination, the following factors
shall, without excluding other factors determined by the Board of
Directors of PTI Holdco to be relevant, be considered by the
Board of Directors of PTI Holdco:
(i) in the case of any stock dividend or other distribution
payable in OSI Common Stock, the number of such shares
issued in proportion to the number of shares of OSI Common
Stock previously outstanding;
(ii) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase OSI Common
Stock (or securities exchangeable for or convertible into
or carrying rights to acquire OSI Common Stock), the
relationship between the exercise price of each such right,
option or warrant and the current market value (as
determined by the
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Board of Directors of PTI Holdco in the manner contemplated
below) of a share of OSI Common Stock;
(iii) in the case of the issuance or distribution of any other
form of property (including without limitation any share or
securities of OSI of any class other than OSI Common Stock,
any rights, options or warrants other than those referred
to in Section 2.7(d)(ii) above, any evidences of
indebtedness of OSI or any assets of OSI), the relationship
between the fair market value (as determined by the Board
of Directors of PTI Holdco in the manner above
contemplated) of such property to be issued or distributed
with respect to each outstanding share of OSI Common Stock
and the current market value (as determined by the Board of
Directors of PTI Holdco in the manner contemplated below)
of a share of OSI Common Stock;
(iv) in the case of any subdivision, redivision or change of the
then outstanding shares of OSI Common Stock into a greater
number of shares of OSI Common Stock or the reduction,
combination, consolidation or change of the then
outstanding shares of OSI Common Stock into a lesser number
of shares of OSI Common Stock or any amalgamation, merger,
reorganization or other transaction affecting shares of OSI
Common Stock, the effect thereof upon the then outstanding
shares of OSI Common Stock; and
(v) in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the
extent that such consequences may differ from the taxation
consequences to holders of shares of OSI Common stock as a
result of differences between taxation laws of Canada and
the United States (except for any differing consequences
arising as a result of differing marginal taxation rates
and without regard to the individual circumstances of
holders of Exchangeable Shares).
For purposes of the foregoing determinations, the current market
value of any security listed and traded or quoted on a securities
exchange shall be the average of the closing price of such
security during a period of not less than 20 consecutive trading
days ending not more than five trading days before the date of
determination on the principal securities exchange on which such
securities are listed and traded or quoted; provided, however,
that if in the opinion of the Board of Directors of PTI Holdco
the public distribution or trading activity of such securities
during such period does not create a market which reflects the
fair market value of such securities, then the current market
value thereof shall be determined by the Board of Directors of
PTI Holdco, in good faith and in its sole discretion, and
provided further than any such determination by the Board of
Directors of PTI Holdco shall be conclusive and binding on OSI.
(e) PTI Holdco agrees that, to the extent required, upon due
notice from OSI, PTI Holdco will use its best efforts to
take or cause to be taken such steps as may be
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necessary for the purposes of ensuring that appropriate
dividends are paid or other distributions are made by PTI
Holdco, or subdivisions, redivisions or changes are made to
the Exchangeable Shares, in order to implement the required
economic equivalence with respect to the OSI Common Stock
and Exchangeable Shares as provided for in this Section
2.7.
2.8 TENDER OFFERS, ETC.
In the event that a tender offer, share exchange offer, issuer bid,
take-over bid or similar transaction with respect to OSI Common Stock (an
"Offer") is proposed by OSI or is proposed to OSI or its shareholders and is
recommended by the Board of Directors of OSI, or is otherwise effected or to be
effected with the consent or approval of the Board of Directors of OSI, and the
Exchangeable Shares are not redeemed by PTI Holdco or purchased by OSI or OSI
ULC pursuant to the Redemption Call Right, OSI shall, expeditiously and in good
faith, take all such actions and do all such things as are necessary or
desirable to enable and permit holders of Exchangeable Shares to participate in
such Offer to the same extent and on an equivalent basis as the holders of
shares of OSI Common Stock, without discrimination, including, without limiting
the generality of the foregoing, OSI will use its good faith efforts
expeditiously to (and shall, in the case of a transaction proposed by OSI or
where OSI is a participant in the negotiation thereof) ensure that holders of
Exchangeable Shares may participate in all such Offers without being required to
retract Exchangeable Shares as against PTI Holdco (or, if so required, to ensure
that any such retraction shall be effective only upon, and shall be conditional
upon, the closing of the Offer and only to the extent necessary to tender or
deposit to the Offer).
2.9 OWNERSHIP OF OUTSTANDING SHARES
Without the prior approval of PTI Holdco and the prior approval of the
holders of the Exchangeable Shares given in accordance with Section 9.2 of the
Exchangeable Share Provisions, OSI covenants and agrees in favor of PTI Holdco
that, as long as any outstanding Exchangeable Shares are owned by any person or
entity other than OSI or any of its Subsidiaries, OSI, alone or together with
any direct or indirect wholly-owned subsidiary of OSI, will be and remain the
beneficial owner of all issued and outstanding securities of PTI Holdco.
Notwithstanding the foregoing, OSI shall not be in violation of this Section if
any person or group of persons acting jointly or in concert acquires OSI Common
Stock pursuant to any merger of OSI pursuant to which OSI was not the surviving
corporation.
2.10 OSI NOT TO VOTE EXCHANGEABLE SHARES
OSI covenants and agrees that it will appoint and cause to be appointed
proxy holders with respect to all Exchangeable Shares held by OSI and its
Subsidiaries for the sole purpose of attending each meeting of holders of
Exchangeable Shares in order to be counted as part of the quorum for each such
meeting. OSI further covenants and agrees that it will not, and will cause its
Subsidiaries not to, exercise any voting rights which may be exercisable by
holders of Exchangeable Shares from time to time pursuant to the Exchangeable
Share Provisions or pursuant to the provisions of the Act with respect to any
Exchangeable Shares held by it or by its Subsidiaries in respect of any matter
considered at any meeting of holders of Exchangeable Shares.
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2.11 DUE PERFORMANCE
On and after the Effective Date, OSI shall duly and timely perform all
of its obligations provided for in connection with the Plan of Arrangement and
the Articles of Incorporation of PTI Holdco, including any obligations that may
arise upon the exercise of OSI's rights under the Exchangeable Share Provisions.
ARTICLE 3
GENERAL
3.1 TERM
This agreement shall come into force and be effective as of the date
hereof and shall terminate and be of no further force and effect at such time as
no Exchangeable Shares (or securities or rights convertible into or exchangeable
for or carrying rights to acquire Exchangeable Shares) are held by any party
other than OSI and any of its Subsidiaries.
3.2 CHANGES IN CAPITAL OF OSI AND PTI HOLDCO
Notwithstanding the provisions of section 3.4 hereof, at all times
after the occurrence of any event effected pursuant to section 2.7 or 2.8
hereof, as a result of which either OSI Common Stock or the Exchangeable Shares
or both are in any way changed, this agreement shall forthwith be amended and
modified as necessary in order that it shall apply with full force and effect,
mutatis mutandis, to all new securities into which OSI Common Stock or the
Exchangeable Shares or both are so changed, and the parties hereto shall as soon
as possible execute and deliver an agreement in writing giving effect to and
evidencing such necessary amendments and modifications.
3.3 SEVERABILITY
If any provision of this agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
agreement shall not in any way be affected or impaired thereby and this
agreement shall be carried out as nearly as possible in accordance with its
original terms and conditions.
3.4 AMENDMENTS, MODIFICATIONS, ETC.
This agreement may not be amended, modified or waived except by an
agreement in writing executed by PTI Holdco and OSI and approved by the holders
of the Exchangeable Shares in accordance with Section 10.2 of the Exchangeable
Share Provisions.
3.5 MINISTERIAL AMENDMENTS
Notwithstanding the provisions of section 3.4, the parties to this
agreement may in writing, at any time and from time to time, without the
approval of the holders of the Exchangeable Shares, amend or modify this
agreement for the purposes of:
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(a) adding to the covenants of either or both parties for the
protection of the holders of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with
this agreement as may be necessary or desirable with respect to
matters or questions which, in the opinion of the board of
directors of each of PTI Holdco and OSI, it may be expedient to
make, provided that each such board of directors shall be of the
opinion that such amendments or modifications will not be
prejudicial to the interests of the holders of the Exchangeable
Shares; or
(c) making such changes or corrections which, on the advice of
counsel to PTI Holdco and OSI, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error;
provided that the boards of directors of each of PTI Holdco and
OSI shall be of the opinion that such changes or corrections will
not be prejudicial to the interests of the holders of the
Exchangeable Shares.
3.6 MEETING TO CONSIDER AMENDMENTS
PTI Holdco, at the request of OSI, shall call a meeting or meetings of
the holders of the Exchangeable Shares for the purpose of considering any
proposed amendment or modification requiring approval of such shareholders. Any
such meeting or meetings shall be called and held in accordance with the by-laws
of PTI Holdco, the Exchangeable Share Provisions and all Applicable Laws.
3.7 AMENDMENTS ONLY IN WRITING
No amendment to or modification or waiver of any of the provisions of
this agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by both of the parties hereto and approved by holders of
Exchangeable Shares pursuant to Section 9.2 of the Exchangeable Share
Provisions.
3.8 INUREMENT
This agreement shall be binding upon and inure to the benefit of the
parties hereto and each of their respective heirs, successors and assigns.
3.9 NOTICES TO PARTIES
All notices and other communications between the parties shall be in
writing and shall be deemed to have been given if delivered personally or by
confirmed telecopy to the parties at the following addresses (or at such other
address for either such party as shall be specified in like notice):
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(a) if to OSI:
Oil States International, Inc.
Three Allen Center
333 Clay Street, Suite 333460
Houston, Texas 77002
Attention: Cindy B. Taylor
Fax: (713) 652-0499
with a copy to:
Donahue, Ernst & Young LLP
1000 Ernst & Young Tower
440 - 2nd Avenue S.W.
P.O. Box 2258, station M
Calgary, Alberta T2P 5E5
Attention: Richard Peters
Fax: (403) 206-5525
(b) if to PTI Holdco to:
Three Allen Center
333 Clay Street, Suite 333460
Houston, Texas 77002
Attention: Cindy B. Taylor
Fax: (713) 652-0499
Any notice or other communication given personally shall be deemed to
have been given and received upon delivery thereof and if given by telecopy
shall be deemed to have been given and received on the date of confirmed receipt
thereof, unless such day is not a Business Day, in which case it shall be deemed
to have been given and received upon the immediately following Business Day.
3.10 COUNTERPARTS
This agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which taken together shall constitute one and the
same instrument. Executed counterparts of this agreement may be delivered by
facsimile transmission.
3.11 JURISDICTION
This agreement shall be construed and enforced in accordance with the
laws of the Province of Alberta and the federal laws of Canada applicable
therein.
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3.12 ATTORNMENT
OSI agrees that any action or proceeding arising out of or relating to
this agreement may be instituted in the courts of the Province of Alberta,
waives any objection which it may have now or hereafter to the venue of any such
action or proceeding, irrevocably submits to the jurisdiction of such courts in
any such action or proceeding, agrees to be bound by any judgment of such courts
and not to seek, and hereby waives, any review of the merits of any such
judgment by the courts of any other jurisdiction and hereby appoints PTI Holdco
at its registered office in the Province of Alberta as OSI's attorney for
service of process.
IN WITNESS WHEREOF, OSI and PTI Holdco have caused this agreement to be
signed by their respective officers thereunder duly authorized, all as of the
date first written above.
OIL STATES INTERNATIONAL, INC.
Per:
--------------------------------
Per:
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<PAGE> 123
EXHIBIT D
VOTING AND EXCHANGE TRUST AGREEMENT
<PAGE> 124
EXHIBIT D
TO THE COMBINATION AGREEMENT
VOTING AND EXCHANGE TRUST AGREEMENT
THIS VOTING AND EXCHANGE TRUST AGREEMENT is entered into as of o, 2000,
by and between Oil States International, Inc., a Delaware corporation ("OSI"),
o, an Alberta corporation ("PTI Holdco"), and Montreal Trust Company of Canada,
a Canadian trust company ("Trustee").
RECITALS:
A. Pursuant to a Combination Agreement dated as of July 31, 2000 by and among
OSI, HWC Energy Services, Inc., Sooner Inc. and PTI Group, Inc. ("PTI") and such
other parties referenced therein (such agreement as it may be amended or
restated is hereinafter referred to as the "Combination Agreement"), the parties
agreed that on the Effective Date (as defined in the Combination Agreement), OSI
and PTI Holdco would execute and deliver a Voting and Exchange Trust Agreement
containing the terms and conditions set forth in Exhibit D to the Combination
Agreement together with such other terms and conditions as may be agreed to by
the parties to the Combination Agreement acting reasonably.
B. Pursuant to an arrangement (the "Arrangement") effected by Articles of
Arrangement dated o, 2000 filed pursuant to the Business Corporations Act
(Alberta) (or any successor or other corporate statute by which PTI may in the
future be governed) (the "Act"), each issued and outstanding common share of PTI
(a "PTI Common Share"), other than those cancelled pursuant to the Arrangement
or held by OSI or by a Subsidiary of OSI, was ultimately exchanged for
Exchangeable Shares of PTI Holdco (the "Exchangeable Shares");
C. The Articles of Incorporation of PTI Holdco set forth the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares (collectively,
the "Exchangeable Share Provisions"), and a copy of such Articles of
Incorporation is attached hereto as Appendix A;
D. OSI is to provide voting rights in OSI to each holder (other than OSI and its
Subsidiaries) from time to time of Exchangeable Shares, such voting rights per
Exchangeable Share to be equivalent to the voting rights per share of OSI Common
Stock;
E. OSI is to grant to and in favor of the holders (other than OSI and its
Subsidiaries) from time to time of Exchangeable Shares the right, in the
circumstances set forth herein, to require OSI or OSI ULC to purchase from each
such holder all or any part of the Exchangeable Shares held by the holder;
F. The parties desire to make appropriate provision and to establish a procedure
whereby voting rights in OSI shall be exercisable by holders (other than OSI and
its Subsidiaries) from time to time of Exchangeable Shares by and through the
Trustee, which will hold legal title to and a share certificate in respect of
one share of OSI Special Voting Stock (the "OSI Special Voting Stock") to which
voting rights attach for the benefit of such holders of Exchangeable Shares and
whereby the rights to require OSI or, at the option of OSI, OSI ULC, to purchase
Exchangeable Shares from the holders thereof (other than OSI and its
Subsidiaries) shall be
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exercisable by such holders from time to time of Exchangeable Shares by and
through the Trustee, which will hold legal title to such rights for the benefit
of such holders;
G. These recitals and any statements of fact in this agreement are made by OSI
and PTI Holdco and not by the Trustee;
NOW THEREFORE, in consideration of the respective covenants and
agreements provided in this agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this agreement, the following terms shall have the following
meanings:
"Act" has the meaning in the recitals hereto;
"Aggregate Equivalent Vote Amount" means, with respect to any matter,
proposition or question on which holders of OSI Common Stock are entitled to
vote, consent or otherwise act, the product of (i) the number of shares of
Exchangeable Shares issued and outstanding and held by Holders multiplied by
(ii) the Equivalent Vote Amount.
"Applicable Laws" has the meaning provided in Section 5.10 hereof.
"Arrangement" has the meaning provided in the recitals hereto.
"Automatic Exchange Rights" means the benefit of the obligation of OSI
to effect the automatic exchange of shares of OSI Common Stock for Exchangeable
Shares pursuant to Section 5.12 hereof.
"Board of Directors" means the Board of Directors of PTI Holdco.
"Business Day" has the meaning provided in the Exchangeable Share
Provisions.
"Combination Agreement" has the meaning in the recitals hereto.
"Equivalent Vote Amount" means, with respect to any matter, proposition
or question on which holders of OSI Common Stock are entitled to vote, consent
or otherwise act, the number of votes to which a holder of one share of OSI
Common Stock is entitled with respect to such matter, proposition or question.
"Exchange Right" has the meaning provided in Section 5.1(b) hereof.
"Exchangeable Share Consideration" has the meaning provided in the
Exchangeable Share Provisions.
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"Exchangeable Share Price" has the meaning provided in the Exchangeable
Share Provisions.
"Exchangeable Share Provisions" has the meaning provided in the
recitals hereto.
"Exchangeable Shares" has the meaning provided in the recitals hereto.
"freely tradeable", with respect to OSI Common Stock, means freely
transferable under Canadian provincial securities laws and U.S. federal and
state securities laws (pursuant to an effective resale shelf registration
statement or otherwise and assuming the reasonable cooperation of the holder or
recipient of OSI Common Stock in connection with any required resale shelf
registration statement), except to the extent restrictions arise by reason of a
person being a "control person" of OSI for the purposes of Canadian provincial
securities laws or an "affiliate" of OSI for the purposes of United States
federal or state securities laws, provided any trades in such securities are
conducted through the facilities of a stock exchange outside Canada.
"Holder Votes" has the meaning provided in Section 4.2 hereof.
"Holders" means the registered holders from time to time of
Exchangeable Shares, other than OSI and its Subsidiaries.
"Insolvency Event" means the institution by PTI Holdco of any
proceeding to be adjudicated a bankrupt or insolvent or to be dissolved or
wound-up, or the consent of PTI Holdco to the institution of bankruptcy,
insolvency, dissolution or winding-up proceedings against it, or the filing of a
petition, answer or consent seeking dissolution or winding-up under any
bankruptcy, insolvency or analogous laws, including without limitation the
Companies' Creditors Arrangement Act (Canada) and the Bankruptcy and Insolvency
Act (Canada), and the failure by PTI Holdco to contest in good faith any such
proceedings commenced in respect of PTI Holdco within 15 days of becoming aware
thereof, or if so contested the adjudication that PTI Holdco is bankrupt or
insolvent or is to be dissolved or wound-up, or the consent by PTI Holdco to the
filing of any such petition or to the appointment of a receiver, or the making
by PTI Holdco of a general assignment for the benefit of creditors, or the
admission in writing by PTI Holdco of its inability to pay its debts generally
as they become due, or PTI Holdco's not being permitted, pursuant to liquidity
or solvency requirements of applicable law, to redeem any Retracted Shares
pursuant to Section 6.6 of the Exchangeable Share Provisions.
"Liquidation Call Right" has the meaning provided in the Exchangeable
Share Provisions.
"Liquidation Event" has the meaning provided in subsection 5.12(b)
hereof.
"Liquidation Event Effective Time" has the meaning provided in
subsection 5.12(c) hereof.
"List" has the meaning provided in Section 4.6 hereof.
"Officer's Certificate" means, with respect to OSI or PTI Holdco, as
the case may be, a certificate signed by any one of the Chairman of the Board,
the Vice-Chairman of the Board (if there be one), the President or any
Vice-President of OSI or PTI Holdco, as the case may be.
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"OSI" has the meaning in the recitals hereto.
"OSI Common Stock" has the meaning provided in the Exchangeable Share
Provisions.
"OSI Consent" has the meaning provided in Section 4.2 hereof.
"OSI Meeting" has the meaning provided in Section 4.2 hereof.
"OSI Special Voting Stock" has the meaning provided in the recitals
hereto.
"OSI ULC" means the Subsidiary of OSI incorporated under the Companies
Act (Nova Scotia) for the purpose of delivering OSI Common Stock as provided for
in this Agreement, the Exchangeable Share Provisions or the Support Agreement.
"PTI" has the meaning in the recitals hereto.
"PTI Stock Options" means the outstanding options entitling the holders
to acquire upon exercise thereof up to o PTI Common Shares in the aggregate.
"PTI Holdco" has the meaning in the recitals hereto.
"Person" includes an individual, body corporate, partnership, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"Plan of Arrangement" has the meaning provided in the Exchangeable
Share Provisions.
"Redemption Call Right" has the meaning provided in the Exchangeable
Share Provisions.
"Retracted Shares" has the meaning provided in Section 5.7 hereof.
"Retraction Call Right" has the meaning provided in the Exchangeable
Share Provisions.
"Subsidiary" has the meaning provided in the Exchangeable Share
Provisions.
"Successor" has the meaning provided in subsection 11. 1 (a) hereof.
"Support Agreement" means that certain support agreement made as of
even date hereof by and between OSI and PTI Holdco.
"Trust" means the trust created by this agreement.
"Trust Estate" means the Voting Share, any other securities, the
Exchange Right, the Automatic Exchange Rights and any money or other property
which may be held by the Trustee from time to time pursuant to this agreement.
"Trustee" means Montreal Trust Company of Canada and, subject to the
provisions of Article 10 hereof, includes any successor trustee or permitted
assigns.
"Voting Rights" means the voting rights attached to the Voting Share.
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"Voting Share" means the one share of OSI Special Voting Stock, U.S.
$0.0001 par value, issued by OSI to and deposited with the Trustee, which
entitles the holder of record to a number of votes at meetings of holders of OSI
Common Stock equal to the Aggregate Equivalent Vote Amount.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this agreement into articles, sections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this agreement.
1.3 NUMBER, GENDER, ETC.
Words importing the singular number only shall include the plural and
vice versa. Words importing the use of any gender shall include all genders.
1.4 DATE FOR ANY ACTION
If any date on which any action is required to be taken under this
agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.
1.5 PAYMENTS
All payments to be made hereunder will be made without interest and
less any tax required by Canadian law to be deducted or withheld.
ARTICLE 2
PURPOSE OF AGREEMENT
2.1 The purpose of this agreement is to create the Trust for the benefit
of the Holders, as herein provided. The Trustee will hold the Voting Share in
order to enable the Trustee to exercise the Voting Rights and will hold the
Exchange Right and the Automatic Exchange Rights in order to enable the Trustee
to exercise such rights, in each case as trustee for and on behalf of the
Holders as provided in this agreement.
ARTICLE 3
VOTING SHARE
3.1 ISSUANCE AND OWNERSHIP OF THE VOTING SHARE
OSI hereby issues to and deposits with the Trustee the Voting Share to
be hereafter held of record by the Trustee as trustee for and on behalf of, and
for the use and benefit of, the Holders and in accordance with the provisions of
this agreement. OSI hereby acknowledges receipt from the Trustee as trustee for
and on behalf of the Holders of good and valuable consideration (and the
adequacy thereof) for the issuance of the Voting Share by OSI to the Trustee.
During the term of the Trust and subject to the terms and conditions of this
agreement, the Trustee shall possess and be vested with full legal ownership of
the Voting Share and shall be entitled to exercise all of the rights and powers
of an owner with respect to the Voting Share, provided that the Trustee shall:
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(a) hold the Voting Share and the legal title thereto as trustee
solely for the use and benefit of the Holders in accordance with
the provisions of this agreement; and
(b) except as specifically authorized by this agreement, have no
power or authority to sell, transfer, vote or otherwise deal in
or with the Voting Share, and the Voting Share shall not be used
or disposed of by the Trustee for any purpose other than the
purposes for which this Trust is created pursuant to this
agreement.
3.2 LEGENDED SHARE CERTIFICATES
PTI Holdco will cause each certificate representing Exchangeable Shares
to bear an appropriate legend notifying the Holders of their right to instruct
the Trustee with respect to the exercise of the Voting Rights with respect to
the Exchangeable Shares held by a Holder.
3.3 SAFE KEEPING OF CERTIFICATE
The certificate representing the Voting Share shall at all times be
held in safe keeping by the Trustee or its agent.
3.4 HOLDERS' BENEFIT
For greater certainty, the Trustee holds the benefit of the Voting
Rights for the Holders, but all other rights in respect of the Voting Share,
including without limitation any rights to receive dividends on the Voting
Share, are for the benefit of OSI.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 VOTING RIGHTS
The Trustee, as the holder of record of the Voting Share, shall be
entitled to all of the Voting Rights, including the right to consent to or to
vote in person or by proxy the Voting Share, on any matter, question or
proposition whatsoever that may properly come before the stockholders of OSI at
a OSI Meeting or in connection with a OSI Consent (in each case, as hereinafter
defined). The Voting Rights shall be and remain vested in and exercised by the
Trustee. Subject to Section 7.15 hereof, the Trustee shall exercise the Voting
Rights only on the basis of instructions received pursuant to this Article 4
from Holders entitled to instruct the Trustee as to the voting thereof at the
time at which a OSI Consent is sought or a OSI Meeting is held. To the extent
that no instructions are received from a Holder with respect to the Voting
Rights to which such Holder is entitled, the Trustee shall not exercise or
permit the exercise of such Holder's Voting Rights.
4.2 NUMBER OF VOTES
With respect to all meetings of stockholders of OSI at which holders of
shares of OSI Common Stock are entitled to vote (a "OSI Meeting") and with
respect to all written consents sought by OSI from its stockholders including
the holders of shares of OSI Common Stock (a "OSI Consent"), each Holder shall
be entitled to instruct the Trustee to cast and exercise, in the manner
instructed, a number of votes equal to the Equivalent Vote Amount for each
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Exchangeable Share owned of record by such Holder on the record date established
by OSI or by applicable law for such OSI Meeting or OSI Consent, as the case may
be, (the "Holder Votes") in respect of each matter, question or proposition to
be voted on at such OSI Meeting or to be consented to in connection with such
OSI Consent.
4.3 MAILINGS TO SHAREHOLDERS
With respect to each OSI Meeting and OSI Consent, the Trustee will mail
or cause to be mailed (or otherwise communicate in the same manner as OSI
utilizes in communications to holders of OSI Common Stock, subject to the
Trustee's ability to provide this method of communication and upon being advised
in writing of such method) to each of the Holders named in the List on the same
day as the initial mailing or notice (or other communication) with respect
thereto is given by OSI to its stockholders:
(a) a copy of such notice, together with any proxy or information
statement and related materials to be provided to holders of OSI
Common Stock;
(b) a statement of the number of Holder Votes which the Holder is
entitled to exercise;
(c) a statement that such Holder is entitled to instruct the Trustee
as to the exercise of the Holder Votes with respect to such OSI
Meeting or OSI Consent, as the case may be, or, pursuant to
Section 4.7 hereof, to attend such OSI Meeting and to exercise
personally the Holder Votes thereat;
(d) a statement as to the manner in which such instructions may be
given to the Trustee, including an express indication that
instructions may be given to the Trustee to give:
(i) a proxy to such Holder or such Holder's designee to exercise
personally the Holder Votes; or
(ii) a proxy to a designated agent or other representative of the
management of OSI to exercise such Holder Votes;
(e) a statement that if no voting instructions are received from the
Holder, the Holder Votes to which such Holder is entitled will
not be exercised;
(f) a form of direction whereby the Holder may so direct and instruct
the Trustee as contemplated herein; and
(g) a statement of (i) the time and date by which such instructions
must be received by the Trustee in order to be binding upon it,
which in the case of a OSI Meeting shall not be earlier than the
close of business on the Business Day prior to such meeting, and
(ii) the method for revoking or amending such instructions.
The materials referred to above are to be provided by OSI to the
Trustee, but shall be subject to review and comment by the Trustee.
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For the purpose of determining Holder Votes to which a Holder is
entitled in respect of any such OSI Meeting or OSI Consent, the number of
Exchangeable Shares owned of record by the Holder shall be determined at the
close of business on the record date established by OSI or by applicable law for
purposes of determining stockholders entitled to vote at such OSI Meeting or to
give written consent in connection with such OSI Consent. OSI will notify the
Trustee in writing of any decision of the board of directors of OSI with respect
to the calling of any such OSI Meeting or the seeking of any such OSI Consent
and shall provide all necessary information and materials to the Trustee in each
case promptly and in any event in sufficient time to enable the Trustee to
perform its obligations contemplated by this Section 4.3.
4.4 COPIES OF STOCKHOLDER INFORMATION
OSI will deliver to the Trustee copies of all proxy materials,
(including notices of OSI Meetings, but excluding proxies to vote shares of OSI
Common Stock), information statements, reports (including without limitation all
interim and annual financial statements) and other written communications that
are to be distributed from time to time to holders of OSI Common Stock in
sufficient quantities and in sufficient time so as to enable the Trustee to send
those materials to each Holder, to the extent possible, at the same time as such
materials are first sent to holders of OSI Common Stock. The Trustee will mail
or otherwise send to each Holder, at the expense of OSI, copies of all such
materials (and all materials specifically directed to the Holders or to the
Trustee for the benefit of the Holders by OSI) received by the Trustee from OSI,
to the extent possible, at the same time as such materials are first sent to
holders of OSI Common Stock. The Trustee will make copies of all such materials
available for inspection by any Holder at the Trustee's principal transfer
office in the cities of Calgary and Toronto.
4.5 OTHER MATERIALS
Immediately after receipt by OSI or any stockholder of OSI of any
material sent or given generally to the holders of OSI Common Stock by or on
behalf of a third party, including without limitation dissident proxy and
information circulars (and related information and material) and tender and
exchange offer circulars (and related information and material), OSI shall use
its reasonable best efforts to obtain and deliver to the Trustee copies thereof
in sufficient quantities so as to enable the Trustee to forward such material
(unless the same has been provided directly to Holders by such third party) to
each Holder as soon as possible thereafter. As soon as practicable after receipt
thereof, the Trustee will mail or otherwise send to each Holder, at the expense
of OSI, copies of all such materials received by the Trustee from OSI. The
Trustee will also make copies of all such materials available for inspection by
any Holder at the Trustee's principal transfer office in the cities of Calgary
and Toronto.
