UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
CABOT OIL & GAS CORPORATION
(Name of Issuer)
CLASS A COMMON STOCK
(Title of Class of Securities)
127097 10 3
(CUSIP Number)
Marion V. Larson, Riddell, Williams, Bullitt & Walkinshaw
1001 Fourth Avenue Plaza, Suite 4400, Seattle, WA 98154 (206) 624-3600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 2 ,1994
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box _____.
Check the following box if a fee is being paid with the statement XX. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
CUSIP Number 127097 10 3 Page 2 of 10
1. NAME OF REPORTING PERSON S.S. OR I.R.S.
IDENTIFICATION NO OF ABOVE PERSON
WASHINGTON ENERGY COMPANY
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ___
(b) ___
3. SEC USE ONLY
4. SOURCE OF FUNDS
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) ___
6. CITIZENSHIP OR PLACE OF ORGANIZATION
WASHINGTON
NUMBER 0F SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER
4,105,174
8. SHARED VOTING POWER
9. SOLE DISPOSITIVE POWER
4,105,174
10. SHARED DISPOSITIVE POWER
11. AGGREGATE AMOUNT BENEFICIALLY OWNED
4,105,174
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* ___
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6%
14. TYPE OF REPORTING PERSON*
CO
CUSIP Number 127097 10 3 Page 3 of 10
Item 1. Security and Issuer.
This Schedule 13D relates to the Class A Common Stock, $.10 par
value per share (the "Class A Common Stock"), of Cabot Oil & Gas
Corporation, a Delaware corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 15375 Memorial Drive,
Houston, Texas 77079.
Item 2. Identity and Background.
This Schedule 13D is filed by Washington Energy Company, a
Washington corporation (the "Reporting Person"). The Reporting Person is a
holding company whose primary subsidiaries are engaged in the retail
distribution of natural gas and other energy-related activities. The
address of the principal business and the principal office of the Reporting
Person is 815 Mercer Street, Seattle, Washington 98109.
On February 25, 1994, the Issuer, the Reporting Person, COG
Acquisition Company, a Delaware corporation which is a wholly-owned
subsidiary of the Issuer ("COGAC"), and Washington Energy Resources
Company, a Washington corporation which was then a wholly-owned subsidiary
of the Reporting Person ("WERCO"), entered into an Agreement of Merger,
which was subsequently amended on May 2, 1994, by that certain Amendment
No. 1 to Agreement of Merger (said agreement, as so amended, will be
referred to below as the "Agreement of Merger"). Under the Agreement of
Merger, the parties agreed to consummate a statutory merger (the "Merger")
of WERCO into COGAC. On may 2, 1994, the Merger was consummated and, as
consideration therefor, the Reporting Person acquired 2,133,000 shares of
Class A Common Stock and 1,134,000 shares of the 6% Convertible Redeemable
Preferred Stock of the Issuer (the "Preferred Stock"), which shares of
Preferred Stock are convertible into 1,972,174 shares of Class A Common
Stock (the shares of Class A Common Stock and Preferred Stock acquired
pursuant to the Merger will be referred to below as the "Merger Shares").
The following individuals (the "Affiliated Persons"), each of
whom is a United States citizen, hold the indicated positions with the
Reporting Person:
Name Position with Reporting Person
William P. Vititoe Chairman of the Board, Chief
Executive Officer, President and
Chief Operating Officer
Robert J. Tomlinson Senior Vice President - Legal and
Administration
James P. Torgerson Senior Vice President - Finance
Planning & Development and Chief
Financial Officer
Karl R. Karzmar Vice President, Corporate
Controller and Assistant Treasurer
CUSIP Number 127097 10 3 Page 4 of 10
Name Position with Reporting Person
Virginia Anderson Director
Robert F. Bailey Director
Donald J. Covey Director
John W. Creighton, Jr. Director
Robert L. Dryden Director
Tomio Moriguchi Director
Sally G. Narodick Director
The principal occupations of Messrs. Vititoe, Tomlinson,
Torgerson and Karzmar are the positions listed in the foregoing table, and
the business address for each of them is the principal office of the
Reporting Person. The other Affiliated Persons are outside directors of
the Reporting Person having the following principal occupations:
Ms. Anderson is the Director of the Seattle Center (305 Harrison
Street, Seattle, Washington 98109), a large civic center owned by the City
of Seattle.
Mr. Bailey is the President of Trans Republic Energy, L.P., an
oil and gas investment company, Mabelle, Inc., an oil and gas production
company, and Phoenix Processing Systems, Inc., a natural gas processing and
oil and gas investment company (P.O. Box 3595, Midland, Texas 79702).
Mr. Covey is the Chairman of the Board of UNICO Properties, Inc.
(1010 Unigard Financial Center, 1215 Fourth Avenue, Seattle, Washington
98161), a property management company.
Mr. Creighton is the President of Weyerhaeuser Company (Tacoma,
Washington 98477), a forest products company.
Mr. Dryden is the Executive Vice President of Boeing Commercial
Airplane Group (P.O. Box 3707, Seattle, Washington 98124-2207), an aircraft
manufacturer.
Mr. Moriguchi is the President of Uwajimaya, Inc. (P.O. Box 3003,
Seattle, Washington 98114), a food and merchandise retailer, distributor
and exporter.
Ms. Narodick is the Chairman and Chief Executive Officer of
Edmark Corporation (P.O. Box 3218, Redmond, Washington 98073-3218), a
publisher of print and software educational materials.
CUSIP Number 127097 10 3 Page 5 of 10
During the last five years, neither the Reporting Person nor, to
the best of its knowledge, any of the Affiliated Persons has been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
During the last five years, neither the Report Person nor, to the
best of its knowledge, any of the Affiliated Persons has at any time been
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws, or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The shares of Class A Common Stock covered by this Schedule 13D
are 2,133,000 shares of Class A Common Stock held by the Reporting Person
and 1,972,174 shares of Class A Common Stock issuable upon conversion of
1,134,000 shares of Preferred Stock held by the Reporting Person. All of
such shares were acquired by the Reporting Person upon consummation of the
Merger in exchange for all of the outstanding capital stock of WERCO. None
of such capital stock was borrowed or otherwise obtained for the purpose of
acquiring, holding, trading or voting the shares of Class A Common Stock
covered by this Schedule 13D.
Item 4. Purpose of Transaction.
