SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
ONEOK, INC.
(Name of Issuer)
Common Stock, $0.01 par value, per share
(Title of Class of Securities)
68267810
(CUSIP Number)
Steven L. Kitchen
Executive Vice President,
and Chief Financial Officer
Western Resources, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
(785) 575-6300
with a copy to:
John K. Rosenberg, Esq.
Western Resources, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
(785) 575-6300
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 26, 1997
(Date of Event which Requires Filing of this Statement)
If a 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 [ ].
Page 1 of 11 pages
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CUSIP NO. 68267810 13D
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Western Resources, Inc.; 48-0290150
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Kansas
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NUMBER 7. SOLE VOTING POWER
OF SHARES
BENEFICIALLY 3,094,257 shares of Common Stock.
OWNED
BY EACH An additional 19,946,448 shares of Common Stock
REPORTING issuable in certain circumstances in the event of
PERSON the conversion (the conditions for which are not
WITH expected to occur within the next 60 days)
of 19,946,448 shares of Series A Convertible
Preferred Stock.
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8. SHARED VOTING POWER
0
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9. SOLE DISPOSITIVE POWER
3,094,257 shares of Common Stock.
An additional 19,946,448 shares of Common Stock
issuable in certain circumstances in the event of
the conversion (the conditions for which are not
expected to occur within the next 60 days) of
19,946,448 shares of Series A Convertible Preferred
Stock.
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10. SHARED DISPOSITIVE POWER
0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
3,094,257 shares of Common Stock.
An additional 19,946,448 shares of Common Stock issuable in certain
circumstances in the event of the conversion (the conditions for which are not
expected to occur within the next 60 days) of 19,946,448 shares of Series A
Convertible Preferred Stock.
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.9% of the Common Stock.
Up to 45.0% of the Common Stock outstanding in the event of conversion (the
conditions for which are not expected to occur within the next 60 days)of
Series A Convertible Preferred Stock.
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14. TYPE OF REPORTING PERSON CO
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Page 3 of 11 pages
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Item 1. SECURITY AND ISSUER.
This statement is filed by Western Resources, Inc., a Kansas
corporation ("WRI") and relates to the Common Stock, par value $0.01 per share
(the "Common Stock"), of ONEOK, Inc., an Oklahoma corporation (the "Issuer")
with its principal executive offices at 100 West Fifth Street, Tulsa, Oklahoma
74103.
Item 2. IDENTITY AND BACKGROUND.
WRI has its principal office and principal place of business at 818
Kansas Avenue, Topeka, Kansas 66612.
WRI is engaged principally in the production, purchase, transmission,
distribution and sale of electricity, and holds investments in companies engaged
in the delivery and sale of natural gas and the provision of electronic
monitored security services.
The name, business address and present principal occupation of each
executive officer and director of WRI are set forth in Exhibit 1 hereto and
incorporated herein by reference. Each executive officer and director of WRI is
a citizen of the United States.
During the last five years, neither WRI nor, to the best of WRI's
knowledge, any of its directors or officers have been convicted in any criminal
proceeding (excluding traffic violations or similar misdemeanors).
During the last five years, neither WRI nor, to the best of WRI's
knowledge, any of its directors or officers have been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
resulting in 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, and which judgment,
decree or final order was not subsequently vacated.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 4 below, WRI contributed its gas
business assets to the Issuer in exchange for the 3,094,257 shares of Common
Stock and 19,946,448 shares of Series A Convertible Preferred Stock, par value
$0.01 per share, of the Issuer (the "Series A Convertible Preferred Stock")
reported in this Schedule 13D.
Item 4. PURPOSE OF THE TRANSACTION.
Pursuant to a Contribution Agreement, dated as of December 12, 1996, as
amended and restated as of May 19, 1997 (the "Contribution Agreement"), among
WRI, ONEOK Inc., a Delaware corporation ("Old ONEOK") and the Issuer, WRI
contributed to the Issuer all of the assets of WRI that were primarily used in,
or primarily related to or primarily generated by, the field operations of the
local natural gas distribution business of WRI, and all of the outstanding
capital stock of WRI's direct or indirect wholly-owned subsidiaries, Westar Gas
Marketing, Inc. and MCMC, Inc. (collectively, the "Assets"). In addition to
issuing the Common Stock and the Series A Convertible Preferred Stock, pursuant
to the Contribution Agreement the Issuer assumed all of the liabilities of WRI
that arise primarily out of, or relate primarily to or are primarily generated
by, the Assets and certain additional debt of WRI, and Old ONEOK merged (the
"Merger") with and into the Issuer, with the Issuer as the
Page 4 of 11 pages
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surviving corporation. In the Merger, the Issuer's name was changed from
"WAI, Inc." to "ONEOK, Inc."
WRI entered into the Contribution Agreement with the Issuer because
WRI believed that the combination of its natural gas business with the Issuer
would create an opportunity to capitalize on the strengths of both companies,
would concentrate gas management expertise at the Issuer, and allow WRI to
concentrate on its electric utility operations.
The terms of the Contribution Agreement, the Merger and the
transactions contemplated thereby were arrived at through negotiations between
WRI and Old ONEOK. WRI intends to continue to review its investment in the
Issuer on an ongoing basis and based upon the results of such review, WRI's
contractual obligations entered into in connection with such investment, market
and general economic conditions, regulatory approvals and other regulatory
conditions and other facts WRI deems relevant, may seek to modify its investment
in the Issuer through any available means including, without limitation,
increases or decreases in its investment through open market purchases or sales
or privately negotiated transactions or actions of the type enumerated in
clauses (a) through (j) of Item 4 of Schedule 13D. Except as set forth herein
(including the exhibits hereto which are incorporated herein by reference), and
subject to the foregoing, WRI has no current plans or proposals that would
result in any of the actions specified in clauses (a) through (j) of Item 4 of
Schedule 13D.
A. SERIES A CONVERTIBLE PREFERRED STOCK
Each share of Series A Convertible Preferred Stock is convertible, at
the option of the holder, in whole or in part, at any time following the
occurrence of a Regulatory Change, into Common Stock at the rate of one share of
Common Stock for each share of Series A Convertible Preferred Stock (as
adjusted). In addition, any shares of the Series A Convertible Preferred Stock
transferred by WRI to any person other than WRI or its affiliates will
automatically be converted into shares of Common Stock. The holders of Series A
Convertible Preferred Stock will be entitled, with respect to each dividend
period on the Common Stock, to receive a dividend payment thereon that is equal
to 1.5 times (prior to the fifth anniversary of the closing), and 1.25 times
(thereafter), the dividend amount declared in respect of each share of Common
Stock for such dividend period provided that the aggregate annual dividend
amount payable in respect of each share of Series A Convertible Preferred Stock
is not less than $1.80 per share.
A "Regulatory Change" will be deemed to have occurred upon the receipt
by WRI of an opinion of WRI's counsel (which counsel must be reasonably
acceptable to the Issuer) to the effect that either (1) the Public Utility
Holding Act of 1935, as amended (the "1935 Act"), has been repealed, modified,
amended or otherwise changed or (2) WRI has received an exemption, or, in the
unqualified opinion of such counsel, is entitled without any regulatory approval
to claim an exemption, or has received an approval or no-action letter from the
Securities and Exchange Commission or its staff under the 1935 Act or has
registered under the 1935 Act, or any combination of the foregoing, and as a
consequence of (1) and/or (2) WRI may fully and legally exercise the rights set
forth in the Shareholder Agreement (as defined herein) which take effect in the
period after a Regulatory Change has occurred.
Shares of Series A Convertible Preferred Stock are non-voting, except
that they vote with the Common Stock (and any other class or series of stock
which may be similarly entitled to vote with the holders of Common Stock) as a
single class with respect to (i) any proposal to adopt the Opt-out Amendment (as
defined herein) and (ii) any transaction which, if consummated, would constitute
a Change in Control of the Issuer. With respect to any such transaction, each
share of Series A Convertible Preferred Stock shall carry a number of votes
equal to the number of votes carried in the aggregate by the number of shares of
Common Stock issuable upon conversion of one share of Series A Convertible
Preferred Stock.
Pursuant to the Contribution Agreement, at the earlier of the Issuer's
first annual meeting of its shareholders after the Merger, or at a special
meeting to be held no later than 120 days after the Merger, the Issuer shall
propose and recommend and use its best efforts to obtain, approval of an
amendment (the "Opt-out Amendment") to the Issuer's certificate of incorporation
that provides (a) that Sections 1145 through 1155 of Title 18 of the Oklahoma
Statutes, as the same may be amended (the "Control Share Acquisition Statute")
shall not apply to the Issuer as of a date no more than two days after the date
of such
Page 5 of 11 pages
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shareholders' meeting and (b) that such amendment may be further amended only by
the affirmative vote of at least sixty-six and two-thirds per cent (66 2/3%) of
the voting power of all outstanding equity securities of the Issuer, voting as a
class.
"Change in Control" means the occurrence of any one of the following
events: (1) any person (other than the Shareholder Group) becoming the
beneficial owner, directly or indirectly, of voting securities, pursuant to the
consummation of a merger, consolidation, sale of all or substantially all of the
Issuer's assets, share exchange or similar form of corporate transaction
involving the Issuer or any of its subsidiaries that requires the approval of
the Issuer's shareholders, whether for such transaction or the issuance of
securities in such transaction, so as to cause such person's Voting Ownership
Percentage to exceed the Control Percentage (both as defined in Item 6 below);
provided, however, that no Change in Control shall be deemed to have occcured as
the result of acquisitions (A) by any employee benefit plan sponsored or
maintained by the Issuer or any affiliate, or (B) by any underwriter temporarily
holding securities pursuant to an offering of such securities; (2) the
consummation of a merger, consolidation, sale of all or substantially all of the
Issuer's assets, share exchange or similar form of corporate transaction
involving the Issuer or any of its subsidiaries that requires the approval of
the Issuer's shareholders, whether for such transaction or the issuance of
securities in such transaction, unless immediately following such transaction
more than 50% of the total voting power of (x) the corporation resulting from
such transaction, or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 100% of the voting securities
eligible to elect directors of such resulting corporation, is represented by
voting securities that were outstanding immediately prior to such transaction
(or, if applicable, shares into which such voting securities were converted
pursuant to such transaction), and such voting power among the holders of such
voting securities that were outstanding immediately prior to such transaction is
in substantially the same proportion as the voting power of such voting
securities among the holders thereof immediately prior to such transaction; or
(3) the consummation of a plan of complete liquidation or dissolution of the
Issuer.
"Shareholder Group" means WRI, any WRI affiliate and any person with
whom WRI or any of its affiliates is part of a partnership, limited partnership,
syndicate or other group of persons acquiring, holding, voting or disposing of
any voting securities which would be required to file a statement on Schedule
13D under Section 13(d) of the Securities Exchange Act of 1934, as amended.
B. SERIES B CONVERTIBLE PREFERRED STOCK
Shares of the Series B Convertible Preferred Stock, par value $0.01 per
share, of the Issuer (the "Series B Convertible Preferred Stock") will be issued
to WRI in exchange for shares of Common Stock purchased by WRI in the open
market upon WRI's exercise of its Top-Up Rights (as defined in the Shareholder
Agreement described in Item 6 below). The terms of the Series B Convertible
Preferred Stock are the same as the Series A Convertible Preferred Stock, except
that (i) the dividend amount on each share of Series B Convertible Preferred
Stock is equal to 1.25 times the dividend amount declared in respect of each
share of Common Stock for each dividend period (as adjusted to reflect any stock
split or similar events) and (ii) prior to the fifth anniversary of the closing
date, the aggregate annual dividend amount will equal an amount not less than
$1.50 per share of Series B Convertible Preferred Stock and, thereafter, the
aggregate annual dividend amount will equal an amount not less than $1.80 per
share of Series B Convertible Preferred Stock.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) WRI holds 3,094,257 shares of Common Stock and 19,946,448 shares of Series
A Convertible Preferred Stock. The shares of Common Stock held by WRI
constitute 9.9% of the currently
Page 6 of 11 pages
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outstanding Common Stock. Such shares of Series A Convertible Preferred
Stock would constitute 35.1% of the outstanding Common Stock upon (and
after giving effect to) conversion of the Series A Convertible Preferred
Stock; however, they are not currently convertible and WRI does not expect
that a Regulatory Change will occur within the next 60 days. Other than
Steven L. Kitchen, an executive officer of WRI and a director of the
Issuer, who owns 100 shares of Common Stock, to the knowledge of WRI none
of its executive officers or directors owns any Common Stock.
(b) WRI has the sole power to vote and to dispose of the Common Stock,
including any such shares owned following conversion of the Series A
Convertible Preferred Stock or Series B Convertible Preferred Stock,
reported herein.
(c) Other than the transactions described herein, no transactions in the Common
Stock were effected by WRI in the past sixty days.
(d) None.
(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERTAKINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
A. SHAREHOLDER AGREEMENT
In connection with the transactions described herein, the Issuer and
WRI entered into a Shareholder Agreement, dated as of November 26, 1997 (the
"Shareholder Agreement"). The following description of the Shareholder Agreement
is qualified in its entirety by reference to the complete text of such document
which is attached as Exhibit 3 hereto.
The Shareholder Agreement provides, among other things, for the
following:
WRI and its affiliates will be prohibited from taking certain actions,
including, without limitation: (a) prior to the occurrence of a Regulatory
Change, the acquisition of voting securities of the Issuer that would cause the
Shareholder Group to have securities representing more than 9.9% of the Voting
Ownership Percentage and, at any time, the acquisition of securities that would
cause the Shareholder Group's Total Ownership Percentage to exceed the Maximum
Ownership Percentage; (b) the deposit of the Issuer's securities in a voting
trust or subjecting of such securities to any similar arrangement or proxy with
respect to the voting of such securities; (c) commencement of certain
solicitations, participation in a 13D group or initiation of any shareholder
proposal under the Federal proxy rules; (d) the commencement of a merger,
acquisition or other business combination transaction relating to the Issuer;
and (e) engagement in any other action, either alone or in concert with others,
to seek to control or influence the Issuer's management, board of directors (the
"Board") or policies.
In the event that the Shareholder Group's Total Ownership Percentage
falls below the Maximum Ownership Percentage, WRI has certain rights to acquire
additional securities to restore the Total Ownership Percentage of the
Shareholder Group to the Maximum Ownership Percentage. WRI may exercise such
rights either (i) by purchasing Common Stock in the open market or otherwise
(and, to the extent such purchases would cause the Shareholder Group's Voting
Ownership Percentage to exceed 9.9% prior to a Regulatory Change, exchanging
such shares on a share-for-share basis for Series B Convertible Preferred Stock)
or (ii) in certain events where the reduction in the Shareholder Group's Total
Ownership Percentage is caused by a dilutive issuance by the Issuer, by
requiring the Issuer to issue to WRI at the issue price per share in such
issuance, prior to a Regulatory Change, additional shares of Common Stock and,
to the extent such issuance would cause the Shareholder Group's Voting Ownership
Percentage to exceed 9.9%, Series B Convertible Preferred Stock sufficient to
restore the Shareholder Group's Total Ownership Percentage to the Maximum
Ownership Percentage and, after a
Page 7 of 11 pages
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Regulatory Change, shares of Common Stock sufficient to restore the Shareholder
Group's Total Ownership Percentage to the Maximum Ownership Percentage minus
10%.
"Total Ownership Percentage" means, calculated at a particular point in
time, the voting power which would be represented by the securities beneficially
owned by the person whose Total Ownership Percentage is being determined if all
shares of convertible preferred stock (or other securities convertible into
voting securities) beneficially owned by such person were converted into shares
of Common Stock (or other voting security). "Voting Ownership Percentage" means,
calculated at a particular point in time, the voting power represented by the
Common Stock and shares of any other class of capital stock of the Issuer then
entitled to vote in the election of directors (not including convertible
preferred stock prior to conversion) beneficially owned by the person whose
voting ownership percentage is being determined. "Maximum Ownership Percentage"
means, calculated at a particular point in time, a Total Ownership Percentage of
45.0%, less the voting power represented by all voting securities transferred by
the Shareholder Group during the term of the Shareholder Agreement (including
the voting power represented by any shares of convertible preferred stock which
were converted into shares of Common Stock contemporaneously with such transfer
pursuant to the terms of the Shareholder Agreement). "Control Percentage" means
a Voting Ownership Percentage of 15%, during the period prior to a Regulatory
Change, and a Voting Ownership Percentage of 35% thereafter.
The Shareholder Agreement provides that WRI shall be entitled to
designate, and the Issuer shall include in a slate of directors nominated by the
Board and shall use its best efforts to cause the reelection of, two directors
of the Issuer. Upon a Regulatory Change, the Board shall expand the Board to
ensure that WRI can designate four directors (if the size of the Board is 14 or
fewer) or one-third of the Board (if the size of the Board is greater than 14).
Pursuant to the Contribution Agreement, four former employees of WRI became
officers of the Issuer following the Merger.
During the term of the Shareholder Agreement, the Shareholder Group is
prohibited, without the prior written consent of a majority of the Issuer's
independent directors, from transferring any securities of the Issuer, except
(a) transfers of securities representing voting power of less than 5% provided
that the transferee does not have a Voting Ownership Percentage of 5% or more
immediately prior to such transfer; (b) in a bona fide underwritten public
offering pursuant to the Registration Rights Agreement (as defined below); (c)
pursuant to a pro rata distribution to WRI's shareholders or within the
Shareholder Group; and (d) pursuant to a procedure which permits WRI to transfer
securities representing 5% or more of the outstanding voting power, provided
that the Issuer has been given notice thereof, and has failed, within a
specified period of time, to purchase from WRI the securities proposed to be
sold at a cash purchase price per share equal to 98.5% of the then current
market price for the Common Stock. In addition, in the case of a bona fide third
party tender offer for the Issuer, WRI may tender into such offer a
proportionate amount of its Issuer securities.