4.6 LIST OF PERSONS ENTITLED TO VOTE
PTI Holdco shall, (i) prior to each annual, general or special OSI
Meeting or the seeking of any OSI Consent and (ii) forthwith upon each request
made at any time by the Trustee in writing, prepare or cause to be prepared a
list (a "List") of the names and addresses of the Holders arranged in
alphabetical order and showing the number of Exchangeable Shares held of record
by each such Holder, in each case at the close of business on the date specified
by the Trustee in such request or, in the case of a List prepared in connection
with a OSI Meeting or a OSI Consent, at the close of business on the record date
established by OSI or pursuant to
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applicable law for determining the holders of OSI Common Stock entitled to
receive notice of and/or to vote at such OSI Meeting or to give consent in
connection with such OSI Consent. Each such List shall be delivered to the
Trustee promptly after receipt by PTI Holdco of such request or the record date
for such meeting or seeking of consent, as the case may be, and in any event
within sufficient time as to enable the Trustee to perform its obligations under
this agreement. OSI agrees to give PTI Holdco written notice (with a copy to the
Trustee) of the calling of any OSI Meeting or the seeking of any OSI Consent,
together with the record dates therefor, sufficiently prior to the date of the
calling of such meeting or seeking of such consent so as to enable PTI Holdco to
perform its obligations under this Section 4.6.
4.7 ENTITLEMENT TO DIRECT VOTES
Any Holder named in a List prepared in connection with any OSI Meeting
or any OSI Consent will be entitled (i) to instruct the Trustee in the manner
described in Section 4.3 hereof with respect to the exercise of the Holder Votes
to which such Holder is entitled or (ii) to attend such meeting and personally
to exercise thereat (or to exercise with respect to any written consent), as the
proxy of the Trustee, the Holder Votes to which such Holder is entitled.
4.8 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE, AT MEETING
(a) In connection with each OSI Meeting and OSI Consent, the Trustee
shall exercise, either in person or by proxy, in accordance with
the instructions received from a Holder pursuant to Section 4.3
hereof, the Holder Votes as to which such Holder is entitled to
direct the vote (or any lesser number thereof as may be set forth
in the instructions); provided, however, that such written
instructions are received by the Trustee from the Holder prior to
the time and date fixed by it for receipt of such instructions in
the notice given by the Trustee to the Holder pursuant to Section
4.3 hereof.
(b) The Trustee shall cause such representatives as are empowered by
it to sign and deliver, on behalf of the Trustee, proxies for
Voting Rights to attend each OSI Meeting. Upon submission by a
Holder (or its designee) of identification satisfactory to the
Trustee's representatives, and at the Holder's request, such
representatives shall sign and deliver to such Holder (or its
designee) a proxy to exercise personally the Holder Votes as to
which such Holder is otherwise entitled hereunder to direct the
vote, if such Holder either:
(i) has not previously given the Trustee instructions pursuant
to Section 4.3 hereof in respect of such OSI Meeting, or
(ii) submits to the Trustee's representatives written revocation
of any such previous instructions.
At such OSI Meeting, the Holder exercising such Holder Votes shall have
the same rights as the Trustee to speak at the meeting in respect of any matter,
question or proposition, to vote by way of ballot at the meeting in respect of
any matter, question or proposition and to vote at such meeting by way of a show
of hands in respect of any matter, question or proposition.
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4.9 DISTRIBUTION OF WRITTEN MATERIALS
Any written materials to be distributed by the Trustee to the Holders
pursuant to this agreement shall be delivered or sent by mail (or otherwise
communicated in the same manner as OSI utilizes in communications to holders of
OSI Common Stock subject to the Trustee's ability to provide this method of
communication and upon being advised in writing of such method) to each Holder
at its address as shown on the books of PTI Holdco. PTI Holdco shall provide or
cause to be provided to the Trustee for this purpose, on a timely basis and
without charge or other expense:
(a) current lists of the Holders; and
(b) on the request of the Trustee, mailing labels to enable the
Trustee to carry out its duties under this agreement.
The materials referred to above are to be provided by PTI Holdco to the
Trustee, but shall be subject to review and comment by the Trustee.
4.10 TERMINATION OF VOTING RIGHTS
Except as otherwise provided herein or in the Exchangeable Share
Provisions, all of the rights of a Holder with respect to the Holder Votes
exercisable in respect of the Exchangeable Shares held by such Holder, including
the right to instruct the Trustee as to the voting of or to vote personally such
Holder Votes, shall be deemed to be surrendered by the Holder to OSI, and such
Holder Votes and the Voting Rights represented thereby shall cease immediately,
upon the delivery by such Holder to the Trustee of the certificates representing
such Exchangeable Shares in connection with the exercise by the Holder of the
Exchange Right or the occurrence of the automatic exchange of Exchangeable
Shares for shares of OSI Common Stock, as specified in Article 5 hereof (unless
in any case OSI or OSI ULC shall not have delivered the Exchangeable Share
Consideration deliverable in exchange therefor to the Trustee for delivery to
the Holders), or upon the redemption of Exchangeable Shares pursuant to Article
6 or Article 7 of the Exchangeable Share Provisions, or upon the effective date
of the liquidation, dissolution or winding-up of PTI Holdco or any other
distribution of the assets of PTI Holdco among its shareholders for the purpose
of winding up its affairs pursuant to Article 5 of the Exchangeable Share
Provisions, or upon the purchase of Exchangeable Shares from the holder thereof
by OSI pursuant to the exercise by OSI of the Retraction Call Right, the
Redemption Call Right or the Liquidation Call Right.
ARTICLE 5
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
5.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT AND AUTOMATIC EXCHANGE RIGHTS
OSI hereby grants to the Trustee as trustee for and on behalf of, and
for the use and benefit of, the Holders:
(a) the right (the "Exchange Right"), upon the occurrence and during
the continuance of an Insolvency Event, to require OSI to
purchase or cause OSI ULC to purchase
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from each or any Holder all or any part of the Exchangeable
Shares held by the Holders; and
(b) the Automatic Exchange Rights,
all in accordance with the provisions of this agreement and the Exchangeable
Share Provisions, as the case may be. OSI hereby acknowledges receipt from the
Trustee as trustee for and on behalf of the Holders of good and valuable
consideration (and the adequacy thereof) for the grant of the Exchange Right and
the Automatic Exchange Rights by OSI to the Trustee. During the term of the
Trust and subject to the terms and conditions of this agreement, the Trustee
shall possess and be vested with full legal ownership of the Exchange Right and
the Automatic Exchange Rights and shall be entitled to exercise and enforce for
the benefit of the Holders all of the rights and powers of an owner with respect
to the Exchange Right and the Automatic Exchange Rights, provided that the
Trustee shall:
(c) hold the Exchange Right and the Automatic Exchange Rights and the
legal title thereto as trustee solely for the use and benefit of
the Holders in accordance with the provisions of this agreement;
and
(d) except as specifically authorized by this agreement, have no
power or authority to exercise or otherwise deal in or with the
Exchange Right or the Automatic Exchange Rights, and the Trustee
shall not exercise any such rights for any purpose other than the
purposes for which this Trust is created pursuant to this
agreement.
5.2 LEGENDED SHARE CERTIFICATES
PTI Holdco will cause each certificate representing Exchangeable Shares
to bear an appropriate legend notifying the Holders of:
(a) their right to instruct the Trustee with respect to the exercise
of the Exchange Right in respect of the Exchangeable Shares held
by a Holder; and
(b) the Automatic Exchange Rights.
5.3 GENERAL EXERCISE OF THE EXCHANGE RIGHT
The Exchange Right shall be and remain vested in and exercised by the
Trustee. Subject to Section 7.15 hereof, the Trustee shall exercise the Exchange
Right only on the basis of instructions received pursuant to this Article 5 from
Holders entitled to instruct the Trustee as to the exercise thereof. To the
extent that no instructions are received from a Holder with respect to the
Exchange Right, the Trustee shall not exercise or permit the exercise of the
Exchange Right.
5.4 PURCHASE PRICE
The purchase price payable by OSI or OSI ULC for each Exchangeable
Share to be purchased by OSI or OSI ULC under the Exchange Right shall be an
amount equal to the Exchangeable Share Price on the last Business Day prior to
the day of closing of the purchase and sale of such Exchangeable Share under the
Exchange Right. In connection with each
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exercise of the Exchange Right, OSI will provide to the Trustee an Officer's
Certificate setting forth the calculation of the applicable Exchangeable Share
Price for each Exchangeable Share. The applicable Exchangeable Share Price for
each such Exchangeable Share so purchased may be satisfied only by OSI's issuing
and delivering or causing to be delivered to the Trustee, on behalf of the
relevant Holder, the applicable Exchangeable Share Consideration representing
the total applicable Exchangeable Share Price.
5.5 EXERCISE INSTRUCTIONS FOR EXCHANGE RIGHT
Subject to the terms and conditions herein set forth, a Holder shall be
entitled, upon the occurrence and during the continuance of an Insolvency Event,
to instruct the Trustee to exercise the Exchange Right with respect to all or
any part of the Exchangeable Shares registered in the name of such Holder on the
books of PTI Holdco. To cause the exercise of the Exchange Right by the Trustee,
the Holder shall deliver to the Trustee, in person or by certified or registered
mail, at its principal transfer offices in Calgary, Alberta or at such other
places in Canada as the Trustee may from time to time designate by written
notice to the Holders, the certificates representing the Exchangeable Shares
which such Holder desires OSI to purchase, duly endorsed in blank, and
accompanied by such other documents and instruments as may be required to effect
a transfer of Exchangeable Shares under applicable law and the by-laws of PTI
Holdco and such additional documents and instruments as the Trustee may
reasonably require, together with:
(a) a duly completed form of notice of exercise of the Exchange
Right, contained on the reverse of or attached to the
Exchangeable Share certificates, stating:
(i) that the Holder thereby instructs the Trustee to exercise
the Exchange Right so as to require OSI or OSI ULC to
purchase from the Holder the number of Exchangeable Shares
specified therein,
(ii) that such Holder has good title to and owns all such
Exchangeable Shares to be acquired by OSI or OSI ULC free
and clear of all liens, claims, encumbrances, security
interests and adverse claims or interests,
(iii) the names in which the certificates representing OSI Common
Stock issuable in connection with the exercise of the
Exchange Right are to be issued, and
(iv) the names and addresses of the persons to whom the
Exchangeable Share Consideration should be delivered; and
(b) payment (or evidence satisfactory to the Trustee, PTI Holdco and
OSI or OSI ULC of payment) of the taxes (if any) payable as
contemplated by Section 5.8 of this agreement.
If only a part of the Exchangeable Shares represented by any certificate or
certificates delivered to the Trustee are to be purchased by OSI or OSI ULC
under the Exchange Right, a new certificate for the balance of such Exchangeable
Shares shall be issued to the Holder at the expense of PTI Holdco.
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5.6 DELIVERY OF EXCHANGEABLE SHARE CONSIDERATION; EFFECT OF EXERCISE
Promptly after receipt of the certificates representing the
Exchangeable Shares which the Holder desires OSI or OSI ULC to purchase under
the Exchange Right (together with such documents and instruments of transfer and
a duly completed form of notice of exercise of the Exchange Right), duly
endorsed for transfer to OSI, the Trustee shall notify OSI, OSI ULC and PTI
Holdco of its receipt of the same, which notice to OSI, OSI ULC and PTI Holdco
shall constitute exercise of the Exchange Right by the Trustee on behalf of the
Holder of such Exchangeable Shares, and OSI or OSI ULC shall immediately
thereafter deliver or cause to be delivered to the Trustee, for delivery to the
Holder of such Exchangeable Shares (or to such other persons, if any, properly
designated by such Holder), the Exchangeable Share Consideration deliverable in
connection with the exercise of the Exchange Right; provided, however, that no
such delivery shall be made unless and until the Holder requesting the same
shall have paid (or provided evidence satisfactory to the Trustee, PTI Holdco
and OSI or OSI ULC of the payment of) the taxes (if any) payable as contemplated
by Section 5.8 of this agreement. Immediately upon the giving of notice by the
Trustee to OSI, OSI ULC and PTI Holdco of the exercise of the Exchange Right, as
provided in this Section 5.6, (i) the closing of the transaction of purchase and
sale contemplated by the Exchange Right shall be deemed to have occurred, (ii)
OSI or OSI ULC shall be required to take all action necessary to permit it to
occur, including delivery to the Trustee of the relevant Exchangeable Share
Consideration, no later than the close of business on the third Business Day
following the receipt by the Trustee of notice, certificates and other documents
as aforesaid and (iii) the Holder of such Exchangeable Shares shall be deemed to
have transferred to OSI or OSI ULC all of its right, title and interest in and
to such Exchangeable Shares and the related interest in the Trust Estate, shall
cease to be a holder of such Exchangeable Shares and shall not be entitled to
exercise any of the rights of a holder in respect thereof, other than the right
to receive his proportionate part of the total purchase price therefor, unless
such Exchangeable Share Consideration is not delivered by OSI or OSI ULC to the
Trustee by the date specified above, in which case the rights of the Holder
shall remain unaffected until such Exchangeable Share Consideration is delivered
by OSI or OSI ULC and any cheque included therein is paid. Concurrently with
such Holder ceasing to be a holder of Exchangeable Shares, the Holder shall be
considered and deemed for all purposes to be the holder of the shares of OSI
Common Stock delivered to it pursuant to the Exchange Right. Notwithstanding the
foregoing, until the Exchangeable Share Consideration is delivered to the
Holder, the Holder shall be deemed to still be a holder of the sold Exchangeable
Shares for purposes of the Voting Rights with respect thereto.
5.7 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION
In the event that a Holder has exercised its right under Article 6 of
the Exchangeable Share Provisions to require PTI Holdco to redeem any or all of
the Exchangeable Shares held by the Holder (the "Retracted Shares") and is
notified by PTI Holdco pursuant to Section 6.6 of the Exchangeable Share
Provisions that PTI Holdco will not be permitted as a result of liquidity or
solvency provisions of applicable law to redeem all such Retracted Shares,
subject to receipt by the Trustee of written notice to that effect from PTI
Holdco and provided that OSI or OSI ULC shall not have exercised the Retraction
Call Right with respect to the Retracted Shares and that the Holder has not
revoked the retraction request delivered by the Holder to PTI Holdco pursuant to
Section 6.1 of the Exchangeable Share Provisions, the retraction request will
constitute and
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will be deemed to constitute notice from the Holder to the Trustee instructing
the Trustee to exercise the Exchange Right with respect to those Retracted
Shares which PTI Holdco is unable to redeem. In any such event, PTI Holdco
hereby agrees with the Trustee and in favour of the Holder immediately to notify
the Trustee of such prohibition against PTI Holdco's redeeming all of the
Retracted Shares and immediately to forward or cause to be forwarded to the
Trustee all relevant materials delivered by the Holder to PTI Holdco or to the
transfer agent of the Exchangeable Shares (including without limitation a copy
of the retraction request delivered pursuant to Section 6.1 of the Exchangeable
Share Provisions) in connection with such proposed redemption of the Retracted
Shares, and the Trustee will thereupon exercise the Exchange Right with respect
to the Retracted Shares which PTI Holdco is not permitted to redeem and will
require OSI or OSI ULC to purchase such shares in accordance with the provisions
of this Article 5.
5.8 STAMP OR OTHER TRANSFER TAXES
Upon any sale of Exchangeable Shares to OSI or OSI ULC pursuant to the
Exchange Right or the Automatic Exchange Rights, the share certificate or
certificates representing OSI Common Stock to be delivered in connection with
the payment of the total purchase price therefor shall be issued in the name of
the Holder of the Exchangeable Shares so sold or in such names as such Holder
may otherwise direct in writing without charge to the holder of the Exchangeable
Shares so sold, provided, however, that such Holder:
(a) shall pay (and none of OSI, OSI ULC, PTI Holdco or the Trustee
shall be required to pay) any documentary, stamp, transfer or
other similar taxes that may be payable in respect of any
transfer involved in the issuance or delivery of such shares to a
person other than such Holder; or
(b) shall have established to the satisfaction of the Trustee, OSI,
OSI ULC and PTI Holdco that such taxes, if any, have been paid.
PTI Holdco and the Trustee (as directed in writing by PTI Holdco) shall be
entitled to deduct and withhold from any consideration otherwise payable under
this Agreement to any Holder such amounts as PTI Holdco or the Trustee is
required or permitted to deduct and withhold with respect to such payment under
the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or
any provision of provincial, state, local or foreign tax law, in each case as
amended or succeeded unless such Holder provides to PTI Holdco certificates or
such other assurances as are provided for under the Income Tax Act (Canada), the
United States Internal Revenue Code of 1986 or such other applicable taxation
provisions. To the extent that amounts are so withheld, such withheld amounts
shall be treated for all purposes as having been paid to the Holder in respect
of which such deduction and withholding was made, provided that such withheld
amounts are actually remitted to the appropriate taxing authority as and when
required. To the extent that the amount so required or permitted to be deducted
or withheld from any payment to a Holder exceeds the cash portion, if any, of
the consideration otherwise payable to the Holder, PTI Holdco and the Trustee
are hereby authorized to sell or otherwise dispose of such portion of the
consideration as is necessary to provide sufficient funds to PTI Holdco or the
Trustee, as the case may be, to enable it to comply with such deduction or
withholding requirement and PTI Holdco or the Trustee shall notify the Holder
and remit to such Holder any unapplied balance of the net proceeds of such sale.
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5.9 NOTICE OF INSOLVENCY EVENT
Immediately upon the occurrence of an Insolvency Event or any event
which with the giving of notice or the passage of time or both would be an
Insolvency Event, PTI Holdco and OSI shall give written notice thereof to the
Trustee. As soon as practicable after receiving notice from PTI Holdco or OSI of
the occurrence of an Insolvency Event, the Trustee will mail to each Holder, at
the expense of OSI, a notice of such Insolvency Event in the form provided by
OSI, which notice shall contain a brief statement of the right of the Holders
with respect to the Exchange Right.
5.10 QUALIFICATION OF OSI COMMON STOCK
OSI covenants with the Trustee for the benefit of Holders that if any
shares of OSI Common Stock (or other shares or securities into which OSI Common
Stock may be reclassified or changed as contemplated by Section 2.7 of the
Support Agreement) to be issued and delivered pursuant to the Exchange Right or
the Automatic Exchange Rights require registration or qualification with or
approval of or the filing of any document including any prospectus or similar
document, the taking of any proceeding with or the obtaining of any order,
ruling or consent from any governmental or regulatory authority under any
Canadian or United States federal, provincial or state law or regulation or
pursuant to the rules and regulations of any regulatory authority, or the
fulfillment of any other legal requirement (collectively, the "Applicable Laws")
before such shares (or other shares or securities into which OSI Common Stock
may be reclassified or changed as contemplated by Section 2.7 of the Support
Agreement) may be issued and delivered by OSI to the initial holder thereof
(other than PTI Holdco) or in order that such shares may be freely tradeable
thereafter (other than any restrictions on transfer by reason of a holder being
a "control person" of OSI for purposes of Canadian provincial securities law or
an "affiliate" of OSI for purposes of United States federal or state securities
law and provided such trade is conducted through facilities of a stock exchange
outside Canada), OSI will in good faith expeditiously take all such actions and
do all such things as are necessary and permitted by Applicable Laws to cause
such shares of OSI Common Stock (or other shares or securities into which OSI
Common Stock may be reclassified or changed as contemplated by Section 2.7 of
the Support Agreement) to be and remain duly registered, qualified or approved
at all times in order that such shares may be issued and delivered by OSI to the
initial holder thereof (other than PTI Holdco) and in order that such shares or
securities may be freely tradeable thereafter (other than any restrictions on
transfer by reason of a holder being a "control person" of OSI for purposes of
Canadian provincial securities law or an "affiliate" of OSI for purposes of
United States federal or state securities law and provided such trade is
conducted through facilities of a stock exchange outside Canada) including,
without limitation, the filing and maintenance of a registration statement under
the Securities Act of 1933. OSI will in good faith expeditiously take all such
actions and do all such things as are necessary to cause all shares of OSI
Common Stock (or other shares or securities into which OSI Common Stock may be
reclassified or changed as contemplated by Section 2.7 of the Support Agreement)
to be delivered pursuant to the Exchange Right or the Automatic Exchange Rights
to be listed, quoted or posted for trading on all stock exchanges and quotation
systems on which such shares are listed, quoted or posted for trading at such
time immediately upon their issuance.
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5.11 RESERVATION OF SHARES OF OSI COMMON STOCK
OSI hereby represents, warrants and covenants with the Trustee for the
benefit of the Holders that it has irrevocably reserved for issuance and will at
all times keep available, free from pre-emptive and other rights, out of its
authorized and unissued capital stock such number of shares of OSI Common Stock:
(a) as is equal to the sum of
(i) the number of Exchangeable Shares issued and outstanding
from time to time, and
(ii) the number of PTI Stock Options outstanding on the date
hereof; and
(b) as are now and may hereafter be required to enable and permit PTI
Holdco to meet its obligations hereunder, under the Certificate
of Incorporation of PTI Holdco, under the Support Agreement,
under the Exchangeable Share Provisions and under any other
security or commitment pursuant to the Arrangement with respect
to which OSI may now or hereafter be required to issue shares of
OSI Common Stock.
5.12 AUTOMATIC EXCHANGE ON LIQUIDATION OF OSI
(a) OSI will give the Trustee written notice of each of the following
events at the time set forth below:
(i) in the event of any determination by the board of directors
of OSI to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to OSI or to effect any
other distribution of assets of OSI among its stockholders
for the purpose of winding-up its affairs, at least 60 days
prior to the proposed effective date of such liquidation,
dissolution, winding-up or other distribution; and
(ii) immediately, upon the earlier of
(A) receipt by OSI of notice of, and
(B) OSI otherwise becoming aware of
any threatened or instituted claim, suit, petition or other proceedings
with respect to the involuntary liquidation, dissolution or winding-up
of OSI or to effect any other distribution of assets of OSI among its
stockholders for the purpose of winding up its affairs.
(b) Immediately following receipt by the Trustee from OSI of notice
of any event (a "Liquidation Event") contemplated by Section
5.12(a) above, the Trustee will give notice thereof to the
Holders. Such notice will be provided by OSI to the Trustee and
shall include a brief description of the automatic exchange of
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Exchangeable Shares for shares of OSI Common Stock provided for
in Section 5.12(c) below.
(c) In order that the Holders will be able to participate on a pro
rata basis with the holders of OSI Common Stock in the
distribution of assets of OSI in connection with a Liquidation
Event, immediately prior to the effective time (the "Liquidation
Event Effective Time") of a Liquidation Event, all of the then
outstanding Exchangeable Shares shall be automatically exchanged
for shares of OSI Common Stock. To effect such automatic
exchange, OSI shall be deemed to have purchased each Exchangeable
Share outstanding immediately prior to the Liquidation Event
Effective Time and held by Holders, and each Holder shall be
deemed to have sold the Exchangeable Shares held by it at such
time, for a purchase price per share equal to the Exchangeable
Share Price applicable at such time. In connection with such
automatic exchange, OSI will provide to the Trustee an Officer's
Certificate setting forth the calculation of the Exchangeable
Share Price for each Exchangeable Share.
(d) The closing of the transaction of purchase and sale contemplated
by Section 5.12(c) above shall be deemed to have occurred
immediately prior to the Liquidation Event Effective Time, and
each Holder of Exchangeable Shares shall be deemed to have
transferred to OSI all of the Holder's right, title and interest
in and to such Exchangeable Shares and the related interest in
the Trust Estate and shall cease to be a holder of such
Exchangeable Shares, and OSI shall deliver to the Holder the
Exchangeable Share Consideration deliverable upon the automatic
exchange of Exchangeable Shares. Concurrently with such Holder's
ceasing to be a holder of Exchangeable Shares, the Holder shall
be considered and deemed for all purposes to be the holder of the
shares of OSI Common Stock issued to it pursuant to the automatic
exchange of Exchangeable Shares for OSI Common Stock, and the
certificates held by the Holder previously representing the
Exchangeable Shares exchanged by the Holder with OSI pursuant to
such automatic exchange shall thereafter be deemed to represent
the shares of OSI Common Stock issued to the Holder by OSI
pursuant to such automatic exchange. Upon the request of a Holder
and the surrender by the Holder of Exchangeable Share
certificates deemed to represent shares of OSI Common Stock, duly
endorsed in blank and accompanied by such instruments of transfer
as OSI may reasonably require, OSI shall deliver or cause to be
delivered to the Holder certificates representing the shares of
OSI Common Stock of which the Holder is the holder.
Notwithstanding the foregoing, until each Holder is actually
entered on the register of holders of OSI Common Stock, such
Holder shall be deemed to still be a holder of the transferred
Exchangeable Shares for purposes of all Voting Rights with
respect thereto.
ARTICLE 6
RESTRICTIONS ON ISSUANCE OF OSI SPECIAL VOTING STOCK
During the term of this agreement, OSI will not issue any shares of OSI
Special Voting Stock in addition to the Voting Share.
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ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS AND DUTIES OF THE TRUSTEE
The rights, powers and authorities of the Trustee under this agreement,
in its capacity as trustee of the Trust, shall include:
(a) receipt and deposit of the Voting Share from OSI as trustee for
and on behalf of the Holders in accordance with the provisions of
this agreement;
(b) granting proxies and distributing materials to Holders as
provided in this agreement;
(c) voting the Holder Votes in accordance with the provisions of this
agreement;
(d) receiving the grant of the Exchange Right and the Automatic
Exchange Rights from OSI as trustee for and on behalf of the
Holders in accordance with the provisions of this agreement;
(e) exercising the Exchange Right and enforcing the benefit of the
Automatic Exchange Rights, in each case in accordance with the
provisions of this agreement, and in connection therewith
receiving from Holders Exchangeable Shares and other requisite
documents and distributing to such Holders the shares of OSI
Common Stock and cheques and property, if any, to which such
Holders are entitled upon the exercise of the Exchange Right or
pursuant to the Automatic Exchange Rights, as the case may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of the
Trust Estate as provided in this agreement;
(h) taking action at the direction of a Holder or Holders to enforce
the obligations of OSI under this agreement; and
(i) taking such other actions and doing such other things as are
specifically provided in this agreement.
In the exercise of such rights, powers and authorities, the Trustee
shall have (and is granted) such incidental and additional rights, powers and
authority not in conflict with any of the provisions of this agreement as the
Trustee, acting in good faith and in the reasonable exercise of its discretion,
may deem necessary, appropriate or desirable to effect the purpose of the Trust.
Any exercise of such discretionary rights, powers and authorities by the Trustee
shall be final, conclusive and binding upon all persons. For greater certainty,
the Trustee shall have only those duties as are set out specifically in this
agreement. The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith with a view to the best interests
of the Holders and shall exercise the care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances. The
Trustee shall not be bound to
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give any notice or do or take any act, action or proceeding by virtue of the
powers conferred on it hereby unless and until it shall be specifically required
to do so under the terms hereof nor shall the Trustee be required to take any
notice of, or to do or to take any act, action or proceeding as a result of any
default or breach of any provision hereunder, unless and until notified in
writing of such default or breach, which notices shall distinctly specify the
default or breach desired to be brought to the attention of the Trustee and in
the absence of such notice the Trustee may for all purposes of this agreement
conclusively assume that no default or breach has been made in the observance or
performance of any of the representations, warranties, covenants, agreements or
conditions contained herein.
7.2 NO CONFLICT OF INTEREST
The Trustee represents to PTI Holdco and OSI that at the date of
execution and delivery of this agreement there exists no material conflict of
interest in the role of the Trustee as a fiduciary hereunder and the role of the
Trustee in any other capacity. The Trustee shall, within 90 days after it
becomes aware that such a material conflict of interest exists, either eliminate
such material conflict of interest or resign in the manner and with the effect
specified in Article 10 hereof. If, notwithstanding the foregoing provisions of
this Section 7.2, the Trustee has such a material conflict of interest, the
validity and enforceability of this agreement shall not be affected in any
manner whatsoever by reason only of the existence of such material conflict of
interest. If the Trustee contravenes the foregoing provisions of this Section
7.2, any interested party may apply to the superior court of the province in
which PTI Holdco has its registered office for an order that the Trustee be
replaced as trustee hereunder.
7.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC.
PTI Holdco and OSI irrevocably authorize the Trustee, from time to
time, to:
(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents, and with any such subsequent
registrar or transfer agent, of the Exchangeable Shares and OSI
Common Stock; and
(b) requisition, from time to time,
(i) from any such registrar or transfer agent any information
readily available from the records maintained by it which
the Trustee may reasonably require for the discharge of its
duties and responsibilities under this agreement, and
(ii) from the transfer agent of OSI Common Stock, and any
subsequent transfer agent of such shares, to complete the
exercise from time to time of the Exchange Right and the
Automatic Exchange Rights in the manner specified in Article
5 hereof, the share certificates issuable upon such
exercise.
PTI Holdco and OSI irrevocably authorize their respective registrars
and transfer agents to comply with all such requests. OSI covenants that it will
supply its transfer agent with duly
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executed share certificates for the purpose of completing the exercise from time
to time of the Exchange Right and the Automatic Exchange Rights, in each case
pursuant to Article 5 hereof.
7.4 BOOKS AND RECORDS
The Trustee shall keep available for inspection by OSI and PTI Holdco,
at the Trustee's principal transfer office in Calgary, Alberta, correct and
complete books and records of account relating to the Trustee's actions under
this agreement, including without limitation all information relating to
mailings and instructions to and from Holders and all transactions pursuant to
the Voting Rights, the Exchange Right and the Automatic Exchange Rights for the
term of this agreement. On or before March 31, 2001, and on or before March 31
in every year thereafter, so long as the Voting Share is on deposit with the
Trustee, the Trustee shall transmit to OSI and PTI Holdco a brief report, dated
as of the preceding December 31, with respect to:
(a) the property and funds comprising the Trust Estate as of that
date;
(b) the number of exercises of the Exchange Right, if any, and the
aggregate number of Exchangeable Shares received by the Trustee
on behalf of Holders in consideration of the issue and delivery
by OSI of shares of OSI Common Stock in connection with the
Exchange Right, during the calendar year ended on such date; and
(c) all other actions taken by the Trustee in the performance of its
duties under this agreement which it had not previously reported.