The Reporting Person acquired the Merger Shares for investment
purposes, and the Reporting Person has no intention at the present time of
increasing or decreasing its level of ownership of Class A Common Stock or
any other securities of the Issuer. However, subject to compliance with
applicable laws and certain contractual obligations described below, the
Reporting Person may at any time decide to increase or decrease its equity
position in the Issuer by Purchasing additional shares of Class A Common
Stock or other securities of the Issuer or by selling some or all of the
Merger Shares. Such purchases or sales could occur in the open market or
through privately negotiated transactions.
Pursuant to the terms of the Agreement of Merger and other
documents entered into in connection therewith, the Reporting Person and
the Issuer have certain contractual rights and obligation that relate to or
affect the Issuer or the shares of Class A Common Stock covered by this
Schedule 13D, including but not limited to certain rights that will result
in an increase in the size of the Board of Directors of the Issuer and the
appointment of two nominees of the Reporting Person as members of the Board
of Directors and certain of its committees. These rights are described in
Item 6 of this Schedule 13D.
Except as set forth above or as described in Item 6 of this
Schedule 13D, the Reporting Person does not have any current plans or
proposals that relate to or would result in any of the actions described in
paragraphs (a) through (j) of Item 4 of Schedule 13D.
CUSIP Number 127097 10 3 Page 6 of 10
Item 5. Interest in Securities of the Issuer.
(a) The Reporting Person is the beneficial owner of 4,105,174
shares of Class A Common Stock, consisting of 2,133,000 shares of Class A
Common Stock held directly by the Reporting Person and 1,972,174 shares of
Class A Common Stock issuable upon conversion of 1,134,000 shares of
Preferred Stock held directly by the Reporting Person. Such 4,105,174
shares of Class A Common Stock represent, based on information provided to
the Reporting Person by the Issuer, approximately 16.6% of the sum of (i)
the total number of shares of Class A Common Stock outstanding following
consummation of the merger of WERCO into COGAC pursuant to the Agreement of
Merger, and (ii) the 1,972,174 shares of Class A Common Stock issuable upon
conversion of the 1,134,000 shares of Preferred Stock held by the Reporting
Person. In addition, Mr. Robert F. Bailey, a director of the Reporting
Person, is the beneficial owner of 500 shares of Class A Common Stock.
Except for such shares, neither the Reporting Person nor, to the best of
its knowledge, any of the Affiliated Persons beneficially owns any shares
of Class A Common Stock.
(b) The Reporting Person has the sole power to vote and to
direct the vote of, and the sole power to dispose of and to direct the
disposition of, all of the shares of Class A Common Stock covered by this
Schedule 13D.
(c) Except for the acquisition of shares of Class A Common Stock
and the Preferred Stock pursuant to the Agreement of Merger, neither the
Reporting Person nor, to the best of its knowledge, any of the Affiliated
Persons has within the past sixty days engaged in any transaction in the
Class A Common Stock.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Pursuant to the terms of the Agreement of Merger and other
documents entered into in connection therewith, including but not limited
to the Registration Rights Agreement referred to therein and a certain
Standstill and Right of First Refusal Agreement among Issuer, COGAC and the
Reporting Person entered into concurrently with the Agreement of Merger,
the Reporting Person, the Issuer and COGAC have certain contractual rights
and obligations that relate to or affect the shares of Class A Common Stock
covered by this Schedule 13D. Such rights and obligations include but are
not limited to the following:
CUSIP Number 127097 10 3 Page 7 of 10
(a) the right of the Reporting Person to have William P. Vititoe
and one other person designated by the Reporting Person (the "Reporting
Person Nominees") appointed as directors of the Issuer (the Issuer has
agreed to expand its Board of Directors and make such appointments as soon
as practicable);
(b) the right of the Reporting Person to have at least one of
the Reporting Person Nominees appointed to each of the Audit Committee and
the Compensation Committee of the Issuer's Board of Directors;
(c) the right of the Reporting Person under certain
circumstances to require registration by the Issuer under the Securities
Act of 1933, as amended, of some or all of the shares of Class A Common
Stock now held, or issuable upon conversion of the shares of Preferred
Stock now held, by the Reporting Person;
(d) the obligation of the Reporting Person generally to refrain
from acquiring or seeking to acquire, without the prior approval of the
Issuer's Board of Directors, any of the assets or businesses of the Issuer
or any additional securities of the Issuer, other than such number of
shares of Class A Common Stock that will result in the Reporting Person
being the owner of 20% of voting stock of the Issuer;
(e) the obligation of the Reporting Person generally to refrain
from transferring any portion of the Merger Shares to any person if, as a
result thereof, the person would hold more than 5% of the outstanding
voting power of the Issuer;
(f) the obligation of the Reporting Person generally to refrain
from (i) making or participating in any proxy solicitation with respect to
any securities of the Issuer; (ii) soliciting or seeking to effect any form
of business combination or other extraordinary transaction involving the
Issuer; (iii) depositing any voting securities of the Issuer in a voting
trust; (iv) soliciting any offer by any person or group to acquire any
voting securities of the Issuer held by the Reporting Person; (v) seeking
or proposing to influence or control the management of the Issuer other
than by exercise of its voting rights; (vi) acquiring control of any entity
that owns more than 1% of the then outstanding shares of Class A Common
Stock; and (vii) acquiring control of any entity that owns more than 1% of
the then outstanding shares of any other class of voting securities of the
Issuer; and
(g) the obligation of the Reporting Person, if it proposes to
sell any or all of the shares of Preferred Stock acquired pursuant to the
Merger, generally to offer to sell such shares to the Issuer prior to
consummating the proposed sale.
A copy of each of the Agreement of Merger and the Registration Rights
Agreement and the Standstill and Rights of First Refusal Agreement is
included as an exhibit to this Schedule 13D, and the terms and conditions
thereof are incorporated herein by this reference thereto.
CUSIP Number 127097 10 3 Page 8 of 10
Item 7. Material to be Filed as Exhibits.
The following are included as exhibits to this Schedule 13D:
(a) Agreement of Merger.
(b) Amendment No. 1 to Agreement of Merger.
(c) Registration Rights Agreement.
(d) Standstill and Right of First Refusal Agreement.
CUSIP Number 127097 10 3 Page 9 of 10
Signature
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this Schedule 13D
is true, complete and correct.