During the term of the Shareholder Agreement, WRI has agreed to vote
all voting securities owned by it as follows: (a) with respect to the election
of directors, WRI will vote its voting securities in favor of the election of
all candidates for director nominated by the Board; (b) with respect to any
proposal initiated by a shareholder of the Issuer relating to the redemption of
the rights issued pursuant to the shareholder protection right agreement of the
Issuer or any modification of such agreement (other than nonbinding precatory
resolutions), WRI shall, and shall cause each member of the Shareholder Group
to, vote all voting securities beneficially owned by WRI or any member of the
Shareholder Group in accordance with the recommendation of the Board; (c) with
respect to transactions constituting a Change in Control or with respect to any
proposal relating to the Opt-out Amendment, WRI may vote any or all of the
voting securities and convertible preferred stock held by the Shareholder Group
in its sole discretion; (d) with respect to any proposed amendment to the
Issuer's certificate of incorporation or by-laws which would reasonably cause
the Issuer to become subject to (i) the Control Share Acquisition
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Statute or (ii) any other provisions which are substantially similar to the
Control Share Acquisition Statute, WRI or any member of the Shareholder Group
has the right to abstain or vote against such amendment; (e) with respect to all
other matters, (i) prior to the occurrence of a Regulatory Change, WRI may vote
any voting securities of the Issuer held by the Shareholder Group in WRI's sole
discretion and (ii) after the occurrence of a Regulatory Change, WRI may vote in
its sole discretion up to 9.9% of the Issuer's outstanding voting power and WRI
must vote any other voting securities owned by it in the same proportion as all
voting securities voted on such other matter are voted by the other shareholders
of the Issuer.
The Shareholder Agreement terminates under certain circumstances,
including, but not limited to: (a) the quarterly dividend on the Common Stock
falling below $0.30 per share (as adjusted to reflect any stock split or similar
events) in any five quarters or the Issuer's failure to pay the stated quarterly
dividend on any series of convertible preferred stock in any five quarters; (b)
election to the Board of a majority of directors other than those nominated by
its Nominating Committee or an increase in the size of the Board to more than
21; (c) the Shareholder Group's Total Ownership Percentage falling below 9.9% at
any time or (d) the Shareholder Group's Total Ownership Percentage falling below
30% at any time following the 15th anniversary of the signing of the Shareholder
Agreement. In addition, on the 15th and each subsequent anniversary of the
signing of the Shareholder Agreement, each of WRI and the Issuer, on behalf of
the Issuer's shareholders, has the right to buy from or sell to the other, by
purchase, sale or credible tender offer, as appropriate, all outstanding shares
of the Issuer's capital stock beneficially owned by the selling party (which, in
the case of the Issuer, means the shareholders of the Issuer other than WRI and
the Shareholder Group) on terms set forth in the Shareholders Agreement. In
addition, if at any time after the occurrence of a Regulatory Change, the Issuer
believes in good faith that WRI's regulatory status as modified by such
Regulatory Change would place an unreasonable restriction on the implementation
of the Issuer's strategic business plans, the Issuer may immediately initiate
its buy/sell rights.
B. THE REGISTRATION RIGHTS AGREEMENT
Pursuant to the Registration Rights Agreement, dated November 26, 1997
(the "Registration Rights Agreement"), between the Issuer and WRI (attached as
Exhibit 4 hereto), the Issuer has agreed to grant to WRI certain rights to
require the Issuer to register (five times upon demand and with unlimited
piggyback requests) under the Securities Act of 1933, as amended, WRI's shares
of Common Stock, including shares obtainable upon conversion of the Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock, subject to
certain conditions.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
The foregoing descriptions of the documents listed in this Item 7 and
filed as exhibits hereto are qualified in their entirety by the complete texts
of such documents.
Exhibit 1 Identity of Executive Officers and Directors of WRI
Exhibit 2 Certificate of Designation for Series A and Series B
Convertible Preferred Stock
Exhibit 3 Shareholder Agreement, dated as of November 26, 1997,
between WRI and the Issuer
Exhibit 4 Registration Rights Agreement, dated as of November
26, 1997, between WRI and the Issuer
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
WESTERN RESOURCES, INC.
By: /s/ Steven L. Kitchen
Steven L. Kitchen
Executive Vice President,
and Chief Financial Officer
Dated: December 5, 1997
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EXHIBIT INDEX
Exhibit 1 Identity of Executive Officers and Directors of WRI
Exhibit 2 Certificates of Designation for Series A and Series B
Convertible Preferred Stock
Exhibit 3 Shareholder Agreement, dated as of November 26, 1997,
between WRI and the Issuer
Exhibit 4 Registration Rights Agreement, dated as of November
26, 1997, between WRI and the Issuer
Page 11 of 11 pages
Exhibit 1
Executive Officers and Directors of
Western Resources, Inc. ("WRI")
<TABLE>
<S> <C> <C>
NAME POSITION ADDRESS
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John E. Hayes, Jr. Chairman of the Board, Chief Executive Officer, WRI. 1535 SW Pembroke Lane
Topeka, Kansas 66604
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David C. Wittig President and Director, WRI. #5, Westboro Place
Topeka, Kansas 66604
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Steven L. Kitchen Executive Vice President and Chief Financial Officer, WRI. 10047 SW 101st Street
Auburn, Kansas 66042
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Carl M. Koupal Executive Vice President, Chief Administrative Officer, WRI. 3768 SW Clarion Park Drive
Topeka, Kansas 66610
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John K. Rosenberg Executive Vice President and General Counsel, WRI. 5450 SW Fairlawn
Topeka, Kansas 66610
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Jerry D. Courington Controller, WRI. 3624 SE Arrowhead Drive
Topeka, Kansas 66605
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Frank J. Becker Director, WRI. 4408 Heritage Drive
President, Becker Investments, Inc., Lawrence, Kansas. Lawrence, Kansas 66047
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Gene A. Budig Director, WRI. 40 Mercer Street
President, The American League of Professional Baseball Clubs, Princeton, New Jersey
New York, New York. 08540
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C.Q. Chandler Director, WRI. 1515 Foliage Court
Chairman of the Board, INTRUST Financial Corporation, Wichita, Wichita, Kansas 67206
Kansas.
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Thomas R. Clevenger Director, WRI. 9215 Killarney
Investments, Wichita, Kansas. Wichita, Kansas 67206
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John C. Dicus Director, WRI. 1524 Lakeside Drive
Chairman of the Board and Chief Executive Officer, Capitol Federal Topeka, Kansas 66604
Savings and Loan Association, Topeka, Kansas.
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David H. Hughes Director, WRI. 2110 W. 67th Terrace
Retired Vice Chairman, Hallmark Cards, Inc., Kansas City, Missouri. Shawnee Mission, Kansas
66208
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Russell W. Meyer, Jr. Director, WRI. 600 Tara Court
Chairman and Chief Executive Officer, Cessna Aircraft Company, Wichita, Kansas 67206
Wichita, Kansas.
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John H. Robinson Director, WRI. 3223 W. 67th Street
Chairman Emeritus (since December 1992) and prior to that Shawnee Mission, Kansas
Chairman, Black & Veatch, Kansas City, Missouri. 66208
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Louis W. Smith Director, WRI. 11705 Brookwood
President and Chief Operating Officer, Ewing Marion Kauffman Leawood, Kansas 66211
Foundation.
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</TABLE>
EX-2
CERTIFICATE OF THE DESIGNATIONS, POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, OF
CONVERTIBLE PREFERRED STOCK
OF
WAI, INC.
PURSUANT TO SECTION 1032 OF THE
GENERAL CORPORATION ACT OF THE STATE OF OKLAHOMA
WAI, INC., an Oklahoma corporation (the "Corporation"), does hereby
certify that the Board of Directors of the Corporation duly adopted the
following resolution, at a meeting duly convened and held on November 25, 1997,
in respect of two series of Preferred Stock, par value $0.01 per share, of the
Corporation, pursuant to authority conferred upon the Board by Article Fourth of
the Certificate of Incorporation of the Corporation and in accordance with
Section 1032 of the General Corporation Act of the State of Oklahoma:
BE IT RESOLVED, that the issuance of two series of Preferred Stock of
the Corporation is hereby authorized, and the designation, amount, powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof, of the shares of such
series of Preferred Stock of the Corporation, are hereby fixed as follows:
1. Designation; Class and Amount; Certain Definitions. The two series of
Preferred Stock, the issuance of which is hereby authorized, shall comprise
twenty million (20,000,000) shares the distinctive serial designation of which
shall be "Preferred Stock, Series A", which is sometimes herein referred to as
"Convertible Preferred Stock, Series A" and thirty million (30,000,000) shares
the distinctive serial designation of which shall be "Preferred Stock, Series
B", which is sometimes herein referred to as "Convertible Preferred Stock,
Series B" and, together with the Convertible Preferred Stock, Series A, the
"Convertible Preferred Stock". Each share of Convertible Preferred Stock, Series
A shall be identical in all respects with all other shares of Convertible
Preferred Stock, Series A and each share of Convertible Preferred Stock, Series
B shall be identical in all respects with all other shares of Convertible
Preferred Stock, Series B. The number of shares of
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Convertible Preferred Stock which are purchased or otherwise acquired by the
Corporation or converted into Common Stock shall be canceled and shall revert to
authorized but unissued shares of Convertible Preferred Stock undesignated as to
series. Certain capitalized terms used herein have the meanings specified
therefor in Section 10 below.
2. Dividends; Priority.
(a) (i) Payments of Dividend; Convertible Preferred Stock, Series A.
Each Holder of shares of Convertible Preferred Stock, Series A shall be entitled
to receive, when and if declared by the Board of Directors, in respect of each
share of Convertible Preferred Stock, Series A, out of the funds of the
Corporation legally available therefor, quarterly cash dividend payments for
each Dividend Period or portion thereof during which such share of Convertible
Preferred Stock, Series A is outstanding. Such dividend payments shall be made,
(A) during the First Dividend Stage, in an amount determined by multiplying (x)
the dividend amount declared in respect of each share of the Corporation's
common stock, par value $0.01 per share (the "Common Stock") for such Dividend
Period (such amount payable being adjusted appropriately as set forth in Section
7(d) to reflect any stock split, stock dividend, reverse stock split,
reclassification or any transaction with a comparable effect upon the Common
Stock), times (y) 1.5; and (B) during the Second Dividend Stage, in an amount
determined by multiplying (x) the dividend amount declared in respect of each
share of Common Stock of the Corporation for such Dividend Period (such amount
payable being adjusted appropriately as set forth in Section 7(d) to reflect any
stock split, stock dividend, reverse stock split, reclassification or any
transaction with a comparable effect upon the Common Stock), times (y) 1.25,
provided, however, that in no event during either the First or the Second
Dividend Stage shall the aggregate annual dividend amount payable in respect of
each share of Convertible Preferred Stock, Series A be less than $1.80. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on shares of Convertible Preferred Stock,
Series A, which are not paid.
(ii) Payments of Dividend; Convertible Preferred Stock, Series B.
Each Holder of shares of Convertible Preferred Stock, Series B, shall be
entitled to receive, when and if declared by the Board of Directors, in respect
of each share of Convertible Preferred Stock, Series B, out of the funds of the
Corporation legally available therefor, quarterly cash dividend payments for
each Dividend Period or portion thereof during which such share of Convertible
Preferred Stock, Series B is outstanding. Such dividend payments shall be made
in an amount determined by multiplying (x) the dividend amount declared in
respect of each share of Common Stock of the Corporation for such Dividend
Period (such amount payable being adjusted appropriately as set forth in Section
7(d) to reflect any stock split, stock dividend, reverse stock split,
reclassification or any transaction with a comparable effect upon the Common
Stock), times (y) 1.25, provided, however, that in no event, during the First
Dividend Stage, shall the aggregate annual
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dividend amount payable in respect of each share of Convertible Preferred Stock,
Series B be less than $1.50 and provided, further, that in no event, during the
Second Dividend Stage, shall the aggregate annual dividend amount payable in
respect of each share of Convertible Preferred Stock, Series B be less than
$1.80. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on shares of Convertible Preferred
Stock, Series B, which are not paid.
(b) Payment and Record Dates. Dividends accrued on the Convertible
Preferred Stock in respect of each Dividend Period shall be payable, when and if
declared by the Board of Directors, in arrears prior to or concurrently with
each date of payment (each such date, a "Dividend Payment Date") by the
Corporation of quarterly cash dividends on the Common Stock in respect of such
Dividend Period; provided, however, that if any such day is not a Business Day
the applicable Dividend Payment Date shall be the next succeeding day that is a
Business Day; and provided, further that if no quarterly cash dividends are paid
on the Common Stock in respect of any such Dividend Period, the Dividend Payment
Date shall mean such date as may be determined by the Board of Directors within
three months following the end of such Dividend Period. Dividends on the
Convertible Preferred Stock shall accrue based on the then-current dividend
amount on a daily basis from the commencement of each Dividend Period. Dividends
will cease to accrue in respect of any shares of Convertible Preferred Stock on
the Surrender Date (as defined below) in respect of a mandatory conversion
pursuant to Section 7(c) or on the Surrender Date in respect of a voluntary
conversion pursuant to Section 7(a). Dividends payable on the Convertible
Preferred Stock for any Dividend Period constituting less than a full fiscal
quarter shall be computed ratably on the basis of a 360-day year of 12 30-day
months. Dividends for any Dividend Period shall not be cumulative to the extent
not paid in full on each Dividend Payment Date. Dividends on the Convertible
Preferred Stock in respect of any Dividend Period unpaid as of the Dividend
Payment Date for such Dividend Period shall permanently remain unpaid. The
foregoing notwithstanding, dividends on account of arrears for any past Dividend
Periods may be declared and paid at any time, without reference to any regular
Dividend Payment Date. Dividends shall be payable to the Holders as they appear
on the Stock Books not exceeding 40 days preceding the relevant Dividend Payment
Date. Dividends shall be paid in cash, by wire transfer in immediately available
funds to the accounts designated by the respective Holders in written notices
given to the Corporation at least five Business Days prior to the payment date
or by such other means as may be agreed to by the Corporation and the respective
Holders, such wire transfer to be effected for good value on or before the
Dividend Payment Date.
(c) Dividend Rate; Calculation of Dividend Rate; Notice.
(i) The First Dividend Stage shall commence upon the initial
issuance of Convertible Preferred Stock and shall cease upon the fifth
anniversary of the Closing Date.
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(ii) The Second Dividend Stage shall commence upon the fifth
anniversary of the Closing Date and shall continue for so long as any shares of
Convertible Preferred Stock shall remain outstanding.
(iii) Notwithstanding anything in this Certificate of Designations to
the contrary, the holders of the Convertible Preferred Stock shall participate
in all Special Dividends on a share for share basis with the holders of Common
Stock, as if shares of the Convertible Preferred Stock were converted into
Common Stock immediately prior to the record date with respect to each such
Special Dividend, and Special Dividends shall not be taken into account in
determining the annual dividend rate of the Convertible Preferred Stock for
purposes of Section 2(a) hereof.
(d) The Corporation will cause written notice of each dividend
amount on the Convertible Preferred Stock to be given to each Holder within
five Business Days after it is determined by the Board of Directors.
Notwithstanding the foregoing, if the Corporation shall not declare quarterly
cash dividends on its Common Stock for any Dividend Period, the dividend amount
on the Convertible Preferred Stock for purposes of Section 2(a) hereof shall be
computed by reference to the dividend amount on the Common Stock for the most
recent Dividend Period in respect of which dividends (other than Special
Dividends) were paid.
(e) Priority as to Dividends; Restriction on Dividends, Redemption,
etc. The Corporation shall not, for so long as the Convertible Preferred Stock
shall remain outstanding, directly or indirectly, declare or pay or set apart
for payment any dividends (including cumulative dividends) or make (or permit
any Subsidiary to make) any other distributions on, or payment on account of the
purchase, redemption or other retirement or acquisition for value of the Common
Stock, any other capital stock of the Corporation ranking junior to the
Convertible Preferred Stock as to dividends or as to distribution of assets upon
any liquidation, dissolution or winding up of the affairs of the Corporation or
any options, warrants or rights to purchase or acquire Common Stock or any such
capital stock or any securities convertible into or exchangeable for shares of
Common Stock or any such capital stock, except that such payment of dividends
and such other distributions and payments may be made so long as full dividends
payable on the Convertible Preferred Stock for the Dividend Period commencing
immediately prior to the date of such dividend, distribution or other payment
have been or are concurrently paid (or a sum sufficient for the payment thereof
set apart for such payment subject to declaration thereof); provided, however,
that the foregoing restrictions shall not apply to: (i) any dividend payable
solely in shares of any stock of the Corporation ranking, as to dividends and as
to distribution of assets upon any liquidation, dissolution or winding-up of the
affairs of the Corporation, junior to the Convertible Preferred Stock (or
payable solely in options, warrants or rights to purchase or acquire any such
stock) or (ii) any distribution pursuant to any employee or director incentive
or benefit plan or arrangement (including any employment, severance
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or consulting agreement) of the Corporation or any Subsidiary heretofore or
hereafter adopted; or (iii) any distribution pursuant to a redemption, at the
stated redemption price, of any rights granted to Holders of Common Stock
pursuant to a stockholder rights plan; or (iv) any dividend approved in writing
by the holders of at least 66 2/3 percent of all shares of Convertible Preferred
Stock then outstanding. Holders of shares of Convertible Preferred Stock shall
be entitled to receive dividends in accordance with the foregoing clause (a) of
this Section 2 in preference to and in priority over any dividend upon any
securities junior to the Convertible Preferred Stock.