7.5 INCOME TAX RETURNS AND REPORTS
The Trustee shall, to the extent necessary, prepare and file on behalf
of the Trust appropriate United States and Canadian income tax returns and any
other returns or reports as may be required by applicable law or pursuant to the
rules and regulations of any securities exchange or other trading system through
which the Exchangeable Shares are traded and, in connection therewith, may
obtain the advice and assistance of such experts as the Trustee may consider
necessary or advisable. If requested by the Trustee, OSI shall retain such
experts for purposes of providing such advice and assistance.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE
The Trustee shall exercise any or all of the rights, duties, powers or
authorities vested in it by this agreement at the request, order or direction of
any Holder upon such Holder's furnishing to the Trustee reasonable funding,
security and indemnity against the costs, expenses and liabilities which may be
incurred by the Trustee therein or thereby; provided that no Holder shall be
obligated to furnish to the Trustee any such funding, security or indemnity in
connection with the exercise by the Trustee of any of its rights, duties, powers
and authorities with respect to the Voting Share pursuant to Article 4 hereof,
subject to Section 7.15 hereof, and with respect to the Exchange Right pursuant
to Article 5 hereof, subject to Section 7.15 hereof, and with respect to the
Automatic Exchange Rights pursuant to Article 5 hereof. None of the provisions
contained in this agreement shall require the Trustee to expend or risk its own
funds or otherwise incur
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financial liability in the exercise of any of its rights, powers, duties or
authorities unless funded, given funds, security and indemnified as aforesaid.
7.7 ACTIONS BY HOLDERS
No Holder shall have the right to institute any action, suit or
proceeding or to exercise any other remedy authorized by this agreement for the
purpose of enforcing any of its rights or for the execution of any trust or
power hereunder unless the Holder has requested the Trustee to take or institute
such action, suit or proceeding and furnished the Trustee with the funding,
security and indemnity referred to in Section 7.6 hereof and the Trustee shall
have failed to act within a reasonable time thereafter. In such case, but not
otherwise, the Holder shall be entitled to take proceedings in any court of
competent jurisdiction such as the Trustee might have taken; it being understood
and intended that no one or more Holders shall have any right in any manner
whatsoever to affect, disturb or prejudice the rights hereby created by any such
action, or to enforce any right hereunder or under the Voting Rights, the
Exchange Right or the Automatic Exchange Rights, except subject to the
conditions and in the manner herein provided, and that all powers and trusts
hereunder shall be exercised and all proceedings at law shall be instituted, had
and maintained by the Trustee, except only as herein provided, and in any event
for the equal benefit of all Holders.
7.8 RELIANCE UPON DECLARATIONS
The Trustee shall not be considered to be in contravention of any of
its rights, powers, duties and authorities hereunder if, when required, it acts
and relies in good faith upon lists, mailing labels, notices, statutory
declarations, certificates, opinions, reports or other papers or documents
furnished pursuant to the provisions hereof or required by the Trustee to be
furnished to it in the exercise of its rights, powers, duties and authorities
hereunder, and such lists, mailing labels, notices, statutory declarations,
certificates, opinions, reports or other papers or documents comply with the
provisions of Section 7.9 hereof, if applicable, and with any other applicable
provisions of this agreement.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE
PTI Holdco and/or OSI shall furnish to the Trustee evidence of
compliance with the conditions provided for in this agreement relating to any
action or step required or permitted to be taken by PTI Holdco and/or OSI or the
Trustee under this agreement or as a result of any obligation imposed under this
agreement, including, without limitation, in respect of the Voting Rights or the
Exchange Right or the Automatic Exchange Rights and the taking of any other
action to be taken by the Trustee at the request of or on the application of PTI
Holdco and/or OSI forthwith if and when:
(a) such evidence is required by any other section of this agreement
to be furnished to the Trustee in accordance with the terms of
this Section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this agreement, gives PTI Holdco and/or OSI
written notice requiring it to furnish such evidence in relation
to any particular action or obligation specified in such notice.
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Such evidence shall consist of an Officer's Certificate of PTI Holdco
and/or OSI or a statutory declaration or a certificate made by persons entitled
to sign an Officer's Certificate stating that any such condition has been
complied with in accordance with the terms of this agreement.
Whenever such evidence relates to a matter other than the Voting Rights
or the Exchange Right or the Automatic Exchange Rights, and except as otherwise
specifically provided herein, such evidence may consist of a report or opinion
of any solicitor, auditor, accountant, appraiser, valuer, engineer or other
expert or any other person whose qualifications give authority to a statement
made by him, provided that, if such report or opinion is furnished by a
director, officer or employee of PTI Holdco and/or OSI, it shall be in the form
of an Officer's Certificate or a statutory declaration.
Each statutory declaration, certificate, opinion or report furnished to
the Trustee as evidence of compliance with a condition provided for in this
agreement shall include a statement by the person giving the evidence:
(i) declaring that such person has read and understands the
provisions of this agreement relating to the condition in
question;
(ii) describing the nature and scope of the examination or
investigation upon which such person based the statutory
declaration, certificate, statement or opinion; and
(iii) declaring that such person has made such examination or
investigation as such person believes is necessary to
enable such person to make the statements or give the
opinions contained or expressed therein.
7.10 EXPERTS, ADVISERS AND AGENTS
The Trustee may:
(a) in relation to these presents act and rely on the opinion or
advice of or information obtained from or prepared by any
solicitor, auditor, accountant, appraiser, valuer, engineer or
other expert, whether retained by the Trustee or by PTI Holdco
and/or OSI or otherwise, and may employ such assistants as may be
necessary to the proper determination and discharge of its powers
and duties and determination of its rights hereunder and may pay
proper and reasonable compensation for all such legal and other
advice or assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably
require for the proper determination and discharge of its powers
and duties hereunder, and may pay reasonable remuneration for all
services performed for it (and shall be entitled to receive
reasonable remuneration for all services performed by it) in the
discharge of the trusts hereof and compensation for all
disbursements, costs and expenses made or incurred by it in the
determination and discharge of its duties hereunder and in the
management of the Trust.
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7.11 INVESTMENT OF MONEYS HELD BY TRUSTEE
Unless otherwise provided in this agreement, any moneys held by or on
behalf of the Trustee which under the terms of this agreement may or ought to be
invested or which may be on deposit with the Trustee or which may be in the
hands of the Trustee, may be invested and reinvested in the name or under the
control of the Trustee in securities in which, under the laws of the Province of
Alberta, trustees are authorized to invest trust moneys; provided that such
securities are stated to mature within two years after their purchase by the
Trustee, and the Trustee shall so invest such moneys on the written direction of
PTI Holdco. Pending the investment of any moneys as hereinbefore provided, such
moneys may be deposited in the name of the Trustee in any chartered bank in
Canada or, with the consent of PTI Holdco, in the deposit department of the
Trustee or any other loan or trust company authorized to accept deposits under
the laws of Canada or any province thereof at the rate of interest then current
on similar deposits.
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY
The Trustee shall not be required to give any bond or security in
respect of the execution of the trusts, rights, duties, powers and authorities
of this agreement or otherwise in respect of the premises.
7.13 TRUSTEE NOT BOUND TO ACT ON REQUEST
Except as in this agreement otherwise specifically provided, the
Trustee shall not be bound to act in accordance with any direction or request of
PTI Holdco and/or OSI or of the directors thereof until a duly authenticated
copy of the instrument or resolution containing such direction or request shall
have been delivered to the Trustee, and the Trustee shall be empowered to act
and rely upon any such copy purporting to be authenticated and believed by the
Trustee to be genuine.
7.14 AUTHORITY TO CARRY ON BUSINESS
The Trustee represents to PTI Holdco and OSI that at the date of
execution and delivery by it of this agreement it is authorized to carry on the
business of a trust company in the Province of Alberta but if, notwithstanding
the provisions of this Section 7.14, it ceases to be so authorized to carry on
business, the validity and enforceability of this agreement and the Voting
Rights, the Exchange Right and the Automatic Exchange Rights shall not be
affected in any manner whatsoever by reason only of such event; provided,
however, the Trustee shall, within 90 days after ceasing to be authorized to
carry on the business of a trust company in the Province of Alberta, either
become so authorized or resign in the manner and with the effect specified in
Article 10 hereof.
7.15 CONFLICTING CLAIMS
If conflicting claims or demands are made or asserted with respect to
any interest of any Holder in any Exchangeable Shares, including any
disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Holder in any Exchangeable
Shares resulting in conflicting claims or demands being made in connection with
such interest, then the Trustee shall be entitled, at its sole discretion, to
refuse to recognize
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or to comply with any such claim or demand. In so refusing, the Trustee may
elect not to exercise any Voting Rights, Exchange Right or Automatic Exchange
Rights subject to such conflicting claims or demands and, in so doing, the
Trustee shall not be or become liable to any person on account of such election
or its failure or refusal to comply with any such conflicting claims or demands.
The Trustee shall be entitled to continue to refrain from acting and to refuse
to act until:
(a) the rights of all adverse claimants with respect to the Voting
Rights, Exchange Right or Automatic Exchange Rights subject to
such conflicting claims or demands have been adjudicated by a
final judgment of a court of competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Exchange Right
or Automatic Exchange Rights subject to such conflicting claims
or demands have been conclusively settled by a valid written
agreement binding on all such adverse claimants, and the Trustee
shall have been furnished with an executed copy of such
agreement.
If the Trustee elects to recognize any claim or comply with any demand
made by any such adverse claimant, it may in its discretion require such
claimant to furnish such surety bond or other security satisfactory to the
Trustee as it shall deem appropriate fully to indemnify it as between all
conflicting claims or demands.
7.16 ACCEPTANCE OF TRUST
The Trustee hereby accepts the Trust created and provided for by and in
this agreement and agrees to perform the same upon the terms and conditions
herein set forth and to hold all rights, privileges and benefits conferred
hereby and by law in trust for the various persons who shall from time to time
be Holders, subject to all the terms and conditions herein set forth.
ARTICLE 8
COMPENSATION
OSI and PTI Holdco jointly and severally agree to pay to the Trustee reasonable
compensation for all of the services rendered by it under this agreement and
will reimburse the Trustee for all reasonable expenses (including but not
limited to taxes, compensation paid to experts, agents and advisors, and travel
expenses) and disbursements, including the cost and expense of any suit or
litigation of any character and any proceedings before any governmental agency,
reasonably incurred by the Trustee in connection with its rights and duties
under this agreement; provided that OSI and PTI Holdco shall have no obligation
to reimburse the Trustee for any expenses or disbursements paid, incurred or
suffered by the Trustee in any suit or litigation in which the Trustee is
determined to have acted in bad faith or with negligence or willful misconduct.
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ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE
OSI and PTI Holdco jointly and severally agree to indemnify and hold
harmless the Trustee and each of its directors, officers, employees and agents
appointed and acting in accordance with this agreement (collectively, the
"Indemnified Parties") against all claims, losses, damages, costs, penalties,
fines and reasonable expenses (including reasonable expenses of the Trustee's
legal counsel) which, without fraud, negligence, willful misconduct or bad faith
on the part of such Indemnified Party, may be paid, incurred or suffered by the
Indemnified Party by reason of or as a result of the Trustee's acceptance or
administration of the Trust, its compliance with its duties set forth in this
agreement, or any written or oral instructions delivered to the Trustee by OSI
or PTI Holdco pursuant hereto. In no case shall OSI or PTI Holdco be liable
under this indemnity for any claim against any of the Indemnified Parties unless
OSI and PTI Holdco shall be notified by the Trustee of the written assertion of
a claim or of any action commenced against the Indemnified Parties, promptly
after any of the Indemnified Parties shall have received any such written
assertion of a claim or shall have been served with a summons or other first
legal process giving information as to the nature and basis of the claim.
Subject to (ii) below, OSI and PTI Holdco shall be entitled to participate at
their own expense in the defense and, if OSI or PTI Holdco so elect at any time
after receipt of such notice, either of them may assume the defense of any suit
brought to enforce any such claim. The Trustee shall have the right to employ
separate counsel in any such suit and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Trustee
unless: (i) the employment of such counsel has been authorized by OSI or PTI
Holdco, such authorization not to be unreasonably withheld; or (ii) the named
parties to any such suit include both the Trustee and OSI or PTI Holdco and the
Trustee shall have been advised by counsel acceptable to OSI or PTI Holdco that
there may be one or more legal defenses available to the Trustee that are
different from or in addition to those available to OSI or PTI Holdco and that
an actual or potential conflict of interest exists (in which case OSI and PTI
Holdco shall not have the right to assume the defense of such suit on behalf of
the Trustee, but shall be liable to pay the reasonable fees and expenses of
counsel for the Trustee). This indemnity shall survive the resignation or
removal of the Trustee and the termination of the trust.
9.2 LIMITATION OF LIABILITY
The Trustee shall not be held liable for any loss which may occur by
reason of depreciation of the value of any part of the Trust Estate or any loss
incurred on any investment of funds pursuant to this agreement, except to the
extent that such loss is attributable to the fraud, negligence, willful
misconduct or bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 RESIGNATION
The Trustee, or any trustee hereafter appointed, may at any time resign
by giving written notice of such resignation to OSI and PTI Holdco specifying
the date on which it desires to
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resign, provided that such notice shall never be given less than 60 days before
such desired resignation date unless OSI and PTI Holdco otherwise agree and
provided further that such resignation shall not take effect until the date of
the appointment of a successor trustee and the acceptance of such appointment by
the successor trustee. Upon receiving such notice of resignation, OSI and PTI
Holdco shall promptly appoint a successor trustee by written instrument, in
duplicate, one copy of which shall be delivered to the resigning trustee and one
copy to the successor trustee. Failing acceptance by a successor trustee, a
successor trustee may be appointed by an order of the superior court of the
province in which PTI Holdco has its registered office upon application of one
or more of the parties hereto.
10.2 REMOVAL
The Trustee, or any trustee hereafter appointed, may be removed with or
without cause, at any time on 60 days prior notice by written instrument
executed by OSI and PTI Holdco, in duplicate, one copy of which shall be
delivered to the trustee so removed and one copy to the successor trustee;
provided that, in connection with such removal, provision is made for a
replacement trustee similar to that contemplated in Section 10.1.
10.3 SUCCESSOR TRUSTEE
Any successor trustee appointed as provided under this agreement shall
execute, acknowledge and deliver to OSI and PTI Holdco and to its predecessor
trustee an instrument accepting such appointment. Thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor under this
agreement, with like effect as if originally named as trustee in this agreement.
However, on the written request of OSI and PTI Holdco or of the successor
trustee, the trustee ceasing to act shall, upon payment of any amounts then due
it pursuant to the provisions of this agreement, execute and deliver an
instrument transferring to such successor trustee all the rights and powers of
the trustee so ceasing to act. Upon the request of any such successor trustee,
OSI, PTI Holdco and such predecessor trustee shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers.
10.4 NOTICE OF SUCCESSOR TRUSTEE
Upon acceptance of appointment by a successor trustee as provided
herein, OSI and PTI Holdco shall cause to be mailed notice of the succession of
such trustee hereunder to each Holder specified in a List. If OSI or PTI Holdco
shall fail to cause such notice to be mailed within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of OSI and PTI Holdco.
ARTICLE 11
SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC.
Neither OSI nor PTI Holdco shall enter into any transaction (whether by
way of reconstruction, reorganization, consolidation, merger, transfer, sale,
lease or otherwise) whereby
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all or substantially all of its undertaking, property and assets would become
the property of any other Person or, in the case of a merger, of the continuing
corporation resulting therefrom, but may do so if:
(a) (i) such other Person or continuing corporation (the "Successor"),
by operation of law, becomes, without further action, bound by
the terms and provisions of this agreement or, if not so
bound, executes, prior to or contemporaneously with the
consummation of such transaction an agreement supplemental
hereto and such other instruments (if any) as are satisfactory
to the Trustee and in the opinion of legal counsel to the
Trustee are necessary or advisable to evidence the assumption
by the Successor of liability for all moneys payable and
property deliverable hereunder, the covenant of such Successor
to pay and deliver or cause to be delivered the same and its
agreement to observe and perform all the covenants and
obligations of OSI or PTI Holdco, as the case may be, under
this agreement; and
(ii) such transaction shall, to the satisfaction of the Trustee, be
upon such terms which substantially preserve and do not impair
in any material respect any of the rights, duties, powers and
authorities of the Trustee or of the Holders hereunder; or
(b) all Exchangeable Shares are redeemed or repurchased pursuant to
Article 7 of the Exchangeable Share Provisions or under the
Redemption Call Rights prior to or concurrently with the
consummation of such transactions.
11.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of Section 11. 1 hereof have been duly observed
and performed, the Trustee, if required by Section 11.1 hereof, the Successor
and OSI or PTI Holdco, as the case may be, shall execute and deliver the
supplemental agreement provided for in Article 12 hereof, and thereupon the
Successor shall possess and from time to time may exercise each and every right
and power of OSI or PTI Holdco, as the case may be, under this agreement in the
name of OSI or PTI Holdco, as the case may be, or otherwise and any act or
proceeding by any provision of this agreement required to be done or performed
by the board of directors or any officers of OSI or PTI Holdco may be done and
performed with like force and effect by the directors or officers of such
Successor.
11.3 WHOLLY-OWNED SUBSIDIARIES
Nothing herein shall be construed as preventing: (a) the amalgamation
or merger of any wholly-owned subsidiary of OSI with or into OSI; or (b) the
winding-up, liquidation or dissolution of any wholly-owned subsidiary of OSI
provided that all of the assets of such subsidiary are transferred to OSI or
another wholly-owned subsidiary of OSI, and any such transactions are hereby
expressly permitted.
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ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC.
Subject to Sections 12.2 and 12.4, this agreement may not be amended,
modified or waived except by an agreement in writing executed by PTI Holdco, OSI
and the Trustee and approved by the Holders in accordance with Section 9.2 of
the Exchangeable Share Provisions. No amendment to or modification or waiver of
any of the provisions of this agreement otherwise permitted hereunder shall be
effective unless made in writing and signed by all of the parties hereto.
12.2 MINISTERIAL AMENDMENTS
Notwithstanding the provisions of Section 12.1 hereof, the parties to
this agreement may in writing, at any time and from time to time, without the
approval of the Holders, amend or modify this agreement for the purposes of:
(a) adding to the covenants of any or all of the parties hereto for
the protection of the Holders hereunder subject to the receipt by
the Trustee of an opinion of its counsel that the addition of the
proposed covenant is not prejudicial to the interests of the
Holders as a whole or the Trustee;
(b) making such amendments or modifications not inconsistent with
this agreement as may be necessary or desirable with respect to
matters or questions which, in the opinion of the board of
directors of each of OSI and PTI Holdco and in the opinion of the
Trustee and its counsel, having in mind the best interests of the
Holders as a whole, it may be expedient to make, provided that
such boards of directors and the Trustee and its counsel shall be
of the opinion that such amendments and modifications will not be
prejudicial to the interests of the Holders as a whole;
(c) making such changes or corrections which, on the advice of
counsel to PTI Holdco, OSI and the Trustee, are required for the
purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or
manifest error; provided that the Trustee and its counsel and the
board of directors of each of PTI Holdco and OSI shall be of the
opinion that such changes or corrections will not be prejudicial
to the interests of the Holders as a whole; or
(d) making such changes as may be necessary or appropriate to
implement or give effect to any assignment or assumption made
pursuant to Section 14.9 hereof.
12.3 MEETING TO CONSIDER AMENDMENTS
PTI Holdco, at the request of OSI, shall call a meeting or meetings of
the Holders for the purpose of considering any proposed amendment or
modification requiring approval pursuant hereto. Any such meeting or meetings
shall be called and held in accordance with the by-laws of PTI Holdco, the
Exchangeable Share Provisions and all applicable laws.
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12.4 CHANGES IN CAPITAL OF OSI AND PTI HOLDCO
At all times after the occurrence of any event effected pursuant to
Section 2.7 or Section 2.8 of the Support Agreement, as a result of which either
OSI Common Stock or the Exchangeable Shares or both are in any way changed, this
agreement shall forthwith be amended and modified as necessary in order that it
shall apply with full force and effect, mutatis mutandis, to all new securities
into which OSI Common Stock or the Exchangeable Shares or both are so changed,
and the parties hereto shall execute and deliver a supplemental agreement giving
effect to and evidencing such necessary amendments and modifications.
12.5 EXECUTION OF SUPPLEMENTAL AGREEMENTS
From time to time, PTI Holdco (when authorized by a resolution of its
Board of Directors), OSI (when authorized by a resolution of its board of
directors) and the Trustee may, subject to the provisions of these presents, and
they shall, when so directed by these presents, execute and deliver by their
proper officers, agreements or other instruments supplemental hereto, which
thereafter shall form part hereof, for any one or more of the following
purposes:
(a) evidencing the succession of any Successors to OSI and the
covenants of and obligations assumed by each such Successor in
accordance with the provisions of Article 11 and the successor of
any successor trustee in accordance with the provisions of
Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this agreement or the Voting Rights, the Exchange
Right or the Automatic Exchange Rights which, in the opinion of
the Trustee and its counsel, will not be prejudicial to the
interests of the Holders as a whole or are in the opinion of
counsel to the Trustee necessary or advisable in order to
incorporate, reflect or comply with any legislation the
provisions of which apply to OSI, PTI Holdco, the Trustee or this
agreement;
(c) to implement or give effect to any assignment or assumption made
pursuant to Section 14.9 hereof; and
(d) for any other purposes not inconsistent with the provisions of
this agreement, including without limitation to make or evidence
any amendment or modification to this agreement as contemplated
hereby, provided that, in the opinion of the Trustee and its
counsel, the rights of the Trustee and the Holders as a whole
will not be prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 TERM
The Trust created by this agreement shall continue until the earliest
to occur of the following events:
(a) no outstanding Exchangeable Shares are held by a Holder;
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(b) each of PTI Holdco and OSI elects in writing to terminate the
Trust and such termination is approved by the Holders of the
Exchangeable Shares in accordance with Section 9.1 of the
Exchangeable Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants
of Her Majesty Queen Elizabeth II of the United Kingdom of Great
Britain and Northern Ireland living on the date of the creation
of the Trust;
whereupon OSI may repurchase the Voting Share for cancellation, at par value.
13.2 SURVIVAL OF AGREEMENT
This agreement shall survive any termination of the Trust and shall
continue until there are no Exchangeable Shares outstanding held by a Holder;
provided, however, that the provisions of Articles 8 and 9 hereof shall survive
any such termination of this agreement.
ARTICLE 14
GENERAL
14.1 SEVERABILITY
If any provision of this agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
agreement shall not in any way be affected or impaired thereby, and the
agreement shall be carried out as nearly as possible in accordance with its
original terms and conditions.
14.2 INUREMENT
This agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns and to the
benefit of the Holders.
14.3 NOTICES TO PARTIES
All notices and other communications between the parties hereunder
shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following addresses
(or at such other address for such party as shall be specified in like notice):
(a) if to OSI:
Oil States International, Inc.
Three Allen Center 333 Clay
Street, Suite 333460
Houston, Texas 77002
Attention: Cindy B. Taylor
Fax: (713) 652-0499
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with a copy to:
Donahue, Ernst & Young LLP
1000 Ernst & Young Tower
440 - 2nd Avenue S.W.
P.O. Box 2258, Station M
Calgary, Alberta T2P 5E5
Attention: Richard Peters
Fax: (403) 206-5525
(b) if to PTI Holdco to:
Three Allen Center
333 Clay Street, Suite 333460
Houston, Texas 77002
Attention: Cindy B. Taylor
Fax: (713) 652-0499
(c) if to the Trustee to:
Montreal Trust Company of Canada
Suite 600, 530 - 8th Avenue S.W.
Calgary, Alberta
T2P 3S8
Attention: Manager, Stock Transfer Services
Fax: (403) 267-6529
Any notice or other communication given personally shall be deemed to
have been given and received upon delivery thereof, and if given by telecopy
shall be deemed to have been given and received on the date of receipt thereof
unless such day is not a Business Day in which case it shall be deemed to have
been given and received upon the immediately following Business Day.
14.4 NOTICE TO HOLDERS
Any and all notices to be given and any documents to be sent to any
Holders may be given or sent to the address of such Holder shown on the register
of Holders of Exchangeable Shares in any manner permitted by the Exchangeable
Share Provisions and shall be deemed to be received (if given or sent in such
manner) at the time specified in such Exchangeable Share Provisions, the
provisions of which Exchangeable Share Provisions shall apply mutatis mutandis
to notices or documents as aforesaid sent to such Holders.
14.5 RISK OF PAYMENTS BY POST
Whenever payments are to be made or documents are to be sent to any
Holder by the Trustee, by PTI Holdco or by OSI or by such Holder to the Trustee
or to OSI or PTI Holdco, the
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making of such payment or sending of such document sent through the mail shall
be at the risk of PTI Holdco or OSI, in the case of payments made or documents
sent by the Trustee or PTI Holdco or OSI, and the Holder, in the case of
payments made or documents sent by the Holder.
14.6 COUNTERPARTS
This agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
14.7 JURISDICTION
This agreement shall be construed and enforced in accordance with the
laws of the Province of Alberta and the federal laws of Canada applicable
therein.
14.8 ATTORNMENT
OSI agrees that any action or proceeding arising out of or relating to
this agreement may be instituted in the courts of Alberta, waives any objection
which it may have now or hereafter to the venue of any such action or
proceeding, irrevocably submits to the jurisdiction of such courts in any such
action or proceeding, agrees to be bound by any judgment of such courts and
agrees not to seek, and hereby waives, any review of the merits of any such
judgment by the courts of any other jurisdiction and hereby appoints PTI Holdco
at its registered office in the Province of Alberta as OSI's attorney for
service of process.
14.9 PERMITTED ASSIGNMENT
OSI may assign any or all of its rights and obligations under this
Agreement to OSI ULC, provided that each of OSI and OSI ULC shall thereafter,
jointly and severally, be liable for the performance by OSI ULC of the
obligations of OSI pursuant to this Agreement. Any and all of the obligations of
OSI may be performed and satisfied by OSI ULC, except that nothing in this
Section 14.9 will permit any change to the rights, privileges, restrictions and
conditions attaching to the Voting Share or Exchangeable Shares or to the
Exchange Right or Automatic Exchange Rights.
IN WITNESS WHEREOF, the parties hereby have caused this agreement to be
duly executed as of the date first above written.
OIL STATES INTERNATIONAL, INC.
Per:
--------------------------------
Per:
--------------------------------
MONTREAL TRUST COMPANY OF CANADA
Per:
--------------------------------
Per:
--------------------------------
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APPENDIX A
TO THE VOTING AND EXCHANGE TRUST AGREEMENT
[ARTICLES OF PTI HOLDCO]
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EXHIBIT E
FORM OF AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
<PAGE> 158
EXHIBIT E
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement (the
"Agreement"), dated as of ______________ ____, 200_, by and among Oil States
International, Inc., a Delaware corporation ("OSI"), HWC Energy Services, Inc.,
a Texas corporation ("HWC"), Sooner Inc., a Delaware corporation ("Sooner"), and
each of the holders of OSI Common Stock, HWC Common Stock, and Sooner Common
Stock listed on the signature pages hereto, is entered into in connection with
that certain Combination Agreement (the "Combination Agreement") dated as of
July 31, 2000 and among OSI, HWC, Sooner and PTI Group, Inc., an Alberta
corporation ("PTI") and the other parties thereto. Capitalized terms that are
used but not defined herein shall have the meanings set forth in the Combination
Agreement.
RECITALS
WHEREAS, OSI, HWC, Sooner and PTI have entered into the Combination
Agreement, pursuant to which, among other things, the holders of HWC Common
Stock will receive shares of OSI Common Stock in the HWC Merger and the holders
of Sooner Common Stock will receive shares of OSI Common Stock in the Sooner
Merger; and
WHEREAS, certain of the holders of OSI Common Stock, HWC Common Stock
and Sooner Common Stock enjoy various registration rights with respect to such
shares currently owned by them (the "Existing Registration Rights"); and
WHEREAS, Article X of the Combination Agreement provides for the
execution of this Amended and Restated Registration Rights Agreement which will
amend and restate the Existing Registration Rights; and
WHEREAS, the Holders of the Existing Registration Rights wish to
relinquish such rights as of the Effective Time in consideration of receiving
the amended and restated registration rights contemplated by this Agreement;
WHEREAS, this Agreement shall be effective only upon the consummation
of the OSI Initial Public Offering.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
SECTION 1 DEFINITIONS. The terms set forth below in this
Section 1 shall have the meanings ascribed to them below or in the part of this
Agreement referred to below:
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the general rules and regulations under the Exchange Act.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the States of Texas or New York are authorized by law
to close.
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"Demand Holder" means SCF-III, L.P., a Delaware limited partnership,
SCV-IV, L.P., a Delaware limited partnership, or any of their respective
successors and each transferee of their OSI Common Stock to whom the right to
cause a Demand Registration has been expressly assigned in writing directly or
indirectly (in a chain of title) from SCF-III, L.P. or SCF-IV, L.P.
"Demand Registration" has the meaning set forth in Section 2(a) below.
"Demand Request" has the meaning set forth in Section 2(a) below.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Registration Rights" has the meaning set forth in the
recitals above.
"Holders" means those Persons set forth on the signature pages hereto,
each of whom currently owns Registrable Securities; provided, however that a
Person shall cease to be a Holder at any time after 180 days after the OSI
Initial Public Offering if and when such Person owns OSI Common Stock and OSI
Common Stock Equivalents representing less than two percent of the outstanding
OSI Common Stock and such Person may dispose of all Registrable Securities then
owned by such Person pursuant to Rule 144(k) (or any successor rule) under the
Securities Act; provided, further however, that a Person (other than a Demand
Holder) shall cease to be a Holder after the second anniversary hereof if the
Company requests in writing that such Person confirm in writing that such Person
remains a Holder and such Person fails to so confirm within 30 days of such
notice.