Date: May 11, 1994
WASHINGTON ENERGY COMPANY
BY /s/ James P. Torgerson
James P. Torgerson, Senior
Vice President - Financial,
Planning & Development and
Chief Financial Officer
CUSIP Number 127097 10 3 Page 10 of 10
EXHIBIT INDEX
Exhibit
10.1 Agreement of Merger (incorporated by reference from Exhibit 10.13
to the Issuer's Annual Report on Form 10-K for its fiscal year
ended December 31, 1993
*10.2 Amendment No. 1 to Agreement of Merger
*10.3 Registration Rights Agreement
*10.4 Standstill and Right of First Refusal Agreement
* Filed herewith
AMENDMENT NO. 1
TO
AGREEMENT OF MERGER
THIS AMENDMENT NO. 1 TO AGREEMENT OF MERGER, dated May 2, 1994, by and
among Cabot Oil & Gas Corporation, a Delaware corporation, COG Acquisition
Company, a Delaware corporation, Washington Energy Resources Company, a
Washington corporation, and Washington Energy Company, a Washington
corporation.
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into an Agreement of Merger
dated as of February 25, 1994 (the "Merger Agreement");
WHEREAS, the parties hereto wish to amend the Merger Agreement as set
forth in this Amendment No. 1;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
Section i. The definitions of "Intercompany Debt" and
"Title Defect Threshold Amount" contained in
Article 1 of the Merger Agreement are amended to
read in their entirety as follows:
" Intercompany Debt shall mean the indebtedness of WERCO to
WECO in the amount of $63,661,000.
Title Defect Threshold Amount shall mean zero."
Section ii. The first sentence of Section 8.3 of the
Merger Agreement is amended to read in its
entirety as follows:
"WECO shall have the right within ninety (90) days after the
Closing Date to furnish COGC and Merger Sub with a written list
of specified Interest Additions claimed by WECO, specifying in
reasonable detail the basis of each such claimed Interest
Addition, the Lease, Well or Unit that each such claimed Interest
Addition affects and the Interest Addition Amount estimated by
WECO for such Interest Addition."
Section iii. Section 8.11 of the Merger Agreement is amended
to read in its entirety as follows:
"8.11 Environmental Defects. COGC's and Merger Sub's
exclusive remedy for any Environmental Defect shall be as
provided in this Section 8.11. If within three (3) years after
the Effective Time COGC notifies WECO in writing of facts,
conditions and circumstances which constitute an Environmental
Defect with respect to the Properties or the Business, and such
Environmental Defect results in COGC and Merger Sub having
aggregate Losses from Environmental Defects in excess of one
million dollars ($1,000,000), then, with respect to such excess
only and subject to the further limitations set forth in this
Section 8.11, WECO shall indemnify COGC and Merger Sub. WECO's
liability under this Section 8.11 shall be limited to the first
$10,000,000 in excess of $1,000,000 aggregate Losses, plus fifty
percent (50%) of Losses in excess of such $10,000,000 up to
$20,000,000 in excess of $1,000,000 aggregate Losses; thus,
WECO's liability under this Section 8.11 shall in no event exceed
$15,000,000. Notwithstanding anything to the contrary contained
in this Agreement, WECO shall not indemnify COGC for any Losses
from Environmental Defects relating to the matters set forth on
Schedule 8.11."
Section iv. The reference to "Title VIII" in Section 9.15(j)
of the Merger Agreement is amended to refer to
"Title VII" instead.
Section v. Section 15.3 of the Merger Agreement is amended
to read in its entirety as follows:
"15.3 Entire Agreement. This Agreement, including the
schedules and exhibits hereto, and the letter agreements executed
by WECO and COGC on May 2, 1994, contain the entire agreement
between the parties with respect to the subject matter hereof,
and there are no agreements, understandings, representations or
warranties between the parties other than those set forth or
referred to herein."
Section vi. A new Section 2.6 is added to the Merger
Agreement, which will read in its entirety as
follows:
"2.6 Post-Closing Adjustment.
(a) Within 45 days after the Closing Date, WECO shall
provide to COGC a detailed accounting (the "Closing Statement")
of any amounts advanced by WECO to WERCO after March 31, 1994 and
prior to the Closing Date for expenditures by WERCO and customary
administrative and financial services provided by WECO to WERCO
in the ordinary course of its Business consistent with past
practice (the "Advance Amount").
(b) Upon receipt of the Closing Statement, COGC shall have
the right to inspect the work papers supporting the Closing
Statement. If COGC does not object to the Advance Amount as
proposed by WECO on the Closing Statement, by written notice of
objection delivered to WECO within 30 days after COGC's receipt
of the Closing Statement, then the Advance Amount set forth on
the Closing Statement shall be deemed conclusive and binding on
the parties. If COGC does so object to the Advance Amount set
forth on the Closing Statement, COGC shall set forth its
objections in reasonable detail and COGC and WECO shall then
promptly endeavor to resolve the matters in dispute and agree
upon the proper amount of the Advance Amount. If a written
agreement determining the Advance Amount has not been reached
within 30 days after WECO's receipt of COGC's notice of objection
to WECO's determination of the Advance Amount, then either party
may, by notice to the other, submit for determination to a
mutually agreed upon arbitrator (the "Arbitrator") the question
of what adjustments, if any, must be made in the Closing
Statement for the correct determination of the Advance Amount.
Any such determination made by the Arbitrator shall be conclusive
and binding on the parties. Nothing herein shall be construed to
(i) authorize or permit the Arbitrator to determine any question
or matter under or in connection with this Agreement, except the
determination of what adjustments, if any, must be made in the
Closing Statement for the correct determination of the Advance
Amount or (ii) require the Arbitrator to follow the rules or
procedures of the American Arbitration Association. The
reasonable compensation (including reimbursement of reasonable
costs and expenses) of the Arbitrator shall be borne equally by
the WECO and COGC.
(c) Within five days after the final determination of the
Advance Amount pursuant to Section 2.6(b), an adjusting payment
shall be made by COGC to WECO."
Section vii. A new Section 9.24 is added to the Merger
Agreement, which will read in its entirety as
follows:
"9.24 Intercompany Indebtedness. Notwithstanding anything
contained in this Agreement to the contrary, COGC shall have no
liability for any indebtedness (other than indemnification
arrangements) of WERCO to WECO, other than the Intercompany Debt
or the Advance Amount (as described in Section 2.6), and WECO
hereby waives any claim it may otherwise have against COGC or the
Surviving Corporation for the payment of any such indebtedness
and, for the consideration herein contained, forgives any such
indebtedness."
Section viii. A new Section 9.25 is added to the Merger
Agreement, which will read in its entirety as
follows:
"9.25 Assignment of Cause of Action. The parties hereto
agree that immediately prior to Closing, WERCO shall be deemed to
have assigned to WECO all right, title and interest of WERCO or
WEEX in and to the cause of action styled Washington Energy
Exploration, Inc. v. Amoco, U.S. District Court for Colorado, No.