3. Voting Rights.
(a) Holders of shares of Convertible Preferred Stock, voting
together as a single class with holders of shares of Common Stock (and with
holders of any other class or series of stock which may similarly be entitled to
vote with the holders of Common Stock) shall be entitled at any meeting of
stockholders called for the purpose of voting on (or acting by written consent
without need of any advance notice) Opt-out Amendment (as defined in the Merger
Agreement) (ii) any proposed amendment to the Certificate of Incorporation or
By-Laws which would reasonably have the efect of modifying in any way the
Opt-out Amendment or would reasonably cause the Corporation to become subject to
(a) the Control Share Acquisition Statute (as defined in the Merger Agreement)
or (b) any other provisions which are substntially similar to the Control Share
Acquisition Statute or (iii) any transaction or series of transactions submitted
to a vote of the stockholders of the Corporation which, if consummated, would
constitute a Change in Control, to vote with respect to such transaction(s).
When voting together with the holders of shares of Common Stock on any such
transaction(s), each share of Convertible Preferred Stock shall carry, as of the
record date applicable to such vote, a number of votes equal to the number of
votes carried in the aggregate by the number of shares of Common Stock issuable
upon conversion of one share of Convertible Preferred Stock into Common Stock in
accordance with Section 7 below.
(b) Except as provided by this Section 3 and Sections 4 and 8 below,
or as otherwise may be required by applicable law, the Holders of Convertible
Preferred Stock shall not be entitled, by virtue of their being Holders thereof,
to vote in any election of directors to the Board of the Corporation, or with
respect to any other matter submitted to the stockholders of the Corporation.
Where a vote of the Holders, voting as a separate class, may be required by
applicable law or by this Section 3 or Section 4 or 8, each share of Convertible
Preferred Stock, Series A and each share of Convertible Preferred Stock, Series
B, shall carry one vote.
4. Covenants.
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So long as any shares of Convertible Preferred Stock are outstanding,
the Corporation covenants and agrees with and for the benefit of the Holders of
such shares that without the affirmative vote or consent of Holders of 66 2/3
percent of all shares of the Convertible Preferred Stock then outstanding,
voting as a separate class in person or by proxy or by written consent delivered
to the Secretary of the Corporation, the Corporation shall not amend, alter or
repeal any provision of the Certificate of Incorporation of the Corporation,
this Certificate of Designations, or any amendment or supplement to any of the
foregoing, so as to affect adversely the rights, powers, preferences,
qualifications, limitations or restrictions of any Holder of Convertible
Preferred Stock.
5. Redemption. Shares of the Convertible Preferred Stock shall not
be redeemable, in whole or in part, in any event, at the option of the
Corporation.
6. Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the Holders of shares of Convertible Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders an amount per share in cash equal
to the amount that would be payable on one share of Common Stock (such amount
payable being adjusted appropriately to reflect any stock split, stock dividend,
reverse stock split, or any transaction with comparable effect upon the Common
Stock and assuming conversion of all shares of Convertible Preferred Stock then
outstanding into shares of Common Stock immediately prior to such liquidation,
dissolution or winding up), plus all dividends then due on the Convertible
Preferred Stock (the "Liquidation Preference"). This entitlement of the Holders
of shares of Convertible Preferred Stock shall be satisfied before any similar
payment shall be made or any assets distributed to the holders of the Common
Stock or any other security junior in rank to the Convertible Preferred Stock as
to distribution of assets upon such dissolution, liquidation or winding up. If
the assets of the Corporation are not sufficient to pay in full the liquidation
payments payable to all of the Holders of the outstanding shares of Convertible
Preferred Stock, then the Holders of all such shares shall share ratably in such
distribution of assets in accordance with the respective liquidation preferences
to which they are entitled. For the purposes of this section, neither the
voluntary sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Corporation nor the consolidation or merger of the Corporation
with one or more other corporations shall be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, unless such voluntary sale,
conveyance, exchange or transfer shall be in connection with a dissolution or
winding up of the business of the Corporation.
7. Conversion. (a) Conversion Right. At any time after the
occurrence of a Regulatory Change, each share of Convertible Preferred Stock
shall be
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convertible at the option of the Holder thereof into one fully paid and
nonassessable share of Common Stock (as adjusted pursuant to Section 7(d)
hereof).
(b) (i) Conversion Procedures. Any Holder of shares of Convertible
Preferred Stock desiring to convert such shares into Common Stock shall
surrender the certificate(s) evidencing such shares of Convertible Preferred
Stock of the Holder at the office of the transfer agent appointed for the
purpose of such conversion by the Corporation. Such surrendered certificate(s),
if the Corporation shall so require, shall be duly endorsed to the Corporation
or in blank, or accompanied by proper instruments of transfer to the Corporation
or in blank, and, in the case of any conversion other than a mandatory
conversion pursuant to clause (c) of this Section 7 below, shall be accompanied
by written notice to the Corporation that the Holder elects so to convert such
shares of Convertible Preferred Stock, which notice shall specify the name or
names (with address or addresses) in which the Holder wishes the certificate(s)
evidencing shares of Common Stock to be issued, in exchange for that certificate
or those certificates so surrendered.
(ii) The Corporation shall, within five Business Days after such
surrender of certificates evidencing shares of Convertible Preferred Stock
accompanied by written notice and in compliance with any other conditions
contained herein, issue and deliver, or cause to be issued and delivered, to the
person(s) for whose account such certificate(s) evidencing shares of Convertible
Preferred Stock were so surrendered, or to the nominee(s) of such Person(s),
certificates representing the number of full shares of Common Stock to which
such Person shall be entitled pursuant to the then-applicable conversion rate.
Such conversion shall be deemed to have been made on the date of such surrender
of the certificate(s) evidencing shares of Convertible Preferred Stock to be
converted (the "Surrender Date") and the Person(s) entitled to receive the
Common Stock deliverable upon conversion of such Convertible Preferred Stock
shall be treated for all purposes as the record holder(s) of such Common Stock
on such date and thereafter. Conversion of Preferred Stock may otherwise be
achieved in accordance with such procedures as the Corporation and a majority of
the Holders may agree.
(iii) In the event that fewer than all shares of Convertible Preferred
Stock represented by a surrendered certificate are to be converted hereunder, a
new certificate shall be issued at the Corporation's expense representing the
shares of Convertible Preferred Stock not so converted.
(iv) Effective on the day following the Surrender Date, dividends
shall cease to accrue on any shares of Convertible Preferred Stock surrendered
for conversion, such shares of Convertible Preferred Stock shall no longer be
deemed outstanding, all rights of the Holders thereof as preferred stockholders
of the Corporation shall cease (other than the right to receive dividends
declared or otherwise payable to Holders of Convertible Preferred Stock on a
record date prior to the Surrender Date) and thereupon the
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certificate(s) theretofore representing shares of Convertible Preferred Stock
shall represent only the right to receive the Common Stock deliverable upon
conversion in respect thereof.
(v) If any shares of Convertible Preferred Stock are surrendered for
conversion subsequent to the record date preceding a Dividend Payment Date but
on or prior to such Dividend Payment Date (except shares called for redemption
on a redemption date between such record date and such Dividend Payment Date),
the Holder of such shares at the close of business on such record date shall be
entitled to receive the dividend payable on such shares on such Dividend Payment
Date notwithstanding the conversion thereof.
(c) Mandatory Conversion. Immediately upon the transfer of Beneficial
Ownership of any share of Convertible Preferred Stock to any Person other than
the Shareholder or an Affiliate of the Shareholder, such share of Convertible
Preferred Stock shall convert into one fully-paid and non-assessable share of
Common Stock (as adjusted pursuant to Section 7(d)), in accordance with the
procedures provided in clause (b) of this Section 7.
(d) The conversion rate shall be adjusted from time to time as
follows:
(i) In case the Corporation shall, at any time or from time to
time while any of the shares of Convertible Preferred Stock are outstanding, (A)
pay a dividend in shares of its Common Stock, (B) subdivide its outstanding
shares of Common Stock into a smaller number of shares, or (C) combine its
outstanding shares of Common Stock into a smaller number of shares, the
conversion rate in effect immediately prior to such action shall be adjusted so
that the Holder of any shares of Convertible Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock which such Holder would have owned or have been entitled to receive
immediately following such action had such shares of Convertible Preferred Stock
been converted immediately prior thereto. An adjustment made pursuant to this
Section 7(d)(i) shall become effective retroactively to immediately after the
opening of business on the Business Day following the record date in the case of
a dividend and shall become effective immediately after the opening of business
on the Business Day following the effective date in the case of a subdivision or
combination. If, as a result of an adjustment made pursuant to this Section
7(d)(i), the Holder of any shares of Convertible Preferred Stock thereafter
surrendered for conversion shall become entitled to receive shares of two or
more classes of capital stock of the Corporation, the Board of Directors (whose
determination shall be conclusive) shall determine the allocation of the
adjusted conversion rate between or among shares of such classes of capital
stock.
(ii) In case the Corporation shall, at any time or from time to
time while any of the shares of Convertible Preferred Stock are outstanding,
issue rights
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or warrants to all holders of shares of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities convertible into
or exchangeable for Common Stock) at a price per share less than the current
Market Price per share of Common Stock, at such record date, the conversion rate
shall be adjusted so that it shall equal the rate determined by multiplying the
conversion rate in effect immediately prior to the date of issuance of such
rights or warrants by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered for
subscription or purchase, and the denominator of which shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at such current market price.
For the purposes of this Section 7(d)(ii), the issuance of rights or warrants to
subscribe for or purchase securities convertible into Common Stock shall be
deemed to be the issuance of rights or warrants to purchase the shares of Common
Stock into which such securities are convertible at an aggregate offering price
equal to the aggregate offering price of such securities plus the minimum
aggregate amount (if any) payable upon conversion of such securities into shares
of Common Stock; provided, however, that if all of the shares of Common Stock
subject to such rights or warrants have not been issued when such rights or
warrants expire, then the conversion rate shall promptly be readjusted to the
conversion rate which would then be in effect had the adjustment upon the
issuance of such rights or warrants been made on the basis of the actual number
of shares of Common Stock issued upon the exercise of such rights or warrants.
The foregoing provision shall not apply to issuances of rights pursuant to a
stockholder rights plan provided that such rights are issued together with the
Common Stock upon conversion of the Convertible Preferred Stock. An adjustment
made pursuant to this Section 7(d)(ii) shall become effective retroactively
immediately after the record date for the determination of stockholders entitled
to receive such rights or warrants.
(iii) In case the Corporation shall, at any time or from time to
time while any of the shares of Convertible Preferred Stock are outstanding,
distribute to all holders of shares of its Common Stock evidences of its
indebtedness or securities or assets (excluding cash dividends payable out of
consolidated earnings or retained earnings or dividends payable in shares of
Common Stock) or rights or warrants to subscribe for securities of the
Corporation or any of its subsidiaries (excluding those referred to in Section
7(d)(ii)), then in each such case the conversion rate shall be adjusted so that
it shall equal the rate determined by multiplying the conversion rate in effect
immediately prior to the date of such distribution by a fraction, the numerator
of which shall be the current Market Price per share of the Common Stock on the
record date referred to below, and the denominator of which shall be such
current market price per share of the Common Stock less the then fair market
value of the portion of the assets or evidences of indebtedness or securities or
assets so distributed or of such subscription rights or warrants applicable to
one share of Common Stock. Such adjustment shall become effective retroactively
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immediately after the record date for the determination of stockholders entitled
to receive such distribution.
(iv) The Corporation shall be entitled at its option to make such
additional adjustments in the conversion rate, in addition to those required by
subsections 7(d)(i), 7(d)(ii) and 7(d)(iii), as shall be necessary in order that
any dividend or distribution in shares of stock, subdivision or combination of
shares of Common Stock, issuance of rights or warrants, evidences of
indebtedness or assets (other than cash dividends payable out of consolidated
earnings or retained earnings) referred to above, shall not be taxable to the
Holders of shares of Convertible Preferred Stock.
(v) In any case in which this Section 7(d) shall require that
an adjustment be made retroactively immediately following a record date, the
Corporation may elect to defer (but only for five (5) Business Days following
the filing of the statement referred to in Section 7(d)(vii)) issuing to the
holder of any shares of this Series converted after such record date (A) the
shares of Common Stock and other capital stock of the Corporation issuable upon
such conversion over and above (B) the shares of Common Stock and other capital
stock of the Corporation issuable upon such conversion on the basis of the
conversion rate prior to adjustment.
(vi) Notwithstanding any other provisions of this Section 7(d),
the Corporation shall not be required to make any adjustment of the conversion
rate (A) in respect of any Special Dividend in which the holders of Convertible
Preferred Stock participate as provided in Section 2(c)(iii) or (B) unless such
adjustment would require an increase or decrease of at least 1% in such rate
(any lesser adjustment shall be carried forward and shall be made at the time of
and together with the next subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall amount to an increase or
decrease of at least 1% in such rate).
(vii) Whenever an adjustment in the conversion rate is required,
the Corporation shall forthwith place on file with its Transfer Agent a
statement signed by its Chief Executive Officer, Chief Financial Officer or a
Vice President and by its Secretary, Assistant Secretary, Treasurer or Assistant
Treasurer, stating the adjusted conversion rate determined as provided herein.
Such statements shall set forth in reasonable detail such facts as shall be
necessary to show the reason and the manner of computing such adjustment.
Promptly after the adjustment of the conversion rate, the Corporation shall mail
a notice thereof to each holder of shares of Convertible Preferred Stock.
(e) Reservation of Shares; Etc. (i) The Corporation shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized and unissued stock, such number of shares of its Common Stock as
shall from time to time be sufficient
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to effect the conversion of all shares of the Convertible Preferred Stock from
time to time outstanding, solely for the purpose of effecting such conversion.
The Corporation shall, from time to time, in accordance with the laws of the
State of Oklahoma, increase the authorized number of shares of Common Stock if
at any time the number of shares of authorized and unissued Common Stock shall
not be sufficient to permit the conversion of all the then-outstanding shares of
Convertible Preferred Stock.
(ii) If any shares of Common Stock required to be reserved hereunder
for purposes of conversion require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
issued upon conversion, the Corporation shall, in good faith and as
expeditiously as possible, cause such shares to be duly registered or approved
as the case may be. If the Common Stock is listed on the New York Stock Exchange
or any other national or foreign securities exchange, the Corporation shall, if
permitted by the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable upon
conversion of Convertible Preferred Stock.
(iii) The Corporation will pay any and all taxes that may be payable in
respect of the issuance or delivery of shares of Common Stock upon conversion of
shares of Convertible Preferred Stock pursuant hereto. The Corporation shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of shares of Common Stock in a
name other than that in which the shares of Convertible Preferred Stock so
converted were registered and no such issuance or delivery shall be made unless
and until the person requesting such issuance has paid to the Corporation the
amount of any such tax or has established to the satisfaction of the Corporation
that such tax has been paid.
(f) Reclassifications, Consolidations, Mergers or Sales of Assets. In
case of (i) any reclassification or change of outstanding shares of Common Stock
(other than a change in par value or from par value to no par value or from no
par value to par value, or as a result of a subdivision or combination) or (ii)
any consolidation or merger of the Corporation with one or more other
corporations (other than a consolidation or merger in which the Corporation is
the continuing corporation and which does not result in any reclassification or
change of outstanding shares of Common Stock issuable upon conversion of
Convertible Preferred Stock), (iii) any sale or conveyance to another
corporation or other entity of all or substantially all of the property of the
Corporation, or (iv) any other transaction which would constitute a Change in
Control of the Corporation, then the Corporation, or such successor corporation
or other entity, as the case may be, shall make appropriate provision so that
the holder of each share of Convertible Preferred Stock then outstanding shall
have the right to convert such share into the kind and amount of shares of stock
or other securities and property receivable upon such consolidation, merger,
sale, reclassification, change or conveyance by a holder of the number of shares
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of Common Stock into which such shares of Convertible Preferred Stock might have
been converted immediately prior to such consolidation, merger, sale,
reclassification, change or conveyance, subject to adjustment which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
Section 7(d). The provisions of this paragraph shall apply similarly to
successive consolidations, mergers, sales or conveyances.
8. Priority. The Convertible Preferred Stock shall be senior in
rank, both as to dividends and as to distribution of assets upon any
liquidation, dissolution or winding up of the affairs of the Corporation, to
the Common Stock, or any class of equity securities of the Corporation which by
its terms are junior to the Convertible Preferred Stock, and shall not be junior
in rank with respect to any class or series of preferred stock that may be
issued by the Corporation, unless the Holders of 66 2/3 percent of the
outstanding shares of the Convertible Preferred Stock shall consent to the
creation, reclassification or authorization of any class or series of the
Corporation's capital stock ranking prior to the Convertible Preferred Stock as
to dividends or as to distributions of assets upon liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, or any security
convertible into shares of such class or series. Except as otherwise provided in
this Certificate of Designations, the Convertible Preferred Stock, Series A
shall be deemed to rank on a parity with the Convertible Preferred Stock, Series
B.
9. Notices. The Corporation shall provide notice to each Holder of
any action taken or proposed to be taken or any determination made by the
Corporation and/or the Shareholder under the terms of this Certificate of
Designations. Notice of any such action or determination by the Corporation
and/or the Shareholder and all other notices and other communications provided
for in this Certificate of Designations shall be delivered by facsimile and by
reputable overnight courier,
(a) if to the Corporation, to:
WAI, Inc.