"HWC Common Stock" shall mean the common stock, par value $.01 per
share, of HWC Energy Services, Inc., a Texas corporation.
"Indemnified Party" has the meaning set forth in Section 7(c) below.
"Indemnifying Party" has the meaning set forth in Section 7(c) below.
"Inspectors" has the meaning set forth in Section 5(i) below.
"Material Adverse Effect" has the meaning set forth in Section 2(d)
below.
"OSI Common Stock" shall mean the Class A common stock, par value $.01
per share, of OSI.
"OSI Common Stock Equivalents" means (without duplication with any
other OSI Common Stock or OSI Common Stock Equivalents) rights, warrants,
options, convertible securities, or exchangeable securities or indebtedness, or
other rights, exercisable for or convertible or exchangeable into, directly or
indirectly, OSI Common Stock or securities convertible or exchangeable into OSI
Common Stock, whether at the time of issuance or upon the passage of time or the
occurrence of some future event.
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"OSI Initial Public Offering" means the initial public offering of OSI
Common Stock contemplated by an OSI registration statement filed to effect such
offering.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank trust company, land trust, business trust, or other organization,
whether or not a legal entity, and any government or agency or political
subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section 3(a)
below.
"Piggyback Securities" has the meaning set forth in Section 3(b) below.
"PTI Exchangeable Shares" has the meaning set forth in the Combination
Agreement.
"PTI Registration Statement" has the meaning set forth in Section 3(a)
below.
"Records" has the meaning set forth in Section 5(i) below.
"Registrable Securities" means (i) the OSI Common Stock issued in
connection with the Combination Agreement in exchange for shares of HWC Common
Stock or Sooner Common Stock to which, in each case, Existing Registration
Rights were attached, (ii) the OSI Common Stock issued prior to the date hereof
to which Existing Registration Rights are attached and (iii) any OSI Common
Stock and any other securities issued or issuable with respect to such
securities by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
reorganization; provided, that any Registrable Security will cease to be a
Registrable Security when (a) a registration statement covering such Registrable
Security has been declared effective by the SEC and it has been disposed of
pursuant to such effective registration statement, (b) such Registrable Security
is sold under circumstances in which all of the applicable conditions of Rule
144 (or any similar provisions then in force) under the Securities Act are met,
(c) (i) such Registrable Security has been otherwise transferred and (ii) OSI
has delivered a new certificate or other evidence of ownership for it not
bearing any legend with respect to registration and (iii) such Registrable
Security may be resold without subsequent registration under the Securities Act,
or (d) such Registrable Security has ceased to be a Registrable Security in
accordance with the proviso to the definition of Holder provided for herein.
"Registration Expenses" has the meaning set forth in Section 6 below.
"Requesting Holders" means the Demand Holder or group of Demand Holders
acting in concert to make a Demand Request.
"Required Filing Date" has the meaning set forth in Section 2(a)(ii)
below.
"SEC" means the Securities and Exchange Commission or any successor
governmental agency.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
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"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a registration statement under the Securities Act.
"Sooner Common Stock" shall mean the common stock, par value $.01 per
share, of Sooner Inc., a Delaware corporation.
"Subsidiary" means (i) any corporation or other entity a majority of
the capital stock of which having ordinary voting power to elect a majority of
the board of directors or other Persons performing similar functions is at the
time owned, directly or indirectly, with power to vote, by OSI or any direct or
indirect Subsidiary of OSI or (ii) a partnership in which OSI or any direct or
indirect Subsidiary is a general partner.
"Underwriter" means a securities dealer which purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
SECTION 2 DEMAND REGISTRATION.
(a) Request for Registration.
(i) From and after the expiration of the
lock-up period agreed to by OSI in connection with the OSI
Initial Public Offering, any Demand Holder may make a written
request of OSI (a "Demand Request") for registration under the
Securities Act (a "Demand Registration") of the sale of all or
part of its Registrable Securities; provided that the
Registrable Securities proposed to be sold by the Requesting
Holders must have an estimated aggregate gross offering price
of at least $50,000,000.
(ii) Each Demand Request shall specify the type
and number of shares of Registrable Securities proposed to be
sold. Subject to Section 4(c), OSI shall file the Demand
Registration as soon as reasonably practicable but in any
event within 60 days after receiving a Demand Request (the
"Required Filing Date") and shall use all commercially
reasonable efforts to cause the same to be declared effective
by the SEC as promptly as practicable after such filing.
Subject to Section 2(b), if OSI has effected five Demand
Registrations in response to the request of a Demand Holder,
then OSI shall not be obligated to respond to further Demand
Registrations in respect of Demand Holders pursuant to this
Section. OSI shall not be obligated to effect more than one
Demand Registration in any six month period.
(b) Effective Registration and Expenses. Each
registration that becomes effective will be counted as a Demand
Registration. A registration will not count as a Demand Registration
until it has become effective unless (i) prior to such effective time
the Requesting Holders withdraw all their Registrable Securities for
any reason other than (A) the inability or unreasonable delay of OSI in
having such registration statement become effective or (B) the
disclosure of material adverse information regarding OSI that was not
known by such Requesting Holders at the time the request for such
Demand Registration was
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made and (ii) the Requesting Holders elect not to pay all of OSI's
Registration Expenses in connection with such withdrawn registration.
If, after such registration has become effective, an offering of
Registrable Securities pursuant to a registration is interfered with
by any stop order, injunction or other order or requirement of the SEC
or other governmental agency or court, such registration will not
count as a Demand Registration; provided, however, that upon the
termination or release of such stop order, injunction or interference,
such registration will again be counted as a Demand Registration.
(c) Selection of Underwriters. The offering of
Registrable Securities pursuant to a Demand Registration may be in the
form of a "firm commitment" underwritten offering. OSI shall select the
book-running managing Underwriter and such additional Underwriters to
be used in connection with the offering; provided that such selections
shall be subject to the consent of Requesting Holders owning a majority
of the Registrable Securities subject to such Demand Registration,
which consent shall not be unreasonably withheld.
(d) Priority on Demand Registrations. No securities to
be sold for the account of any Person (including OSI) other than a
Holder shall be included in a Demand Registration if the managing
Underwriter or Underwriters shall advise the Requesting Holder in
writing that, in its or their judgment, the inclusion of such
securities may adversely affect the price or success of the offering in
any significant or material respect (a "Material Adverse Effect").
Furthermore, in the event the managing Underwriter or Underwriters
shall advise the Requesting Holder that even after exclusion of all
securities of other Persons pursuant to the immediately preceding
sentence, the amount of Registrable Securities proposed to be included
in such Demand Registration by Holders electing to participate is
sufficiently large to cause a Material Adverse Effect, the Registrable
Securities of such Holders to be included in such Demand Registration
shall be allocated pro rata among such Holders on the basis of the
number of outstanding shares of OSI Common Stock requested to be
included in such registration by each such Holder.
SECTION 3 PIGGYBACK REGISTRATION.
(a) If OSI proposes to file a registration statement
under the Securities Act, including a Demand Registration, with respect
to an offering of OSI Common Stock for cash by OSI for its own account
or for the account of any of its equity holders (other than a
registration statement on Form S-4 or S-8 or any substitute form that
may be adopted by the SEC or any registration statement filed in
connection with an exchange offer or offering of securities solely to
OSI's existing security holders or any registration statement filed in
connection with an exchange offer or offering of securities to holders
of Exchangeable Shares) (the "PTI Registration Statement"), then OSI
shall give written notice of such proposed filing to the Holders of the
Registrable Securities as soon as practicable (but in no event less
than 20 days before the anticipated initial filing date of such
registration statement), and such notice shall offer such Holders the
opportunity to register such number of Registrable Securities as each
such Holder may request (a "Piggyback Registration"). On or before the
10th day following the receipt of such notice by the Holders, any
Holder wishing to include any or all of its Registrable Securities in
such registration statement shall give written notice to OSI stating
the name of such Holder and the amount of such Holder's
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Registrable Securities to be included in such registration statement.
Subject to Section 3(b), OSI shall include in each such Piggyback
Registration all Registrable Securities requested to be included in the
registration for such offering; provided, however, that OSI may at any
time withdraw or cease proceeding with such registration without the
consent of any Holder of Registrable Securities, notwithstanding the
request of any such Holder to participate therein in accordance with
this provision, if OSI determines in its sole discretion that such
action is in the best interests of OSI and its stockholders (for this
purpose, the interests of the Holders shall not be considered). Each
Holder of Registrable Securities shall be permitted to withdraw all or
part of such Holder's Registrable Securities from a Piggyback
Registration at any time prior to the effective date thereof.
(b) OSI shall use all commercially reasonable efforts
to cause the managing Underwriter or Underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to
be included in the registration statement for such offering under
Section 3(a) ("Piggyback Securities"), to be included on the same terms
and conditions as any similar securities included therein.
Notwithstanding the foregoing, OSI shall not be required to include any
Holder's Piggyback Securities in such offering unless such Holder
accepts the terms of the underwriting agreement between OSI and the
managing Underwriter or Underwriters and otherwise complies with the
provisions of Section 8. If such offering is a Demand Registration
pursuant to Section 2(a), then the provisions of Section 2(d) shall
apply. In all other offerings that are underwritten, if the managing
Underwriter or Underwriters of such proposed underwritten offering
advise OSI in writing that in its or their opinion the total amount of
securities, including Piggyback Securities, to be included in such
offering is sufficiently large to cause a Material Adverse Effect, then
in such event the securities to be included in such offering shall be
allocated first to OSI, and then, to the extent that any additional
securities can, in the opinion of such managing Underwriter or
Underwriters, be sold without any such Material Adverse Effect, pro
rata among the holders of Piggyback Securities on the basis of the
number of outstanding shares of OSI Common Stock requested to be
included in such registration by each such Holder.
(c) Until such time as the PTI Registration Statement
has been declared effective by the SEC, the holders of PTI Exchangeable
Shares shall be deemed to be Holders hereunder for purposes of
participation in Piggyback Registrations. The holders of PTI
Exchangeable Shares shall have the same rights, duties and obligations
of Holders with respect to Piggyback Registrations and shall be subject
to the same limitations and restrictions thereon. The rights provided
in this Section 3(c) shall terminate as to any particular holder of PTI
Exchangeable Shares at such time as such holder ceases to be a holder
of PTI Exchangeable Shares.
SECTION 4 HOLDBACK AGREEMENTS.
(a) Restrictions on Public Sale by Holder of
Registrable Securities. Each Holder of Registrable Securities (whether
or not such Registrable Securities are included in a registration
statement pursuant hereto) agrees not to effect any direct or indirect
(including through derivative transactions) sale or distribution of the
issue being registered or of any securities convertible into or
exchangeable or exercisable for such securities, including a sale
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pursuant to Rule 144 under the Securities Act, during the 14 days prior
to, and during such period (up to 90 days) beginning on, the date of
the final prospectus used with respect to any underwritten public
offering of equity securities by the Company or any Holder of
Registrable Securities if and to the extent requested by the managing
Underwriter or Underwriters.
(b) Restrictions on Public Sale by OSI and Others. OSI
agrees not to effect any direct or indirect (including through
derivative transactions) sale or distribution of any securities similar
to those being registered, or any securities convertible into or
exchangeable or exercisable for such securities, during the 14 days
prior to, and during a period of up to 90 days, if requested by the
managing underwriters, beginning on, the date of the final prospectus
used with respect to any underwritten public offering of equity
securities by the Company or any Holder of Registrable Securities
(unless such sale or distribution is pursuant to such registration
statement); provided, such restriction shall not affect OSI's ability
to issue OSI Common Stock pursuant to the PTI Registration Statement.
(c) Deferral of Filing. OSI may defer the filing (but
not the preparation) of a registration statement required by Section 2
if (i) at the time OSI receives the Demand Request, OSI is engaged in
confidential negotiations or other confidential business activities,
disclosure of which would be required in such registration statement
(but would not be required if such registration statement were not
filed), and the Board of Directors of OSI determines in good faith that
such disclosure would not be in the best interests of OSI and its
stockholders, or (ii) prior to receiving the Demand Request, the Board
of Directors had determined to effect a registered underwritten public
offering of OSI's equity securities for OSI's account and OSI had taken
substantial steps (including, but not limited to, selecting the
managing Underwriter for such offering) and is proceeding with
reasonable diligence to effect such offering. A deferral of the filing
of a registration statement pursuant to this Section 4(c) shall be
lifted, and the requested registration statement shall be filed
forthwith, if, in the case of a deferral pursuant to clause (i) of the
preceding sentence, the negotiations or other activities are disclosed
or terminated, or, in the case of a deferral pursuant to clause (ii) of
the preceding sentence, the proposed registration for OSI's account is
abandoned. In order to defer the filing of a registration statement
pursuant to this Section 4(c), OSI shall promptly, upon determining to
seek such deferral, deliver to each Requesting Holder a certificate
signed by the President of Company stating that OSI is deferring such
filing pursuant to this Section 4(c). Within twenty days after
receiving such certificate, the Requesting Holder may withdraw such
request by giving notice to OSI; if withdrawn, the Demand Request shall
be deemed not to have been made for all purposes of this Agreement. OSI
may defer the filing of a particular registration statement pursuant to
this Section 4(c) for a period of 45 days in any three month period and
of all registration statements for a total of 90 days during any twelve
month period.
SECTION 5 REGISTRATION PROCEDURES. Whenever the Holders have
requested that any Registrable Securities be registered pursuant to Section 2
hereof, OSI will, at its expense, use all commercially reasonable efforts to
effect the registration and the sale of such Registrable Securities under the
Securities Act in accordance with the intended method of disposition thereof as
quickly as practicable, and in connection with any such request, OSI will as
expeditiously as practicable:
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(a) prepare and file with the SEC a registration
statement on any form for which OSI then qualifies or which counsel for
OSI shall deem appropriate and which form shall be available for the
sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and use
all commercially reasonable efforts and proceed diligently and in good
faith to cause such filed registration statement to become effective
under the Securities Act; provided, however, that before filing a
registration statement or prospectus or any amendments or supplements
thereto, OSI will furnish to all Selling Holders and to one counsel
reasonably acceptable to OSI selected by the Selling Holders, copies of
all such documents proposed to be filed, which documents will be
subject to the review of such counsel;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective pursuant to Section 2 for a period (except as
provided in the last paragraph of this Section 5) of not less than 180
consecutive days or, if shorter, the period terminating when all
Registrable Securities covered by such registration statement have been
sold (but not before the expiration of the applicable period referred
to in Section 4(3) of the Securities Act and Rule 174 thereunder, if
applicable) and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement during such period in accordance with the
intended methods of disposition by the Selling Holders thereof set
forth in such registration statement;
(c) furnish to each such Selling Holder one copy of
such registration statement, and of each amendment and supplement
thereto (in each case including one copy of all exhibits thereto), and
such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus) as such Selling
Holder may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such Selling Holder;
(d) notify the Selling Holders promptly, and (if
requested by any such Person) confirm such notice in writing, (i) when
a prospectus or any prospectus supplement or post-effective amendment
has been filed, and, with respect to a registration statement or any
post-effective amendment, when the same has become effective under the
Securities Act and each applicable state law; (ii) of any request by
the SEC or any other federal or state governmental authority for
amendments or supplements to a registration statement or related
prospectus or for additional information; (iii) of the issuance by the
SEC of any stop order suspending the effectiveness of a registration
statement or the initiation of any proceedings for that purpose; (iv)
if at any time the representations or warranties of OSI contained in
any agreement (including any underwriting agreement) contemplated by
Section 5(h) below cease to be true and correct in any material
respect; (v) of the receipt by OSI of any notification with respect to
the suspension of the qualification or exemption from qualification of
any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; (vi) of
the happening of any event which makes any statement made in such
registration statement or related prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue
in any
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material respect or that requires the making of any changes in
such registration statement, prospectus or documents so that, in the
case of the registration statement, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the prospectus, it will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading, and (vii) of OSI's reasonable determination
that a post-effective amendment to a registration statement would be
appropriate;
(e) use every commercially reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of a
registration statement, or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment;
(f) cooperate with the Selling Holders and the managing
Underwriter or Underwriters to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be
sold, which certificates shall not bear any restrictive legends and
shall be in a form eligible for deposit with The Depositary Trust
Company; and enable such Registrable Securities to be registered in
such names as the managing Underwriter or Underwriters may request
prior to any sale of Registrable Securities;
(g) use all commercially reasonable efforts to register
or qualify such Registrable Securities as promptly as practicable under
such other securities or blue sky laws of such jurisdictions as any
Selling Holder or managing Underwriter reasonably (in light of the
intended plan of distribution) requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable
such Selling Holder or managing Underwriter to consummate the
disposition in such jurisdictions of the Registrable Securities owned
by such Selling Holder; provided, however, that OSI will not be
required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this
paragraph (g); (ii) subject itself to taxation in any such jurisdiction
or (iii) consent to general service of process in any such
jurisdiction;
(h) enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions
as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities;
(i) make available for inspection by any Selling Holder
of such Registrable Securities, any Underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other professional retained by any such Selling Holder or
Underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of OSI
(collectively, the "Records") as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause
OSI's officers, directors and employees to supply all information
reasonably requested by any such Inspectors in connection with such
registration statement. Each Selling Holder of such Registrable
Securities agrees that information obtained by it as a result of such
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inspections shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of OSI or its
Affiliates unless and until such is made generally available to the
public.
(j) use all commercially reasonable efforts to obtain a
comfort letter or comfort letters from OSI's independent public
accountants in customary form and covering such matters of the type
customarily covered by comfort letters as the Selling Holders of a
majority of the shares of Registrable Securities being sold or the
managing Underwriter or Underwriters reasonably requests;
(k) otherwise use all commercially reasonable efforts
to comply with all applicable rules and regulations of the SEC, and
make available to its security holders, as soon as reasonably
practicable, an earnings statement covering a period of twelve months,
which twelve month period shall commence no later than three months
after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act;
(l) use all commercially reasonable efforts to cause
all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by OSI are then listed or
quoted on any inter-dealer quotation system on which similar securities
issued by OSI are then quoted;
(m) subject to the provisions of Section 4(c) if any
event contemplated by Section 5(d)(vi) above shall occur, as promptly
as practicable prepare a supplement or amendment or post-effective
amendment to such registration statement or the related prospectus or
any document incorporated therein by reference or promptly file any
other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; and
(n) cooperate and assist in any filing required to be made
with the National Association of Securities Dealers, Inc. and in the
performance of any due diligence investigation by any underwriter,
including any "qualified independent underwriter," or any Selling
Holder.
OSI may require each Selling Holder to promptly furnish in writing to
OSI such information regarding the distribution of the Registrable Securities as
it may from time to time reasonably request and such other information as may be
legally required in connection with such registration. Notwithstanding anything
herein to the contrary, OSI shall have the right to exclude from any offering
the Registrable Securities of any Selling Holder who does not comply with the
provisions of the immediately preceding sentence.
Each Selling Holder agrees that, upon receipt of any notice from OSI of
the happening of any event of the kind described in Section 5(d)(vi) hereof,
such Selling Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such
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Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5(m) hereof, and, if
so directed by OSI, such Selling Holder will deliver to OSI all copies, other
than permanent file copies, then in such Selling Holder's possession, of the
most recent prospectus covering such Registrable Securities at the time of
receipt of such notice. In the event OSI shall give such notice, OSI shall
extend the period during which such registration statement shall be maintained
effective (including the period referred to in Section 5(b) hereof) by the
number of days during the period from and including the date of the giving of
notice pursuant to Section 5(d)(vi) hereof to the date when OSI shall make
available to the Selling Holders of Registrable Securities covered by such
registration statement a prospectus supplemented or amended to conform with the
requirements of Section 5(m) hereof.
SECTION 6 REGISTRATION EXPENSES. Subject to the provisions in
Section 2(b) above with respect to a Demand Registration, in connection with any
Demand Registration or Piggyback Registration hereunder, OSI shall pay the
following registration expenses (the "Registration Expenses"): (a) all
registration and filing fees (including, without limitation, with respect to
filings to be made with the National Association of Securities Dealers, Inc.),
(b) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (c) printing expenses, (d)
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (e) the fees
and expenses incurred in connection with the listing of the Registrable
Securities on an exchange or the quotation of the Registrable Securities on an
inter-dealer quotation system, (f) reasonable fees and disbursements of counsel
for OSI and customary fees and expenses for independent certified public
accountants retained by OSI (including the expenses of any comfort letters
requested pursuant to Section 5(j) hereof), (g) the reasonable fees and expenses
of any special experts retained by OSI in connection with such registration, (h)
reasonable fees and expenses of one counsel reasonably acceptable to OSI
selected by the Selling Holders incurred in connection with the registration of
such Registrable Securities hereunder and (i) fees and expenses of any
"qualified independent underwriter" or other independent appraiser participating
in any offering pursuant to the requirements of the National Association of
Securities Dealers, Inc. OSI shall not have any obligation to pay any
underwriting fees, discounts, or commissions attributable to the sale of
Registrable Securities, any capital gains, income or transfer taxes or, except
as provided by clause (b), (h) or (i) above, any out-of-pocket expenses of the
Holders (or the agents who manage their accounts) or the fees and disbursements
of counsel for any Underwriter.
SECTION 7 INDEMNIFICATION; CONTRIBUTION.
(a) Indemnification by OSI. OSI agrees to indemnify and
hold harmless each Selling Holder, each Person, if any, who controls
such Selling Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and the officers, directors,
agents, members, general and limited partners, and employees of each
Selling Holder and each such controlling person from and against any
and all losses, claims, damages, liabilities, and expenses (including
reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Registrable Securities or in any amendment or supplement thereto or in
any preliminary prospectus, or arising out
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of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses arise out of, or are based
upon, any such untrue statement or omission or allegation thereof
based upon information furnished in writing to OSI by such Selling
Holder or on such Selling Holder's behalf expressly for use therein.
OSI also agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors and each Person who controls
such Underwriters on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section 7(a).
(b) Indemnification by Holder of Registrable Securities.
Each Selling Holder, severally and not jointly, agrees to indemnify
and hold harmless OSI, and each Person, if any, who controls OSI
within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act and the officers, directors, agents and
employees of OSI and each such controlling Person to the same extent
as the foregoing indemnity from OSI to such Selling Holder, but only
with respect to information furnished in writing by such Selling
Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable
Securities. The liability of any Selling Holder under this Section
7(b) shall be limited to the aggregate cash and property received by
such Selling Holder pursuant to the sale of Registrable Securities
covered by such registration statement or prospectus.
(c) Conduct of Indemnification Proceedings. If any action or
proceeding (including any governmental investigation) shall be brought
or asserted against any Person entitled to indemnification under
Section 7(a) or 7(b) above (an "Indemnified Party") in respect of
which indemnity may be sought from any party who has agreed to provide
such indemnification (an "Indemnifying Party"), the Indemnified Party
shall give prompt written notice to the Indemnifying Party and the
Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all reasonable expenses of such
defense. Such Indemnified Party shall have the right to employ
separate counsel in any such action or proceeding and to participate
in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party has agreed to pay such fees and expenses or (ii)
the Indemnifying Party fails promptly to assume the defense of such
action or proceeding or fails to employ counsel reasonably
satisfactory to such Indemnified Party or (iii) the named parties to
any such action or proceeding (including any impleaded parties)
include both such Indemnified Party and Indemnifying Party (or an
Affiliate of the Indemnifying Party), and such Indemnified Party shall
have been advised by counsel that there is a conflict of interest on
the part of counsel employed by the Indemnifying Party to represent
such Indemnified Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of
such action or proceeding on behalf of such Indemnified Party).
Notwithstanding the foregoing, the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but
substantially similar related actions or proceedings in the same
jurisdiction arising out of the same general
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allegations or circumstances, be liable at any time for the fees and
expenses of more than one separate firm of attorneys (together in each
case with appropriate local counsel). The Indemnifying Party shall not
be liable for any settlement of any such action or proceeding effected
without its written consent (which consent will not be unreasonably
withheld), but if settled with its written consent, or if there be a
final judgment for the plaintiff in any such action of proceeding, the
Indemnifying Party shall indemnify and hold harmless such Indemnified
Party from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. The Indemnifying
Party shall not 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
release, in form and substance satisfactory to the Indemnified Party,
from all liability in respect of such action or proceeding for which
such Indemnified Party would be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 7 is unavailable to the Indemnified Parties in respect of any
losses, claims, damages, liabilities or judgments referred to herein,
then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims, damages,
liabilities and judgments as between OSI on the one hand and each
Selling Holder on the other, in such proportion as is appropriate to
reflect the relative fault of OSI and of each Selling Holder in
connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any
other relevant equitable considerations. The relative fault of OSI on
the one hand and of each Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. OSI and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred
to in the first two sentences of this Section 7(d). The amount paid or
payable by an Indemnified Party as a result of the losses, claims,
damages, liabilities or judgments referred to in Sections 7(a) and (b)
hereof shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section
7(d), no Selling Holder shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities of such Selling Holder were offered to the public exceeds
the amount of any damages which such Selling Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
SECTION 8 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No
Holder may participate in any underwritten registration hereunder unless such
Holder (a) agrees to sell such Holder's
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Registrable Securities on the basis provided in any underwriting arrangements
approved by the Person entitled hereunder to approve such arrangements, and (b)
timely completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements, custody agreements and other documents
reasonably required under the terms of such underwriting arrangements and this
Agreement.
SECTION 9 MISCELLANEOUS.
9.1 Rule 144. OSI covenants that, upon any registration statement
covering Company securities becoming effective, it will file the reports
required to be filed by it under the Exchange Act and the rules and regulations
adopted by the Commission thereunder, and it will take such other action as any
Holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the 1933 Act within the limitation of the exemptions
provided by (a) Rule 144 under the 1933 Act, as such Rule may be amended from
time to time, or (b) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any Holder of Registrable Securities, OSI will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
9.2 Issuance of New Certificates. Each Holder who ceases to be a Holder
may thereafter surrender any certificate or certificates of OSI Common Stock
bearing legends restricting the transferability thereof and shall be entitled,
upon such surrender, to receive in exchange therefor a certificate or
certificates, free of such restrictive legends, representing the same number of
shares of OSI Common Stock; provided, however, that prior to the issuance of
such unrestricted shares of OSI Common Stock, OSI may require an opinion of its
counsel, at its expense, in customary form and reasonably satisfactory to OSI to
the effect that the issuance of such unrestricted shares is permitted under
applicable federal and state securities laws. If any such certificate for OSI
Common Stock is to be issued in a name other than that in which the surrendered
certificate is registered, it shall be a condition of such exchange that the
certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such exchange shall have paid
any transfer and other taxes required by reason of such issuance of certificates
of OSI Common Stock in a name other than that of the registered holder of the
certificate surrendered, or shall have established to the satisfaction of OSI
and its transfer agent that such tax has been paid or is not applicable.
9.3 Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is, or whose stockholders or partners are,
entitled to the benefits thereof. This Agreement may not be amended or
supplemented at any time, except by an instrument in writing signed on behalf of
the Holders of 50% or more of the Registrable Securities.
9.4 Assignment. The registration rights of Holders under this Agreement
may be assigned and transferred to any transferee acquiring Registrable
Securities, other than in a public offering pursuant to a registration statement
or pursuant to Rule 144; provided, however, that OSI is given written notice by
the Holder at the time of such transfer stating the name and address of the
transferee and identifying the Registrable Securities with respect to which the
rights under this Agreement are being assigned and the transferee agrees to be
bound by the terms and conditions hereof and agrees to execute and deliver to
OSI an acknowledgement and agreement to such effect.
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This Agreement shall also be binding upon and enforceable by the heirs,
executors, or other personal representatives of the Holders and the successors
and assigns of OSI.
9.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered if delivered
in person, by cable, telegram, telex, or telecopy and shall be deemed to have
been duly given three business days after deposit with a United States post
office if delivered by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties as follows:
if to OSI:
Oil States International, Inc.
Three Allen Center
333 Clay Street, Suite 333460
Houston, Texas 77002
Attention: Cindy B. Taylor
Telephone: (713) 652-0588
Facsimile: (713) 652-0499
with a copy to:
Locke Liddell & Sapp LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas, 75201
Attention: Maury Purnell
Telephone: (214) 740-8000
Facsimile: (214) 740-8800
if to HWC:
HWC Energy Services, Inc.
811 Dallas, Suite 1322
Houston, Texas 77002
Attention: Rob Hampton
Telephone: (713) 750-0600
Facsimile: (713) 750-0058
with a copy to:
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P
201 St. Charles Avenue
New Orleans, Louisiana 70170
Attention: Bill Masters
Telephone: (504) 582-8000
Facsimile: (504) 582-8549
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if to Sooner:
Sooner Inc.
1221 Lamar Street, Suite 1010
Houston, Texas 77010
Attention: Chris Cragg
Telephone: (713) 759-1200
Facsimile: (713) 759-0442
with a copy to:
Scott F. Zarrow
900 Mid-Continent Tower
401 S. Boston
Tulsa, OK 74103
Telephone: (918) 295-8054
Facsimile: (918) 295-8048
and if to a Holder, at such Holder's address as shown on OSI's stock transfer
records or to such other address as any party may have furnished to the others
in writing in accordance herewith, except that notices of change of address
shall only be effective upon receipt.
9.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive law of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
9.7 Severability. If any term or other provisions of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
material manner to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible.
9.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original document, but all of which
together shall constitute one and the same agreement.
9.9 Headings. The Section headings herein are for convenience only and
are not intended to be part of or to affect the meaning or interpretation of the
Agreement.