94-S-298, and, in connection with such assignment, WECO hereby
indemnifies and holds harmless COGC and the Surviving Corporation
from any and all loss thereto which may arise at any time on
account of such cause of action or the matters which are the
subject thereof or on account of any counterclaim or cross-claim
asserted therein. Within ten days after the Closing Date, WECO
shall reimburse COGC for any costs and expenses of WERCO related
to such cause of action that are included in the Intercompany
Debt. Notwithstanding the provisions of Section 13.1, the
agreements contained in this Section 9.25 shall survive the
Closing without limitation."
Section ix. Schedule 5.13 is amended to read in its entirety
as attached hereto. Schedule 8.11 is attached
hereto.
Section x. This Amendment shall be governed by and
construed and enforced in accordance with the laws
of the State of Delaware without regard to
principles of conflict of laws.
Section xi. This Amendment may be executed in one or more
counterparts, all of which shall be considered one
and the same agreement, and shall become effective
when one or more counterparts have been signed by
each of the parties and delivered to the other
parties.
IN WITNESS WHEREOF, this Amendment has been signed by or on behalf of
each of the parties as of the date first above written.
Washington Energy Resources Company
By: /s/ Keith E. Anderson, President
Keith E. Anderson, President
Washington Energy Company
By: /s/ Keith E. Anderson, President
Keith E. Anderson, Vice President-
Natural Resources
Cabot Oil & Gas Corporation
By: /s/ John U. Clarke
John U. Clarke,
Executive Vice President
COG Acquisition Company
By: /s/ John U. Clarke
John U. Clarke,
Executive Vice President
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement ("Agreement") dated as of ____________,
1994 among Cabot Oil & Gas Corporation, a Delaware corporation (the
"Company"), Washington Energy Company, a Washington corporation ("WECO"),
and any other persons who become parties hereto in accordance herewith.
W I T N E S S E T H:
WHEREAS, the Company and WECO are parties to that certain
Agreement of Merger (the "Agreement of Merger") dated as of February ___,
1994 pursuant to which, among other things, Washington Energy Resources
Company, a Washington corporation and a wholly owned subsidiary of WECO
("WERCO"), is merging into a wholly owned subsidiary of the Company;
WHEREAS, pursuant to the Agreement of Merger the shares of common
stock of WERCO are being changed into the right to receive, among other
things, 2,133,000 shares of Common Stock and 1,134,000 shares of
Convertible Preferred Stock;
WHEREAS, as an inducement to enter into the Agreement of Merger
and to consummate the transactions contemplated thereby, the Company agreed
to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
I. Definitions.
A. Terms used but not defined in this Agreement have the meanings
set forth in the Agreement of Merger, unless the context otherwise
requires. In addition, the following terms have the indicated meanings,
unless the context otherwise requires:
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the class A common stock, par value $0.10 per
share, of the Company.
"Company Securities" means the shares of Merger Common Stock, the
shares of Convertible Preferred Stock and any shares of Converted Common
Stock.
"Converted Common Stock" means the shares of Common Stock issued
pursuant to the conversion of the Convertible Preferred Stock.
"Convertible Preferred Stock" means the 6% Convertible Redeemable
Preferred Stock, par value $.10 per share, of the Company received by WECO
pursuant to the Agreement of Merger.
"Disposition" means any sale, transfer, pledge, assignment,
hypothecation, mortgage or other encumbrance, or any other disposition of
Company Securities whatsoever, whether voluntary or involuntary.
"Holder" means WECO or any transferee thereof permitted hereby if such
transferee (i) is designated a Holder by WECO and (ii) has executed a
counterpart hereof at the time of the transfer to such transferee, unless
the Registrable Securities held by such person are acquired in (a) a public
distribution pursuant to a registration statement under the Securities Act
or (b) transactions exempt from registration under the Securities Act where
securities sold in such transaction may be resold without subsequent
registration under the Securities Act.
"Merger Common Stock" means the shares of Common Stock received by
WECO pursuant to the Agreement of Merger.
"Registrable Securities" means the Company Securities, provided that
with respect to Section 3, Registrable Securities does not include the
Convertible Preferred Stock.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a registration statement.
B. Registrable Securities. Any Registrable Security will cease to
be a Registrable Security when (i) a registration statement covering such
Registrable Security has been declared effective by the Commission and such
Registrable Security has been disposed of pursuant to such effective
registration statement, (ii) such Registrable Security is distributed
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, (iii) such Registrable Security may be publicly resold
without registration under the Securities Act (and without limitations as
to volume or manner of sale or both) or (iv) such Registrable Security is
no longer held by a Holder.
II. Demand Registration.
A. At any time until the first time at which all Holders are legally
permitted to sell publicly all Registrable Securities owned by the Holders
without registration under the Securities Act (and without limitations as
to volume or manner of sale or both), any Holder or Holders of an aggregate
of at least 25% of the Registrable Securities (on an as-converted basis)
may make a written request for registration under the Securities Act of at
least (i) 200,000 shares of Convertible Preferred Stock constituting
Registrable Securities and/or (ii) 400,000 shares of Common Stock
(including Converted Common Stock) constituting Registrable Securities, in
either case for sale in an underwritten public offering (a "Demand
Registration"); provided, that the Company need effect only two Demand
Registrations, one of which must be for Converted Common Stock ("Converted
Stock Demand Registration"). Each such request shall specify the aggregate
number of shares of, and the class of, the Registrable Securities proposed
to be sold. Within 10 days after receipt of such request, the Company will
give written notice of such registration request to all other Holders of
Registrable Securities and include in such registration all Registrable
Securities with respect to which the Company has received written requests
for inclusion therein within 15 days after the giving of such notice. Each
such request will also specify the aggregate number of shares of, and class
of, Registrable Securities to be registered.
B. A registration will not count as a Demand Registration until it
becomes effective. Notwithstanding the foregoing, in the event the Company
has filed a registration statement pursuant to Section 2(a) hereof and the
Holders elect to withdraw from such registration prior to effectiveness of
such registration statement (such election being effective for all Holders
upon the vote of Holders of a majority of the Registrable Securities (on an
a converted basis) unless such Holders elect to withdraw because of a
material adverse change in the business, prospects, properties or condition
(financial or otherwise) of the Company, then such registration shall be
treated as a registration effected by the Company for purposes of
Section 2(a) hereof.