100 West Fifth Street
Tulsa, Oklahoma 74103
Facsimile: (918) 588-7960
Attn: President
12
<PAGE>
with a copy to:
Gable Gotwals Mock Schwabe Kihle Gaberino
100 West Fifth Street, Suite 1000
Tulsa, Oklahoma 74103
Facsimile: (918) 588-7873
Attn: Donald H. Kihle, Esq.
and
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Facsimile: (212) 859-4000
Attn: F. William Reindel, Esq.
or such other address as the Corporation shall have furnished to the Holders in
writing,
(b) if to a Holder and/or the Shareholder, to the address and
facsimile number of such Holder listed on the Stock Books
of the Corporation.
10. Definitions. Certain capitalized terms are used herein as defined
below:
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such Person. For the purposes of
this definition, "control," when used with respect to any particular Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Beneficial Owner" (and, with correlative meanings, "Beneficially Own"
and "Beneficial Ownership") of any interest means a Person who, together with
his, her or its Affiliates, is or may be deemed a beneficial owner of such
interest for purposes of Rule 13d-3 or 13d-5 under the Exchange Act of 1934, or
who, together with his, her, or its Affiliates, has the right to become such a
beneficial owner of such interest (whether such right is exercisable immediately
or only after the passage of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise, conversion or exchange of any warrant,
right or other instrument, or otherwise.
13
<PAGE>
"Board" shall mean the Board of Directors of the Corporation in office
at the applicable time, as elected in accordance with the By-Laws of the
Corporation and with the Stockholder Agreement.
"Business Day" means any day other than a Saturday, a Sunday, a day on
which the New York Stock Exchange is closed or a day on which state or federally
chartered banking institutions in New York, New York are not required to be
open.
"By-Laws" shall mean the By-Laws of the Corporation, in the form
specified in the Merger Agreement, as they may be amended from time to time.
"Certificate of Designations" means this Certificate of Designations,
Powers, Preferences and Relative, Participating, Optional or other Rights, and
the Qualifications, Limitations or Restrictions Thereof, creating the
Convertible Preferred Stock, Series A and Convertible Preferred Stock, Series B.
"Certificate of Incorporation" shall mean the Certificate of
Incorporation of the Corporation, in the form specified in the Merger Agreement,
as it may be amended from time to time.
"Change in Control" shall mean the occurrence of any one of the
following events:
(1) any Person (other than WRI and/or its Affiliates) becoming the
Beneficial Owner, directly or indirectly, of Voting Securities,
pursuant to the consummation of a merger, consolidation, sale of
all or substantially all of the Corporation's assets, share
exchange or similar form of corporate transaction involving the
Corporation or any of its subsidiaries that requires the approval
of the Corporation's shareholders, whether for such transaction
or the issuance of securities in such transaction, so as to cause
such Person's Voting Ownership Percentage to exceed the Control
Percentage (as defined below); provided, however, that the event
described in this paragraph (1) shall not be deemed to be a
Change in Control if it occurs as the result of any of the
following acquisitions: (A) by any employee benefit plan
sponsored or maintained by the Corporation or any Affiliate, or
(B) by any underwriter temporarily holding securities
pursuant to an offering of such securities;
(2) the consummation of a merger, consolidation, sale of all or
substantially all of the Corporation's assets, share exchange or
14
<PAGE>
similar form of corporate transaction involving the Corporation
or any of its subsidiaries that requires the approval of the
Corporation's shareholders, whether for such transaction or the
issuance of securities in such transaction, unless immediately
following such transaction more than 50 percent of the total
voting power of (x) the corporation resulting from such
transaction, or (y) if applicable, the ultimate parent
corporation that directly or indirectly has Beneficial Ownership
of 100 percent of the voting securities eligible to elect
directors of such resulting corporation, is represented by Voting
Securities that were outstanding immediately prior to such
transaction (or, if applicable, shares into which such Voting
Securities were converted pursuant to such transaction), and such
voting power among the holders of such Voting Securities that
were outstanding immediately prior to such transaction is in
substantially the same proportion as the voting power of such
Voting Securities among the holders thereof immediately prior to
such transaction; or
(3) the consummation of a plan of complete liquidation or dissolution
of the Corporation.
"Closing Date" means the date of consummation of the merger of ONEOK
with and into the Corporation, as provided in the Merger Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning specified in Section 2(a)(i) above.
"Control Percentage" shall mean a Voting Ownership Percentage of 15
percent, during the period prior to a Regulatory Change, and a Voting Ownership
Percentage of 35 percent thereafter.
"Convertible Preferred Stock" has the meaning specified in Section 1
above.
"Dividend Period" means the applicable period from (and including) the
Closing Date to the end of the first fiscal quarter after the Closing Date, and
each fiscal quarter thereafter.
"Dividend Rate" has the meaning specified in Section 2(c) above.
"First Dividend Stage" has the meaning specified in Section 2(c)(iii)
above.
15
<PAGE>
"Holder" means a holder of record of a share or shares of Convertible
Preferred Stock.
"Liquidation Preference" has the meaning specified in Section 6 above.
The "Market Price" for the Common Stock shall mean the average of the
closing prices for such Common Stock for the twenty (20) Trading Days
immediately prior to the date on which the Market Price is being determined;
provided, however, that in the event that the current per share market price of
the Common Stock is determined during a period following the announcement by the
Corporation of (a) a dividend or distribution on the Common Stock payable in
shares of Common Stock or securities convertible into Common Stock, or (b) any
subdivision, combination or reclassification of the Common Stock and prior to
the expiration of 20 Trading Days after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to take into account ex-dividend trading
or the effects of such subdivision, combination or reclassification. The closing
price for each Trading Day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system of the New York Stock Exchange or, if
the Common Stock is no longer listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to the principal national securities exchange on which the
Common Stock is then listed or admitted to trading or if the Common Stock is no
longer listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System or such
other system then in use, or, if on any such date the Common Stock is not quoted
by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in such security
selected by a majority of the Board or, if on any such date no market maker is
making a market in such security, the fair value as determined in good faith by
a majority of the Board based upon the opinion of an independent investment
banking firm of recognized standing.
"Merger Agreement" means the Agreement, dated as of December 12, 1996,
between ONEOK and WRI, as amended and/or restated from time to time.
"ONEOK" means Oneok, Inc., a Delaware corporation.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization, government or any agency or political
subdivision thereof, or any other entity.
16
<PAGE>
A "Regulatory Change" will be deemed to have occurred upon the receipt
by the Shareholder of an opinion of the Shareholder's counsel (which counsel
must be reasonably acceptable to the Corporation) to the effect that either (1)
the Public Utility Holding Company Act of 1935 (the "1935 Act") has been
repealed, modified, amended or otherwise changed or (2) the Shareholder has
received an exemption, or, in the unqualified opinion of such counsel, is
entitled without any regulatory approval to claim an exemption, or has received
an approval or no-action letter from the Securities and Exchange Commission or
its staff under the 1935 Act or has registered under the 1935 Act, or any
combination of the foregoing, and as a consequence of (1) and/or (2) the
Shareholder may fully and legally exercise the rights set forth in the
Shareholder Agreement which take effect in the period after a Regulatory Change
has occurred.
"Second Dividend Stage" has the meaning specified in Section 2(c)(ii)
above.
"Shareholder" means WRI.
"Shareholder Agreement" means the Shareholder Agreement, dated as of
November 26, 1997 between WAI and WRI.
"Special Dividend" means a dividend declared or paid on the Common
Stock in respect of a recapitalization, spin-off, reorganization or other
extraordinary transaction of the Corporation.
"Stock Books" means the stock transfer books of the Corporation
relating to its Common Stock and Preferred Stock.
"Surrender Date" has the meaning specified in Section 7 above.
"Total Voting Power" shall mean, calculated at a particular point in
time, the aggregate Votes represented by all then outstanding Voting Securities.
"Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to trading
is open for the transaction of business.
"Votes" shall mean votes entitled to be cast generally in the election
of any member of the Board, as elected in accordance with the provisions of the
By-Laws, not including the votes that would be able to be cast by holders of
shares of Convertible Preferred Stock upon the conversion of such shares to
shares of Common Stock, unless such conversion shall occur or be deemed to
occur.
17
<PAGE>
"Voting Ownership Percentage" shall mean, calculated at a particular
point in time, the Voting Power represented by the Voting Securities
Beneficially Owned by the Person whose Voting Ownership Percentage is being
determined.
"Voting Power" shall mean, calculated at a particular point in time,
the ratio, expressed as a percentage, of (a) the Votes represented by the Voting
Securities with respect to which the Voting Power is being determined to (b)
Total Voting Power.
"Voting Securities" shall mean the Common Stock and shares of any other
class of capital stock of the Corporation then entitled to vote generally in the
election of any member of the Board, as elected in accordance with the
provisions of the By-Laws and shall not include the Convertible Preferred Stock
(or other securities convertible into Voting Securities) prior to its conversion
into Common Stock (or other Voting Securities).
"WRI" means Western Resources, Inc., a Kansas corporation.
IN WITNESS WHEREOF, WAI, INC. has caused this Certificate to be made
under the seal of the Corporation and signed and attested by the undersigned
officers of the Corporation this 26th day of November, 1997.
WAI, INC.
By____________________________
Name:
Title:
(Corporate Seal)
Attest:
By________________________
Name:
Title:
18
EX-3
SHAREHOLDER AGREEMENT
between
WAI, INC.,
an Oklahoma corporation
and
WESTERN RESOURCES, INC.,
a Kansas corporation
Dated as of November 26, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1...................................................................1
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the Company...................9
Section 2.2. Representations and Warranties of the Shareholder..............10
ARTICLE III
SHAREHOLDER AND COMPANY CONDUCT
Section 3.1. Standstill Provision...........................................10
Section 3.2. Required Reduction of Ownership Percentage.....................12
Section 3.3. Top-Up Rights; Dilutive Issuance Right.........................12
Section 3.4. Restrictions on Transfer.......................................14
Section 3.5. Buy-Back Options...............................................16
Section 3.6. Buy/Sell Option................................................17
Section 3.7 Charter and By-Laws.............................................18
Section 3.8. Rights Agreement...............................................19
Section 3.9. Agreement Not to Convert.......................................19
Section 3.10. Taxes Upon Conversion or Exchange..............................19
Section 3.11. Make Whole Payment.............................................19
Section 3.12. Prohibition on Senior Securities...............................19
<PAGE>
TABLE OF CONTENTS (CONTINUED)
Page
ARTICLE IV
BOARD REPRESENTATION AND VOTING
Section 4.1. Directors Designated by the Shareholder........................20
Section 4.2. Resignation of Shareholder Nominees............................22
Section 4.3. Voting.........................................................22
ARTICLE V
EFFECTIVENESS AND TERMINATION
Section 5.1. Effectiveness..................................................24
Section 5.2. Termination....................................................24
ARTICLE VI
MISCELLANEOUS
Section 6.1. Compliance With Law............................................26
Section 6.2. Regulatory Matters.............................................26
Section 6.3. Injunctive Relief..............................................26
Section 6.4. Successors and Assigns.........................................26
Section 6.5. Amendments; Waiver.............................................27
Section 6.6. Notices........................................................27
Section 6.7. APPLICABLE LAW.................................................28
Section 6.8. Headings.......................................................28
Section 6.9. Integration....................................................28
Section 6.10. Severability...................................................29
Section 6.11. Consent to Jurisdiction........................................29
Section 6.12. Counterparts...................................................29
<PAGE>
SHAREHOLDER AGREEMENT, dated as of November 26, 1997 (this
"Agreement"), between WAI, Inc., an Oklahoma corporation (the "Company"), and
Western Resources, Inc., a Kansas corporation (the "Shareholder").
W I T N E S S E T H:
WHEREAS, the Shareholder, the Company, and ONEOK, Inc., a Delaware
corporation ("ONEOK") have entered into an Agreement, dated as of December 12,
1996, amended and restated as of May 19, 1997 (the "Merger Agreement"), pursuant
to which ONEOK has been merged with and into the Company (the "Merger") and the
Shareholder has acquired pursuant to the transactions contemplated thereby
Beneficial Ownership (as defined in Article I hereof) of 2,996,702 shares of
common stock of the Company, par value $.01 per share (the "Common Stock") and
19,317,584 shares of Series A Convertible Preferred Stock of the Company, par
value $.01 per share (together with the Company's Series B Convertible Preferred
Stock, the "Convertible Preferred Stock");
WHEREAS, prior to the consummation of the Merger (the "Closing"), the
Company and the Shareholder desire to establish in this Agreement certain terms
and conditions concerning the acquisition and disposition of securities of the
Company by the Shareholder, and related provisions concerning the Shareholder's
relationship with and investment in the Company; and
WHEREAS, concurrently with the execution and delivery hereof, the
Company and the Shareholder are entering into a Registration Rights Agreement,
dated as of the date hereof (the "Registration Rights Agreement"), in the form
attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. In addition to other terms defined elsewhere in this
Agreement, as used in this Agreement, the following terms shall have the
meanings ascribed to them below:
"Adjusted Maximum Ownership Percentage" shall mean the Maximum
Ownership Percentage minus 10.0%.
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"Affiliate" shall mean, with respect to any person, any other person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such person. For the purposes of
this definition, "control," when used with respect to any particular person,
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" shall have the meaning assigned to such term in the
introduction hereto.
"Beneficial Owner" (and, with correlative meanings, "Beneficially Own"
and "Beneficial Ownership") of any interest means a Person who, together with
his or its Affiliates, is or may be deemed a beneficial owner of such interest
for purposes of Rule 13d-3 or 13d-5 under the Exchange Act, or who, together
with his or its Affiliates, has the right to become such a beneficial owner of
such interest (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding, or
upon the exercise, conversion or exchange of any warrant, right or other
instrument, or otherwise.
"Board" shall mean the Board of Directors of the Company in office at
the applicable time, as elected in accordance with the By-laws of the Company
and with the provisions of this Agreement.
"Buy-Back Offer" shall have the meaning assigned to such term in
Section III3.5(a) hereof.
"Buyout Tender Offer" shall have the meaning assigned to such term in
Section III3.6(b) hereof.
"Buy/Sell Notice" shall have the meaning assigned to such term in
Section III3.6(a) hereof.
"Buy/Sell Option" shall have the meaning assigned to such term in
Section III3.6(a) hereof.
"Buy/Sell Price" shall have the meaning assigned to such term in
Section III3.6(a) hereof.
"By-laws" shall mean the by-laws of the Company, in the form specified
in the Merger Agreement, as they may be amended from time to time.
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"Change in Control" shall mean the occurrence of any one of the
following events:
(1) any Person (other than the Shareholder Group) becoming the
Beneficial Owner, directly or indirectly, of Voting Securities,
pursuant to the consummation of a merger, consolidation, sale of
all or substantially all of the Company's assets, share exchange
or similar form of corporate transaction involving the Company or
any of its subsidiaries that requires the approval of the
Company's shareholders, whether for such transaction or the
issuance of securities in such transaction, so as to cause such
Person's Voting Ownership Percentage to exceed the Control
Percentage (as defined below); provided, however, that the event
described in this paragraph (1) shall not be deemed to be a
Change in Control if it occurs as the result of any of the
following acquisitions: (A) by any employee benefit plan
sponsored or maintained by the Company or any Affiliate, or (B)
by any underwriter temporarily holding securities pursuant to an
offering of such securities;
(2) the consummation of a merger, consolidation, sale of all or
substantially all of the Company's assets, share exchange or
similar form of corporate transaction involving the Company or
any of its subsidiaries that requires the approval of the
Company's shareholders, whether for such transaction or the
issuance of securities in such transaction, unless immediately
following such transaction more than 50% of the total voting
power of (x) the corporation resulting from such transaction, or
(y) if applicable, the ultimate parent corporation that directly
or indirectly has Beneficial Ownership of 100% of the voting
securities eligible to elect directors of such resulting
corporation, is represented by Voting Securities that were
outstanding immediately prior to such transaction (or, if
applicable, shares into which such Voting Securities were
converted pursuant to such transaction), and such voting power
among the holders of such Voting Securities that were outstanding
immediately prior to such transaction is in substantially the
same proportion as the voting power of such Voting Securities
among the holders thereof immediately prior to such transaction;
or
(3) the consummation of a plan of complete liquidation or dissolution
of the Company.
"Charter" shall mean the Certificate of Incorporation of the Company,
in the form specified in the Merger Agreement, as it may be amended from time to
time.
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"Clearly Credible Tender Offer" shall mean any bona fide offer, tender
offer or exchange offer that is subject to Section 14 of the Exchange Act, other
than any such offer with respect to which (i) the Board of Directors of the
Company is advised in writing by outside counsel of recognized standing that the
consummation of such offer would be in violation of applicable law, or (ii) the
party making such offer has not obtained as of the date of the commencement of
such offer definitive commitment letters from reputable financial institutions
in customary form with respect to the financing of such offer.
"Closing" shall have the meaning assigned in the second recital of this
Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall have the meaning assigned in the first recital of
this Agreement.
"Company" shall have the meaning assigned in the introduction of this
Agreement.
"Company Decision Period" shall have the meaning assigned in Section
III3.6(c)(i) hereof.
"Company Repurchase Notice" shall have the meaning assigned to such
term in Section III3.5(b) hereof.
"Control Percentage" shall mean a Voting Ownership Percentage of 15%,
during the period prior to a Regulatory Change, and a Voting Ownership
Percentage of 35% thereafter.
"Conversion" shall mean the conversion of shares of Convertible
Preferred Stock into shares of Common Stock pursuant to the Charter.
"Convertible Preferred Stock" shall have the meaning assigned in the
first recital of this Agreement.
"Dilutive Issuance" shall have the meaning assigned in Section
III3.3(a)(iii) of this Agreement.
"Dilutive Issuance Right" shall have the meaning assigned in Section
III3.3(a)(iii) of this Agreement.