9.10 Entire Agreement; Third Party Beneficiaries. This Agreement,
including the exhibits hereto and the documents, information supplied in
writing, and instruments referred to herein, constitute the entire agreement and
supersedes all other prior agreements, and understandings, both oral and
written, among the parties or any of them, with respect to the subject matter
hereof. Except as set forth in Section 3(c) hereof with respect to holders of
PTI Exchangeable Shares, this Agreement shall be binding upon and inure solely
to the benefit of the parties hereto, and nothing
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in this Agreement and the documents, information supplied in writing, and
instruments referred to herein, express or implied, is intended to confer upon
any other person any rights or remedies of any nature whatsoever under or by
reason of this Agreement. For greater certainty, Section 3(c) hereof, and the
application of this Agreement contemplated thereby, shall inure to the benefit
of, and shall be enforceable against the parties hereto by, the holders of PTI
Exchangeable Shares.
9.11 Termination. The provisions of Sections 2, 3, 4, 5 and 6 shall
terminate and be of no further force or effect on or after the tenth anniversary
of the date hereof.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties to this Agreement have caused it to be
executed as of the date first above written.
OIL STATES INTERNATIONAL, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
HWC ENERGY SERVICES, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SOONER INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SCF III, L.P.
By: SCF II, L.P.,
its General Partner
By: L.E. Simmons & Associates,
Incorporated, its General Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
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SCF IV, L.P.
By: SCF-IV, G.P., Limited Partnership,
its General Partner
By: L.E. Simmons & Associates,
Incorporated, its General Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
OSI REGISTRATION RIGHTS HOLDERS
David Altholff*
Charles Armbrust*
The Bovaird Supply Co.*
James Cauble*
Chase Manhattan Investment Holdings, Inc.*
J. Kelly Elliot*
Donald Gregory*
T. L. Gregory*
T. L. Gregory, Trustee for the Betty Sue
Gregory Trust*
Howard Hughes*
The Huntfield Trust Limited*
Michael Kief*
Werner Kief*
Klaper (UK) Ltd*
Menikoff Family Partnership*
J. Michael Newell*
Richard Schultz*
Stephen Wells*
James Woods*
*By:
----------------------------------------
Attorney in Fact
E-19
<PAGE> 177
HWC REGISTRATION RIGHTS HOLDERS
Tommy Parkhill*
Gerald Loring*
James L. Skeans*
Chad W. Parkhill Trust*
Shelly L. Parkhill Trust*
Charles Helms*
Don Cobb*
Gary Rosenthal*
Jay Trahan*
John Lauletta*
Larry Pavlicek*
Richard Broussard*
Robert W. Hampton*
Shanna Trosclair*
*By:
----------------------------------------
Attorney in Fact
E-20
<PAGE> 178
SOONER REGISTRATION RIGHTS HOLDERS
Zarrow Operating Company*
Stuart A. Zarrow*
Judith Z. Kishner*
Gail Z. Richards*
Foreman Investment Capital, LLC*
*By:
----------------------------------------
Attorney in Fact
E-21
<PAGE> 179
EXHIBIT F
SUMMARY OF TAX OPINION OF ERNST & YOUNG LLP
(US HOLDERS OF HWC, SOONER, OSI AND PTI)
THIS DRAFT IS FURNISHED SOLELY TO INDICATE THE EXPECTED OPINION, ASSUMING A
SATISFACTORY COMPLETION OF CERTAIN DUE DILIGENCE PROCEDURES AND REPRESENTATIONS
FROM THE MANAGEMENT OF HWC, SOONER, OSI AND PTI AND FROM THE MAJORITY
SHAREHOLDER.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS TO THE PARTICIPATING
SHAREHOLDERS
SHAREHOLDERS THAT ARE UNITED STATES HOLDERS
The following is a summary of certain United States federal income tax
considerations generally applicable to the Participating Shareholders that are
"United States persons," as defined for United States federal income tax
purposes, and that currently hold shares of HWC, Sooner or PTI as capital assets
("United States Holders"), upon entering into the proposed transactions as
detailed in the Combination Agreement and Form S-1 (collectively the "Proposed
Arrangement"), including the receipt and ownership of OSI Common Stock. For
United States federal income tax purposes, "United States persons" are United
States citizens or residents, corporations or partnerships organized under the
laws of the United States or any state thereof, estates subject to United States
federal income tax on their income regardless of source and trusts subject to
the primary supervision of a court within the United States and control of a
United States fiduciary as described in Section 7701(a)(30) of the U.S. Internal
Revenue Code of 1986, as amended (the "Code").
This summary is based on United States federal income tax law in effect as of
the date hereof. Although certain statutory and administrative authorities exist
which address certain of the United States federal income tax consequences
related to the issuance and receipt of equity interests in the common stock of a
corporation, the conclusions expressed herein are subject to interpretation and
are not absolutely certain. No advance income tax ruling has been sought or
obtained from the United States Internal Revenue Service ("IRS") regarding the
United States federal income tax consequences of any of the transactions
described herein.
This summary does not address aspects of United States taxation other than
United States federal income taxation, nor does it address all aspects of United
States federal income taxation that may be applicable to particular United
States Holders, including, without limitation, holders of stock options and
holders of common shares acquired as a result of the exercise of employee stock
options. In addition, this summary does not address the United States state or
local tax consequences or the foreign tax consequences of the Proposed
Arrangement.
UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES AND THE FOREIGN TAX
CONSEQUENCES OF THE PROPOSED ARRANGEMENT.
<PAGE> 180
Characterization of the Proposed Arrangement for United States Federal Income
Tax Purposes. The management of OSI anticipates receiving a tax opinion from
Ernst & Young LLP upon the satisfactory completion of the necessary information
requests, representations, and other document requests. This opinion would
provide that, based upon current statutory and administrative authorities, the
Proposed Arrangement should qualify as a tax free transfer to a controlled
corporation within the meaning of Section 351(a) of the Code. However, there can
be no assurance that the IRS would not challenge the status of the Proposed
Arrangement as a transfer to a controlled corporation or that, if challenged, a
court would not agree with the IRS. The tax opinion is subject to certain
customary assumptions, qualifications and similar matters and is limited solely
to certain United States federal income tax consequences of the Proposed
Arrangement.
The following substantially represents the anticipated federal income tax
consequences of the Proposed Arrangement that OSI anticipates receiving in the
tax opinion from Ernst & Young LLP.
Receipt of OSI common shares. Assuming the Proposed Arrangement qualifies under
Section 351(a) of the Code, the following federal income tax consequences should
occur: (i) except as provided below, a United States Holder of HWC, Sooner or
PTI shares who solely receives OSI common shares pursuant to the Proposed
Arrangement should not recognize any gain or loss with respect to the receipt of
such shares; (ii) except as provided below, the aggregate basis of the OSI
common shares received pursuant to the Proposed Arrangement by a United States
Holder should equal such holder's aggregate tax basis in the shares of HWC,
Sooner or PTI shares exchanged pursuant to the Proposed Arrangement reduced by
the tax basis allocated to fractional share interests for which cash is
received; (iii) the holding period for federal income tax purposes of the OSI
common shares received by a United States Holder of HWC, Sooner or PTI shares
pursuant to the Proposed Arrangement should include the holding period of the
HWC, Sooner or PTI shares exchanged therefor; and (iv) cash payments in lieu of
a fractional OSI common share should be treated as a taxable exchange of cash in
full payment for the fractional share.
<PAGE> 181
EXHIBIT G
SUMMARY OF TAX OPINION OF ERNST & YOUNG LLP
(PTI)
THIS DRAFT IS FURNISHED SOLELY TO ILLUSTRATE CERTAIN OF THE EXPECTED TAX
CONSIDERATIONS THAT WILL BE CONTAINED IN THE FINAL OPINION ASSUMING A
SATISFACTORY COMPLETION OF CERTAIN DUE DILIGENCE PROCEDURES AND REPRESENTATIONS
FROM MANAGEMENT. The matters discussed below will, along with additional
matters, be set out more fully in the Income Tax Considerations section of the
Management Information Circular.
The following is a brief summary of some of the Canadian federal income tax
consequences to PTI Group, Inc. ("PTI") and its shareholders of the Combination
Agreement and the Arrangement. It is not intended to be, and should not be
construed to be, legal, business or tax advice to either PTI or any particular
shareholder of PTI.
This summary assumes that PTI shareholders hold their shares of PTI as capital
property for purposes of the Canadian Income Tax Act (the "Act").
TAX CONSEQUENCES TO PTI
The Combination Agreement and the Arrangement may result in an acquisition of
control of PTI for Canadian income tax purposes. There are a number of tax
consequences that arise if there is an acquisition of control including a deemed
year end for tax purposes with all of the requisite filing requirements;
realization of accrued losses; expiration of capital losses and property losses;
and restrictions on the future utilization of non-capital losses.
PTI will also have a deemed year end for tax purposes on the amalgamation of PTI
and PTI Amalco. There should be no other significant tax consequences to PTI as
a result of the amalgamation.
As discussed below, on a redemption (including a retraction) of an Exchangeable
Share by PTI Holdco, the shareholder will be deemed to have received and PTI
Holdco will be deemed to have paid a dividend equal to the amount, if any, by
which the redemption proceeds (the fair market value at that time of the Oil
States International, Inc. ("OSI") Common Stock received by the shareholder from
PTI Holdco on the redemption) exceed the paid-up capital (for purposes of the
Act) of the Exchangeable Share at the time the share is redeemed. PTI Holdco
will be required to pay annually a tax under Part VI.1 of the Act equal to 66
2/3% of the amount, if any, by which the total of all taxable dividends paid or
deemed to have been paid on the Exchangeable Shares for the year exceeds
$500,000. PTI Holdco will also be entitled to deduct, in computing taxable
income, an amount equal to 9/4 of the Part VI.1 tax it is required to pay for
the year. If certain conditions are met, this Part VI.1 tax and corresponding
deduction may be transferred to a related Canadian corporation.
<PAGE> 182
PTI SHAREHOLDERS RESIDENT IN CANADA
On the amalgamation of PTI and PTI Amalco, a PTI shareholder will be deemed to
have disposed of PTI common shares owned by the PTI common shareholder for
proceeds equal to the adjusted cost base of the PTI common shares to that
shareholder immediately before the amalgamation; as a result, no capital gain or
capital loss will generally arise for a PTI shareholder on the amalgamation. The
PTI shareholder will be deemed to have acquired the shares of New PTI Group,
Inc. ("New PTI") on the amalgamation at a cost equal to the proceeds of
disposition of the PTI common shares referred to above.
The increase in legal stated capital of the Class B shares of New PTI will
result in a deemed dividend to the Class B shareholders. The tax implications of
that deemed dividend are not discussed in this summary. This increase in legal
stated capital of the Class B shares will not have any adverse income tax
implications to the other shareholders of New PTI or to New PTI itself.
The increase in legal stated capital of the Class C shares of New PTI will
result in a deemed dividend to the Class C shareholders. The tax implications of
that deemed dividend are not discussed in this summary. This increase in legal
stated capital of the Class C shares will not have any adverse income tax
implications to the other shareholders of New PTI or to New PTI itself.
On the transfer of the shares of New PTI by the New PTI shareholder to PTI
Holdco, the New PTI shareholder and PTI Holdco will file the appropriate joint
elections pursuant to the provisions of section 85(1) of the Act electing an
amount (the "Elected Amount") selected by the New PTI shareholder within the
limits provided for under the Act.
A New PTI shareholder who receives Exchangeable Shares of PTI Holdco and
ancillary rights and benefits on the transfer of the New PTI shares to PTI
Holdco will not realize a capital gain for Canadian income tax purposes on the
transfer provided that the shareholder files the joint election with PTI Holdco
with an Elected Amount equal to the adjusted cost base to the shareholder of the
shareholder's New PTI shares and such adjusted cost base exceeds the sum of:
(i) any cash received in respect of a fractional Exchangeable Share;
and
(ii) the fair market value of the ancillary rights and benefits
received by such shareholder in connection with the exchange.
A New PTI shareholder will realize a capital gain to the extent that such sum,
net of any reasonable costs of disposition, exceeds the adjusted cost base of
the New PTI shares to the shareholder. Certain shareholders may realize a
dividend rather than a capital gain. A New PTI shareholder will be required to
determine the fair market value of the ancillary rights and benefits received.
Any determination of value is not binding on the Canada Customs and Revenue
Agency ("CCRA"). It is possible that the CCRA could take the position that the
ancillary rights and benefits have a fair market value in excess of a nominal
amount.
A shareholder who selects an Elected Amount greater than the adjusted cost base
of the New PTI shares will realized a capital gain to the extent that elected
amount, net of any reasonable costs of disposition exceeds the adjusted cost
base.
On the redemption (including a retraction) of an Exchangeable Share by PTI
Holdco, the shareholder of the Exchangeable Share will be deemed to have
received a dividend from PTI Holdco equal to
<PAGE> 183
the amount, if any, by which the redemption proceeds (the fair market value at
that time of the OSI Common Stock received by the shareholder from PTI Holdco on
the redemption) exceed the paid-up capital (for purposes of the Act) of the
Exchangeable Share at the time the share is redeemed. The shareholder will also
be considered to have disposed of the Exchangeable Share for proceeds of
disposition equal to the redemption proceeds less the amount of such deemed
dividend.
On the exchange of an Exchangeable Share by the shareholder thereof with OSI ULC
for OSI Common Stock, the shareholder will in general realize a capital gain (or
capital loss) to the extent the proceeds of disposition of the Exchangeable
Share, net of any reasonable costs of disposition, exceed (or are less than) the
adjusted cost base to the holder of the Exchangeable Share. For these purposes,
the proceeds of disposition will be the fair market value, at the time of the
exchange, of the OSI Common Stock received on the exchange.
Because of the existence of the Redemption and Retraction Call Rights, a PTI
Exchangeable Shareholder cannot control whether such shareholder will receive
the OSI Common Stock by way of a redemption of the Exchangeable Shares or by way
of a purchase of the Exchangeable Shares. As described above, the income tax
consequences of a redemption differ from those of a purchase.
The cost of the OSI Common Stock received on the retraction, redemption or
exchange of Exchangeable Shares will be equal to the fair market value of such
OSI Common Stock at the time of such event, and must be averaged with the
adjusted cost base of any other OSI Common Stock held at that time by the holder
for the purposes of determining the adjusted cost base of all OSI Common Stock
held by the holder.
On June 22, 2000, the Department of Finance released draft amendments to the Act
regarding the taxation of "participating interests" of Canadian taxpayers in
"foreign investment entities". The intention of the legislation is to prevent
Canadian taxpayers from avoiding Canadian income tax by transferring funds to
offshore accounts. Under these provisions, both a PTI Holdco Exchangeable Share
and an OSI common share will be considered to be a "participating interest" in
OSI. If OSI is determined to be a "foreign investment entity" there would be
negative tax consequences to Canadian shareholders holding such interests.
Basically, a "foreign investment entity" is a non-resident entity the
"investment property" of which represents at least half of its assets. It is
anticipated that OSI will not be a "foreign investment entity" on the basis that
half of its assets will not be investment property and, therefore, these draft
provisions should not apply.
PTI OPTIONHOLDERS
There should be no negative income tax consequences to a PTI Optionholder on the
exchange of the options to acquire PTI Common shares for options to acquire OSI
Common Shares..
PTI SHAREHOLDERS NOT RESIDENT IN CANADA
The transfer by the non-resident shareholders of PTI of their shares of PTI to
OSI in exchange for common stock of OSI is a disposition of "taxable Canadian
property" ("TCP") for Canadian income tax purposes. Any gain arising on the
disposition by a non-resident of TCP is taxable in Canada, subject to the terms
of any bi-lateral income tax treaty that Canada has entered into with the
country
<PAGE> 184
of which the disposing shareholder is resident. In particular, pursuant to the
terms of the Canada - US Income Tax Convention (the "Treaty"), Canada cannot tax
a gain realized by a shareholder of PTI who is a resident of the US for purposes
of the Treaty. Any Canadian non-resident shareholder who is not a resident of
the US for purposes of the Treaty, or of a jurisdiction with a similar treaty,
will be taxable on the gain arising on the transfer. Where a partnership is a
shareholder, the Canadian tax rules will generally require that these rules be
applied separately to each partner of the partnership with respect to their
proportionate share of the gain. Where a partnership is itself a partner in a
partnership, it will be necessary to look through that partnership as well.
Regardless of whether any particular non-resident shareholder of PTI is subject
to Canadian income tax on the gain, such non-resident shareholder must notify
CCRA of the disposition and obtain a clearance certificate (a "Section 116
certificate") from CCRA. In the event the transferor does not obtain a Section
116 certificate, OSI as the purchaser, is required to withhold an amount equal
to 33 1/3% of the cost to OSI of the shares of PTI and remit this amount to the
CCRA. For these purposes, the cost of the shares of PTI will be the aggregate
fair market value, at the time of the transfer, of the OSI Common Stock
delivered to the PTI shareholders in exchange for their shares of PTI.
<PAGE> 185
EXHIBIT H
FORM OF OMNIBUS CONSENT, WAIVER AND AGREEMENT
OF SHAREHOLDERS OF HWC
<PAGE> 186
EXHIBIT H
OMNIBUS CONSENT, WAIVER AND INVESTMENT AGREEMENT
OF THE SHAREHOLDERS
OF
HWC ENERGY SERVICES INC.
The undersigned, being HWC Energy Services Inc., a Texas corporation
(the "Company" or "HWC") and the holders (the "Shareholders") of the issued and
outstanding shares of common stock, par value $.01 per share (the "HWC Common
Stock"), Series A Cumulative Convertible Preferred Stock, par value $.01 per
share, and Series B Cumulative Convertible Preferred Stock, par value $.01 per
share, of the Company (the Series A and Series B Cumulative Convertible
Preferred Stock being referred to herein collectively as the "HWC Preferred
Stock"), do hereby consent, adopt, approve and agree as follows:
1. RECITALS.
a. The Company's board of directors (the "Board of Directors")
has considered the form, terms, provisions and conditions of that certain
Combination Agreement, including the exhibits thereto, by and among the Company,
Oil States International, Inc., a Delaware corporation ("OSI"), Sooner Inc., a
Delaware corporation ("Sooner") and PTI Group, Inc., an Alberta corporation
("PTI") and the other parties thereto, a copy of which has been provided
herewith to the Shareholders.
b. The Board of Directors has determined that the Combination
Agreement, including the exhibits thereto and the transactions contemplated
thereby, are in the best interests of, and fair to, the Company and the
Shareholders and on that basis has entered into the Combination Agreement
effective as of July 31, 2000.
c. The Board of Directors has submitted the Combination
Agreement to the Shareholders for approval and adoption and has recommended to
the Shareholders that they so approve and adopt the Combination Agreement.
d. The Combination Agreement contemplates the execution of an
Amended and Restated Registration Rights Agreement to be effective at the
Effective Time, pursuant to which the existing registration rights of certain
holders of OSI Common Stock, HWC Common Stock and Sooner Common Stock (the
"Existing Registration Rights") granted pursuant to existing registration rights
agreements (each an "Existing Registration Rights Agreement") shall be amended
and restated.
e. The Combination Agreement contemplates that, prior to the Effective
Time, the Company shall cause to be terminated the existing shareholders
agreement between the Company and certain of the Shareholders (the "Shareholders
Agreement").
H-1
<PAGE> 187
f. The Combination Agreement contemplates certain other actions to be
taken by the Shareholders to effect the purposes thereof.
g. Capitalized terms that are used but not defined herein have the
meanings set forth in the Combination Agreement.
2. RESOLUTIONS OF SHAREHOLDERS. Acting pursuant to the provisions of
Article 9.10A of the Texas Business Corporation Act (the "TBCA"), the
Shareholders hereby approve and adopt the following resolutions:
APPROVAL OF COMBINATION AGREEMENT
RESOLVED, that, upon the recommendation of the Board of
Directors, the Shareholders hereby approve and adopt the Combination
Agreement and the transactions contemplated thereby, including, without
limitation, the HWC Merger and the conversion of each issued and
outstanding share of HWC Common Stock and HWC Preferred Stock into
shares of OSI Common Stock in the HWC Merger.
GENERAL AUTHORITY AND RATIFICATION
RESOLVED, that the Shareholders, based upon the recommendation
of the Board of Directors, hereby authorize each duly appointed officer
of the Company to take all action and to prepare, execute, and deliver
all documents that such officer deems appropriate or advisable in order
to effect the foregoing resolutions and to consummate the transactions
contemplated by the Combination Agreement and the exhibits thereto; and
RESOLVED FURTHER, that any lawful act heretofore taken by any
duly appointed officer of the Company in such capacity in connection
with the matters set forth in the foregoing recitals and resolutions
be, and it hereby is in all respects approved, adopted, ratified and
confirmed as an act of the Company.
3. WAIVER OF CERTAIN RIGHTS.
a. The Shareholders, by approving the Combination Agreement,
acknowledge that they will not be entitled to rights of dissent or appraisal
that they may have under Article 5.11 of the TBCA in connection with the HWC
Merger and the conversion of the issued and outstanding shares of HWC Common
Stock held by the Shareholders into shares of OSI Common Stock.
b. The Shareholders hereby waive any statutory or contractual
preemptive or similar rights, including any rights of first offer or refusal,
that they now have or may have had prior to the date hereof to purchase
additional shares of HWC Common Stock.
c. Effective at the Effective Time, the Shareholders hereby waive any
and all claims for damages they may have against the HWC Surviving Corporation,
HWC or any of its subsidiaries.
H-2
<PAGE> 188
4. REGISTRATION RIGHTS AGREEMENT AND RELATED MATTERS.
a. The Shareholders who have Existing Registration Rights with respect
to the shares of HWC Common Stock owned by them and whose names are set forth on
Schedule A attached hereto (the "Registration Rights Shareholders") hereby
approve the Amended and Restated Registration Rights Agreement contemplated by
the Combination Agreement (the "Registration Rights Agreement"), a copy of which
Registration Rights Agreement has been provided to the Shareholders herewith.
b. At the Effective Time, the Registration Rights Agreement shall
replace the Existing Registration Rights Agreement in its entirety and the
Existing Registration Rights Agreement shall terminate and be of no further
force or effect.
c. The Registration Rights Shareholders hereby constitute and appoint
each of Douglas Swanson and Cindy Taylor, or either of them, their true and
lawful attorney-in-fact and agent to execute the Registration Rights Agreement
in their names and on their behalf.
d. The Registration Rights Agreement will be executed and become
effective with respect to the Registration Rights Shareholders at the Effective
Time.
e. An amendment to the Existing Registration Rights Agreement has been
approved and adopted by Board of Directors to provide that no Person shall have
the right to request the registration of any HWC Common Stock, or any other
shares of capital stock of HWC or OSI, in connection with the OSI Initial Public
Offering. The Registration Rights Shareholders hereby approve, adopt and agree
to such amendment to the Existing Registration Rights Agreement, which amendment
shall be effective without further action by the Registration Rights
Shareholders or the Company.
f. The Registration Rights Shareholders hereby waive any rights they
may have to demand or request registration of any of their HWC Common Stock, or
any other shares of capital stock of HWC or OSI, in the OSI Initial Public
Offering pursuant to their Existing Registration Rights.
g. In the event the Combination Agreement is terminated prior to the
Effective Time in accordance with its terms, the Existing Registration Rights
Agreement shall continue in full force and effect.
5. TERMINATION OF SHAREHOLDERS AGREEMENT AND RELATED MATTERS.
a. Effective immediately prior to the Effective Time, the Shareholders
Agreement shall terminate and be of no further force or effect.
b. In the event the Combination Agreement is terminated prior to the
Effective Time in accordance with its terms, the Shareholders Agreement shall
continue in full force and effect.
H-3
<PAGE> 189
6. INVESTOR REPRESENTATIONS OF SHAREHOLDERS. The undersigned Shareholders
hereby represent and warrant to the Company and OSI as follows:
a. The undersigned has been furnished with, has carefully read and
hereby acknowledges receipt of the Confidential Information Memorandum, dated
August 2, 2000 and enclosed herewith, the Combination Agreement, including the
exhibits and schedules thereto, and the draft OSI Registration Statement dated
August 2, 2000 and enclosed herewith, and is familiar with and understands the
terms of the transactions contemplated thereby. The undersigned has carefully
considered and has, to the extent the undersigned believes such discussion
necessary, discussed with the undersigned's professional legal, tax, accounting
and/or financial advisors, as the case may be, the suitability of an investment
in the OSI Common Stock for the undersigned's particular tax and financial
situation and has determined that the OSI Common Stock to be received by the
undersigned is a suitable investment for the undersigned.
b. Except as may be indicated by the undersigned below, the undersigned
is an individual "ACCREDITED INVESTOR," as that term is defined in Rule 501(a)
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
The undersigned has the knowledge and experience in financial and business
matters necessary for evaluating the merits and risks of investing in the OSI
Common Stock. THE UNDERSIGNED HAS CHECKED THE BOX BELOW INDICATING THE BASIS ON
WHICH HE IS REPRESENTING HIS STATUS AS AN "ACCREDITED INVESTOR":
[ ] a bank as defined in Section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as
amended (the "Securities Exchange Act"); an insurance company as
defined in Section 2(13) of the Securities Act; an investment
company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of
that Act; a small business investment company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958; a plan established and
maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions, for
the benefit of its employees, and such plan has total assets in
excess of $5,000,000; an employee benefit plan within the meaning
of the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in
excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are "accredited investors";
[ ] a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
[ ] an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring securities in the proposed offering, with total assets
in excess of $5,000,000;
[ ] a director or executive officer of OSI;
H-4
<PAGE> 190
[ ] a natural person whose individual net worth, or joint net worth
with the undersigned's spouse, at the time of this purchase
exceeds $1,000,000;
[ ] a natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income
with the undersigned's spouse in excess of $300,000 in each of
those years and has a reasonable expectation of reaching the same
income level in the current year;
[ ] a trust with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose
purchase is directed by a person who has such knowledge and
experience in financial and business matters that he is capable
of evaluating the merits and risks of the prospective investment;
or
[ ] an entity in which all of the equity holders are "accredited
investors" by virtue of their meeting one or more of the above
standards.
IF NONE OF THE FOREGOING DESCRIPTIONS ARE APPLICABLE, CHECK THE
FOLLOWING BOX:
[ ] THE UNDERSIGNED IS NOT AN ACCREDITED INVESTOR AND THE UNDERSIGNED
HEREBY ACKNOWLEDGES AND AGREES THAT IMMEDIATELY PRIOR TO THE
CONSUMMATION OF THE MERGERS, THE UNDERSIGNED WILL SELL THE
UNDERSIGNED'S SHARES OF HWC COMMON STOCK AND HWC PREFERRED STOCK
FOR CASH IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE
COMBINATION AGREEMENT.
c. The undersigned acknowledges that (i) the undersigned has had the
opportunity to request copies of any documents, records, and books pertaining to
this investment and (ii) any such documents, records and books which the
undersigned requested have been made available for inspection by the undersigned
and the undersigned's attorney, accountant or advisor.
d. The undersigned has such knowledge and experience in financial, tax
and business matters so as to enable the undersigned to use the information made
available to the undersigned in connection with the offering to evaluate the
merits and risks of an investment in the OSI Common Stock and to make an
informed investment decision with respect thereto.
e. The undersigned has had a reasonable opportunity to ask questions of
and receive answers from a person or persons acting on behalf of OSI concerning
the transactions contemplated by the Combination Agreement and all such
questions have been answered to the full satisfaction of the undersigned.
f. The undersigned is not participating in the transactions
contemplated by the Combination Agreement as a result of or after any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or meeting.
g. If the undersigned is a natural person, the undersigned has reached
the age of majority in the state in which the undersigned resides, has adequate
means of providing for the undersigned's current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the OSI Common Stock for an indefinite period of time, has no need for
liquidity in such investment and, at the present time, could afford a complete
loss of such investment.
H-5
<PAGE> 191
h. The undersigned will not sell or otherwise transfer the OSI Common
Stock received in connection with the HWC Merger without registration under the
Securities Act and applicable state securities laws or an exemption therefrom.
The OSI Common Stock has not been registered under the Securities Act or under
the securities laws of any domestic or foreign jurisdiction. The undersigned
represents that the undersigned is acquiring the OSI Common Stock for the
undersigned's own account, for investment purposes only and with no current
intention or plan to distribute, sell or otherwise dispose of the OSI Common
Stock in connection with any distribution.
i. The undersigned recognizes that investment in the OSI Common Stock
involves substantial risks, including loss of the entire amount of such
investment. Further, the undersigned has taken full cognizance of and
understands all of the risks related to the purchase of the OSI Common Stock.
j. In addition to any other restrictive legends that may be required by
the terms of the Combination Agreement, the undersigned acknowledges that the
certificates representing the OSI Common Stock shall be stamped or otherwise
imprinted with a legend substantially in the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND SUCH LAWS OR PURSUANT TO AN EXEMPTION THEREFROM, WHICH,
IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS
CORPORATION, IS AVAILABLE."
k. The undersigned represents and warrants that, except as set forth on
Schedule B attached hereto, and except for options granted to the undersigned
under the Company's 1997 Stock Option Plan, as amended, the undersigned is
neither the record nor beneficial owner of any equity securities, including any
warrants, options, convertible debt, rights of conversion or similar securities
or rights, of HWC or any of its subsidiaries.
l. The undersigned acknowledges and understands that OSI is relying
upon the foregoing representations and warranties for the purpose of compliance
by OSI with Federal and state securities laws related to the issuance of OSI
Common Stock pursuant to the Combination Agreement.