C. The Holders shall have the right to select an investment banker
or investment bankers reasonably satisfactory to the Company to administer
the offering pursuant to a Demand Registration
III. Piggy-Back Registration.
A. If at any time until the first time at which the Holders are
legally permitted to sell publicly all Registrable Securities (which for
purposes of this Section 3 shall not include any security other than the
Merger Common Stock and Converted Common Stock) without registration under
the Securities Act (and without limitations as to volume or manner of sale
or both), the Company proposes to file a registration statement under the
Securities Act with resect to a firm commitment underwritten offering of
Common Stock whether or not for sale for the Company's account (other than
a registration statement on Form S-4 or S-8 (or any substitute form for
comparable purposes that may be adopted by the Commission) or a
registration statement filed in connection with a business combination, an
exchange offer or an offering of securities to the Company's existing
security holders or employees), then the Company shall in each such case
give written notice of such proposed filing to each Holder of Registrable
Securities as soon as practicable (but in no event less than 10 days before
the anticipated filing date), and such notice shall offer such Holder the
opportunity to register such number of shares of Registrable Securities as
such Holder may request ("Piggy-Back Registration").
B. The Company shall use its 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 to be included on the same terms
and conditions as any Common Stock to be issued by the Company included
therein. Notwithstanding the foregoing, if the managing underwriter or
underwriters of any offering shall inform the Company and the Selling
Holders that because of the size of the offering which the Holders, the
Company and other persons intend to make or because of the inclusion of
securities sold by selling security holders, the success of the offering
would be adversely affected by inclusion of the Registrable Securities
requested to be included, then the amount of securities to be offered for
the account of the Holders shall be reduced pro-rata to the extent
necessary to reduce the total amount of securities to be included in such
offering to the amount such managing underwriter or underwriters have
advised the Company and the Selling Holders can be sold in such offering;
provided that if Common Stock is being offered for the account of
stockholders other than a Holder, then the proportion by which the amount
of Registrable Securities intended to be offered by Holders is reduced
shall not exceed the proportion by which the amount of Common Stock
intended to be offered by such other stockholders is reduced; provided,
further, that in any such event set forth above, the amount of Registrable
Securities of WECO (but not any transferee of WECO) shall not be reduced to
less than 30% of the total number of shares of Common Stock to be offered
by the Company, all Holders and any other stockholders. If the number of
shares of Merger Common Stock and Converted Common Stock owned by WECO is
less than the total number of shares of Merger Common Stock, Converted
Common Stock and shares of Common Stock then issuable on conversion of the
Convertible Preferred Stock then outstanding, the 30% figure in the
preceding proviso shall be reduced by multiplying 30% by a fraction, the
numerator of which is the number of shares of Merger Common Stock and
Converted Common Stock owned by WECO and the denominator of which is such
total number of shares.
C. Each Selling Holder must agree, in order to exercise its rights
under this Section 3, to be a party to the underwriting agreement between
the Company and such underwriters.
IV. Restrictions on Public Sale by Holders of Registrable Securities.
When Registrable Securities are included in a registration statement,
or when the Company conducts a public offering of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock
and securities of any Holder are not included in such registration
statement, each Holder agrees, and the Company shall use its best efforts
to cause its directors, officers and affiliates to agree, not to effect any
sale or distribution of any Convertible Preferred Stock or Common Stock, or
any securities convertible into or exchangeable or exercisable for such
securities, including a sale pursuant to Rule 144 (or any similar
provision) under the Securities Act, during the fourteen days prior to, and
during the 90-day period beginning on, the effective date of such
registration statement (except pursuant to such registration), if and to
the extent requested by the Company in the case of a non-underwritten
public offering or if and to the extent requested by the managing
underwriter or underwriters in the case of an underwritten public offering.
V. Registration Procedures.
Whenever Holders have requested that any Registrable Securities be
included in a registration statement pursuant to Section 2 or 3 hereof, the
Company shall use its reasonable best efforts to effect the registration
and the sale of such Registrable Securities as contemplated by such Section
as promptly as practicable, and in connection with any such request, the
Company shall:
A. in connection with a request pursuant to Section 2 hereof,
prepare and file with the Commission, as promptly as possible and in no
event later than 60 days after receipt of such request, a registration
statement on any form (to be selected by the Company) for which the Company
then qualifies or which counsel for the Company 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 its best efforts to cause such registration
statement to become effective; provided, however, that
(x) the Company shall not be obligated to file a registration
statement at any time during the six-month period immediately
following the effective date of another registration statement
subject to this Agreement (unless such effectiveness is
terminated pursuant to clause (y) below); and
(y) with respect to any registration statement filed or to be filed
pursuant to Section 2 of this Agreement, if the Board of
Directors of the Company or the President and Executive Vice
President of the Company shall determine in good faith that to
maintain the effectiveness of such registration statement or to
permit such registration statement to become effective (or, if no
registration statement has yet been filed, to file such
registration statement) would be significantly disadvantageous (a
"Disadvantageous Condition") to the Company or its stockholders
for any reason, including the existence, or in reasonable
anticipation, of any acquisition or financing activity involving
the Company or the unavailability of any required financial
statements, or any other event or condition of similar
significance to the Company, the Company may, for a period not to
exceed 60 days or, if earlier, until such Disadvantageous
Condition no longer exists, cause such registration statement to
be withdrawn and the effectiveness of such registration statement
to be terminated or, if no registration statement has yet been
filed, elect not to file such registration statement; provided
that (i) the Company many take such action no more than two times
in any calendar year, and that the total duration during any
calendar year of any delays or suspensions pursuant to this
clause (y) shall not exceed 90 days and (ii) any such withdrawn
registration shall not be deemed a Demand Registration unless and
until reinstated;
B. (i) prior to filing a registration statement or prospectus or any
amendments or supplements thereto, furnish to the Selling Holders and one
counsel selected by the Selling Holders of a majority in aggregate number
of shares of the Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel, (ii) as soon as
reasonably possible, furnish to each Selling Holder such number of copies
of such registration statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus) and such
other documents as such Selling Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Selling Holder, and (iii) after the filing of the registration statement,
promptly notify such Selling Holder of any stop order issued or threatened
by the Commission and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered;
C. in connection with a registration pursuant to Section 2 hereof,
prepare and file with the Commission 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 for a
period of not less than 180 days or such shorter period which will
terminate when all Registrable Securities covered by such registration
statement have been sold;
D. use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any Selling Holder reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to
enable such Selling Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Selling Holder;
provided that the Company shall 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 (d), (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
E. immediately notify each Selling Holder, at any time when a
prospectus relating to the Registrable Securities is required to be
delivered under the Securities Act, of the occurrence of an event known to
the Company requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such 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 promptly make available to each Selling Holder any such
supplement or amendment;
F. enter into or arrange for the furnishing of customary agreements
and documents (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;
G. make available for inspection by any Selling Holder, and any
attorney, accountant or other professional retained by any such Selling
Holder (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company or its
subsidiaries (collectively, the "Records") as shall be reasonably necessary
to enable them to exercise their due diligence responsibility, and cause
the Company's and its subsidiaries' officers, directors and employees to
supply all information reasonably requested by any such Inspector in
connection with such registration statement. Each Inspector that actually
reviews Records supplied by the Company or its subsidiaries shall be
required, prior to any such review, to execute an agreement with the
Company providing that such Inspector shall not disclose any confidential
information of the Company (other than to another Inspector) unless such
disclosure is required by applicable law or legal process. Each Selling
Holder agrees that it will not make any market transaction in securities of
the Company based on such confidential information in violation of
applicable securities laws. Each Selling Holder further agrees that it
will, upon learning that disclosure of confidential information is sought
in a court of competent jurisdiction, give notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of the confidential information. Each Selling Holder also
agrees that the due diligence investigation made by the Inspectors shall be
conducted in a manner which shall not unreasonably disrupt the operations
of the Company or the work performed by the Company's officers and
employees;
H. use its reasonable best efforts to obtain (i) an opinion or
opinions of counsel to the Company and (ii) a comfort letter or comfort
letters from the Company's independent public accountants each in customary
form and covering such matters of the type customarily covered by such
opinion and comfort letters as the manage underwriter reasonably requests;
I. otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings
statement covering a period of twelve months, beginning within 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; and
J. use its reasonable best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
The Company may require each Selling Holder to furnish to the Company
such information regarding the distribution of such Registrable Securities
as the Company may from time to time reasonably request in writing and such
other information as may be legally required in connection with such
registration.
Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 5(e)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 5(e) hereof,
and, if so directed by the Company, such Selling Holder will deliver to the
Company all copies, other than permanent file copies, then in such Selling
Holder's possession of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company
shall give any such notice, the Company shall extend the period during
which such registration statement shall be maintained effective (including
the period referred to in Section 5(c) hereof) by the number of days during
the period from and including the date of the giving of such notice
pursuant to Section 5(e) hereof to and including the date when each Selling
Holder of Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended prospectus
contemplated by Section 5(c) hereof. Each Selling Holder also agrees to
notify the Company if any event relating to such Selling Holder occurs
which would require the preparation of a supplement or amendment to the
prospectus so that such prospectus will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
VI. Registration Expenses.
All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and
filing fees, 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), rating agency
fees, printing expenses, messenger and delivery expenses, the fees and
expenses occurred by it in connection with the listing of the securities to
be registered, fees and disbursements of counsel for the Company and its
independent certified public accountants, and fees and expenses of other
persons retained by the Company, incurred in connection with each
registration hereunder, will be borne by the Company in the case of the
Demand Registration other than the Converted Stock Demand Registration. In
the event of the Converted Stock Demand Registration, the Selling Holders
will bear their pro rata share of the expenses incident to the Company's
performance of or compliance with this Agreement, but not including any
allocated overhead expenses, costs related to an annual audit or other
expenses that the Company would have incurred in the absence of a Converted
Stock Demand Registration. In the case of any Piggy-Back Registration
(other than the first four Piggy-Back Registrations, the costs of which
shall be borne by the Company as if such registrations were Demand
Registrations), the Company shall pay all such expenses other than
additional or incremental registration and filing fees, printing expenses
and other expenses resulting from the inclusion of the Registrable
Securities to such registration. Any underwriting discounts and
commissions attributable to the sale of Registrable Securities and any
expenses of counsel for the Selling Holders will be borne by the Selling
Holders.
VII. Indemnification; Contribution.
A. Indemnification by the Company. The Company agrees to indemnify
and hold harmless each Selling Holder, its officers, directors, partners
and agents and each person, if any, who controls such Selling Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all losses, claims, damages, liabilities and expenses
(including any reasonable legal or other costs of investigation) whatsoever
arising out of or based upon any untrue statement or alleged untrue
statement of a material Act 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 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 the Company by such Selling Holder or on such
Selling Holder's behalf expressly for use therein; provided, however, that
with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus, the indemnity
agreement contained in this Section 7(a) shall not apply to the extent that
any such loss, claim, damage, liability or expense results from the fact
that a current copy of the prospectus was not sent or given to the person
asserting any such loss, claim, damage, liability or expense at or prior to
the written confirmation of the sale of the Registrable Securities
concerned to such person if it is determined that it was the responsibility
of such Selling Holder to provide such person with a current copy of the
prospectus and such current copy of the prospectus would have cured the
defect giving rise to such loss, claim, damage, liability or expense. The
Company 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. Conduct of Indemnification Proceedings. If any action or
proceeding (including any governmental investigation) shall be brought or
asserted against any Selling Holder (or its officers, directors, partners
or agents) or any person controlling any such Selling Holder in respect of
which indemnity may be sought from the Company, the Company shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such Selling Holder, and shall assume the payment of all
fees and expenses. Such Selling Holder or any controlling person thereof
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Selling Holder or such controlling
person unless (i) the Company has agreed to pay such fees and expenses or
(ii) the named parties to any such action or proceeding (including any
impleaded parties) include both such Selling Holder or such controlling
person and the Company, and such Selling Holder or such controlling person
shall have been advised by counsel that there may be one or more legal
defenses available to such Selling Holder or such controlling person which
are different from or additional to those available to the Company, in
which case, if such Selling Holder or such controlling person notifies the
Company in writing that it elects to employ separate counsel at the expense
of the Company, the Company shall not have the right to assume the defense
of such action or proceeding on behalf of such Selling Holder or such
controlling person; it being understood, however, that the Company shall
not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for all
Selling Holders and such controlling persons, and that all such fees and
expenses shall be reimbursed as they are incurred. The Company shall not
be liable for any settlement of any such action or proceeding effected
without the Company's written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such
action or proceeding, the Company agrees to indemnify and hold harmless
such Selling Holder and such controlling person from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment.