"Director" shall mean any member of the Board of Directors of the
Company in office at the applicable time, as elected in accordance with the
provisions of the By-laws of the Company.
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"Dividend Premium" with respect to any share of Series A Convertible
Preferred Stock calculated at any time, shall be equal to the aggregate of the
present values as of the date of the Closing (assuming a discount rate of 9.25%)
of the excess of (x) each quarterly dividend actually paid by the Company to the
Shareholder Group with respect to such share of Series A Convertible Preferred
Stock over (y) $0.45.
"Excess Buy-Back Shares" shall have the meaning assigned to such term
in Section III3.5(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Independent Director" shall mean any person who is not a Shareholder
Nominee and is independent of and otherwise unaffiliated with any member of the
Shareholder Group, and who is not a director, officer, employee, consultant or
advisor (financial, legal or other) of any member of the Shareholder Group and
has not served in any such capacity in the previous three (3) years.
"Initial Shareholder Nominee Notice" shall have the meaning assigned in
Section IV4.1(b) of this Agreement.
"Initial Shareholder Nominees" shall have the meaning assigned in
Section IV4.1(b) of this Agreement.
"Market Price" for a Security of the Company shall mean the average of
the closing prices for such Security for the twenty (20) Trading Days
immediately prior to the date on which the Market Price is being determined;
provided, however, that in the event that the current per share market price of
such security is determined during a period following the announcement by the
Company of (a) a dividend or distribution on such security payable in shares of
such security or securities convertible into such shares, or (b) any
subdivision, combination or reclassification of such security and prior to the
expiration of 20 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to take into account ex-dividend trading
or the effects of such subdivision, combination or reclassification. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if such security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such security is listed or
admitted to trading or, if such security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
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<PAGE>
as reported by the National Association of Securities Dealers, Inc. Automated
Quotations System or such other system then in use, or, if on any such date such
security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
such security selected by a majority of the Board or, if on any such date no
market maker is making a market in such security, the fair value as determined
in good faith by a majority of the Board based upon the opinion of an
independent investment banking firm of recognized standing.
"Make Whole Payment" shall have the meaning assigned to such term in
Section 3.11 hereof.
"Maximum Ownership Percentage" shall mean, calculated at a particular
point in time, a Total Ownership Percentage of 45.0%, less the Voting Power
represented by all Voting Securities Transferred by the Shareholder Group during
the term of this Agreement (including the Voting Power represented by any shares
of Convertible Preferred Stock which were converted into shares of Common Stock
contemporaneously with such Transfer pursuant to the terms of this Agreement).
"Merger" shall have the meaning set forth in the first recital of this
Agreement.
"Merger Agreement" shall have the meaning set forth in the first
recital of this Agreement.
"1935 Act" shall mean the Public Utility Holding Act of 1935, as
amended.
"NYSE" shall mean the New York Stock Exchange.
"ONEOK" shall have the meaning assigned in the first recital of this
Agreement.
"Person" shall mean any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government or department or
agency of a government.
"Quarterly Pay Down Amount" shall mean the Total Per Share Pay Down
Amount divided by 20.
"Registration Rights" shall mean the rights and obligations of the
Shareholder Group and the corresponding rights and obligations of the Company
set forth in the Registration Rights Agreement.
"Registration Rights Agreement" shall have the meaning assigned in the
third recital of this Agreement.
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<PAGE>
A "Regulatory Change" will be deemed to have occurred, with respect to
all or any one of the provisions of this Agreement, upon the receipt by the
Shareholder of an opinion of the Shareholder's counsel (which counsel must be
reasonably acceptable to the Company) to the effect that either (1) the 1935 Act
has been repealed, modified, amended or otherwise changed or (2) the Shareholder
has received an exemption, or, in the unqualified opinion of such counsel, is
entitled without any regulatory approval to claim an exemption, or has received
an approval or no-action letter from the Securities and Exchange Commission or
its staff under the 1935 Act or has registered under the 1935 Act, or any
combination of the foregoing, and as a consequence of (1) and/or (2) the
Shareholder may fully and legally exercise the rights set forth in such
provision(s) of this Agreement which take effect in the period after a
Regulatory Change has occurred.
"Repurchase" shall have the meaning assigned in Section 3.5(a) of this
Agreement.
"Rights Agreement" means the Shareholder Protection Rights Agreement,
dated as of the date hereof, attached hereto as Exhibit B.
"Sale Notice" shall have the meaning assigned in Section III3.4(b)(i)
of this Agreement.
"Sale Option" shall have the meaning assigned in Section III3.4(b) of
this Agreement.
"Sale Period" shall have the meaning assigned in Section 3.4(b)(ii) of
this Agreement.
"Sale Securities" shall have the meaning assigned in Section
III3.4(b)(i) of this Agreement.
"Securities" shall mean any equity securities of the Company.
"Securities Act" shall mean the Securities Act of 1993, as amended.
"Seller" shall have the meaning assigned in Section 3.4 of this
Agreement.
"Series A Convertible Preferred Stock" shall mean the Series A
Convertible Preferred Stock, par value $.01 per share, of the Company.
"Series B Convertible Preferred Stock" shall mean the Series B
Convertible Preferred Stock, par value $.01 per share, of the Company.
"Shareholder" shall have the meaning assigned in the introduction to
this Agreement.
-7-
<PAGE>
"Shareholder Affiliate" shall mean any Affiliate of the Shareholder.
"Shareholder Group" shall mean the Shareholder, any Shareholder
Affiliate and any Person with whom any Shareholder or any Affiliate of any
Shareholder is part of a 13D Group.
"Shareholder Nominees" shall have the meaning set forth in Section
IV4.1(d) of this Agreement.
"Successor Shareholder Nominee Notice" shall have the meaning assigned
in Section IV4.1(d) of this Agreement.
"Successor Shareholder Nominees" shall have the meaning assigned in
Section IV4.1(d) of this Agreement.
"13D Group" shall mean any group of Persons acquiring, holding, voting
or disposing of any Voting Security which would be required under Section 13(d)
of the Exchange Act and the rules and regulations thereunder to file a statement
on Schedule 13D with the Commission as a "person" within the meaning of Section
13(d)(3) of the Exchange Act.
"Total Make Whole Amount" shall mean, with respect to any share of
Series A Convertible Preferred Stock calculated at any time, an amount equal to
the Total Per Share Pay Down Amount minus the sum of (I) the product of (x) the
Quarterly Pay Down Amount and (y) the number of quarters since the date of the
Closing in which the Company has paid a dividend on the Series A Convertible
Preferred Stock of at least $0.45 per share plus (II) the Dividend Premium with
respect to such share through such time.
"Total Ownership Percentage" shall mean, calculated at a particular
point in time, the Voting Power which would be represented by the Securities
Beneficially Owned by the Person whose Total Ownership Percentage is being
determined if all shares of Convertible Preferred Stock (or other Securities
convertible into Voting Securities) Beneficially Owned by such Person were
converted into shares of Common Stock (or other Voting Security).
"Total Per Share Paydown Amount" shall mean the product of (i)
$35,000,000 divided by (ii) the total number of shares of Series A Convertible
Preferred Stock issued at the Closing.
"Total Voting Power" shall mean, calculated at a particular point in
time, the aggregate Votes represented by all then outstanding Voting Securities.
"Trading Day", with respect to a Voting Security, shall mean a day on
which the principal national securities exchange on which such Voting Security
is listed or admitted to trading is open for the transaction of business or, if
such security is not listed or admitted to
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trading on any national securities exchange, any day other than a Saturday,
Sunday or a day on which banking institutions in the City of New York are
authorized or obligated to close.
"Transfer" shall mean any sale, transfer, pledge, encumbrance or other
disposition to any Person, and to "Transfer" shall mean to sell, transfer,
pledge, encumber or otherwise dispose of to any Person.
"Unrestricted Ownership Percentage" shall mean a Voting Ownership
Percentage of 9.9%.
"Votes" shall mean votes entitled to be cast generally in the election
of Directors, not including the votes that would be able to be cast by holders
of shares of Convertible Preferred Stock upon Conversion to shares of Common
Stock unless such Conversion shall occur or be deemed to occur.
"Voting Ownership Percentage" shall mean, calculated at a particular
point in time, the Voting Power represented by the Voting Securities
Beneficially Owned by the Person whose Voting Ownership Percentage is being
determined.
"Voting Power" shall mean, calculated at a particular point in time,
the ratio, expressed as a percentage, of (a) the Votes represented by the Voting
Securities with respect to which the Voting Power is being determined to (b)
Total Voting Power.
"Voting Securities" shall mean the Common Stock and shares of any other
class of capital stock of the Company then entitled to vote generally in the
election of Directors, and shall not include Convertible Preferred Stock (or
other Securities convertible into Voting Securities) prior to Conversion into
Common Stock (or other Voting Security).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the Company. The Company
represents and warrants to the Shareholder as of the date hereof as follows:
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Oklahoma and has all
necessary corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder.
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(b) This Agreement has been duly and validly authorized by the Company
and all necessary and appropriate action has been taken by the Company to
execute and deliver this Agreement and to perform its obligations hereunder.
(c) This Agreement has been duly executed and delivered by the Company
and assuming due authorization and valid execution and delivery by the
Shareholder, this Agreement is a valid and binding obligation of the Company,
enforceable in accordance with its terms.
Section 2.2. Representations and Warranties of the Shareholder. The
Shareholder represents and warrants to the Company as of the date hereof as
follows:
(a) The Shareholder has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Kansas and has
all necessary corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder.
(b) This Agreement has been duly and validly authorized by the
Shareholder and all necessary and appropriate action has been taken by the
Shareholder to execute and deliver this Agreement and to perform its obligations
hereunder.
(c) This Agreement has been duly executed and delivered by the
Shareholder and assuming due authorization and valid execution and delivery by
the Company, this Agreement is a valid and binding obligation of the
Shareholder, enforceable in accordance with its terms.
(d) As of the effectiveness of this Agreement, the Shareholder Group
Beneficially Owns 2,996,702 shares of Common Stock and 19,317,584 shares of
Series A Convertible Preferred Stock and does not Beneficially Own any other
Voting Security, warrant, option, convertible security or other similar right to
acquire Common Stock or shares of any other class of capital stock of the
Company which are entitled to vote generally in the election of directors.
ARTICLE III
SHAREHOLDER AND COMPANY CONDUCT
Section 3.1. Standstill Provision. Subject to the provisions of this
Agreement, during the term of this Agreement, the Shareholder agrees with the
Company that, without the prior approval of a majority of the Board, the
Shareholder will not, and will cause each Shareholder Affiliate not to, take any
of the following actions:
(a) prior to the occurrence of a Regulatory Change, but not thereafter,
singly or as part of a partnership, limited partnership, syndicate or other 13D
Group, directly or indirectly,
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acquire Beneficial Ownership of any Voting Security so as to cause the
Shareholder Group's Voting Ownership Percentage to exceed the Unrestricted
Ownership Percentage.
(b) singly or as part of a partnership, limited partnership, syndicate
or other 13D Group, directly or indirectly, acquire, propose to acquire, or
publicly announce or otherwise disclose an intention to propose to acquire, or
offer or agree to acquire, by purchase or otherwise, Beneficial Ownership of any
Security so as to cause the Shareholder Group's Total Ownership Percentage to
exceed the Maximum Ownership Percentage;
(c) deposit (either before or after the date of the execution of this
Agreement) any Security in a voting trust or subject any Security to any similar
arrangement or proxy with respect to the voting of such Security;
(d) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies", or become a "Participant" in a "solicitation" (as
such terms are used in Regulation 14A under the Exchange Act) to seek to advise
or influence any person to vote against any proposal or director nominee
recommended to the shareholders of the Company or any of its subsidiaries by at
least a majority of the Board of Directors;
(e) form, join or in any way participate in a 13D Group with respect to
any Security of the Company or any securities of its subsidiaries;
(f) commence (including by means of proposing or publicly announcing or
otherwise disclosing an intention to propose, solicit, offer, seek to effect or
negotiate) a merger, acquisition or other business combination transaction
relating to the Company;
(g) initiate a "proposal," as such term is used in Rule 14a-8 under the
Exchange Act, "propose", or otherwise solicit the approval of, one or more
stockholders for a "proposal" or induce or attempt to induce any other person to
initiate a "proposal";
(h) otherwise act, alone or in concert with others, to seek to control
or influence the management, the Board or policies of the Company;
(i) take any other action to seek or effect control of the Company
other than in a manner consistent with the terms of this Agreement.
This Section 3.1 shall not be interpreted to restrict the Shareholder
or any Shareholder Affiliate from taking any action or exercising any right
consistent with the terms of this Agreement, including engaging in private and
confidential discussions with the Board or the management of the Company. In
addition, this section shall not be deemed to restrict the Shareholder Nominees
from participating as board members in the direction of the Company.
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Section 3.2. Required Reduction of Ownership Percentage. If at any time
the Shareholder becomes aware that the Shareholder Group's Total Ownership
Percentage (excluding Excess Buy-Back Securities) exceeds the Maximum Ownership
Percentage and/or, prior to the occurrence of a Regulatory Change and not
thereafter, that the Shareholder Group's Voting Ownership Percentage (excluding
Excess Buy-Back Securities) exceeds the Unrestricted Ownership Percentage, in
each case other than as permitted pursuant to the terms of this Agreement, then
the Shareholder shall, or shall cause the Shareholder Affiliates to, consistent
with the provisions of Section 3.4 of this Agreement, promptly take all action
necessary to reduce the amount of Securities or Voting Securities, as the case
may be, Beneficially Owned by the Shareholder Group such that the Shareholder
Group's Total Ownership Percentage (excluding Excess Buy-Back Securities) is not
greater than the Maximum Ownership Percentage and that the Shareholder Group's
Voting Ownership Percentage (excluding Excess Buy-Back Securities) is not
greater than the Unrestricted Ownership Percentage, as the case may be.
Section 3.3. Top-Up Rights; Dilutive Issuance Right. (a) During the
term of this Agreement and prior to the occurrence of a Regulatory Change, but
not thereafter:
(i) If the Shareholder Group's Voting Ownership Percentage falls
below the Unrestricted Ownership Percentage, the Shareholder may at its
option (A) purchase Voting Securities from time to time in the open
market or otherwise or (B) convert shares of Convertible Preferred
Stock into shares of Common Stock pursuant to the terms of the Charter,
in each case in an amount sufficient in order to restore the
Shareholder Group's Voting Ownership Percentage to the Unrestricted
Ownership Percentage.
(ii) If the Shareholder Group's Total Ownership Percentage
falls below the Maximum Ownership Percentage, the Shareholder may at
its option purchase Voting Securities from time to time in the open
market or otherwise in an amount sufficient in order to restore the
Shareholder Group's Total Ownership Percentage to the Maximum Ownership
Percentage; provided, however that the Shareholder shall present for
exchange, and the Company shall exchange at no cost to the Shareholder,
Common Stock purchased pursuant to this paragraph for shares of Series
B Convertible Preferred Stock (at a ratio of one share of Series B
Convertible Preferred Stock in exchange for each share of Common Stock
(as appropriately adjusted to reflect any stock split, stock dividend,
reverse stock split, reclassification or any other transaction with a
comparable effect)) in an amount sufficient to ensure that the
Shareholder Group is in compliance with its obligations under Section
3.1(a) hereof.
(iii) If the Shareholder Group's Total Ownership Percentage
would fall below the Maximum Ownership Percentage as a result of any
security issuance (a "Dilutive Issuance") by the Company, except as
provided in paragraph III3.3(a)(v) below, the Shareholder shall have
the right (the "Dilutive Issuance Right") to require the Company to
issue to the Shareholder (A) additional Common Stock, up to the maximum
number of such
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shares that would permit the Shareholder Group to remain in compliance
with Section 3.1(a) hereof, and (B) additional shares of Series B
Convertible Preferred Stock, up to an amount of such shares of Common
Stock and Series B Convertible Preferred Stock as may be necessary to
restore the Shareholder Group's Total Ownership Percentage to the
Maximum Ownership Percentage. Shares of Common Stock or Series B
Preferred Stock issued pursuant to the exercise of a Dilutive Issuance
Right shall be issued for cash concurrently with the closing of the
Dilutive Issuance. The issue price per share for shares of Common Stock
and shares of Series B Convertible Preferred Stock issued pursuant to
the Dilutive Issuance Right shall be equal to the issue price per share
of the Dilutive Issuance. Such issue price shall in turn be equal to
the aggregate amount of cash plus the fair market value of any other
property received by the Company in consideration of the Dilutive
Issuance, divided by the number of shares being issued in such Dilutive
Issuance, with such fair market value being determined in good faith by
the Board of Directors of the Company, provided that if the Shareholder
shall object to such valuation within 30 days of its receipt of notice
thereof, then the fair market value of such property shall be
determined at the Company's sole expense by an independent nationally
recognized financial advisor mutually acceptable to the Shareholder and
the Company.
(iv) The Shareholder must provide the Company with notice of
its intention to exercise the Dilutive Issuance Right sixty (60) days
prior to the expected closing of the Dilutive Issuance, which expected
closing date will be provided to the Shareholder by or on behalf of the
Company not less than ninety (90) days prior to such expected closing
date.
(v) The Company shall not be obligated to provide the
Shareholder with a Dilutive Issuance Right (I) in connection with
issuances of securities pursuant to employee benefit plans and programs
of the Company in the ordinary course of business or (II) which would
require the issuance of fewer than 25,000 shares of Series B
Convertible Preferred Stock; provided, however, that any share
issuances not required to be made pursuant to this clause (II) shall be
carried forward and taken into account in determining whether the
Company must provide the Shareholder with a subsequent Dilutive
Issuance Right. In addition, in the case of any Dilutive Issuance in
connection with any acquisition or other business combination
transaction, by merger or otherwise, by the Company, the Company shall
be required to provide the Shareholder with a Dilutive Issuance Right
only to the extent of restoring the Shareholder Group's Total Ownership
Percentage to the Adjusted Maximum Ownership Percentage.