7. TRANSFER RESTRICTIONS AND RELATED REPRESENTATIONS OF SHAREHOLDERS.
a. The undersigned hereby acknowledges and understands that, in
connection with the OSI Initial Public Offering, the representatives (the
"Representatives") of the underwriters (the "Underwriters") propose to enter
into an underwriting or purchase agreement (the "Purchase Agreement") with OSI,
among others, providing for the public offering of shares of OSI Common
H-6
<PAGE> 192
Stock. The undersigned hereby acknowledges and understands that, in connection
with the entering into of such Purchase Agreement, the Representatives, on
behalf of the Underwriters, will require the execution and delivery by the
undersigned of an agreement (the "Lock-Up Agreement") substantially to the
effect that, during a period of 180 days from the date of the Purchase
Agreement, the undersigned will not, without the prior written consent of the
lead manager named in the final OSI Registration Statement, directly or
indirectly, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of, or otherwise dispose of or transfer any shares
of OSI Common Stock or any securities convertible into or exchangeable or
exercisable for OSI Common Stock, whether owned at the date of the Purchase
Agreement or thereafter acquired by the undersigned or with respect to which the
undersigned had at the date of the Purchase Agreement or thereafter acquires the
power of disposition, or file any registration statement under the Securities
Act with respect to any of the foregoing, or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the OSI Common Stock,
whether any such swap or transaction is to be settled by delivery of OSI Common
Stock or other securities, in cash or otherwise. Notwithstanding the foregoing,
without obtaining the prior written consent of the lead manager named in the
final OSI Registration Statement, the undersigned will be permitted to transfer
shares of OSI Common Stock otherwise subject to the Lock-Up Agreement to any
immediate family member of the undersigned or any trust established for the
benefit of any such immediate family member, provided that, prior to such
transfer and as a condition thereof, the transferee shall deliver to the
Representatives a written agreement to be bound by the restrictions set forth in
the Lock-Up Agreement until the expiration of the aforementioned 180-day period.
b. The undersigned hereby irrevocably constitutes and appoints each of
Douglas Swanson and Cindy Taylor, or either of them, as the undersigned's true
and lawful attorney-in-fact and agent to execute and deliver to the
Representatives in the name and on behalf of the undersigned the Lock-Up
Agreement substantially to the effect set forth above and to take such other
actions on behalf of the undersigned in connection with the Lock-Up Agreement as
may be reasonably necessary. The undersigned hereby represents and warrants to
OSI and the Underwriters (a) that each of Mr. Swanson and Ms. Taylor is
irrevocably authorized to execute and deliver to the Representatives in the name
and on behalf of the undersigned such a Lock-Up Agreement and to take such other
actions on behalf of the undersigned in connection with the Lock-Up Agreement as
may be reasonably necessary and (b) that upon such execution and delivery by
such attorney-in-fact on behalf of the undersigned, such Lock-Up Agreement will
constitute the legal, valid and binding obligation of the undersigned,
enforceable against the undersigned in accordance with its terms, except as such
enforceability may be (i) limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and (ii) subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
c. Subject to any additional restrictions contained in the Shareholders
Agreement, prior to the earlier of (i) the termination of the Combination
Agreement or (ii) the effectiveness of the Lock-Up Agreement, no Shareholder
shall sell, convey, pledge or otherwise transfer any shares of HWC Common Stock
or other shares of capital stock of the Company or other securities convertible
into or exchangeable for HWC Common Stock unless the transferee of any such
securities executes and delivers to the Company a copy of this Omnibus Consent,
Waiver and Agreement, which
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<PAGE> 193
execution and delivery shall evidence such transferee's intent to be bound by
each of the provisions hereof.
8. EFFECTIVENESS AND IRREVOCABILITY. The Company anticipates that this Omnibus
Consent, Waiver and Investment Agreement will be executed and delivered to the
Company by each Shareholder. This Omnibus Consent, Waiver and Investment
Agreement will become effective at such time that the Company has received
executed Omnibus Consents, Waivers and Agreements from the holders of all of the
shares of HWC Common Stock issued and outstanding at such time. EACH OF THE
PROVISIONS OF THIS OMNIBUS CONSENT, WAIVER AND INVESTMENT AGREEMENT SHALL BE
IRREVOCABLE AND SHALL BE BINDING ON THE UNDERSIGNED AND HIS, HER OR ITS
RESPECTIVE SUCCESSORS, HEIRS, PERSONAL REPRESENTATIVES AND ASSIGNS.
9. RELIANCE BY THE COMPANY, OSI AND THE UNDERWRITERS. The undersigned confirms
that he, she or it understands that the Company, OSI and the Underwriters will
rely upon the foregoing resolutions, representations, covenants, waivers and
agreements in proceeding with the OSI Initial Public Offering.
[SIGNATURE PAGES FOLLOW]
H-8
<PAGE> 194
IN WITNESS WHEREOF, the Company and the undersigned Shareholders have
executed this irrevocable Omnibus Consent, Waiver and Investment Agreement on
this day of August 2000, to become effective as provided in Section 8
above, which irrevocable Omnibus Consent, Waiver and Investment Agreement may be
executed by original or facsimile signature and in one or more counterparts,
each such counterpart being deemed an original document and all such
counterparts together being deemed one and the same instrument.
HWC Energy Services, Inc.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
SCF-III, L.P
By: SCF-II G.P., Limited Partnership,
its general partner
By: L.E. Simmons & Associates,
Incorporated, its general partner
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
------------------------------------------------
Tommy Parkhill
------------------------------------------------
Gerald Loring
------------------------------------------------
Larry Skeans
------------------------------------------------
Chad Parkhill Trust
By:
---------------------------------------------
Carolyn S. Parkhill, Trustee
H-9
<PAGE> 195
Shelly Parkhill Trust
By:
---------------------------------------------
Carolyn S. Parkhill, Trustee
------------------------------------------------
James Woods
------------------------------------------------
Gary Rosenthal
------------------------------------------------
John Lauletta
------------------------------------------------
Jay Trahan
------------------------------------------------
Rob Hampton
------------------------------------------------
Don Cobb
------------------------------------------------
Charles Helms
------------------------------------------------
Richard Broussard
------------------------------------------------
Larry Pavlicek
------------------------------------------------
Shanna Trosclair
H-10
<PAGE> 196
SCHEDULE A
REGISTRATION RIGHTS SHAREHOLDERS
SCF-III, L.P.
Tommy Parkhill
Gerald Loring
James L. Skeans
Chad W. Parkhill Trust
Shelly L. Parkhill Trust
Charles Helms
Don Cobb
Gary Rosenthal
James Woods
Jay Trahan
John Lauletta
Larry Pavlicek
Richard Broussard
Robert W. Hampton
Shanna Trosclair
H-11
<PAGE> 197
SCHEDULE B
OWNERSHIP OF EQUITY SECURITIES
[omitted]
H-12
<PAGE> 198
EXHIBIT I
FORM OF OMNIBUS CONSENT, WAIVER AND AGREEMENT
OF STOCKHOLDERS OF SOONER
<PAGE> 199
EXHIBIT I
OMNIBUS CONSENT, WAIVER AND INVESTMENT AGREEMENT
OF THE STOCKHOLDERS
OF
SOONER INC.
The undersigned, being Sooner Inc., a Delaware corporation (the
"Company" or "Sooner") and the holders (the "Stockholders") of the issued and
outstanding shares of common stock of the Company, par value $.01 per share (the
"Sooner Common Stock"), do hereby consent, adopt, approve and agree as follows:
1. RECITALS.
a. the Company's board of directors (the "Board of Directors") has
considered the form, terms, provisions and conditions of that certain
Combination Agreement, including the exhibits thereto, by and among the Company,
Oil States International, Inc., a Delaware corporation ("OSI"), HWC Energy
Services, Inc., a Texas corporation ("HWC") and PTI Group, Inc., an Alberta
corporation ("PTI") and the other parties thereto, a copy of which has been
provided herewith to the Stockholders.
b. The Board of Directors has determined that the Combination
Agreement, including the exhibits thereto, and the transactions contemplated
thereby are in the best interests of, and fair to, the Company and the
Stockholders and on that basis has entered into the Combination Agreement
effective as of July 31, 2000.
c. The Board of Directors has submitted the Combination Agreement to
the Stockholders for approval and adoption and has recommended to the
Stockholders that they so approve and adopt the Combination Agreement;
d. The Combination Agreement contemplates the execution of an Amended
and Restated Registration Rights Agreement to be effective at the Effective
Time, pursuant to which the existing registration rights of certain holders of
OSI Common Stock, HWC Common Stock and Sooner Common Stock (the "Existing
Registration Rights") granted pursuant to existing registration rights
agreements (each an "Existing Registration Rights Agreement") shall be amended
and restated.
e. The Combination Agreement contemplates that, prior to the
Effective Time, the Company shall cause to be terminated the existing
stockholders agreement between the Company and certain Stockholders (the
"Stockholders Agreement").
f. The Combination Agreement contemplates certain other actions to be
taken by the Stockholders to effect the purposes thereof.
I-1
<PAGE> 200
g. Capitalized terms that are used but not defined herein have the
meanings set forth in the Combination Agreement.
2. RESOLUTIONS OF THE STOCKHOLDERS. Acting pursuant to the provisions of
Section 228 of the Delaware General Corporation Law (the "DGCL"), the
Stockholders hereby adopt and approve the following resolutions:
APPROVAL OF COMBINATION AGREEMENT
RESOLVED, that, upon the recommendation of the Board of
Directors, the Stockholders hereby approve and adopt the Combination
Agreement and the transactions contemplated thereby, including, without
limitation, the Sooner Merger and the conversion of each issued and
outstanding share of Sooner Common Stock into shares of OSI Common
Stock in the Sooner Merger.
GENERAL AUTHORITY AND RATIFICATION
RESOLVED, that the Stockholders, based upon the recommendation
of the Board of Directors, hereby authorize each duly appointed officer
of the Company to take all action and to prepare, execute, and deliver
all documents that such officer deems appropriate or advisable in order
to effect the foregoing resolutions and to consummate the transactions
contemplated by the Combination Agreement and the exhibits thereto; and
RESOLVED FURTHER, that any lawful act heretofore taken by any
duly appointed officer of the Company in such capacity in connection
with the matters set forth in the foregoing recitals and resolutions
be, and it hereby is in all respects approved, adopted, ratified and
confirmed as an act of the Company.
3. WAIVER OF CERTAIN RIGHTS.
a. The Stockholders, by approving the Combination Agreement,
acknowledge that they will not be entitled to rights of dissent or appraisal
that they may have under Section 262 of the DGCL in connection with the Sooner
Merger and the conversion of the issued and outstanding shares of Sooner Common
Stock held by the Stockholders into shares of OSI Common Stock.
b. The Stockholders hereby waive any statutory or contractual
preemptive or similar rights, including any rights of first offer or refusal,
that they now have or may have had prior to the date hereof to purchase
additional shares of Sooner Common Stock.
c. Effective at the Effective Time, the Stockholders hereby waive any
and all claims for damages they may have against the Sooner Surviving
Corporation, Sooner or any of its subsidiaries.
I-2
<PAGE> 201
4. REGISTRATION RIGHTS AGREEMENT AND RELATED MATTERS.
a. The Stockholders who have Existing Registration Rights with respect
to the shares of Sooner Common Stock owned by them and whose names are set forth
on Schedule A attached hereto (the "Registration Rights Stockholders") hereby
approve the Amended and Restated Registration Rights Agreement contemplated by
the Combination Agreement (the "Registration Rights Agreement"), a copy of which
Registration Rights Agreement has been provided to the Stockholders herewith.
b. At the Effective Time, the Registration Rights Agreement shall
replace each Existing Registration Rights Agreement in its entirety and each
Existing Registration Rights Agreement shall terminate and be of no further
force or effect.
c. The Registration Rights Stockholders hereby constitute and appoint
each of Douglas Swanson and Cindy Taylor, or either of them, their true and
lawful attorney-in-fact and agent to execute the Registration Rights Agreement
in their names and on their behalf.
d. The Registration Rights Agreement will be executed and become
effective with respect to the Registration Rights Stockholders at the Effective
Time.
e. An amendment to the Existing Registration Rights Agreement has been
approved and adopted by Board of Directors to provide that no Person shall have
the right to request the registration of any Sooner Common Stock, or any other
shares of capital stock of Sooner or OSI, in connection with the OSI Initial
Public Offering. The Registration Rights Stockholders hereby approve, adopt and
agree to such amendment with respect to each of their respective Existing
Registration Rights Agreements, which amendment shall be effective without
further action by the Registration Rights Stockholders or the Company.
f. The Registration Rights Stockholders hereby waive any rights they
may have to demand or request registration of any of their Sooner Common Stock,
or any other shares of capital stock of Sooner or OSI, in the OSI Initial Public
Offering pursuant to their Existing Registration Rights.
g. In the event the Combination Agreement is terminated before the
Effective Time in accordance with its terms, the Existing Registration Rights
Agreement shall continue in full force and effect.
5. EXERCISE OF WARRANTS BY CERTAIN STOCKHOLDERS. In connection with the
consummation of the OSI Initial Public Offering, the Stockholders identified on
Schedule B attached hereto agree to the exchange of all of their warrants to
purchase Sooner Common Stock for OSI Common Stock in accordance with the
Combination Agreement.
6. INVESTOR REPRESENTATIONS OF THE STOCKHOLDERS. The undersigned hereby
represents and warrants to the Company and OSI as follows:
I-3
<PAGE> 202
a. The undersigned has been furnished with, has carefully read and
acknowledges receipt of the Confidential Information Memorandum, dated August 2,
2000 and enclosed herewith, the Combination Agreement, including exhibits and
schedules thereto, and the draft OSI Registration Statement, dated August 2,
2000 and enclosed herewith, and is familiar with and understands the terms of
the transactions contemplated thereby. The undersigned has carefully considered
and has, to the extent the undersigned believes such discussion necessary,
discussed with the undersigned's professional legal, tax, accounting and/or
financial advisors, as the case may be, the suitability of an investment in the
OSI Common Stock for the undersigned's particular tax and financial situation
and has determined that the OSI Common Stock to be received by the undersigned
is a suitable investment for the undersigned.
b. Except as may be indicated by the undersigned below, the undersigned
is an individual "ACCREDITED INVESTOR," as that term is defined in Rule 501(a)
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
The undersigned has the knowledge and experience in financial and business
matters necessary for evaluating the merits and risks of investing in the OSI
Common Stock. THE UNDERSIGNED HAS CHECKED THE BOX BELOW INDICATING THE BASIS ON
WHICH HE IS REPRESENTING HIS STATUS AS AN "ACCREDITED INVESTOR":
[ ] a bank as defined in Section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as
amended (the "Securities Exchange Act"); an insurance company as
defined in Section 2(13) of the Securities Act; an investment
company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of
that Act; a small business investment company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958; a plan established and
maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions, for
the benefit of its employees, and such plan has total assets in
excess of $5,000,000; an employee benefit plan within the meaning
of the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in
excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are "accredited investors";
[ ] a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
[ ] an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring securities in the proposed offering, with total assets
in excess of $5,000,000;
[ ] a director or executive officer of OSI;
[ ] a natural person whose individual net worth, or joint net worth
with the undersigned's spouse, at the time of this purchase
exceeds $1,000,000;
I-4
<PAGE> 203
[ ] a natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income
with the undersigned's spouse in excess of $300,000 in each of
those years and has a reasonable expectation of reaching the same
income level in the current year;
[ ] a trust with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose
purchase is directed by a person who has such knowledge and
experience in financial and business matters that he is capable
of evaluating the merits and risks of the prospective investment;
or
[ ] an entity in which all of the equity holders are "accredited
investors" by virtue of their meeting one or more of the above
standards.
IF NONE OF THE FOREGOING DESCRIPTIONS ARE APPLICABLE, CHECK
THE FOLLOWING BOX:
[ ] THE UNDERSIGNED IS NOT AN ACCREDITED INVESTOR AND THE UNDERSIGNED
HEREBY ACKNOWLEDGES AND AGREES THAT IMMEDIATELY PRIOR TO THE
CONSUMMATION OF THE MERGERS, THE UNDERSIGNED WILL SELL THE
UNDERSIGNED'S SHARES OF SOONER COMMON STOCK FOR CASH IN
ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE COMBINATION
AGREEMENT.
c. The undersigned acknowledges that (i) the undersigned has had the
opportunity to request copies of any documents, records, and books pertaining to
this investment and (ii) any such documents, records and books which the
undersigned requested have been made available for inspection by the undersigned
and the undersigned's attorney, accountant or advisor.
d. The undersigned has such knowledge and experience in
financial, tax and business matters so as to enable the undersigned to use the
information made available to the undersigned in connection with the offering to
evaluate the merits and risks of an investment in the OSI Common Stock and to
make an informed investment decision with respect thereto.
e. The undersigned has had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on behalf of
OSI concerning the transactions contemplated by the Combination Agreement and
all such questions have been answered to the full satisfaction of the
undersigned.
f. The undersigned is not participating in the transactions
contemplated by the Combination Agreement as a result of or after any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or meeting.
g. If the undersigned is a natural person, the undersigned has
reached the age of majority in the state in which the undersigned resides, has
adequate means of providing for the undersigned's current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the OSI Common Stock for an indefinite period of time, has no need for
liquidity in such investment and, at the present time, could afford a complete
loss of such investment.
I-5
<PAGE> 204
h. The undersigned will not sell or otherwise transfer the OSI
Common Stock received in connection with the Sooner Merger without registration
under the Securities Act and applicable state securities laws or an exemption
therefrom. The OSI Common Stock has not been registered under the Securities Act
or under the securities laws of any domestic or foreign jurisdiction. The
undersigned represents that the undersigned is acquiring the OSI Common Stock
for the undersigned's own account, for investment purposes only and with no
current intention or plan to distribute, sell or otherwise dispose of the OSI
Common Stock in connection with any distribution.
i. The undersigned recognizes that investment in the OSI Common
Stock involves substantial risks, including loss of the entire amount of such
investment. Further, the undersigned has taken full cognizance of and
understands all of the risks related to the purchase of the OSI Common Stock.
j. In addition to any other restrictive legends that may be
required by the terms of the Combination Agreement, the undersigned acknowledges
that the certificates representing the OSI Common Stock shall be stamped or
otherwise imprinted with a legend substantially in the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND SUCH LAWS OR PURSUANT TO AN
EXEMPTION THEREFROM, WHICH, IN THE OPINION OF COUNSEL FOR THE
HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO
COUNSEL FOR THIS CORPORATION, IS AVAILABLE."
k. The undersigned represents and warrants that, except as set
forth on Schedule C attached hereto, and except for options granted to the
undersigned under the Company's 1998 Stock Option Plan, as amended, the
undersigned is neither the record nor beneficial owner of any equity securities,
including any warrants, options, convertible debt, rights of conversion or
similar securities or rights, of Sooner or any of its subsidiaries.
l. The undersigned acknowledges and understands that OSI is
relying upon the foregoing representations and warranties for the purpose of
compliance by OSI with Federal and state securities laws related to the issuance
of OSI Common Stock pursuant to the Combination Agreement.
7. TRANSFER RESTRICTIONS OF THE STOCKHOLDERS.
a. The undersigned hereby acknowledges and understands that, in
connection with the OSI Initial Public Offering, the representatives (the
"Representatives") of the underwriters (the "Underwriters") propose to enter
into an underwriting or purchase agreement (the "Purchase Agreement") with OSI,
among others, providing for the public offering of shares of OSI Common Stock.
The undersigned hereby acknowledges and understands that, in connection with the
entering
I-6
<PAGE> 205
into of such Purchase Agreement, the Representatives, on behalf of the
Underwriters, will require the execution and delivery by the undersigned of an
agreement (the "Lock-Up Agreement") substantially to the effect that, during a
period of 180 days from the date of the Purchase Agreement, the undersigned will
not, without the prior written consent of the lead manager named in the final
OSI Registration Statement, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of OSI Common Stock or any
securities convertible into or exchangeable or exercisable for OSI Common Stock,
whether owned at the date of the Purchase Agreement or thereafter acquired by
the undersigned or with respect to which the undersigned had at the date of the
Purchase Agreement or thereafter acquires the power of disposition, or file any
registration statement under the Securities Act with respect to any of the
foregoing, or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the OSI Common Stock, whether any such swap or
transaction is to be settled by delivery of OSI Common Stock or other
securities, in cash or otherwise. Notwithstanding the foregoing, without
obtaining the prior written consent of the lead manager named in the final OSI
Registration Statement, the undersigned will be permitted to transfer shares of
OSI Common Stock otherwise subject to the Lock-Up Agreement to any immediate
family member of the undersigned or any trust established for the benefit of any
such immediate family member, provided that, prior to such transfer and as a
condition thereof, the transferee shall deliver to the Representatives a written
agreement to be bound by the restrictions set forth in the Lock-Up Agreement
until the expiration of the aforementioned 180-day period.
b. The undersigned hereby irrevocably constitutes and appoints
each of Douglas Swanson and Cindy Taylor, or either of them, as the
undersigned's true and lawful attorney-in-fact and agent to execute and deliver
to the Representatives in the name and on behalf of the undersigned the Lock-Up
Agreement substantially to the effect set forth above and to take such other
actions on behalf of the undersigned in connection with the Lock-Up Agreement as
may be reasonably necessary. The undersigned hereby represents and warrants to
OSI and the Underwriters (a) that each of Mr. Swanson and Ms. Taylor is
irrevocably authorized to execute and deliver to the Representatives in the name
and on behalf of the undersigned such a Lock-Up Agreement and to take such other
actions on behalf of the undersigned in connection with the Lock-Up Agreement as
may be reasonably necessary and (b) that upon such execution and delivery by
such attorney-in-fact on behalf of the undersigned, such Lock-Up Agreement will
constitute the legal, valid and binding obligation of the undersigned,
enforceable against the undersigned in accordance with its terms, except as such
enforceability may be (i) limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and (ii) subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
c. Subject to any additional restrictions contained in the
Stockholders Agreement, prior to the earlier of (i) the termination of the
Combination Agreement or (ii) the effectiveness of the Lock-Up Agreement, no
Stockholder shall sell, convey, pledge or otherwise transfer any shares of
Sooner Common Stock or other shares of capital stock of the Company or other
securities convertible into or exchangeable for Sooner Common Stock unless the
transferee of any such securities executes and delivers to the Company a copy of
this Omnibus Consent, Waiver and
I-7
<PAGE> 206
Investment Agreement, which execution and delivery shall evidence such
transferee's intent to be bound by each of the provisions hereof.
8. EFFECTIVENESS AND IRREVOCABILITY. The Company anticipates that this
Omnibus Consent, Waiver and Investment Agreement will be executed and delivered
to the Company by each Stockholder. This Omnibus Consent, Waiver and Investment
Agreement will become effective at such time that the Company has received
executed Omnibus Consents, Waivers and Agreements from the holders of all of the
shares of Sooner Common Stock issued and outstanding at such time. EACH OF THE
PROVISIONS OF THIS OMNIBUS CONSENT, WAIVER AND INVESTMENT AGREEMENT SHALL BE
IRREVOCABLE AND SHALL BE BINDING ON THE UNDERSIGNED AND HIS, HER OR ITS
RESPECTIVE SUCCESSORS, HEIRS, PERSONAL REPRESENTATIVES AND ASSIGNS.
9. RELIANCE BY THE COMPANY, OSI AND THE UNDERWRITERS. The undersigned
confirms that he, she or it understands that the Company, OSI and the
Underwriters will rely upon the foregoing resolutions, representations,
covenants, waivers and agreements in proceeding with the OSI Initial Public
Offering.
[SIGNATURE PAGES FOLLOW]
I-8
<PAGE> 207
IN WITNESS WHEREOF, the Company and the undersigned Stockholders have executed
this irrevocable Omnibus Consent, Waiver and Investment Agreement on this
day of August 2000, to become effective as provided in Section 8 above, which
irrevocable Omnibus Consent, Waiver and Investment Agreement may be executed by
original or facsimile signature and in one or more counterparts, each such
counterpart being deemed an original document and all such counterparts together
being deemed one and the same instrument.
Sooner, Inc.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
SCF-IV, L.P
By: SCF-IV, G.P., Limited Partnership, its
general partner
By: L.E. Simmons & Associates,
Incorporated, its general partner
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ZARROW OPERATING COMPANY
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
---------------------------------------------
John Schoaf
---------------------------------------------
Joe Ottaviani
---------------------------------------------
Stuart A. Zarrow
---------------------------------------------
Judith Z. Kishner
I-9
<PAGE> 208
---------------------------------------------
Gail Z. Richards
---------------------------------------------
Foreman Investment Capital, LLC
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
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SCHEDULE A
REGISTRATION RIGHTS STOCKHOLDERS
SCF-IV, L.P.
Zarrow Operating Company
Stuart A. Zarrow
Judith Z. Kishner
Gail Z. Richards
Foreman Investment Capital, LLC
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SCHEDULE B
WARRANT HOLDERS
[omitted]
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SCHEDULE C
OWNERSHIP OF COMMON STOCK AND WARRANTS
[omitted]
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EXHIBIT J
FORM OF OMNIBUS VOTING, WAIVER AND INVESTMENT AGREEMENT
OF U.S. STOCKHOLDERS OF PTI
<PAGE> 213
OMNIBUS VOTING, WAIVER AND INVESTMENT
AGREEMENT OF U.S. SHAREHOLDERS OF PTI
August 2, 2000
(the "Shareholder")
-----------------------------------
Name
-----------------------------------
Address
-----------------------------------
City, Province, Postal Code
-----------------------------------
Telecopier
Dear Shareholder:
RE: AGREEMENT TO VOTE IN CONNECTION WITH PLAN OF ARRANGEMENT AND RELATED
MATTERS
Oil States International, Inc. ("OSI") understands that the undersigned
Shareholder is the resgistered and beneficial owner of common
shares (the "Owned Shares") of PTI Group Inc. ("PTI") and options to acquire
common shares of PTI (the "Subject Options") (the Owned Shares
and any common shares issued on the exercise of the Subject Options are
hereinafter collectively referred to as the "Shares"). Each capitalized term
used but not otherwise defined herein has the meaning ascribed to it in the
Combination Agreement dated as of July 31, 2000 between OSI and PTI, among
others (the "Combination Agreement"). The term "PTI Arrangement" shall mean the
PTI Arrangement as provided for in the Plan of Arrangement, as the Plan of
Arrangement may be modified or amended pursuant to the terms of the Combination
Agreement.
1. PTI ARRANGEMENT
In consideration of the execution and delivery by OSI of the
Combination Agreement, the performance of its obligations thereunder
and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the Shareholder, the Shareholder
covenants and agrees with OSI that, until the Release Date, as defined
below, the Shareholder will:
(a) at the PTI Shareholders Meeting, if any, vote all of the
Shareholder's Shares to approve the PTI Arrangement;
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(b) execute and deliver any written resolution approving the PTI
Arrangement;
(c) not exercise any rights of dissent or appraisal in respect of any
resolution approving the PTI Arrangement or any aspect thereof or
matter related thereto, and not to exercise any other shareholder
or optionholder rights or remedies available at common law or
pursuant to the Business Corporation Act (Alberta) or in any
manner delay, hinder, challenge, or upset the PTI Arrangement;
(d) except as provided pursuant to the PTI Arrangement, not sell,
assign, transfer or otherwise convey or dispose of any Shares
except to a person that prior thereto agrees in writing to be
bound by the terms of this Agreement, provided that the
Shareholder shall remain liable for the performance by such
person of all of the provisions of this Agreement.
For the purposes of the Agreement "Release Date" means the earlier of:
(i) the Effective Date of the PTI Arrangement; or (ii) the date the
Combination Agreement is terminated in accordance with its terms.
2. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder hereby covenants, represents and warrants to OSI,
as covenants, representations and warranties that will survive
completion of the transactions contemplated hereby, that:
(a) the Shareholder has been furnished with and hereby acknowledges
receipt of the Confidential Information Memorandum enclosed
herewith, the Combination Agreement, including the exhibits and
schedules thereto, and the OSI Registration Statement and is
familiar with and understands the terms of the transactions
contemplated thereby. The Shareholder has carefully considered
and has, to the extent the Shareholder believes such discussion
necessary, discussed with professional legal, tax, accounting
and/or financial advisors, as the case may be, the suitability of
an investment in the OSI Common Stock for the Shareholder's
particular tax and financial situation and has determined that
the OSI Common Stock to be received by the Shareholder is a
suitable investment for the Shareholder;
(b) except as may be indicated by the Shareholder below, the
Shareholder is an individual "ACCREDITED INVESTOR," as that term
is defined in Rule 501(a) promulgated under the Securities Act of
1933, as amended (the "Securities Act"), which is incorporated
herein by reference. The Shareholder has the knowledge and
experience in financial and business matters necessary for
evaluating the merits and risks of investing in the OSI Common
Stock. THE SHAREHOLDER HAS CHECKED THE BOX BELOW INDICATING THE
BASIS ON WHICH HE IS REPRESENTING HIS STATUS AS AN "ACCREDITED
INVESTOR":
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[ ] a bank as defined in Section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; a broker or
dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended (the "Securities Exchange
Act"); an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the
Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958; a plan established and
maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, and such plan
has total assets in excess of U.S. $5,000,000; an employee
benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such
Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of U.S.
$5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited
investors;
[ ] a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
[ ] an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring securities in the proposed offering, with total
assets in excess of U.S.$5,000,000;
[ ] a director or executive officer of OSI;
[ ] a natural person whose individual net worth, or joint net
worth with the Shareholder's spouse, at the time of this
purchase exceeds U.S.$1,000,000;
[ ] a natural person who had an individual income in excess of
U.S.$200,000 in each of the two most recent years or joint
income with the Shareholder's spouse in excess of U.S.
$300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year;
[ ] a trust with total assets in excess of U.S.$5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a person who has such
knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of the
prospective investment; or
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[ ] an entity in which all of the equity holders are "accredited
investors" by virtue of their meeting one or more of the
above standards.