C. Indemnification by Holders of Registrable Securities. Each
Selling Holder agrees, severally but not jointly, to indemnify and hold
harmless the Company, its directors and officers who sign the registration
statement and each person, if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company
to such Selling Holder, but only with respect to information concerning
such Selling Holder 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, or any amendment or
supplement thereto, or any preliminary prospectus; provided, however, that
such Selling Holder shall not be liable to the Company with respect to any
loss, claim, damage or liability (or actions in respect thereof) arising
out of or based on any untrue statement or alleged untrue statement or
omission or alleged omission to state a material fact in any preliminary
prospectus, which is correct in the prospectus if the person asserting any
such loss, claim, damage or liability purchased shares of Common Stock from
the underwriter thereof but was not sent or given a copy of the prospectus
at or prior to the written confirmation of the sale of such shares to such
person. In case any action or proceeding shall be brought against the
Company or its directors or officers, or any such controlling person, in
respect of which indemnity may be sought against such Selling Holder, such
Selling Holder shall have the rights and duties given to the Company, and
the Company or its directors or officers or such controlling person shall
have the rights and duties given to such Selling Holder, by the preceding
paragraph. Each Selling Holder also agrees to indemnify and hold harmless
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 Company provided in this
Section 7(c). Notwithstanding anything to the contrary herein, in no event
shall the amount paid or payable by any Selling Holder under this
Section 7(c) exceed the amount of proceeds received by such Selling Holder
from the offering of the Registrable Securities.
D. Contribution. If the indemnification provided for in this
Section 7 is unavailable to any indemnified party in respect of any losses,
claims, damages, liabilities or expenses referred to herein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified parties in connection with the
actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, relates to
information supplied by such indemnified party or indemnified parties, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action.
The Company 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 immediately
preceding paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities or expenses referred
to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), (i) no underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Registrable Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission and
(ii) no Selling Holder shall be required to contribute any amount in excess
of the amount by which the proceeds received by such Selling Holder from
the offering of the Registrable Securities 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.
If indemnification is available under this Section 7, the indemnifying
parties shall indemnify each indemnified party to the full extent provided
in Sections 7(a) and (c) without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 7(d).
VIII. Participation in Registrations.
No Holder may participate in any registration hereunder unless it (a)
agrees to sell its Registrable Securities on the basis provided in any
underwriting arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such
underwriting arrangements and this Agreement.
9. Rule 144.
The Company covenants that it will file any reports required to
be filed by it under the Securities Act and the Securities Exchange Act of
1934, and that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
Holders to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities 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, the Company will deliver to
such Holder a written statement as to whether it has complied with such
requirements.
IX. Miscellaneous.
A. Binding Effect. Unless otherwise provided herein, the provisions
of this Agreement shall be binding upon and accrue to the benefit of the
parties hereto and their respective heirs, legal representatives, permitted
transferees, successors, and permitted assigns.
B. Amendment. This Agreement may be amended or terminated only by a
written instrument signed by the Company and the Holders of a majority of
the shares of Registrable Securities (treating all Convertible Preferred
Stock as being converted into Common Stock for this purpose).
C. Applicable Law. The internal laws of the State of Texas (without
regard to choice of law provisions thereof) shall govern the
interpretation, validity and performance of the terms of this Agreement.
D. Notices. All notices provided for herein shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
registered or certified mail, postage prepaid, as set forth in Section 15.5
of the Agreement of Merger.
E. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year
first above written.
CABOT OIL & GAS CORPORATION
/s/ John U. Clarke
By: John U. Clarke
Title: Executive Vice President
WASHINGTON ENERGY COMPANY
/s/ T.J. Hogan
By: T.J. Hogan
Title: Vice President - Legal
and Secretary
STANDSTILL AND RIGHT OF FIRST REFUSAL AGREEMENT
This Agreement, dated as of February ____, 1994 (this
"Agreement"), by and among Cabot Oil & Gas Corporation, a Delaware corporation
(the "Company"), COG Acquisition Company, a Delaware corporation and a wholly
owned subsidiary of the Company ("CAC"), and Washington Energy Company, a
Washington corporation ("WECO").
W I T N E S S E T H:
Whereas, the beneficial and record ownership of all shares of
common stock of Washington Energy Resources Company, a Washington
corporation ("WERCO"), is held by WECO;
Whereas, the Company, CAC, WECO and WERCO propose to enter into
an Agreement of Merger dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, that WERCO will be merged
(the "Merger") with and into CAC; and
Whereas, to induce the Company and CAC to enter into the Merger
Agreement, WECO has agreed to extend to the Company certain covenants
regarding standstill and rights of first refusal with respect to the equity
securities of the Company acquired by WECO in connection with the Merger;
Now, Therefore, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
Section 1. Additional Definitions. As used herein, the
following terms have the meanings set forth below:
"Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 under the Exchange Act.
"Common Stock" means the Class A Common Stock, par value $.10
per share, of the Company.
"Conversion Shares" means shares of Common Stock into which
the Preferred Stock is convertible.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Independent Directors" means, at any time, the directors of
the Company who are not affiliates of WECO at such time.
"Initial Common Stock" means the 2,133,000 shares of Common
Stock acquired by WECO pursuant to the Merger.
"Initial Equity" means the Preferred Stock, the Initial Common
Stock and the Conversion Shares, if any.
"Preferred Stock" means the 1,134,000 shares of convertible
preferred stock, par value $.10 per share, of the Company
acquired by WECO pursuant to the Merger.
"Securities Act" means the Securities Act of 1933, as amended.
Section 2. Standstill Provisions.
(a) WECO shall not, without the prior written approval of the
majority of the Company's Board of Directors, acquire, or agree, offer,
seek or propose to acquire, ownership (including, but not limited to,
beneficial ownership as defined in Rule 13d-3 under the Exchange Act) of
any of the assets or businesses of the Company (other than hydrocarbons in
the ordinary course of business) or any securities issued by the Company
(except as a stock dividend) or any options to acquire such ownership
(including from a third party), or make any public announcement (or request
permission to make any such announcement) or enter into any discussions,
negotiations, arrangements or understandings with any third party with
respect to any of the foregoing, except for the Initial Equity acquired
pursuant to the Merger and, so long as WECO shall not have sold or
otherwise disposed of any of the Initial Equity, the acquisition of a
number of shares of Common Stock which will result in WECO being the owner
of 20% of the voting stock of the Company then outstanding (as determined
in accordance with generally accepted accounting principles) (or such
lesser number of shares as would then entitle WECO to equity accounting
treatment with respect to its investment in the Company).
(b) WECO shall not transfer all or any portion of the Initial
Equity if, as a result thereof, the person acquiring such securities would
hold more than 5% of the outstanding voting power of the Company (assuming
conversion of such portion of the Preferred Stock, if any, that is
transferred), except that WECO may transfer the Preferred Stock, the
Initial Common Stock and the Conversion Shares (i) pursuant to a bona fide
public offering, or pursuant to Rule 144 or Rule 144A as promulgated under
the Securities Act; (ii) in connection with the sale of the Company at any
time to a third party approved by a majority of the Independent Directors;
(iii) to a successor entity; (iv) pursuant to a transfer to any Affiliate
of WECO, provided that such Affiliate becomes a signatory party to this
Agreement and continues to be an Affiliate of WECO; (v) pursuant to a bona
fide pledge to bank lenders, provided such bank lenders agree to be bound
by the provisions hereof; and (vi) pursuant to a tender offer approved or
recommended by a majority of the Independent Directors.