(vi) At the Closing, the Shareholder shall be entitled to
require the Company to issue to the Shareholder, at a price per share
equal to the Market Price as of the date of the Closing, additional
Common Stock up to the maximum number of shares that would permit the
Shareholder Group to remain in compliance with Section 3.1(a) and
additional shares
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of Series A Convertible Preferred Stock so as to restore the
Shareholder Group's Total Ownership Percentage to the Maximum Ownership
Percentage.
(b) From time to time following a Regulatory Change and during the term
of this Agreement:
(i) If the Shareholder Group's Total Ownership Percentage
falls below the Maximum Ownership Percentage, the Shareholder may at
its option purchase Voting Securities from time to time in the open
market or otherwise in an amount sufficient in order to restore the
Shareholder Group's Total Ownership Percentage to the Maximum Ownership
Percentage.
(ii) If the Shareholder Group's Total Ownership Percentage
would fall below the Adjusted Maximum Ownership Percentage as a result
of a Dilutive Issuance by the Company pursuant to primary or secondary
offerings, mergers, acquisitions or otherwise, the Shareholder shall
have a Dilutive Issuance Right (for the issuance of Common Stock only
and not Series B Convertible Preferred Stock) to the extent of
restoring the Shareholder Group's Ownership Percentage to the Adjusted
Maximum Ownership Percentage.
(iii) The Shareholder must provide the Company with notice of
its intention to exercise the Dilutive Issuance Right sixty (60) days
prior to the expected closing of the Dilutive Issuance, which expected
closing date will be provided to the Shareholder by or on behalf of the
Company not less than ninety (90) days prior to such expected closing
date.
(c) All Securities acquired by purchase or conversion pursuant to this
Section 3.3 shall be subject to the terms of this Agreement. In no event shall
the Shareholder Group's exercise of the Dilutive Issuance Right be interpreted
to be a waiver by the Shareholder of its right to make purchases of Securities
pursuant to this Section.
Section 3.4. Restrictions on Transfer. None of the members of the
Shareholder Group shall directly or indirectly Transfer any Voting Securities
without the prior written consent of a majority of the Independent Directors,
except the following Transfers:
(a) Transfers of Securities representing upon Transfer Voting
Power of less than 5.0% to any Transferee, without prior notice to the
Company, so long as such Transferee and any Affiliate of such
Transferee and any such person who is a member of a 13D Group with such
Transferee does not have a Voting Ownership Percentage of 5.0% or more
immediately prior to giving effect to at the time of each such
Transfer.
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(b) Transfers of Securities representing upon Transfer Voting
Power of 5.0% or more pursuant to the following procedure (the "Sale
Option"):
(i) The Seller must provide written notice (a "Sale
Notice") of its intention to sell to the Company Securities
representing, upon Transfer, Voting Power of 5.0% or more (the
"Sale Securities"). The Sale Notice shall specify the number
of Sale Securities and the cash price per share at which the
Company or its designee may purchase the Sale Securities,
which cash price shall equal 98.5% of the Market Price of such
Sale Securities determined as of the date of the Sale Notice;
provided, however, that the cash price per share at which the
Company or its designee shall purchase shares of Convertible
Preferred Stock pursuant to this subsection shall equal 98.5%
of the Market Price of the Common Stock determined as of the
date of the Sale Notice.
(ii) The Company shall have a period ending on the
later of ninety (90) days after the date of the Sale Notice
and thirty (30) days from the date of receipt of all necessary
regulatory approvals (the "Sale Period") (provided, that in no
event shall the Sale Period exceed one hundred eighty (180)
days) within which to effect a closing of the Company's or its
designee's purchase of all, but not less than all, of the Sale
Securities.
(iii) If the Company or its designee shall for any
reason fail to effect a closing of the purchase of all, but
not less than all, of the Sale Securities within the Sale
Period, the Company shall at its option inform the Seller in
writing that it shall reimburse the Seller for the aggregate
difference between the Market Price of the Sale Securities as
of the date of the Sale Notice and the Market Price of the
Sale Securities as of the date that the Seller completes its
transfer of the Sale Securities, in which event such transfer
by the Seller must be completed within the later of 180 days
from the date of the Sale Notice or 30 days from the receipt
of all necessary regulatory approvals. Otherwise, if the
Company shall not have so informed the Seller, the Seller
shall have 16 months from the date of the Sale Notice to
complete such transfer. In the event that such transfer by the
Seller is not so completed within the applicable period, the
Sale Securities shall thenceforth again be subject to this
Section 3.4.
(c) Transfers of Securities to the public in a bona fide
underwritten offering pursuant to the Registration Rights Agreement;
provided, however, that the Seller and the representative or
representatives of the underwriters previously agree in writing with
the Company that all reasonable efforts will be made to achieve a wide
distribution of the Voting Securities in such offering and to ensure
that no Transferee in such offering acquires for its own account
Beneficial Ownership of Securities representing upon Transfer Voting
Power of 5.0% or more.
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(d) Transfers of all or part of the Shareholder Group's
Securities pursuant to a pro rata distribution of Securities among the
shareholders of the Shareholder.
(e) Transfers of Securities among members of the Shareholder
Group; provided, however, that any such transferee shall agree with the
Company in writing prior to each such transfer to be bound by the terms
of this Agreement with respect to its Beneficial Ownership of
Securities.
(f) If a Clearly Credible Tender Offer for the Company has
been commenced, at the Shareholder's option Transfers of Securities by
means of tenders into such Clearly Credible Tender Offer in an amount
not exceeding the percentage (on the basis of total Votes and assuming
the conversion of all shares of Convertible Preferred Stock into shares
of Common Stock) of the Voting Securities of which it is the Beneficial
Owner equal to the highest percentage (on the basis of total Votes) of
the aggregate of all Voting Securities not Beneficially Owned by any
member of the Shareholder Group which has ever been announced to have
been tendered into such Clearly Credible Tender Offer.
Section 3.5. Buy-Back Options. (a) During the term of this Agreement,
if the Company purchases Securities from the public, whether by tender offer,
open market purchase or otherwise (a "Repurchase"), the Company shall
contemporaneously with the Repurchase offer to repurchase from the Shareholder
on the same terms and conditions, including price, as in the Repurchase, a
percentage (on the basis of total Votes and assuming the conversion of all
shares of Convertible Preferred Stock into shares of Common Stock) of those
Securities Beneficially Owned by the Shareholder equal to the percentage (on the
basis of total Votes and assuming the conversion of all shares of Convertible
Preferred Stock into shares of Common Stock) of Securities to be Repurchased
from the Beneficial Owners of Securities other than the Shareholder or any
Shareholder Affiliate (the "Buy-Back Offer"). The Shareholder may accept such
Buy-Back Offer in its sole discretion; provided, however, that in the event of a
Repurchase the Shareholder shall be required to sell Securities or Voting
Securities of which it is the Beneficial Owner to the Company in an amount
sufficient to ensure that its Total Ownership Percentage does not exceed the
Maximum Ownership Percentage and/or, prior to the occurrence of a Regulatory
Change and not thereafter, that the Shareholder Group's Voting Ownership
Percentage does not exceed the Unrestricted Ownership Percentage, in each case
other than as permitted pursuant to the terms of this Agreement; and provided
further that the Shareholder shall not be required to comply with the preceding
mandatory sale requirement (i) during any period when doing so would cause the
Shareholder to incur any liability under Section 16(b) of the Exchange Act or
the rules and regulations promulgated thereunder, and (ii) to the extent that
compliance with such mandatory sale requirement would have an adverse effect on
the availability of pooling-of-interests accounting treatment with respect to
any business combination involving the Shareholder or any of the Shareholder's
subsidiaries that has either been announced or is under bona fide consideration
by the Shareholder at the time of such Repurchase, but the Shareholder shall be
required to comply with such mandatory sale requirement immediately upon the
conditions set forth in (i) and (ii)
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above no longer being applicable. Any Securities Beneficially Owned by the
Shareholder Group as permitted by the preceding sentence which cause the
Shareholder Group's Total Ownership Percentage to exceed the Maximum Ownership
Percentage and/or, prior to the occurrence of a Regulatory Change and not
thereafter, the Shareholder Group's Voting Ownership Percentage to exceed the
Unrestricted Ownership Percentage shall be referred to in this Agreement as
"Excess Buy-Back Securities."
(b) The Company shall provide notice to the Shareholder of its
intention to engage in a Repurchase not less than 30 days in advance of the date
on which the Repurchase is to begin (the "Company Repurchase Notice"). The
Shareholder must provide notice to the Company within ten (10) days of receipt
of the Company Repurchase Notice of (i) whether the Shareholder intends to
accept the Buy-Back Offer and (ii) in good faith whether the Shareholder is
aware that the Shareholder would be subject to any of the conditions set forth
in (i) or (ii) above as a result of such Repurchase.
Section 3.6. Buy/Sell Option. (a) At the fifteenth and at each
succeeding anniversary of the date hereof, if at such times this Agreement
remains in force, each of the Shareholder and the Company may at its option (the
"Buy/Sell Option") provide notice (the "Buy/Sell Notice") to the other party of
a price (the "Buy/Sell Price") at which such notifying party intends in good
faith either to sell to the receiving party all, but not less than all, of the
Securities Beneficially Owned by the notifying party or to buy from the
receiving party all, but not less than all, of the Securities Beneficially Owned
by the receiving party; provided, however, that the Buy/Sell Price shall apply
equally to shares of Convertible Preferred Stock and shares of Common Stock and
provided, further, that all references in this Section 3.6 to Securities
Beneficially Owned by the Company shall be deemed to refer only to outstanding
Securities Beneficially Owned by shareholders of the Company other than the
Shareholder Group.
(b) Upon receipt by the Shareholder of a Buy/Sell Notice from the
Company, the Shareholder Group shall have ninety (90) days (the "Shareholder
Decision Period") within which either to (i) agree to sell for cash all, but not
less than all, of the Securities Beneficially Owned by the Shareholder Group to
the Company at the Buy/Sell Price or (ii) make a bona fide Clearly Credible
Tender Offer (a "Buyout Tender Offer") at the Buy/Sell Price for any and all
Securities Beneficially Owned by the Company, which Buyout Tender Offer the
Company hereby agrees not to oppose. A non-waivable condition to the
consummation of the Buyout Tender Offer shall be the valid tender into such
offer, on or prior to the 20th day following the receipt of all regulatory
approvals required for the consummation of such offer, of Voting Securities
representing in the aggregate two-thirds (2/3) of the Voting Power represented
by all Voting Securities held by shareholders of the Company other than the
Shareholder Group.
(c) (i) Upon receipt by the Company of a Buy/Sell Notice from the
Shareholder, the Company shall have ninety (90) days (the "Company Decision
Period") within which to (A) agree to purchase for cash all but not less than
all of the Securities Beneficially Owned by the
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Shareholder Group at the Buy/Sell Price or (B) agree to seek an opinion from an
independent, internationally recognized investment banking firm relating to the
fairness to the Company's shareholders of the Offer Price in the Buyout Tender
Offer with respect to the acquisition by the Shareholder of all Securities
Beneficially Owned by the Company at the Buy/Sell Price.
(ii) If the Company shall not agree to repurchase the
Voting Securities Beneficially Owned by the Shareholder Group
pursuant to Section 3.6(c)(i) above, the Company shall have
the right, within ninety (90) days following the end of the
Company Decision Period, to obtain the fairness opinion and
execute a merger agreement between the Company and any member
of the Shareholder Group pursuant to which the Shareholder or
a Shareholder Affiliate shall acquire Beneficial Ownership of
all remaining Securities at the Buy/Sell Price. The terms of
such merger agreement shall include customary provisions
regarding the non- solicitation of alternative transactions by
the Company and the recommendation of the Merger to the
Company's shareholders, if required.
(iii) If the Company fails to satisfy the condition
pursuant to Section 3.6(c)(ii) above by the end of such ninety
(90) day period, or if the Company cannot obtain a fairness
opinion by the end of such ninety (90) day period, this
Agreement shall immediately terminate.
(d) If the Shareholder and the Company each provide a Buy/Sell Notice
to the other party on the same day, the Buy/Sell Notice containing the higher
valued Buy/Sell Price shall be the effective and controlling Buy/Sell Notice. In
the event that (i) the Buy/Sell Price set forth in either or both of the
Buy/Sell Notices consists of consideration other than cash, and (ii) the parties
are unable to reach agreement as to which of the Buy/Sell Prices is higher
valued for purposes of this subsection (d), an independent, internationally
recognized investment banking firm mutually agreeable to both parties shall
conclusively make such determination.
(e) Any purchase by the Company of the Shareholder Group's Securities
pursuant to this Section shall be closed within a period ending ninety (90) days
after the end of the Shareholder Decision Period or the Company Decision Period,
as the case may be, or thirty (30) days after the date of receipt of all
necessary regulatory approvals, whichever is later.
Section 3.7 Charter and By-Laws. During the term of this Agreement the
Company shall not amend, alter or repeal, or propose the amendment, alteration
or repeal of, any provision of the Charter or the By-Laws in any manner which is
inconsistent with the terms of this Agreement and which adversely affects the
rights of the Shareholder Group under the terms of this Agreement. If at any
time during the term of this Agreement the provisions of this Agreement shall
conflict with the provisions of the Charter and the By-Laws, the provisions of
this Agreement shall be controlling.
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Section 3.8. Rights Agreement. During the term of this Agreement, the
Company hereby agrees not to amend any provision of the Rights Agreement in any
manner which is inconsistent with the terms of this Agreement or the Merger
Agreement and which adversely affects the rights of the Shareholder Group under
the terms of this Agreement.
Section 3.9. Agreement Not to Convert. During the term of this
Agreement and prior to the occurrence of a Regulatory Change, the Shareholder
agrees that it shall not, and shall cause each Shareholder Affiliate not to,
Convert shares of Convertible Preferred Stock Beneficially Owned by the
Shareholder or any Affiliate into shares of Common Stock except to the extent
any such shares of Convertible Preferred Stock are Converted (a) concurrently
with the Transfer of such shares to any Person other than the Shareholder or any
Shareholder Affiliate or (b) pursuant to the Shareholder's top-up rights as set
forth in Section 3.3(a)(i)(B).
Section 3.10. Taxes Upon Conversion or Exchange. The Company hereby
agrees to pay any and all stock transfer and documentary stamp taxes that may be
payable in respect of any issuance or delivery of (i) any shares of Convertible
Preferred Stock, (ii) any shares of Common Stock issued in a Conversion of
shares of Convertible Preferred Stock, or (iii) any exchange of shares of Common
Stock for shares of Convertible Preferred Stock, or certificates or instruments
evidencing any of such shares or securities. The Company shall not, however, be
required to pay any such tax which may be payable in respect of any transfer
involved in the issuance or delivery of shares of Common Stock in a Conversion
of shares of Convertible Preferred Stock in a name other than that in which the
shares of such Convertible Preferred Stock were registered.
Section 3.11. Make Whole Payment. Immediately upon the Conversion of
any share of Series A Preferred Stock, the Company shall pay to the Shareholder
an amount (a "Make Whole Payment") with respect to such share equal to the Total
Make Whole Amount for such share as of the date of such Conversion; provided,
however, that the Company shall not be required to make a Make Whole Payment in
respect of the Conversion of fewer than 25,000 shares of Series A Convertible
Preferred Stock; provided, further, that any Make Whole Payments not required to
be made pursuant to this sentence shall be carried forward and taken into
account in determining whether the Company must provide the Shareholder with a
subsequent Make Whole Payment.
Section 3.12. Prohibition on Senior Securities. During the term of this
Agreement, the Company hereby agrees that it shall not create, authorize or
reclassify any authorized stock of the Company into (x) any class or series of
the Company's capital stock ranking prior to the Convertible Preferred Stock as
to dividends or as to distributions of assets upon liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, or (y) any class or
series of the Company's capital stock entitled to vote separately as a class on
any matter whatsoever, other than an amendment to the Charter which would have
the effect of modifying the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions
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of such class or series so as to affect the holders thereof adversely, or (z)
any security convertible into shares of any class or series described in (x) or
(y) above.
ARTICLE IV
BOARD REPRESENTATION AND VOTING
Section 4.1. Directors Designated by the Shareholder. (a) Immediately
following the Closing, the Board shall expand the size of the Board by two (2)
Directors and shall appoint as additional Directors the two (2) Initial
Shareholder Nominees (as defined in Section IV4.1(b) below) who have been
designated by the Shareholder in the Initial Shareholder Nominee Notice (as
defined in Section IV4.1(b) below) attached as Exhibit C hereto. One Initial
Shareholder Nominee shall be placed in the class of Directors next standing for
election, and the remaining Initial Shareholder Nominee shall be placed in the
class of Directors next but one standing for election. Immediately following the
occurrence of a Regulatory Change, the Board shall expand the Board as may be
necessary and shall appoint additional Initial Shareholder Nominees as
designated by the Shareholder in an additional Initial Shareholder Nominee
Notice in a number sufficient to ensure that Shareholder Nominees comprise a
number of Directors which is (x) 4 Directors if the total size of the Board is
14 or fewer Directors (excluding any Shareholder Nominees) or (y) one-third
(rounding down to the nearest whole Director) of the Board if the total size of
the Board is more than 14 Directors (excluding any Shareholder Nominees). Such
additional Initial Shareholder Nominees shall be distributed among the classes
of Directors as evenly as possible. In the event of a vacancy caused by the
disqualification, removal, resignation or other cessation of service of any
Initial Shareholder Nominee from the Board, the Board shall elect as a Director
(to serve until the Company's immediately succeeding annual meeting of
shareholders) a new Initial Shareholder Nominee who has been designated by the
Shareholder in an additional Initial Shareholder Nominee Notice that has been
provided to the Company at least seven (7) days prior to the date of a regular
meeting of the Board.