IF NONE OF THE FOREGOING DESCRIPTIONS ARE APPLICABLE, CHECK THE
FOLLOWING BOX:
[ ] THE SHAREHOLDERS IS NOT AN ACCREDITED INVESTOR AND THE
SHAREHOLDER HEREBY ACKNOWLEDGES AND AGREES THAT IMMEDIATELY
PRIOR TO THE CONSUMMATION OF MERGERS, THE SHAREHOLDER WILL
SELL THE SHAREHOLDER'S OWNED SHARES IN ACCORDANCE WITH THE
APPLICABLE PROVISIONS OF THE PTI ARRANGEMENT.
(c) the Shareholder is a resident of the United States of America;
(d) the Shareholder acknowledges that (i) the Shareholder has had the
opportunity to request copies of any documents, records, and
books pertaining to this investment and (ii) any such documents,
records and books which the Shareholder requested have been made
available for inspection by the Shareholder and the Shareholder's
attorney, accountant or advisor;
(e) the Shareholder has such knowledge and experience in financial,
tax and business matters so as to enable the Shareholder to use
the information made available to the Shareholder in connection
with the offering to evaluate the merits and risks of an
investment in the OSI Common Stock and to make an informed
investment decision with respect thereto;
(f) the Shareholder has had a reasonable opportunity to ask questions
of and receive answers from a person or persons acting on behalf
of OSI concerning the transactions contemplated by the PTI
Arrangement and all such questions have been answered to the full
satisfaction of the Shareholder;
(g) the Shareholder is not participating in the PTI Arrangement as a
result of or after any advertisement, article, notice or other
communication published in any newspaper, magazine or similar
media or broadcast over television or radio or presented at any
seminar or meeting;
(h) if the Shareholder is a natural person, the Shareholder has
reached the age of majority in the state in which the Shareholder
resides, has adequate means of providing for the Shareholder's
current financial needs and contingencies, is able to bear the
substantial economic risks of an investment in the OSI Common
Stock for an indefinite period of time, has no need for liquidity
in such investment and, at the present time, could afford a
complete loss of such investment;
(i) the Shareholder will not resell or otherwise transfer the OSI
Common Stock received in the PTI Arrangement without registration
under the Securities Act and
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applicable state securities laws or pursuant to an available
exemption from registration under the Securities Act and
applicable state securities laws. The OSI Common Stock has not
been registered under the Securities Act or under the securities
laws of any domestic or foreign jurisdiction. The Shareholder
represents that the Shareholder is acquiring the OSI Common Stock
for the Shareholder's own account, for investment purposes only
and with no current intention or plan to distribute, sell or
otherwise dispose of the OSI Common Stock in connection with any
distribution;
(j) the Shareholder recognizes that an investment in the OSI Common
Stock involves substantial risks, including loss of the entire
amount of such investment. Further, the Shareholder has taken
full cognizance of and understands all of the risks related to
the purchase of the OSI Common Stock;
(k) in addition to any other restrictive legends that may be required
by the terms of the Combination Agreement, the Shareholder
acknowledges that the certificates representing the OSI Common
Stock shall be stamped or otherwise imprinted with a legend
substantially in the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR
PURSUANT TO AN EXEMPTION THEREFROM, WHICH, IN THE OPINION OF
COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS
AVAILABLE."
(l) the Shareholder represents and warrants that, other than the
Owned Shares and the Owned Options, the Shareholder is the record
or beneficial owner of no equity securities, including any
warrants, options, convertible debt, rights of conversion or
similar securities or rights, of PTI;
(m) the Shareholder acknowledges and understands that OSI is relying
upon the foregoing representations and warranties for the purpose
of compliance by OSI with U.S. Federal and state securities laws
related to the issuance of the OSI Common Stock pursuant to the
PTI Arrangement;
(n) the Shareholder is duly authorized to execute and deliver this
Agreement and this letter is a valid and binding agreement,
enforceable against the Shareholder in accordance with its terms,
and the consummation by the Shareholder of the transaction
contemplated hereby will not constitute a violation of or default
under, or conflict with, any contract, commitment, agreement,
<PAGE> 218
understanding or arrangement of any kind to which any of the
Shareholder will be a party and by which the Shareholder will be
bound at the time of such consummation;
(o) subject to Section 1(d), the Shareholder is the beneficial holder
of the number of Owned Shares and Subject Options set forth in
the opening paragraph of this Agreement free and clear of all
claims, liens, charges, encumbrances and security interests
(other than those imposed by the Unanimous Shareholder Agreement
(as defined in the Plan of Arrangement) or by applicable
securities laws);
(p) all of the representations, warranties and covenants contained in
this paragraph 2 shall be valid and true as if recited and
repeated as at the Effective Time.
3. LOCK-UP AGREEMENT
The Shareholder hereby acknowledges and understands that, in
connection with the OSI Initial Public Offering, the representatives
(the "Representatives") of the underwriters (the "Underwriters")
propose to enter into an underwriting or purchase agreement (the
"Purchase Agreement") with OSI, among others, providing for the public
offering of shares of OSI Common Stock. The Shareholder hereby
acknowledges and understands that, in connection with the entering into
of such Purchase Agreement, the Representatives, on behalf of the
Underwriters, will require the execution and delivery by the
Shareholder of an agreement (the "Lock-Up Agreement") substantially to
the effect that, during a period of 180 days from the date of the
Purchase Agreement, the Shareholder will not, without the prior written
consent of the lead manager named in the final OSI Registration
Statement, directly or indirectly, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer any shares of OSI Common Stock or
any securities convertible into or exchangeable or exercisable for OSI
Common Stock, whether owned at the date of the Purchase Agreement or
thereafter acquired by the Shareholder or with respect to which the
Shareholder had at the date of the Purchase Agreement or thereafter
acquires the power of disposition, or file any registration statement
under the Securities Act with respect to any of the foregoing, or (ii)
enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the OSI Common Stock, whether any such swap
or transaction is to be settled by delivery of OSI Common Stock or
other securities, in cash or otherwise. Notwithstanding the foregoing,
without obtaining the prior written consent of the lead manager named
in the final OSI Registration Statement, the Shareholder will be
permitted to transfer shares of OSI Common Stock otherwise subject to
the Lock-Up Agreement to any immediate family member of the
Shareholder, any trust established for the benefit of any such
immediate family member or any corporation wholly owned by the
Shareholder or any combination of the Shareholder and any of the
foregoing, provided that, prior to such transfer and as a condition
thereof, the transferee shall deliver to the Representatives a written
agreement to be bound by the restrictions set forth in the Lock-Up
Agreement until the expiration of the aforementioned 180-day period.
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The Shareholder hereby irrevocably constitutes and appoints
each of Douglas Swanson and Cindy Taylor, or either of them, as the
Shareholder's true and lawful attorney-in-fact and agent to execute and
deliver to the Representatives in the name and on behalf of the
Shareholder the Lock-Up Agreement substantially to the effect set forth
above and to take such other actions on behalf of the Shareholder in
connection with the Lock-Up Agreement as may be reasonably necessary.
The Shareholder hereby represents and warrants to OSI and the
Underwriters (a) that each of Mr. Swanson and Ms. Taylor is irrevocably
authorized to execute and deliver to the Representatives in the name
and on behalf of the Shareholder such a Lock-Up Agreement and to take
such other actions on behalf of the Shareholder in connection with the
Lock-Up Agreement as may be reasonably necessary and (b) that upon such
execution and delivery by such attorney-in-fact on behalf of the
Shareholder, such Lock-Up Agreement will constitute the legal, valid
and binding obligation of the Shareholder, enforceable against the
Shareholder in accordance with its terms, except as such enforceability
may be (i) limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and (ii) subject to general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at
law).
The Shareholder hereby confirms that he, she or it understands
that the Underwriters and OSI will rely upon the foregoing in
proceeding with the OSI Initial Public Offering. The foregoing shall be
binding on the Shareholder and his, her or its respective successors,
heirs, personal representatives and assigns.
4. AMENDMENT
Except as expressly set forth herein, this Agreement
constitutes the whole of the agreement between the parties and may not
be modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by the effected party.
5. ASSIGNMENT
No party to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written consent of
OSI.
6. NOTICE
Any notice, document or other communication required or permitted
to be given to the parties under this Agreement shall be in writing and
be either hand delivered or telecopied (with a following letter) as
follows:
(a) to the Shareholder at the address and telecopier listed on the
first page of this Agreement; and
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(b) to OSI at:
Oil States International, Inc.
Three Allen Center
333 Clay Street, Suite 333460
Houston, Texas 77002
Attention: Cindy B. Taylor
Fax: (713) 652-0499
and shall be deemed to be received by the party to whom such notice is given on
the date of delivery or transmission.
7. SUCCESSORS
This Agreement will be binding upon, enure to the benefit of
and be enforceable by OSI Shareholder and their respective successors.
8. TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
9. APPLICABLE LAW
This Agreement shall be governed and construed in accordance
with the laws of the Province of Alberta and the laws of Canada
applicable herein.
This letter may be signed by fax and in counterparts, which, together,
shall be deemed to constitute one valid and binding agreement and delivery of
such counterparts may be effected by means of telecopier.
Yours truly,
OIL STATES INTERNATIONAL, INC.
By:
---------------------------
Name: Cindy B. Taylor
Title: Chief Financial Officer
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The foregoing is in accordance with our understanding and is agreed to
as of August __, 2000.
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(Print Name of Shareholder)
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(Authorized Signature)
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(Official Capacity or Title - if applicable)
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EXHIBIT K
OMNIBUS VOTING, WAIVER AND INVESTMENT
AGREEMENT OF CERTAIN CANADIAN SHAREHOLDERS OF PTI
August 2, 2000
(the "Shareholder")
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Name
------------------------------------
Address
------------------------------------
City, Province, Postal Code
------------------------------------
Telecopier
Dear Shareholder:
RE: AGREEMENT TO VOTE IN CONNECTION WITH PLAN OF ARRANGEMENT AND RELATED
MATTERS
Oil States International, Inc. ("OSI") understands that the undersigned
Shareholder is the registered and beneficial owner of _________________ common
shares (the "Owned Shares") of PTI Group Inc. ("PTI") and options to acquire
_________________ common shares of PTI (the "Subject Options") (the Owned Shares
and any common shares issued on the exercise of the Subject Options are
hereinafter collectively referred to as the "Shares"). Each capitalized term
used but not otherwise defined herein has the meaning ascribed to it in the
Combination Agreement dated as of July 31, 2000 between OSI and PTI, among
others (the "Combination Agreement"). The term "PTI Arrangement" shall mean the
PTI Arrangement as provided for in the Plan of Arrangement, as the Plan of
Arrangement may be modified or amended pursuant to the terms of the Combination
Agreement.
1. PTI ARRANGEMENT
In consideration of the execution and delivery by OSI of the
Combination Agreement, the performance of its obligations thereunder
and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the Shareholder, the Shareholder
covenants and agrees with OSI that, until the Release Date, as defined
below, the Shareholder will:
(a) at the PTI Shareholders Meeting, if any, vote all of the
Shareholder's Shares to approve the PTI Arrangement;
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(b) execute and deliver any written resolution approving the PTI
Arrangement;
(c) not exercise any rights of dissent or appraisal in respect of
any resolution approving the PTI Arrangement or any aspect
thereof or matter related thereto, and not to exercise any
other shareholder or optionholder rights or remedies available
at common law or pursuant to the Business Corporation Act
(Alberta) or in any manner delay, hinder, challenge, or upset
the PTI Arrangement;
(d) except as provided pursuant to the PTI Arrangement, not sell,
assign, transfer or otherwise convey or dispose of any Shares
except to a person that prior thereto agrees in writing to be
bound by the terms of this Agreement, provided that the
Shareholder shall remain liable for the performance by such
person of all of the provisions of this Agreement.
For the purposes of the Agreement "Release Date" means the earlier of:
(i) the Effective Date of the PTI Arrangement; or (ii) the date the
Combination Agreement is terminated in accordance with its terms.
2. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder hereby covenants, represents and warrants to
OSI, as covenants, representations and warranties that will survive
completion of the transactions contemplated hereby, that:
(a) the Shareholder has been furnished with and hereby
acknowledges receipt of the Confidential Information
Memorandum enclosed herewith, the Combination Agreement,
including the exhibits and schedules thereto, and the OSI
Registration Statement draft dated August 2, 2000 and is
familiar with and understands the terms of the transactions
contemplated thereby;
(b) except as may be indicated by the Shareholder in Appendix A
hereto, the Shareholder is an individual "ACCREDITED
INVESTOR," as that term is defined in Rule 501(a) promulgated
under the Securities Act of 1933, as amended (the "Securities
Act"), and as set forth in Appendix A hereto. The Shareholder
has the knowledge and experience in financial and business
matters necessary for evaluating the merits and risks of
investing in the Exchangeable Shares and the underlying OSI
Common Stock.
(c) the Shareholder is a resident of Canada;
(d) the Shareholder has had a reasonable opportunity to ask
questions of and receive answers from a person or persons
acting on behalf of OSI concerning the transactions
contemplated by the PTI Arrangement and all such questions
have been answered to the full satisfaction of the
Shareholder;
(e) the Shareholder is not participating in the PTI Arrangement as
a result of or after any advertisement, article, notice or
other communication published in any
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newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or meeting;
(f) the Shareholder will not resell or otherwise transfer the
Exchangeable Shares or the underlying OSI Common Stock
received in the PTI Arrangement except in accordance with the
provisions of Regulation S promulgated under the Securities
Act (which generally provides that offers and sales of
securities outside of the United States are not subject to the
registration and prospectus delivery requirements of the
Securities Act), pursuant to registration under the Securities
Act and applicable state securities laws or pursuant to an
available exemption from registration under the Securities Act
and applicable state securities laws. The Exchangeable Shares
and the underlying OSI Common Stock have not been registered
under the Securities Act or under the securities laws of any
domestic or foreign jurisdiction. The Shareholder represents
that the Shareholder is acquiring the Exchangeable Shares for
the Shareholder's own account, for investment purposes only
and with no current intention or plan to distribute, sell or
otherwise dispose of the Exchangeable Shares in connection
with any distribution;
(g) in addition to any other restrictive legends that may be
required by the terms of the Combination Agreement, the
Shareholder acknowledges that the certificates representing
the Exchangeable Shares and the underlying OSI Common Stock
shall be stamped or otherwise imprinted with a legend
substantially in the following form:
ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS STRICTLY PROHIBITED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), PURSUANT TO REGISTRATION UNDER
THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION. THE HOLDER OF THIS CERTIFICATE MAY NOT
ENGAGE IN ANY HEDGING TRANSACTIONS INVOLVING THE
SECURITIES REPRESENTED HEREBY EXCEPT IN COMPLIANCE
WITH THE ACT.
(h) the Shareholder represents and warrants that the Shareholder
is the beneficial holder of the number of Owned Shares and
Subject Options set forth in the opening paragraph of this
Agreement free and clear of all claims, liens, charges,
encumbrances and security interests (other than those imposed
by the Unanimous Shareholder Agreement (as defined in the Plan
of Arrangement) and by applicable securities laws), and, other
than the Owned Shares and the Owned Options, the Shareholder
is the record or beneficial owner of no equity securities,
including any warrants, options, convertible debt, rights of
conversion or similar securities or rights, of PTI;
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(i) the Shareholder is duly authorized to execute and deliver this
Agreement and this letter is a valid and binding agreement,
enforceable against the Shareholder in accordance with its
terms, and the consummation by the Shareholder of the
transaction contemplated hereby will not constitute a
violation of or default under, or conflict with, any contract,
commitment, agreement, understanding or arrangement of any
kind to which any of the Shareholder will be a party and by
which the Shareholder will be bound at the time of such
consummation;
(j) the Shareholder is not a U.S. person and is not acquiring
Exchangeable Shares for the account or benefit of any U.S.
person. For purposes of this representation, a U.S. person has
the meaning set forth in Appendix A;
(k) the Shareholder shall not engage in hedging transactions
involving Exchangeable Shares or the underlying OSI Common
Stock unless in compliance with the Securities Act;
(l) all of the representations, warranties and covenants contained
in this paragraph 2 shall be valid and true as if recited and
repeated as at the Effective Time.
3. LOCK-UP AGREEMENT
The Shareholder hereby acknowledges and understands that, in
connection with the OSI Initial Public Offering, the representatives
(the "Representatives") of the underwriters (the "Underwriters")
propose to enter into an underwriting or purchase agreement (the
"Purchase Agreement") with OSI, among others, providing for the public
offering of shares of OSI Common Stock. The Shareholder hereby
acknowledges and understands that, in connection with the entering into
of such Purchase Agreement, the Representatives, on behalf of the
Underwriters, will require the execution and delivery by the
undersigned of an agreement (the "Lock-Up Agreement") substantially to
the effect that, during a period of 180 days from the date of the
Purchase Agreement, the Shareholder will not, without the prior written
consent of the lead manager named in the final OSI Registration
Statement, directly or indirectly, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer any Exchangeable Shares or shares
of OSI Common Stock or any securities convertible into or exchangeable
or exercisable for Exchangeable Shares or OSI Common Stock, whether
owned at the date of the Purchase Agreement or thereafter acquired by
the Shareholder or with respect to which the Shareholder had at the
date of the Purchase Agreement or thereafter acquires the power of
disposition, or file any registration statement under the Securities
Act with respect to any of the foregoing, or (ii) enter into any swap
or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership
of the Exchangeable Shares or OSI Common Stock, whether any such swap
or transaction is to be settled by delivery of Exchangeable Shares or
OSI Common Stock or other securities, in cash or otherwise.
Notwithstanding the foregoing, without obtaining the prior written
consent of the lead manager named in the final OSI Registration
Statement, the Shareholder will be permitted to transfer
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Exchangeable Shares or shares of OSI Common Stock otherwise subject to
the Lock-Up Agreement to any immediate family member of the
Shareholder, any trust established for the benefit of any such
immediate family member or any corporation wholly owned by the
Shareholder or any combination of the Shareholder and any of the
foregoing, provided that, prior to such transfer and as a condition
thereof, the transferee shall deliver to the Representatives a written
agreement to be bound by the restrictions set forth in the Lock-Up
Agreement until the expiration of the aforementioned 180-day period.
The Shareholder hereby irrevocably constitutes and appoints
each of Douglas Swanson and Cindy Taylor, or either of them, as the
Shareholder's true and lawful attorney-in-fact and agent to execute and
deliver to the Representatives in the name and on behalf of the
Shareholder the Lock-Up Agreement substantially to the effect set forth
above and to take such other actions on behalf of the Shareholder in
connection with the Lock-Up Agreement as may be reasonably necessary.
The Shareholder hereby represents and warrants to OSI and the
Underwriters (a) that each of Mr. Swanson and Ms. Taylor is irrevocably
authorized to execute and deliver to the Representatives in the name
and on behalf of the Shareholder such a Lock-Up Agreement and to take
such other actions on behalf of the Shareholder in connection with the
Lock-Up Agreement as may be reasonably necessary and (b) that upon such
execution and delivery by such attorney-in-fact on behalf of the
Shareholder, such Lock-Up Agreement will constitute the legal, valid
and binding obligation of the Shareholder, enforceable against the
Shareholder in accordance with its terms, except as such enforceability
may be (i) limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and (ii) subject to general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at
law).
The Shareholder hereby confirms that he, she or it understands
that the Underwriters and OSI will rely upon the foregoing in
proceeding with the OSI Initial Public Offering. The foregoing shall be
binding on the Shareholder and his, her or its respective successors,
heirs, personal representatives and assigns.
4. AMENDMENT
Except as expressly set forth herein, this Agreement
constitutes the whole of the agreement between the parties and may not
be modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by the effected party.
5. ASSIGNMENT
No party to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written consent of
OSI.
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<PAGE> 227
6. NOTICE
Any notice, document or other communication required or
permitted to be given to the parties under this Agreement shall be in
writing and be either hand delivered or telecopied (with a following
letter) as follows:
(a) to the Shareholder at the address and telecopier listed on the
first page of this Agreement; and
(b) to OSI at:
Oil States International, Inc.
Three Allen Center
333 Clay Street, Suite 333460
Houston, Texas 77002
Attention: Cindy B. Taylor
Fax: (713) 652-0499
and shall be deemed to be received by the party to whom such notice is given on
the date of delivery or transmission.
7. SUCCESSORS
This Agreement will be binding upon, enure to the benefit of
and be enforceable by OSI Shareholder and their respective successors.
8. TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
9. APPLICABLE LAW
This Agreement shall be governed and construed in accordance
with the laws of the Province of Alberta and the laws of Canada
applicable herein.
K-6
<PAGE> 228
This letter may be signed by fax and in counterparts, which, together,
shall be deemed to constitute one valid and binding agreement and delivery of
such counterparts may be effected by means of telecopier.
Yours truly,
OIL STATES INTERNATIONAL, INC.
By:
--------------------------
Name: Cindy B. Taylor
Title: Chief Financial Officer
The foregoing is in accordance with our understanding and is agreed to
as of __________, 2000.
--------------------------------------------
(Print Name of Shareholder)
--------------------------------------------
(Authorized Signature)
--------------------------------------------
(Official Capacity or Title - if applicable)
K-7
<PAGE> 229
APPENDIX A
Under Rule 501(a) of the Securities Act, "accredited investor" means
any person who comes within any of the following categories at the time of the
sale of securities to that person:
(i) a natural person whose individual net worth, or joint net
worth with the Shareholder's spouse, at the time of this
purchase exceeds U.S.$1,000,000;
(ii) a natural person who had an individual income in excess of
U.S.$200,000 in each of the two most recent years or joint
income with the Shareholder's spouse in excess of U.S.
$300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year;
(iii) a bank as defined in Section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; a broker or
dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended (the "Securities Exchange
Act"); an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the
Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958; a plan established and
maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, and such plan
has total assets in excess of U.S. $5,000,000; an employee
benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such
Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of U.S.
$5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited
investors;
(iv) a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(v) an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring securities in the proposed offering, with total
assets in excess of U.S.$5,000,000;
(vi) a director or executive officer of OSI;
(vii) a trust with total assets in excess of U.S.$5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a person
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<PAGE> 230
who has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits
and risks of the prospective investment; or
(viii) an entity in which all of the equity holders are "accredited
investors" by virtue of their meeting one or more of the above
standards.
IF NONE OF THE FOREGOING DESCRIPTIONS ARE APPLICABLE, CHECK THE
FOLLOWING BOX:
[ ] THE SHAREHOLDER IS NOT AN ACCREDITED INVESTOR.
A U.S. person is:
(i) any natural person resident in the United States;
(ii) any partnership or corporation organized or incorporated under
the laws of the United States;
(iii) any estate of which any executor or administrator is a U.S.
person;
(iv) any trust of which any trustee is a U.S. person;
(v) any agency or branch of a foreign entity located in the United
States;
(vi) any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary for
the benefit or account of a U.S. person;
(vii) any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary
organized, incorporated, or (if any individual) resident in
the United States; or
(viii) any partnership or corporation if (A) organized or
incorporated under the laws of any foreign jurisdiction; and
(B) formed by a U.S. person principally for the purpose of
investing in securities not registered under the Act, unless
it is organized or incorporated, and owned, by "accredited
investors" (as defined in Rule 501(a) promulgated under the
Securities Act) who are not natural persons, estates or
trusts.
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<PAGE> 231
EXHIBIT L
FORM OF OMNIBUS CONSENT, WAIVER AND AGREEMENT
OF STOCKHOLDERS OF OSI
<PAGE> 232
EXHIBIT L
OMNIBUS CONSENT, WAIVER AND AGREEMENT
OF THE STOCKHOLDERS
OF
OIL STATES INTERNATIONAL, INC.
The undersigned, being Oil States International, Inc., a Delaware
corporation (the "Company" or "OSI") and the holders (the "Stockholders") of the
issued and outstanding shares of Class A common stock, par value $.01 per share,
of the Company (the "OSI Common Stock"), do hereby consent, adopt, approve and
agree as follows:
1. RECITALS.
a. The Company's board of directors (the "Board of Directors") has
considered the form, terms, provisions and conditions of that certain
Combination Agreement, including the exhibits thereto, by and among the Company,
Sooner Inc., a Delaware corporation ("Sooner"), HWC Energy Services, Inc., a
Texas corporation ("HWC") and PTI Group, Inc., an Alberta corporation ("PTI")
and the other parties thereto, a copy of which has been provided herewith to the
Stockholders.
b. The Board of Directors has determined that the Combination
Agreement, including the exhibits thereto and the transactions contemplated
thereby, are in the best interests of, and fair to, the Company and the
Stockholders and on that basis has entered into the Combination Agreement
effective as of July 31, 2000.
c. The Board of Directors has submitted the Combination Agreement to
the Stockholders for approval and adoption and has recommended to the
Stockholders that they so approve and adopt the Combination Agreement.
d. The Combination Agreement contemplates the execution of an Amended
and Restated Registration Rights Agreement to be effective at the Effective
Time, pursuant to which the existing registration rights of certain holders of
OSI Common Stock, HWC Common Stock and Sooner Common Stock (the "Existing
Registration Rights") granted pursuant to existing registration rights
agreements (each an "Existing Registration Rights Agreement") shall be amended
and restated.
e. The Combination Agreement contemplates that, prior to the Effective
Time, the Company shall cause to be terminated each of the existing stockholders
agreements between the Company and certain Stockholders (each a "Stockholders
Agreement").
f. The Combination Agreement contemplates certain other actions to be
taken by the Stockholders to effect the purposes thereof.
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<PAGE> 233
g. Capitalized terms that are used but not defined herein have the
meanings set forth in the Combination Agreement.
2. RESOLUTIONS OF THE STOCKHOLDERS. Acting pursuant to the provisions of
Section 228 of the Delaware General Corporation Law (the "DGCL"), the
Stockholders hereby adopt and approve the following resolutions:
APPROVAL OF COMBINATION AGREEMENT
RESOLVED, that, upon the recommendation of the Board of
Directors, the Stockholders hereby approve and adopt the Combination
Agreement, and the transactions contemplated thereby, including,
without limitation, the issuance of shares of OSI Common Stock to the
stockholders and other security holders of HWC, Sooner and PTI in
accordance with the provisions of the Combination Agreement.
AMENDMENT OF CERTIFICATE OF INCORPORATION
RESOLVED, that in conjunction with the transactions
contemplated by the Combination Agreement, the Stockholders, upon the
recommendation of the Board of Directors, hereby approve and adopt the
following amendment to the Company's Certificate of Incorporation, as
amended:
Article Fourth of the Company's Certificate of
Incorporation, as amended, shall be amended and restated in
its entirety to provide as follows:
"The total number of shares of capital stock which
the Corporation shall have authority to issue is two hundred
twenty five million (225,000,000), consisting of 25,000,000
shares of preferred stock, par value $0.0001 per share
("Preferred Stock") and two hundred million (200,000,000)
shares of common stock, par value $0.01 per share ("Common
Stock").";
RESOLVED FURTHER, that each duly appointed officer of the
Company be, and they hereby are, authorized to execute and file in the
office of the Secretary of State of Delaware a Certificate of Amendment
to the Company's Certificate of Incorporation, as amended, and to make
such changes thereto and take or cause to be taken such other actions
as such officer(s) may deem necessary, proper or convenient in order to
effect the foregoing amendment in accordance with the DGCL; and
RESOLVED FURTHER, that upon the filing of the aforementioned
Certificate of Amendment with the Secretary of State of Delaware, each
issued and outstanding share of the Company's Class A Common Stock be,
and it hereby is, redesignated as "Common Stock" and each share of
Class B Common Stock, all of which are held by the Company as treasury
stock and none of which are outstanding, shall be cancelled and
retired.
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<PAGE> 234
AMENDMENT OF SERIES A CERTIFICATE OF DESIGNATION
RESOLVED, that in conjunction with the transactions
contemplated by the Combination Agreement, the Stockholders, based upon
the recommendation of the Board of Directors, hereby approve and adopt
the following amendments to the Certificate of Designations, Powers and
Rights of Series A Convertible Cumulative Preferred Stock:
To delete references to Class A Common Stock and Class B
Common Stock, the definition of "Common Stock" contained in Article Two
of the Certificate of Designations, Powers and Rights of Series A
Convertible Cumulative Preferred Stock is hereby amended to read in its
entirety as follows:
"Common Stock means Issuer's Common Stock par value $0.01 per
share, and any capital stock of Issuer which has the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount or percentage."
To replace references to "Class A Common Stock" with the term
"Common Stock," Section 4.1 of Article Four of the Certificate of
Designations, Powers and Rights of Series A Convertible Cumulative
Preferred Stock is hereby amended to read in its entirety as follows:
"4.1 Mandatory Conversion. Each share of Preferred Stock
outstanding on August 1, 2002 shall be automatically converted into a
number of shares of the Company's Common Stock (the "Conversion
Shares"). Each share of Preferred Stock shall be convertible into a
number of Conversion Shares according to the conversion ratio and the
conversion procedures set forth in this Section 4.1. Subject to
compliance with the conditions set forth in the remaining provisions of
this Section 4, the Company shall cause certificates evidencing
ownership of the Conversion Shares to be delivered to each holder of
Preferred Stock on or before August 15, 2002."