(c) WECO shall not, except solely by virtue of its
representation on the Company's Board of Directors as contemplated by the
Merger Agreement: (i) make, or in any way participate in, directly or
indirectly, any solicitation of proxies to vote, or to seek to advise or
influence any person with respect to the voting of, any voting securities
of the Company; (ii) unless and until it has received the prior written
invitation or approval of a majority of the Board of Directors of the
Company, directly or indirectly solicit, seek or offer to effect, negotiate
with or provide any information to any party with respect to, or make any
public announcement or proposal to the Board of Directors of the Company,
or otherwise make any public announcement or proposal or offer whatsoever
with respect to, any form of business combination or other extraordinary
transaction involving the Company; (iii) deposit any voting securities of
the Company in a voting trust; (iv) except in connection with a sale or
other disposition permitted by this Agreement, solicit any offer by any
person or group to acquire any voting securities of the Company owned by
WECO; (v) seek or propose to influence or control the management or
policies of the Company, other than by the exercise of its voting rights;
(vi) acquire control of any entity that owns a number of shares of Common
Stock of the Company in excess of 1% of the then outstanding shares of
Common Stock; or (vii) acquire control of any entity that owns a number of
shares of any other voting securities of the Company in excess of 1% of the
then outstanding shares of such class of voting securities, or enter into
any discussions, negotiations, arrangements or understandings with any
third party with respect to any of the foregoing.
Section 3. Right of First Refusal.
(a) If WECO desires to sell all or any part of its Preferred
Stock (a "Transfer") other than pursuant to a bona fide public offering,
WECO shall first offer to sell such Preferred Stock to the Company in the
manner specified in this Section 3.
(b) If WECO desires to make a Transfer, it shall first give
notice (the "Transfer Notice") to the Company in writing specifying the
number of shares of Preferred Stock proposed to be transferred and the
proposed price therefor, and any specific offer to purchase such Preferred
Stock theretofore received and remaining open, identifying the offeror and
setting forth all the terms of such offer. The Company shall have the
right, exercisable by written notice to WECO within 15 days after receipt
of the Transfer Notice, to purchase all, but not part of, the Preferred
Stock specified in the Transfer Notice for cash at the price per share set
forth therein.
(c) If the Company exercises its right of first refusal
hereunder, the closing of the purchase of the Preferred Stock with respect
to which such right has been exercised shall take place within 30 calendar
days (or if approval of such purchase by the Company's stockholders is
required by law or pursuant to any stock exchange rule or policy, within 90
calendar days) after the Company gives notice of such exercise.
(d) If the Company does not exercise its right of first
refusal hereunder within the time specified for such exercise, WECO shall
be free to sell such shares to a third party on terms no less favorable
than the terms specified in the Transfer Notice during the 120 days
following the earlier of (i) notification by the Company of its election
not to purchase such shares and (ii) the expiration of the time specified
in subsection 3(b) above for such exercise after receipt of the Transfer
Notice.
Section 4. Indemnification.
(a) WECO agrees to indemnify and hold harmless the Company
and CAC and their respective officers, directors and agents against and in
respect of any and all losses, damages, deficiencies, costs, liabilities
and expenses, including without limitation reasonable attorneys' fees,
resulting from or relating to any breach by WECO of any of the agreements
of WECO contained herein.
(b) The Company and CAC agree to indemnify and hold harmless
WECO and its officers, directors and agents against and in respect of any
and all losses, damages, deficiencies, costs, liabilities and expenses,
including without limitation reasonable attorneys' fees, resulting from or
relating to any breach by the Company or CAC of the agreements of the
Company and CAC contained herein.
Section 5. Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of
Texas.
Section 6. Remedies. Each of WECO, the Company and CAC
understand and agree that the covenants and undertakings on each of their
parts herein contained are uniquely related to the desire of the parties
that the Company and CAC consummate the Merger, that the Merger is a unique
business opportunity for the Company, CAC, WECO and WERCO, and that,
although monetary damages may be available for the breach of such covenants
and undertakings, monetary damages would be an inadequate remedy therefor.
Accordingly, WECO, the Company and CAC agree that the Company and CAC shall
be entitled to obtain specific performance by WECO of every covenant and
undertaking contained herein to be performed by them and that WECO shall be
entitled to obtain specific performance from the Company and CAC of each
and every covenant and undertaking herein contained to be observed or
performed by the Company and CAC.
Section 7. Survival; Binding Effect. This Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective successors and assigns. The Company may, without the consent of
WECO, assign its rights hereunder to any directly or indirectly wholly
owned subsidiary of the Company for so long as that subsidiary remains a
wholly owned subsidiary of the Company.
Section 8. Amendment. This Agreement may be amended by the
parties hereto at any time, but only by an instrument in writing duly
executed and delivered on behalf of each of the parties hereto.
Section 9. Notices. All notices required to be given
hereunder shall be deemed given if mailed, first class, postage prepaid, to
the respective parties at its address as set out in the following.
If to WECO:
Washington Energy Company
815 Mercer Street
Seattle, Washington 98109
Attention: James P. Torgerson, Senior Vice
President-Finance
If to the Company:
Cabot Oil & Gas Corporation
15375 Memorial Drive
Houston, Texas 77079
Attention: John U. Clarke-Executive Vice President
Section 10. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the subject
matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties.
Section 11. Headings. Section headings are included solely
for convenience and are not to be considered to be part of this Agreement
and are not intended to be an accurate description of the contents hereof.
Section 12. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
Section 13. Termination. Except for the obligations set
forth in Section 4 hereof, the obligations of the parties hereto under this
Agreement shall terminate at such time as WECO and its Affiliates cease to
own 5% or more of the then outstanding voting securities of the Company,
assuming conversion of the Preferred Stock.
In Witness Whereof, the parties hereto have caused this Agreement
to be executed and entered into as of the date first set forth above.
Cabot Oil & Gas Corporation
/s/ John U. Clarke
By: John U. Clarke
Title: Executive Vice President
COG Acquisition Company
/s/ John U. Clarke
By: John U. Clarke
Title: Executive Vice President
Washington Energy Company
/s/ Robert R. Golliver
By: Robert R. Golliver
Title: President and Chief Operating Officer