(b) The Shareholder shall provide notice to the Company (the "Initial
Shareholder Nominee Notice") as required by Section IV4.1(a) above, which notice
shall contain the following information: (i) the name of the person(s) it has
designated to become Director(s) (the "Initial Shareholder Nominees"), and (ii)
all information required by Regulation 14A and Schedule 14A under the Exchange
Act with respect to each such Initial Shareholder Nominee.
(c) Following the occurrence of a Regulatory Change and during the term
of this Agreement, until such time as the Initial Shareholder Nominees and the
Successor Shareholder Nominees (as defined in Section IV4.1(d) below) together
comprise a number of Directors which is one-third (rounding down to the nearest
whole Director) of the Board, at the first annual meeting of shareholders of the
Company following the occurrence of a Regulatory Change and at each subsequent
annual meeting of shareholders of the Company at which (i) the term of any
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Director is to expire or (ii) a vacancy is caused by the removal, resignation,
retirement, death, disability or disqualification or other cessation of service
of any Director, the Company shall at its option (i) cause such directorship to
remain vacant, with the size of the Board correspondingly being reduced, or (ii)
designate as a replacement Director a Successor Shareholder Nominee to be
included in the slate of nominees recommended by the Board to the Company's
shareholders for election as Directors and use its best efforts to cause the
election of each such Successor Shareholder Nominee to the Board, including
soliciting proxies in favor of the election of such persons. The Successor
Shareholder Nominees shall be divided as nearly equally as possible among all
the classes of Directors, as specified in the Successor Shareholder Nominee
Notice (as defined in Section IV4.1(d) below).
(d) Following the occurrence of a Regulatory Change and during the term
of this Agreement, until such time as the Initial Shareholder Nominees and the
Successor Shareholder Nominees together comprise a number of Directors which is
one-third (rounding down to the nearest whole Director) of the Board, the
Shareholder shall provide notice to the Company in writing sixty (60) days prior
to each annual meeting of the Company's shareholders ("Successor Shareholder
Nominee Notice"), indicating (i) the name of the person(s) it has designated to
become Director(s) ("Successor Shareholder Nominees" and together with Initial
Shareholder Nominees, "Shareholder Nominees"), if any, (ii) the class of
Directors to which each such Successor Shareholder Nominee shall be assigned,
and (iii) all information required by Regulation 14A and Schedule 14A under the
Exchange Act with respect to each such Successor Shareholder Nominee.
(e) The Shareholder shall consult with the Company in connection with
the identity of any proposed Shareholder Nominee. In the event the Company is
advised in writing by its outside counsel that a proposed Shareholder Nominee
would not be qualified under the Company's Charter or By-Laws or any applicable
statutory or regulatory standards to serve as a Director, or if the Company
otherwise reasonably objects to a proposed Shareholder Nominee, including
without limitation because such Shareholder Nominee either (i) is a director or
officer of a direct competitor of the Company or (ii) has engaged in any adverse
conduct that would require disclosure under Item 7 of Schedule 14A promulgated
under the Exchange Act, the Shareholder agrees to withdraw such proposed
Shareholder Nominee and nominate a replacement therefor (which replacement would
be subject to the requirements of this Section IV4.1(e)). Any such objection by
the Company must be made no later than one (1) month after the Shareholder first
informs the Company of the identity of the proposed Shareholder Nominee;
provided, however, that the Company shall in all cases notify the Shareholder of
any such objection sufficiently in advance of the date on which proxy materials
are mailed by the Company in connection with such election of directors to
enable the Shareholder to propose an alternate Shareholder Nominee pursuant to
and in accordance with the terms of this Agreement. Prior to the occurrence of a
Regulatory Change, no more than one Shareholder Nominee may be a director,
officer or employee of the Shareholder. Following the occurrence of a Regulatory
Change, no more than two (2) Shareholder Nominees may be directors, officers or
employees of the Shareholder.
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(f) During the term of this Agreement the Company agrees to include
each Shareholder Nominee to be added to or retained on the Board pursuant to
this Agreement in the slate of nominees recommended by the Board to the
Company's shareholders for election as Directors and shall use its best efforts
to cause the election or reelection of each such Shareholder Nominee to the
Board, including soliciting proxies in favor of the election of such persons.
(g) During the term of this Agreement and prior to the occurrence of a
Regulatory Change, but not thereafter, no Shareholder Nominee shall chair a
committee of the Board and no Shareholder Nominee shall serve on the Nominating
Committee of the Board. Following the occurrence of a Regulatory Change and
during the term of this Agreement, the Shareholder shall be entitled to
designate Shareholder Nominees to be members of each committee of the Board
(including without limitation the executive committee, the audit committee, the
nominating committee and the executive compensation committee), and to fill any
vacancies caused by the departure of Shareholder Nominees from any such
committees if no other Shareholder Nominee is a member of such committee, for so
long as Shareholder Nominees are not represented pro rata, based on the number
of Directors who are Shareholder Nominees (rounding down to the nearest whole
Director), with respect to each committee of the Board.
Section 4.2. Resignation of Shareholder Nominees. Unless otherwise
agreed by the Company, the Shareholder shall cause each of the Shareholder
Nominees then serving on the Board to offer their resignations from the Board
immediately upon the earlier to occur of the following:
(a) The termination of this Agreement pursuant to and in
accordance with Section 5.2 hereof; and
(b) The Shareholder Group's Total Ownership Percentage falling
below 10.0%.
Section 4.3. Voting. During the term of this Agreement, the
Shareholder, as a holder of shares of Voting Securities, agrees that:
(a) The Shareholder shall, and shall cause each Shareholder Affiliate
to, be present, in person or by proxy, at all meetings of shareholders of the
Company so that all Voting Securities having voting rights which are
Beneficially Owned by the Shareholder and the Shareholder Affiliates may be
counted for the purpose of determining the presence of a quorum at such
meetings.
(b)(i) With respect to the election of Directors, the Shareholder
shall, and shall cause each Shareholder Affiliate to, vote all Voting Securities
Beneficially Owned by the Shareholder and any Shareholder Affiliate in favor of
the election of all candidates for Director nominated by the Company's Board
(including the Shareholder Nominees) and (ii) with respect to any proposal
initiated by a shareholder of the Company relating to the redemption of the
rights
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<PAGE>
issued pursuant to the Rights Agreement or any modification of the Rights
Agreement (other than nonbinding precatory resolutions with respect to which
subsection (c) hereof shall apply), the Shareholder shall, and shall cause each
member of the Shareholder Group to, vote all Voting Securities Beneficially
Owned by the Shareholder or any member of the Shareholder Group in accordance
with the recommendation of the Board.
(c)(i) With respect to the Opt-out Amendment (as defined in the Merger
Agreement), the Shareholder and any member of the Shareholder Group may vote any
or all of the Securities Beneficially Owned by them in their sole discretion;
and (ii) with respect to any proposed amendment to the Charter or By-laws which
would reasonably have the effect of modifying in any way the Opt-out Amendment
or would reasonably cause the Company to become subject to (a) the Control Share
Acquisition Statute (as defined in the Merger Agreement) or (b) any other
provisions which are substantially similar to the Control Share Acquisition
Statute, the Shareholder Group shall have the right to abstain or vote against
such amendment.
(d) With respect to all other matters submitted to a vote of the
Company's shareholders, prior to the occurrence of a Regulatory Change, but not
thereafter, and during the term of this Agreement, the Shareholder and any
member of the Shareholder Group may vote any or all of the Voting Securities
Beneficially Owned by them, in their sole discretion. Following the occurrence
of a Regulatory Change and during the term of this Agreement, (i) the
Shareholder and each member of the Shareholder Group may vote in their sole
discretion a number of Voting Securities Beneficially Owned by the Shareholder
Group having voting rights with respect to such other matters representing in
the aggregate a Voting Ownership Percentage not in excess of the Unrestricted
Ownership Percentage, and (ii) the Shareholder shall, and shall cause each
member of the Shareholder Group to, vote all Voting Securities Beneficially
Owned by the Shareholder Group having voting rights with respect to such other
matters representing in the aggregate a Voting Ownership Percentage in excess of
the Unrestricted Ownership Percentage in the same proportion (based on total
Votes) as all Voting Securities voted on any such other matter are voted by the
shareholders of the Company other than the Shareholder or any member of the
Shareholder Group, provided, however, that the Shareholder and any member of the
Shareholder Group may vote any or all of the Voting Securities Beneficially
Owned by them in their sole discretion with respect to a vote of the Company's
shareholders on any transaction or series of transactions which would, if
consummated, constitute a Change in Control of the Company. Notwithstanding the
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foregoing, at all times prior to or following the occurrence of a Regulatory
Change, the Shareholder shall, and shall cause each member of the Shareholder
Group to, vote all Excess Buy- Back Securities having voting rights with respect
to any matter (including the election of Directors) in the same proportion
(based on total Votes) as all Voting Securities voted on such matter are voted
by the shareholders of the Company other than the Shareholder or any member of
the Shareholder Group.
(e) At all times the Shareholder Group may exercise in its sole
discretion such voting rights as the Convertible Preferred Stock may have from
time to time pursuant to the Charter and with respect to an amendment to the
Charter which would have the effect of modifying the voting powers,
designations, preferences, rights and qualifications, limitations or
restrictions of such class or series so as to affect the holders thereof
adversely.
ARTICLE V
EFFECTIVENESS AND TERMINATION
Section 5.1. Effectiveness. This Agreement shall take effect
immediately upon the Closing and shall remain in effect until it is terminated
pursuant to Section 5.2 hereof.
Section 5.2. Termination. Unless otherwise agreed in writing by the
Shareholder, this Agreement shall terminate upon the earliest to occur of the
following:
(a) The Company's quarterly dividend on its Common Stock falling below
$0.30 per share (as appropriately adjusted to reflect any stock split, stock
dividend, reverse stock split, reclassification or any other transaction with a
comparable effect) in any five (5) quarters during the term of this Agreement.
(b) The Company's failure to pay the stated quarterly dividend on any
series of Convertible Preferred Stock in any five (5) quarters during the term
of this Agreement.
(c) The election to the Board of a majority of Directors other than
those nominated by the Nominating Committee of the Board.
(d) The size of the Board being increased to more than 21 directors.
(e) The Shareholder Group's Voting Ownership Percentage falling below
9.9% at any time.
(f) The Shareholder Group's Total Ownership Percentage falling below
30.0% at any time following the fifteenth (15th) anniversary of the date hereof.
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(g) The material breach of this Agreement or the Merger Agreement by
the Company, provided that the Company has not cured the breach within thirty
(30) days after receiving notice of such breach, or if cure within such time is
not possible, the Company has not made reasonable efforts to cure such breach,
provided, further that in no event shall such cure period extend longer than
ninety (90) days from the date of first notice of such breach.
(h) Mutual written agreement of the Company and the Shareholder at any
time to terminate this Agreement, which termination shall occur at a time to be
fixed in such mutual agreement.
(i) The entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of the Company's
property, or ordering the winding up or liquidation of the Company's affairs;
and the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of sixty (60) consecutive
days.
(j) The commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the Company to the entry of a decree or
order for relief in respect of the Company in an involuntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company, or the filing by the Company of a petition or
answer or consent seeking reorganization or relief under any applicable Federal
or State law, or the consent by the Company to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of the Company's property, or the making by the Company of
an assignment for the benefit of creditors, or the admission by the Company in
writing of the Company's inability to pay its debts generally as they become
due, or the taking of corporate action by the Company in furtherance of any such
action.
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<PAGE>
ARTICLE VI
MISCELLANEOUS
Section 6.1. Compliance With Law. Notwithstanding anything to the
contrary in this Agreement, no Transfer of Securities shall be deemed to be
required or permitted pursuant to this Agreement if such Transfer would (a)
result in an adverse effect on the exemptions from the 1935 Act of the
Shareholder or any Shareholder Affiliate or the Company or any subsidiary of the
Company, or (b) require regulatory approvals which, individually or in the
aggregate with respect to such Transfer, would have a material adverse impact on
the Company or any of its subsidiaries or the Shareholder or any Shareholder
Affiliate.
Section 6.2. Regulatory Matters. During the term of this Agreement, the
Company agrees to take all commercially reasonable steps to assist the
Shareholder in (a) with respect to each provision of this Agreement, causing a
Regulatory Change which would not reasonably be expected to have an adverse
effect on the Company to occur as soon as reasonably practicable, and (b)
securing such regulatory approvals as would not reasonably be expected to have a
material adverse effect on the Company and as may be necessary to allow the
Shareholder to exercise its rights under the Agreement at all times, including
without limitation the right of the Shareholder to Transfer Securities free of
the restrictions and limitations imposed by Section 6.1. Following the
occurrence of a Regulatory Change, if the Company believes in good faith that
the Shareholder's regulatory status as modified by such Regulatory Change would
place an unreasonable restriction on the Company's implementation of the
Company's strategic business plan, then the Company shall have an immediate
right to exercise its Buy-Sell Option as provided in Section 3.6 hereof, without
regard to whether Section 3.6 would otherwise then be applicable.
Section 6.3. Injunctive Relief. Each party hereto acknowledges that it
would be impossible to determine the amount of damages that would result from
any breach of any of the provisions of this Agreement and that the remedy at law
for any breach, or threatened breach, of any of such provisions would likely be
inadequate and, accordingly, agrees that each other party shall, in addition to
any other rights or remedies which it may have, be entitled to seek such
equitable and injunctive relief as may be available from any court of competent
jurisdiction to compel specific performance of, or restrain any party from
violating, any of such provisions. In connection with any action or proceeding
for injunctive relief, each party hereto hereby waives the claim or defense that
a remedy at law alone is adequate and agrees, to the maximum extent permitted by
law, to have each provision of this Agreement specifically enforced against him
or it, without the necessity of posting bond or other security against him or
it, and consents to the entry of injunctive relief against him or it enjoining
or restraining any breach or threatened breach of such provisions of this
Agreement.
Section 6.4. Successors and Assigns. This Agreement shall be binding
upon, shall inure to the benefit of and shall be enforceable by the Company and
by the Shareholder and their
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<PAGE>
respective successors and permitted assigns, and no such term or provision is
for the benefit of, or intended to create any obligations to, any other Person.
Section 6.5. Amendments; Waiver. (a) This Agreement may be amended only
by an agreement in writing executed by the parties hereto. Any approval of an
amendment of this Agreement upon the part of the Company shall require the
approval of a majority of the Independent Directors at a duly convened meeting
thereof or all of the Company's directors by written consent thereto.
(b) Either party may waive in whole or in part any benefit or right
provided to it under this Agreement, such waiver being effective only if
contained in a writing executed by the waiving party. No failure by any party to
insist upon the strict performance of any covenant, duty, agreement or condition
of this Agreement or to exercise any right or remedy consequent upon breach
thereof shall constitute a waiver of any such breach or of any other covenant,
duty, agreement or condition, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter. Any waiver of any benefit or right provided to the
Company under this Agreement shall require the approval of a majority of the
Board and a majority of the Independent Directors at a duly convened meeting
thereof or all of the Company's directors by written consent thereto.
Section 6.6. Notices. Except as otherwise provided in this Agreement,
all notices, requests, claims, demands, waivers and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered by hand, when delivered personally or by courier, three days after
being deposited in the mail (registered or certified mail, postage prepaid,
return receipt requested), or when received by facsimile transmission if
promptly confirmed by one of the foregoing means, as follows:
If to the Company:
WAI, Inc.
100 W. Fifth Street
Tulsa, Oklahoma
Attention: President
Fax: (918) 588-7960
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<PAGE>
with a copy to:
Gable Gotwals Mock Schwabe Khile Gaberino
100 W. Fifth Street
Suite 1000
Tulsa, Oklahoma 74103
Attention: Donald A. Kihle, Esq.
Fax: (918) 588-7873
If to the Shareholder:
Western Resources, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
Attention: President
Fax: (913) 575-8061
with a copy to:
Western Resources, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
Attention: General Counsel
Fax: (913) 575-1788
or to such other address or facsimile number as either party may, from time to
time, designate in a written notice given in a like manner.
Section 6.7. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF OKLAHOMA WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 6.8. Headings. The descriptive headings of the several sections
in this Agreement are for convenience only and do not constitute a part of this
Agreement and shall not be deemed to limit or affect in any way the meaning or
interpretation of this Agreement.
Section 6.9. Integration. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and
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<PAGE>
understandings between the parties with respect to its subject matter. There are
no restrictions, agreements, promises, representations, warranties, covenants or
undertakings with respect to its subject matter other than those expressly set
forth or referred to herein.
Section 6.10. Severability. If any term or provision of this Agreement
or any application thereof shall be declared or held invalid, illegal or
unenforceable, in whole or in part, whether generally or in any particular
jurisdiction, such provision shall be deemed amended to the extent, but only to
the extent, necessary to cure such invalidity, illegality or unenforceability,
and the validity, legality and enforceability of the remaining provisions, both
generally and in every other jurisdiction, shall not in any way be affected or
impaired thereby.
Section 6.11. Consent to Jurisdiction. In connection with any suit,
claim, action or proceeding arising out of this Agreement, the Shareholder and
the Company each hereby consent to the in personam jurisdiction of the United
States federal courts and state courts located in Tulsa, Oklahoma; the
Shareholder and the Company each agree that service in the manner set forth in
Section 6.5 hereof shall be valid and sufficient for all purposes; and the
Shareholder and the Company each agree to, and irrevocably waive any objection
based on forum non conveniens or venue not to, appear in any United States
federal court state court located in Tulsa, Oklahoma.