To permit the holders of Series A Convertible Cumulative
Preferred Stock to participate and vote in elections of the Board of
Directors, Article Six of the Certificate of Designations, Powers and
Rights of Series A Convertible Cumulative Preferred Stock is hereby
amended to read in its entirety as follows:
"6. Voting Rights. In addition to any voting rights contained
in Section 8 below or as otherwise from time to time required by law,
the holders of the Preferred Stock will have the right, on an
as-converted basis, to vote as a class with the holders of Common Stock
of the Company on any matter upon which the holders of the Common Stock
are entitled to vote. Each share of Preferred Stock shall be entitled
to a number of votes equal to the number of shares of Common Stock into
which such share of Preferred Stock would be convertible, rounded down
to the nearest whole number of shares, were such share of Preferred
Stock to be converted on the
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<PAGE> 235
record date with respect to the election at which the holders of the
Common Stock are entitled to vote";
RESOLVED FURTHER, that the officers of the Company be, and
each hereby is, authorized, empowered and directed, by and on behalf of
the Company and in its name, to execute and file a Certificate of
Amendment to the Certificate of Designations, Powers and Rights of
Series A Cumulative Preferred Stock in the office of the Secretary of
State of Delaware and make such changes thereto and take or cause to be
taken such other actions as such officer(s) may deem necessary, proper
or convenient in order for the foregoing amendments to the Certificate
of Designations, Powers and Rights of Series A Cumulative Preferred
Stock to become effective in accordance with the DGCL.
GENERAL AUTHORITY AND RATIFICATION
RESOLVED, that the Stockholders, upon the recommendation of
the Board of Directors, hereby authorize each duly appointed officer of
the Company to take all action and to prepare, execute, and deliver all
documents that such officer deems appropriate or advisable in order to
effect the foregoing resolutions and to consummate the transactions
contemplated by the Combination Agreement and the exhibits thereto; and
RESOLVED FURTHER, that any lawful act heretofore taken by any
duly appointed officer of the Company in such capacity in connection
with the matters set forth in the foregoing recitals and resolutions
be, and it hereby is, in all respects approved, adopted, ratified and
confirmed as an act of the Company.
3. FURTHER AMENDMENTS TO CERTIFICATE OF INCORPORATION. The draft OSI
Registration Statement, dated August 2, 2000 and enclosed herewith, contemplates
that certain further amendments will be made to the Company's Certificate of
Incorporation in anticipation of the OSI Initial Public Offering. The
Stockholders agree to consent to, or vote all of their respective shares of OSI
Common Stock in favor of, as the case may be, any and all further amendments to
the Company's Certificate of Incorporation to the extent such amendments are in
substantial conformity with the descriptions of the Company's Certificate of
Incorporation in the draft OSI Registration Statement.
4. WAIVER OF PREEMPTIVE AND SIMILAR RIGHTS.
a. The Stockholders hereby waive any statutory or contractual
preemptive or similar rights that they now have or may have had prior to the
date hereof to purchase additional shares of OSI Common Stock.
b. Each Stockholder hereby acknowledges and agrees that any
statutory or contractual preemptive or similar rights (including any rights of
first offer or refusal) held by or granted to any Stockholder at any time prior
to the date hereof (including, without limitation, rights to purchase OSI Common
Stock offered by the Company in August 1997, December 1997, January 1998 and
March
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<PAGE> 236
1998 to the former shareholders of HydroTech Systems, Inc. pursuant to the
preemptive rights granted to such former shareholders under the Agreement and
Plan of Merger, dated July 15, 1997, by and among such former shareholders, the
Company, HydroTech Systems, Inc., and the other parties thereto) have been fully
satisfied and extinguished by the Company's issuance of shares of OSI Common
Stock or other securities of the Company or by cash and that no Person,
including any Stockholder, is entitled to receive any further OSI Common Stock
or any other securities of the Company or cash pursuant to any such right.
c. Each Stockholder hereby acknowledges and agrees that any
right to receive additional shares of capital stock or other securities of the
Company in connection with any prior purchase of capital stock of the Company by
any Stockholder has been fully satisfied and extinguished by the Company's
issuance of shares of OSI Common Stock or other securities of the Company and
that no Person, including any Stockholder, is entitled to receive any additional
shares of OSI Common Stock or any other securities of the Company with respect
to such prior purchases.
5. REGISTRATION RIGHTS AGREEMENTS AND RELATED MATTERS.
a. The Stockholders who have Existing Registration Rights with
respect to the shares of OSI Common Stock owned by them and whose names are set
forth on Schedule A attached hereto (the "Registration Rights Stockholders")
hereby approve the Amended and Restated Registration Rights Agreement
contemplated by the Combination Agreement (the "Registration Rights Agreement"),
a copy of which Registration Rights Agreement has been provided to the
Stockholders herewith.
b. At the Effective Time, the Registration Rights Agreement
shall replace each of the Existing Registration Rights Agreements of the
Stockholders in their entirety and each of the Existing Registration Rights
Agreements shall terminate and be of no further force or effect.
c. The Registration Rights Stockholders hereby constitute and
appoint each of Douglas Swanson and Cindy Taylor, or either of them, their true
and lawful attorney-in-fact and agent (collectively, the "Registration Rights
Agents") to execute the Registration Rights Agreement in the name of and on
behalf of each Registration Rights Stockholder.
d. The Registration Rights Agreement will be executed and become
effective with respect to the Registration Rights Stockholders at the Effective
Time.
e. An amendment to each of the Existing Registration Rights
Agreements has been approved and adopted by Board of Directors to provide that
no Person shall have the right to request the registration of any OSI Common
Stock, or any other shares of capital stock of the Company, in connection with
the OSI Initial Public Offering. The Registration Rights Stockholders hereby
approve, adopt and agree to such amendment with respect to each of their
respective Existing Registration Rights Agreements, which amendment shall be
effective without further action by the Registration Rights Stockholders or the
Company.
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<PAGE> 237
f. The Registration Rights Stockholders hereby waive any rights
they may have to demand or request registration of any of OSI Common Stock, or
any other shares of capital stock of OSI, in the OSI Initial Public Offering
pursuant to their Existing Registration Rights.
g. In the event the Combination Agreement is terminated prior
to the Effective Time in accordance with its terms, each of the Existing
Registration Rights Agreements shall continue in full force and effect.
6. TERMINATION OF STOCKHOLDERS AGREEMENTS AND RELATED MATTERS.
a. Effective immediately prior to the Effective Time, each
Stockholders Agreement shall terminate and be of no further force or effect.
b. In the event the Combination Agreement is terminated prior
to the Effective Time in accordance with its terms, each Stockholders Agreement
shall continue in full force and effect.
7. TRANSFER RESTRICTIONS AND RELATED REPRESENTATIONS OF STOCKHOLDERS.
a. The undersigned hereby acknowledges and understands that, in
connection with the OSI Initial Public Offering, the representatives (the
"Representatives") of the underwriters (the "Underwriters") propose to enter
into an underwriting or purchase agreement (the "Purchase Agreement") with OSI,
among others, providing for the public offering of shares of OSI Common Stock.
The undersigned hereby acknowledges and understands that, in connection with the
entering into of such Purchase Agreement, the Representatives, on behalf of the
Underwriters, will require the execution and delivery by the undersigned of an
agreement (the "Lock-Up Agreement") substantially to the effect that, during a
period of 180 days from the date of the Purchase Agreement, the undersigned will
not, without the prior written consent of the lead manager named in the final
OSI Registration Statement, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of OSI Common Stock or any
securities convertible into or exchangeable or exercisable for OSI Common Stock,
whether owned at the date of the Purchase Agreement or thereafter acquired by
the undersigned or with respect to which the undersigned had at the date of the
Purchase Agreement or thereafter acquires the power of disposition, or file any
registration statement under the Securities Act with respect to any of the
foregoing, or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the OSI Common Stock, whether any such swap or
transaction is to be settled by delivery of OSI Common Stock or other
securities, in cash or otherwise. Notwithstanding the foregoing, without
obtaining the prior written consent of the lead manager named in the final OSI
Registration Statement, the undersigned will be permitted to transfer shares of
OSI Common Stock otherwise subject to the Lock-Up Agreement to any immediate
family member of the undersigned or any trust established for the benefit of any
such immediate family member, provided that, prior to such transfer and as a
condition thereof, the transferee shall deliver to the Representatives a written
agreement to be bound by the restrictions set forth in the Lock-Up Agreement
until the expiration of the aforementioned 180-day period.
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<PAGE> 238
b. The undersigned hereby irrevocably constitutes and appoints each of
Douglas Swanson and Cindy Taylor, or either of them, as the undersigned's true
and lawful attorney-in-fact and agent to execute and deliver to the
Representatives in the name and on behalf of the undersigned the Lock-Up
Agreement substantially to the effect set forth above and to take such other
actions on behalf of the undersigned in connection with the Lock-Up Agreement as
may be reasonably necessary. The undersigned hereby represents and warrants to
OSI and the Underwriters (a) that each of Mr. Swanson and Ms. Taylor is
irrevocably authorized to execute and deliver to the Representatives in the name
and on behalf of the undersigned such a Lock-Up Agreement and to take such other
actions on behalf of the undersigned in connection with the Lock-Up Agreement as
may be reasonably necessary and (b) that upon such execution and delivery by
such attorney-in-fact on behalf of the undersigned, such Lock-Up Agreement will
constitute the legal, valid and binding obligation of the undersigned,
enforceable against the undersigned in accordance with its terms, except as such
enforceability may be (i) limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and (ii) subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
c. Subject to any additional restrictions contained in the Stockholders
Agreements, prior to the earlier of (i) the termination of the Combination
Agreement or (ii) the effectiveness of the Lock-Up Agreement, no Stockholder
shall sell, convey, pledge or otherwise transfer any shares of OSI Common Stock
or other shares of capital stock of the Company or other securities convertible
into or exchangeable for OSI Common Stock unless the transferee of any such
securities executes and delivers to the Company a copy of this Omnibus Consent,
Waiver and Agreement, which execution and delivery shall evidence such
transferee's intent to be bound by each of the provisions hereof.
d. The undersigned represents and warrants that, except as set forth on
Schedule B attached hereto, and except for options granted to the undersigned
under the Company's 1996 Equity Participation Plan, as amended, the undersigned
is neither the record nor beneficial owner of any equity securities, including
any warrants, options, convertible debt, rights of conversion or similar
securities or rights, of the Company or any of its subsidiaries.
8. EFFECTIVENESS AND IRREVOCABILITY. The Company anticipates that this
Omnibus Consent, Waiver and Agreement will be executed and delivered to the
Company by each Stockholder. Notwithstanding the fact that less than all of the
Stockholders may execute and deliver this Omnibus Consent, Waiver and Agreement,
this Omnibus Consent, Waiver and Agreement will become effective at such time
that the Company has received executed Omnibus Consents, Waivers and Agreements
from the holders of at least 92.5% of the shares of OSI Common Stock issued and
outstanding at such time. EACH OF THE PROVISIONS OF THIS OMNIBUS CONSENT, WAIVER
AND AGREEMENT SHALL BE IRREVOCABLE AND SHALL BE BINDING ON THE UNDERSIGNED AND
HIS, HER OR ITS RESPECTIVE SUCCESSORS, HEIRS, PERSONAL REPRESENTATIVES AND
ASSIGNS.
9. RELIANCE BY THE COMPANY AND THE UNDERWRITERS. The undersigned
confirms that he, she or it understands that the Underwriters and the Company
will rely upon the foregoing resolutions, representations, covenants, waivers
and agreements in proceeding with the OSI Initial Public Offering.
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<PAGE> 239
IN WITNESS WHEREOF, the Company and the undersigned Stockholders have
executed this irrevocable Omnibus Consent, Waiver and Agreement on this _____
day of August 2000, to become effective as provided in Section 8 above, which
irrevocable Omnibus Consent, Waiver and Agreement may be executed by original or
facsimile signature and in one or more counterparts, each such counterpart being
deemed an original document and all such counterparts together being deemed one
and the same instrument.
Oil States International, Inc.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SCF-III, L.P
By: SCF-II, G.P., Limited Partnership,
its general partner
By: L.E. Simmons & Associates,
Incorporated, its general partner
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
---------------------------------------
David Altholff
---------------------------------------
Charles A. Armbrust
The Bovaird Supply Co.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
---------------------------------------
Randall E. Carlson, Jr.
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<PAGE> 240
---------------------------------------
James Cauble
Chase Equity Associates, L.P.
By: Chase Capital Partners,
its general partner
By:
-------------------------------
its general partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
---------------------------------------
Alphonso J. Cooper
---------------------------------------
Lawrence Decker
---------------------------------------
Dominion Partners
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
---------------------------------------
Gerald R. Douglas
---------------------------------------
J. Kelly Elliot
---------------------------------------
Donald L. Frankel
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<PAGE> 241
The Freeman Organization, Inc.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
---------------------------------------
Donald Gregory
---------------------------------------
T. L. Gregory
The Betty Sue Gregory Trust
By:
------------------------------------
T. L. Gregory Trustee
---------------------------------------
Howard Hughes
The Huntfield Trust Limited
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
---------------------------------------
Michael Kief
---------------------------------------
Werner Kief
Klaper (UK) Ltd.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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<PAGE> 242
---------------------------------------
Dan LaFollette
---------------------------------------
Peter Little
---------------------------------------
Nancy Little
---------------------------------------
Keith A. McGee
---------------------------------------
Menikoff Family Partnership
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
---------------------------------------
Harvey O. Mohr
---------------------------------------
Franco Nanni
---------------------------------------
J. Michael Newell
---------------------------------------
Larry S. Richards
---------------------------------------
Richard A. Schultz
L-11
<PAGE> 243
---------------------------------------
Rush A. Seldon
---------------------------------------
Oran Tarlton
---------------------------------------
John J. Van Pelt
---------------------------------------
Waldrop Investment Corp.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
---------------------------------------
Stephen A. Wells
---------------------------------------
Jeffrey L. Whipple
---------------------------------------
Robert H. Wittman
---------------------------------------
Rosalie F. Wittman
---------------------------------------
James D. Woods
---------------------------------------
Jerry Woods
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<PAGE> 244
SCHEDULE A
REGISTRATION RIGHTS STOCKHOLDERS
SCF-III, L.P.
David Altholff
Charles A. Armbrust
The Bovaird Supply Co.
James Cauble
Chase Equity Associates
J. Kelly Elliot
Donald Gregory
T. L. Gregory
T. L. Gregory, Trustee for the Betty Sue Gregory Trust
Howard Hughes
The Huntfield Trust Limited
Michael Kief
Werner Kief
Klaper (UK) Ltd.
Menikoff Family Partnership
J. Michael Newell
Richard A. Schultz
Stephen A. Wells
James D. Woods
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<PAGE> 245
SCHEDULE B
OWNERSHIP OF EQUITY SECURITIES
[omitted]
L-14
<PAGE> 246
SCHEDULE 11.11
AGREEMENTS TO BE TERMINATED
All stockholders agreements, registration rights agreements, voting agreements
and other agreements related to the ownership of equity interests in HWC,
Sooner, PTI and OSI.
HWC
Second Amended and Restated Shareholders Agreement of HWC Energy
Services, Inc. dated as of November 30, 1999 by and among HWC Energy Services,
Inc. and the persons listed as "Shareholders" on the signature page thereto.
Sooner
Shareholders Agreement of Sooner Inc. dated as of July 2, 1998 by and
among Sooner Inc. and the persons listed as "Initial Shareholders" on the
signature page thereto, as amended.
PTI
Unanimous Shareholder Agreement dated January 8, 1997 by and among PTI
Group Inc., SCF-III, L.P., Vencap, Inc., RJM Corp., Robert J. MacLean, John
Bubel, Jim L. Cebuliak, R. James Needham, Gary Fortier, James E. Lorencz, Robert
C. Hokanson and the remaining shareholders of PTI Group Inc., as amended.
OSI
OSI has entered into individual Stockholders Agreements and
Registration Rights Agreements with certain of its stockholders. The following
table identifies the stockholder parties to, and the effective dates of, such
agreements. Where no date is shown with respect to a particular Stockholders
Agreement or Registration Rights Agreement, no such agreement has been entered
into between OSI and the stockholder parties in the corresponding column.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
DATE OF REGISTRATION DATE OF STOCKHOLDERS
NAME OF STOCKHOLDER PARTIES RIGHTS AGREEMENT AGREEMENT
----------------------------------------------------------------------------------------
<S> <C> <C>
Charles A. Armbrust and Diana Armbrust 12/23/96 12/23/96
----------------------------------------------------------------------------------------
David E. Althoff and Kathleen Althoff 12/23/96 12/23/96
----------------------------------------------------------------------------------------
The Bovaird Supply Company 8/31/95 8/31/95
----------------------------------------------------------------------------------------
Randall E. Carlson, Jr. 12/23/96
----------------------------------------------------------------------------------------
James N. Cauble and Barbara B. Cauble 1/1/98 1/1/98
----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 247
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
DATE OF REGISTRATION DATE OF STOCKHOLDERS
NAME OF STOCKHOLDER PARTIES RIGHTS AGREEMENT AGREEMENT
----------------------------------------------------------------------------------------
<S> <C> <C>
Chase Manhattan Investment Holdings, 7/31/95 7/31/95
Inc.
----------------------------------------------------------------------------------------
SCF-III, L.P. 7/31/95 7/31/95
----------------------------------------------------------------------------------------
Alphonse J. Cooper and Marjorie B. 8/20/97
Cooper
----------------------------------------------------------------------------------------
Lawrence A. Decker and Patricia A. 8/12/97
Decker
----------------------------------------------------------------------------------------
Dominion Partners 8/?/97
----------------------------------------------------------------------------------------
Gerald R. Douglas and Karen K. Douglas 8/25/97
----------------------------------------------------------------------------------------
J. Kelly Elliott and Bobbie N. Elliott 12/23/96 12/23/96
----------------------------------------------------------------------------------------
Donald L. Frankel and Donna J. Frankel 12/23/96 12/23/96
----------------------------------------------------------------------------------------
G.C. Frazier and Susan Frazier 12/23/96 12/23/96
----------------------------------------------------------------------------------------
The Freeman Organization, Inc. 11/10/97
----------------------------------------------------------------------------------------
Don K. Gregory and Claire Gregory 12/3/97 12/3/97
----------------------------------------------------------------------------------------
T.L. Gregory and Genevieve Gregory 12/3/97 12/3/97
----------------------------------------------------------------------------------------
T.L. Gregory, Trustee for the Betty 12/3/97 12/3/97
Sue Gregory Trust
----------------------------------------------------------------------------------------
Howard Hughes and Becky Hughes 12/23/96 12/23/96
----------------------------------------------------------------------------------------
Huntfield Trust Limited 2/3/98 2/3/98
----------------------------------------------------------------------------------------
Michael Kief 2/28/98 2/27/98
----------------------------------------------------------------------------------------
Werner Kief and Jimmie Kief 2/28/98 2/27/98
----------------------------------------------------------------------------------------
Klaper (UK) Limited 4/1/98 4/1/98
----------------------------------------------------------------------------------------
Dan LaFollette 8/14/97
----------------------------------------------------------------------------------------
Peter Little and Nancy Little 8/?/97
----------------------------------------------------------------------------------------
Keith A. McGee and Maryanne R. McGee 11/10/98
----------------------------------------------------------------------------------------
Menikoff Family Partnership, Ltd. 4/14/97 4/14/97
----------------------------------------------------------------------------------------
Harvey O. Mohr and Vera L. Mohr 8/29/97
----------------------------------------------------------------------------------------
Franco Nanni and Alole Nanni 8/12/97
----------------------------------------------------------------------------------------
Michael Newell and Kathleen G. Newell 2/28/98 2/27/98
----------------------------------------------------------------------------------------
Larry S. Richards 12/23/96
----------------------------------------------------------------------------------------
Richard Schultz and Susan Schultz 2/28/98 2/27/98
----------------------------------------------------------------------------------------
Rush Selden and Lisa Selden 8/20/97
----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 248
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
DATE OF REGISTRATION DATE OF STOCKHOLDERS
NAME OF STOCKHOLDER PARTIES RIGHTS AGREEMENT AGREEMENT
----------------------------------------------------------------------------------------
<S> <C> <C>
W. Stansbury and Sandra L. Stansbury 12/23/96 12/23/96
----------------------------------------------------------------------------------------
Dran D. Tarlton and Mary Ann Tarlton 12/31/97
----------------------------------------------------------------------------------------
Jerry Van Pelt 12/23/96
----------------------------------------------------------------------------------------
Waldrop Investment Co. 10/26/98
----------------------------------------------------------------------------------------
Stephen A. Wells and Judy B. Wells 12/23/96 12/23/96
----------------------------------------------------------------------------------------
Jeffrey L. Whipple and Mary W. Whipple 8/24/97
----------------------------------------------------------------------------------------
Carol M. Wittman 8/15/97
----------------------------------------------------------------------------------------
Robert H. Wittman and Teresa T. Whitman 8/30/97
----------------------------------------------------------------------------------------
Rosalie Wittman 8/30/97
----------------------------------------------------------------------------------------
James D. Woods and Jeanette F. Woods 12/23/96 6/13/97
----------------------------------------------------------------------------------------
Jerry W. Woods and Gloria M. Woods 8/15/97
----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 249
SCHEDULE 11.14
INDEBTEDNESS AND PREFERRED STOCK TO BE RETIRED
See attached Appendix 1 to this Schedule 11.14.
<PAGE> 250
OIL STATES INTERNATIONAL, INC.
SUMMARY DEBT SCHEDULE
(US DOLLARS IN
MILLIONS)
<TABLE>
<CAPTION>
COMPANY / SECURITY DESCRIPTION
------------------------------------------------ -------------------------------------------------------------------------- -
DEBT TO BE REPAID IN THE OFFERING
OSI
Subordinated Debt:
<S> <C>
SMATCO Note is no longer outstanding as of 5/31/00. It has already been repaid.
SMATCO Subordinated Promissory Notes $7,000,000 of principal split into five separate notes to five former
owners of SMATCO. The notes all have a fixed interest rate of 8.0% and
in aggregate have principal payments of $2 million, $2 million and $3
million on July 31st of 2000, 2001 and 2002, respectively. Held by R.
Thompson, Sr., R. Thompson, Jr., T. Thompson, Th. Thompson, and John
Ledet (none appear to be common shareholders of OSI).
SVI Subordinated Promissory Notes $7,000,000 of notes held by the former owners of Subsea Ventures. The
note has a fixed interest rate of 8.0% and a staggered redemption
starting on 8/31/00 with all of principal to be repaid by 2/23/03. Held
by Werner Kief*, Richard Schultz*, John Newell, and Michael Kief* (*
indicates OSI shareholders).
Hunting Subordinated Promissory Notes Three notes which are similarly structured with a fixed interest rate of
8.50% as of 1/1/00. The principal balances of the notes are $10.0
million, $500k and $449,248 and are all due on 5/17/01.
CONEMSCO Shareholder Note $25,000,000 of principal as a result of dividend to the shareholders of
CONEMSCO on 12/31/98. The note has non-cash interest payments accruing
at a fixed rate of 6.0%. Principal and interest are due on 12/31/05. If
SCF-III, L.P. and OSI agree prior to the Effective Time, all or a portion
of the principal and interest of this note shall remain outstanding until
such date as agreed to by SCF-III, L.P. and OSI (but not later than
12/31/05).
Preferred Stock:
LTV Series Cumulative 143,000 shares of Series A Cumulative Preferred Stock with (i) a
Preferred Stock liquidation value of $100 per share plus accrued dividends and (ii) a
fixed dividend rate of 7.0%. Mandatorily redeemable on 9/15/05 and
optionally redeemable on or after 9/15/00.
Hydrotech Series B Exchangeable 38,500 shares of Series A Exchange Cumulative Preferred Stock with a
Preferred Stock liquidation value of $100 per share plus accrued dividends. The
preferred stock has a fixed dividend rate of 3.1% and is mandatorily
redeemable on 7/15/04. The preferred stock is exchangeable into CONEMSCO
common stock at $12.80 per share (Pre-IPO reverse split). The series of
preferred stock is held by 18 former owners of Hydrotech.
Hydrotech Series A Exchangeable 20,000 shares of Series A Exchange Cumulative Preferred Stock with a
Preferred Stock liquidation value of $100 per share plus accrued dividends. The
preferred stock has a fixed dividend rate of 7.0% and is mandatorily
redeemable on 7/15/02. The preferred stock is exchangeable into CONEMSCO
common stock at $15 + 80% * (FMV $15) (Pre-IPO reverse split). The
series of preferred stock is held by 18 former owners of Hydrotech. At
the time of the transaction, 45,000 shares were issued. However, in late
1998, 25,000 shares were repurchased/revoked as a reduction in purchase
price due to Hydrotech's missing earnings estimates.
SMATCO Series A Convertible Cumulative 16,250 shares of Series A Convertible Cumulative Preferred Stock with a
Preferred Stock liquidation value of $100 per share plus accrued dividends. The
preferred stock is NOT redeemable but is convertible into CONEMSCO common
stock at $15.00 per share (Pre-IPO reverse split). Mandatory conversion
on 8/1/02. This preferred stock is held by 5 former SMATCO owners. OSI
currently anticipates that the preferred stock will be redeemed or
purchased immediately prior to the Effective Time. However, OSI reserves
the right not to redeem or purchase such shares prior to the Effective
Time. Further, OSI reserves the right not to redeem such shares in
connection with the OSI Initial Public Offering.
TOTAL OSI
<CAPTION>
PLANNED NET BALANCE
BALANCE AS OF REPAYMENT AFTER
COMPANY / SECURITY 3/31/00 WITH PROCEEDS PROCEEDS
------------------------------------------------ ------------- ------------- -------------
<S> <C> <C> <C>
DEBT TO BE REPAID IN THE OFFERING
OSI
Subordinated Debt:
SMATCO $ 0.1 $ (0.1) $ 0.0
SMATCO Subordinated Promissory Notes 7.0 (7.0) 0.0
SVI Subordinated Promissory Notes 7.0 (7.0) 0.0
Hunting Subordinated Promissory Notes 10.9 (10.9) 0.0
CONEMSCO Shareholder Note 25.0 (25.0) 0.0
Preferred Stock:
LTV Series Cumulative 14.3 (14.3) 0.0
Preferred Stock
Hydrotech Series B Exchangeable 3.9 (3.9) 0.0
Preferred Stock
Hydrotech Series A Exchangeable 2.0 (2.0) 0.0
Preferred Stock
SMATCO Series A Convertible Cumulative 1.6 (1.6) 0.0
Preferred Stock
---------- ---------- ----------
TOTAL OSI $ 71.8 $ (71.8) $ 0.0
========== ========== ==========
</TABLE>
i
<PAGE> 251
<TABLE>
<S> <C>
SOONER
Subordinated Debt:
ZOC Senior Promissory Note Senior Subordinated Promissory Note with a interest rate equal to
Sooner's bank facility interest rate plus 0.25% (approximately
8.6% at 5/31/00). Balance of the principal is due over the next
twelve months. Held entirely by Zarrow Operating Company ("ZOC").
SCF Junior Promissory Note Junior Subordinated Promissory Note with a fixed interest rate of
6.0%. Held entirely by SCF-IV and is due on 6/30/08.
ZOC Junior Promissory Note Junior Subordinated Promissory Note with a fixed interest rate of
6.0%. Held entirely by ZOC and is due on 6/30/08.
Preferred Stock:
TOTAL SOONER
HWC
Subordinated Debt:
Preferred Stock:
TOTAL HWC
PTI
Subordinated Debt:
Preferred Stock:
TOTAL PTI
TOTAL PREFERRED STOCK AND SUB. DEBT
TO BE REPAID IN THE OFFERING USE OF PROCEEDS
PREFERRED STOCK CONVERTED
HWC
(1) Series A Preferred Stock 2,145 shares of Series A Cumulative Convertible Preferred Stock,
with (i) a liquidation value of $1,000 plus accrued dividends
and (ii) a 6.5% fixed dividend rate. Mandatorily redeemable in
2004
(1) Series B Preferred Stock 2,717 shares of Series B Cumulative Convertible Preferred Stock
with (i) a liquidation value of $1,000 plus accrued dividends and
(ii) a 6.5% fixed dividend rate. Mandatorily redeemable in 2004
Conversion of HWC Preferred Stock\
TOTAL PREFERRED STOCK AND SUB. DEBT TO BE
REPAID/CONVERTED IN THE OFFERING
<S> <C> <C> <C>
SOONER
Subordinated Debt:
ZOC Senior Promissory Note $ 5.3 $ (5.3) $ 0.0
SCF Junior Promissory Note 23.3 (23.3) 0.0
ZOC Junior Promissory Note 2.4 (2.4) 0.0
Preferred Stock: 0.0 0.0 0.0
---------- ---------- ----------
TOTAL SOONER $ 31.0 $ (31.0) $ 0.0
========== ========== ==========
HWC
Subordinated Debt: $ 0.0 $ 0.0 $ 0.0
Preferred Stock: 0.0 0.0 0.0
---------- ---------- ----------
TOTAL HWC $ 0.0 $ 0.0 $ 0.0
========== ========== ==========
PTI
Subordinated Debt: $ 0.0 $ 0.0 $ 0.0
Preferred Stock: 0.0 0.0 0.0
---------- ---------- ----------
TOTAL PTI $ 0.0 $ 0.0 $ 0.0
========== ========== ==========
TOTAL PREFERRED STOCK AND SUB. DEBT
TO BE REPAID IN THE OFFERING USE OF PROCEEDS $ 102.8 $ (102.8) $ 0.0
========== ========== ==========
PREFERRED STOCK CONVERTED
HWC
(1) Series A Preferred Stock $ 2.3 $ (2.3) $ 0.0
(1) Series B Preferred Stock 2.8 (2.8) 0.0
---------- ---------- ----------
Conversion of HWC Preferred Stock\ $ 5.1 $ (5.1) $ 0.0
========== ========== ==========
TOTAL PREFERRED STOCK AND SUB. DEBT TO BE
REPAID/CONVERTED IN THE OFFERING $ 107.9 $ (107.9) $ 0.0
========== ========== ==========
</TABLE>
----------
(1) HWC preferred stock is not being refinanced, but converted. As a
result, it is not a use of proceeds, but will not be outstanding
after the IPO.
ii