Section 6.12. Counterparts. This Agreement may be executed by the
parties hereto in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Shareholder have caused this
Agreement to be duly executed by their respective authorized officers as of the
date set forth at the head of this Agreement.
WAI, INC.
By:_________________________
Name:
Title:
WESTERN RESOURCES, INC.
By:_________________________
Name:
Title:
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EX-4
REGISTRATION RIGHTS AGREEMENT
between
WAI, INC.,
an Oklahoma corporation
and
WESTERN RESOURCES, INC.,
a Kansas corporation
Dated as of November 26, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Defined Terms.................................................. 1
Section 1.2. General........................................................ 3
Section 1.3. Headings....................................................... 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the Shareholder.............. 4
Section 2.2. Representations and Warranties of the Company.................. 4
ARTICLE III
REGISTRATION RIGHTS
Section 3.1. Demand Registrations........................................... 4
Section 3.2. "Piggy-Back" Registrations..................................... 6
Section 3.3. Additional Agreements.......................................... 8
Section 3.4. Registration Procedures........................................ 9
Section 3.5. Registration Expenses..........................................16
Section 3.6. Indemnification; Contribution..................................16
Section 3.7. Underwriters...................................................20
Section 3.8. Exchange Act Filings; Rule 144; Rule 144A......................20
Section 3.9. Agreement of the Shareholder...................................20
Section 3.10. Legends........................................................21
Section 3.11. Treatment of Convertible Preferred Stock
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<PAGE>
ARTICLE IV
MISCELLANEOUS
Section 4.1. Term of Agreement; Termination.................................22
Section 4.2. Recapitalizations, Exchanges, Etc. Affecting the Shares........22
Section 4.3. Other Company Securities.......................................22
Section 4.4. Amendment......................................................22
Section 4.5. Notices........................................................22
Section 4.6. Integration....................................................23
Section 4.7. Binding Effect; Benefit........................................23
Section 4.8. Assignability..................................................23
Section 4.9. Counterparts...................................................24
Section 4.10. Applicable Law.................................................24
Section 4.11. Shareholder Agreement..........................................24
Section 4.12. Severability...................................................24
-ii-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of November
26, 1997, between Western Resources, Inc., a Kansas corporation (the
"Shareholder") and WAI, Inc., an Oklahoma corporation (the "Company").
WHEREAS, the Shareholder, the Company and ONEOK Inc., a Delaware
corporation ("ONEOK"), have entered into an Agreement, dated as of December 12,
1996, amended and restated as of May 19, 1997 (the "Merger Agreement"), pursuant
to which ONEOK will be merged with and into the Company (the "Merger") and the
Shareholder has acquired pursuant to the Agreement beneficial ownership of
2,996,702 shares of common stock of the Company, no par value (the "Common
Stock") and 19,317,584 shares of a new series of convertible preferred stock of
the Company, par value $0.01 per share (the "Convertible Preferred Stock"),
pursuant to the Merger and the transactions contemplated thereby;
WHEREAS, the parties each desire to make certain covenants and
agreements concerning, among other things, the registration from time to time of
the Shareholder's shares of Common Stock and Common Stock obtainable upon
conversion of Convertible Preferred Stock (the "Shares") under the Securities
Act of 1933, as amended (the "Securities Act"); and
WHEREAS, concurrently with the execution and delivery hereof, the
Shareholder and ONEOK have entered into an agreement with respect to the
Shareholder's investment in the Company (the "Shareholder Agreement").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
Company and the Shareholder hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Defined Terms. In addition to other terms defined
elsewhere in this Agreement, as used in this Agreement, the following
capitalized terms have the respective meanings set forth below:
<PAGE>
"Affiliate" shall mean, with respect to any person, any other person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such person. For the purposes of
this definition, "control" when used with respect to any particular person,
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Blackout Period" shall have the meaning assigned to such term in
Section 3.1(b).
"Claims" shall have the meaning assigned to such term in Section
3.6(a).
"Demand Period" shall have the meaning assigned to such term in Section
3.1(a).
"Demand Registration" shall have the meaning assigned to such term in
Section 3.1(a).
"Demand Request" shall have the meaning assigned to such term in
Section 3.1(a).
"Effective Period" shall have the meaning assigned to such term in
Section 3.4(a)(iii).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Holder" shall mean, with respect to any shares of Common Stock, the
signatory to the Agreement; and the terms "hold", "held" and "holding" shall
have meanings correlative to the foregoing.
"Inspectors" shall have the meaning assigned to such term in Section
3.4(a)(iv).
"Maximum Number" shall have the meaning assigned to such term in
Section 3.2(b).
"Other Holder" shall have the meaning assigned to such term in Section
3.2(b).
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<PAGE>
"person" shall mean any individual, corporation, company, partnership,
joint venture, trust, group (as such term is used in Rule 13d-5 under the
Exchange Act), business association, government or political subdivision
thereof, governmental body or other entity.
"Piggy-Back Registration" shall have the meaning assigned to such term
in Section 3.2(a).
"Piggy-Back Request" shall have the meaning assigned to such term in
Section 3.2(a).
"Records" shall have the meaning assigned to such term in Section
3.4(a)(iv).
"Registered Shares" shall have the meaning assigned to such term in
Section 3.4(a)(xviii).
"Registration" shall have the meaning assigned to such term in Section
3.2(a).
"Registration Expenses" shall have the meaning assigned to such term in
Section 3.5.
"SEC" shall mean the United States Securities and Exchange Commission
or any other United States federal agency at the time administering the
Securities Act or the Exchange Act, as applicable, whichever is the relevant
statute.
Section 1.2. General. Unless the context otherwise requires, references
in this Agreement to any "section" or "article" shall mean a section or article
of this Agreement, as the case may be, and the terms "hereof," "hereunder" and
"hereto" and words of similar meaning shall mean this Agreement in its entirety
and not any particular provisions of this Agreement. Unless the context
otherwise requires, the terms defined herein include the singular as well as the
plural.
Unless the context otherwise requires, each reference herein to the
Securities Act, the Exchange Act or Rule 144 (or any other rule, regulation or
form promulgated under either such statute) shall be deemed to mean, as of any
time, such statute, rule, regulation or form as then in effect, after all
amendments thereto, or, if not then in effect, any successor statute, rule,
regulation or form as then in effect, after all amendments thereto.
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Section 1.3. Headings. The descriptive headings of the several Sections
and paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the Shareholder. The
Shareholder hereby represents and warrants to the Company (i) that it has been
duly organized and is an existing corporation in good standing as a corporation
under the laws of the State of Kansas, (ii) that it has all requisite corporate
power and authority and has received all requisite approvals (including any
necessary approval of its board of directors) to complete the transactions
contemplated hereby, and (iii) that this Agreement has been duly authorized,
executed and delivered by the Shareholder and constitutes a valid and binding
agreement of the Shareholder enforceable against the Shareholder in accordance
with its terms.
Section 2.2. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Shareholder (i) that it has been duly
organized and is an existing corporation in good standing under the laws of the
State of Oklahoma, (ii) that it has all requisite corporate power and authority,
and has received all requisite approvals (including any necessary approval of
its Board of Directors) to complete the transactions contemplated hereby and
(iii) this Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding agreement enforceable against the
Company in accordance with its terms.
ARTICLE III
REGISTRATION RIGHTS
Section 3.1. Demand Registrations. (a) At any time following the date
hereof and prior to the date on which the Company shall have obtained a written
opinion of legal counsel reasonably satisfactory to the Shareholder and
addressed to the Company and the Shareholder to the effect that the Shares may
be publicly offered for sale in the United States by the Shareholder without
restriction as to manner of sale and amount of securities sold and without
registration under the Securities Act (such period, the "Demand Period"), the
Shareholder shall have the right on five (5) occasions to require
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the Company to file a registration statement under the Securities Act in respect
of all or a portion of the Shares (so long as such request covers at least
25,000 shares), by delivering to the Company written notice stating that such
right is being exercised, specifying the number of the Shares to be included in
such registration and describing the intended method of distribution thereof (a
"Demand Request"). As promptly as practicable, but in no event later than thirty
(30) days after the Company receives a Demand Request, the Company shall file
with the SEC and thereafter use its best efforts to cause to be declared
effective promptly a registration statement (including, without limitation, by
means of a shelf registration pursuant to Rule 415 under the Securities Act if
so requested and if the Company is then eligible to use such a registration) (a
"Demand Registration") providing for the registration of such number of Shares
the Shareholder shall have demanded be registered for distribution in accordance
with such intended method of distribution.
(b) Anything in this Agreement to the contrary notwithstanding, the
Company shall be entitled to postpone and delay, for a reasonable period of
time, not to exceed ninety (90) days in the case of clauses (i) and (ii) below,
or thirty (30) days in the case of clause (iii) below (each, a "Blackout
Period"), the filing of any Demand Registration if the Company shall determine
that any such filing or the offering of any Shares would (i) in the good faith
judgment of the Board of Directors of the Company, unreasonably impede, delay or
otherwise interfere with any pending or contemplated financing, acquisition,
corporate reorganization or other similar transaction involving the Company,
(ii) based upon advice from the Company's investment banker or financial
advisor, adversely affect any pending or contemplated offering or sale of any
class of securities by the Company, or (iii) in good faith judgment of the Board
require disclosure of material non-public information (other than information
relating to an event described in clause (i) or (ii) of this subsection (b))
which, if disclosed at such time, would be materially harmful to the interests
of the Company and its stockholders; provided, however, that in the case of a
Blackout Period pursuant to clause (i) or (ii) above, the Blackout Period shall
earlier terminate upon the completion or abandonment of the relevant securities
offering or sale, financing, acquisition, corporate reorganization or other
similar transaction; and provided, further, that in the case of a Blackout
Period pursuant to clause (iii) above, the Company shall give written notice of
its determination to postpone or delay the filing of any Demand Registration and
in the case of clause (iii) above, the Blackout Period shall earlier terminate
upon public disclosure by the Company or public admission by the Company of such
material non-public information or such time as such material non-public
information shall be publicly disclosed without breach of the last sentence of
this subsection (b); and provided, further, that in the case of a Blackout
Period pursuant to clause (i), (ii) or (iii) above, the Company shall furnish to
the Shareholder a certificate of an executive officer of the Company to the
effect that an event permitting a Blackout Period has occurred. Notwithstanding
anything herein to the contrary, the Company shall not exercise pursuant to
clause (i) or (ii) of the preceding sentence the right to postpone or delay the
filing of any Demand Registration more than
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twice in any twelve (12) month period. Upon notice by the Company to the
Shareholder of any such determination, the Shareholder covenants that it shall
keep the fact of any such notice strictly confidential, and, in the case of a
Blackout Period pursuant to clause (iii) above or Section 3.1(c) below, promptly
halt any offer, sale, trading or transfer by it or any of its Affiliates of any
Common Stock for the duration of the Blackout Period set forth in such notice
(or until such Blackout Period shall be earlier terminated in writing by the
Company) and promptly halt any use, publication, dissemination or distribution
of the Demand Registration, each prospectus included therein, and any amendment
or supplement thereto by it and any of its Affiliates for the duration of the
Blackout Period set forth in such notice (or until such Blackout Period shall be
earlier terminated in writing by the Company) and, if so directed by the
Company, will deliver to the Company any copies then in such Shareholder's
possession of the prospectus covering such Shares, that was in effect at the
time of receipt of such notice. After the expiration of any Blackout Period and
without further request from the Shareholder, the Company shall effect the
filing of the relevant Demand Registration and shall use its best efforts to
cause any such Demand Registration to be declared effective as promptly as
practicable unless the Shareholder shall have, prior to the effective date of
such Demand Registration, withdrawn in writing its initial request, in which
case such withdrawn request shall not constitute a Demand Registration for
purposes of determining the number of Demand Registrations to which the
Shareholder is entitled under this Agreement.
(c) Anything in this Agreement to the contrary notwithstanding, in case
a Demand Registration has been filed, if a transaction of the type specified in
Section 3.1(b)(i) has not resulted from actions taken by the Company, the
Company may cause such Demand Registration to be withdrawn and its effectiveness
terminated or may postpone amending or supplementing such Demand Registration
for a reasonable period of time, not to exceed the Blackout Period applicable to
Section 3.1(b)(i); provided, however, that in no event shall a Demand
Registration so withdrawn count as one of the five Demand Registrations which
the Shareholder is entitled to make pursuant to Section 3.1(a) hereof.
(d) The Shareholder may withdraw a Demand Request in circumstances
including, but not limited to, the following: if (i) the Company is in material
breach of its obligation hereunder and has not cured such breach after having
received notice thereof and a reasonable opportunity to do so or (ii) the
withdrawal occurs during a Blackout Period. Any Demand Request withdrawn prior
to such Demand Registration becoming effective and pursuant to this subsection
(d) shall not constitute a Demand Registration for the purposes of determining
the number of Demand Registrations to which the Shareholder is entitled.
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(e) The Company may elect to include in any registration statement
filed pursuant to this Section 3.1 any Common Stock to be issued by it or held
by any of its subsidiaries or by any other shareholders only to the extent such
Common Stock is offered and sold pursuant to, and on the terms and subject to
the conditions of, any underwriting agreement or distribution arrangements
entered into or effected by the Shareholder.
(f) The managing underwriter for any Demand Registration shall be
selected by the party or parties making the demand for such registration,
provided that such underwriter shall be reasonably satisfactory to the Company.
Section 3.2. "Piggy-Back" Registrations. (a) If, at any time following
the effective time of the Merger, the Company proposes to register any Common
Stock under the Securities Act on a registration statement on Form S-1, Form S-2
or Form S-3 (or any equivalent general registration form then in effect other
than pursuant to a Demand Registration under Section 3.1) for purposes of a
primary offering, secondary offering or combined offering of such Common Stock,
the Company shall give prompt written notice to the Shareholder of its intention
to do so. Such notice shall specify, at a minimum, the number of shares of
Common Stock so proposed to be registered, the proposed date of filing of such
registration statement, any proposed means of distribution of such Common Stock,
any proposed managing underwriter or underwriters of such offering and a good
faith estimate by the Company of the proposed maximum offering price thereof, as
such price is proposed to appear on the facing page of such registration
statement. Upon the written direction of the Shareholder (a "Piggy-Back
Request"), given within fifteen (15) business days following the receipt by the
Shareholder of any such written notice (which direction shall specify the number
of the Shares intended to be disposed of by the Shareholder), the Company shall
include in such registration statement (a "Piggy-Back Registration" and,
collectively with a Demand Registration, a "Registration"), subject to the
provisions of Section 3.2 hereof, such numbers of the Shares as shall be set
forth in such Piggy-Back Request.
(b) In the event that the Company proposes to register Common Stock in
connection with an underwritten offering and a nationally recognized independent
investment banking firm selected by the Company to act as managing underwriter
thereof reasonably and in good faith shall have advised the Company, any holder
of Common Stock intending to offer such Common Stock in a secondary offering or
combined offering (each, an "Other Holder") or the Shareholder in writing that,
in its opinion, the inclusion in the registration statement of some or all of
the Shares sought to be registered by the Shareholder creates a substantial risk
that the price per share of Common Stock that the Company or any Other Holder
will derive from such registration will be materially and adversely affected or
that the number of shares of Common Stock sought to be registered (including any
shares of Common Stock sought to be registered at the
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request of the Company and any Other Holder and those sought to be registered by
the Shareholder) is a greater number than can reasonably be sold, the Company
shall include in such registration statement such number of shares of Common
Stock as the Company, any Other Holder and the Shareholder are so advised can be
sold in such offering without such an effect (the "Maximum Number") as follows
and in the following order of priority: (A) first, such number of shares of
Common Stock as the Company intended to be registered and sold by the Company
and (B) second, in the case of a secondary offering or a combined offering and
if and to the extent that the number of shares of Common Stock to be registered
under clause (A) is less than the Maximum Number, such number of shares of
Common Stock as the Shareholder and any Other Holder shall have intended to
register which, when added to the number of shares of Common Stock to be
registered under clause (A), is less than or equal to the Maximum Number;
provided that if such number exceeds the Maximum Number, the shares of Common
Stock of the Shareholder and such Other Holders will be excluded on a pro rata
basis according to the total number of Shares and shares of Common Stock
requested to be registered by such persons.
(c) No Piggy-Back Registration effected under this Section 3.2 shall be
deemed to have been effected pursuant to Section 3.1 hereof or shall release the
Company of its obligations to effect any Demand Registration upon request as
provided under Section 3.1 hereof.
(d) Notwithstanding any request under this Section 3.2, a selling
Holder may elect in writing to withdraw its request for inclusion of its Shares
in any registration statement; provided, however, that (i) such request must be
made in writing prior to the earlier of the execution of the underwriting
agreement or the execution of the custody agreement with respect to such
registration and (ii) such withdrawal shall be irrevocable and, after making
such withdrawal, a Holder shall no longer have any right to include Shares in
the registration as to which such withdrawal was made.
(e) If, at any time after giving written notice of its intention to
register any Common Stock and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such Common
Stock, the Company may, at its election, give written notice of such
determination to all Holders of record of Shares and (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Shares in connection with such abandoned registration, without prejudice,
however, to the rights of Holders under Section 3.1 and (ii) in the case of a
determination to delay such registration of the Company's Common Stock, shall be
permitted to delay the registration of such Shares for the same period as the
delay in registering such other Common Stock.
(f) If, as a result of the proration provisions of this Section 3.2,
any Holder shall not be entitled to include all Shares in a registration that
such Holder has
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requested to be included, such Holder may elect to withdraw his request to
include Shares in such registration or may reduce the number requested to be
included, provided that the same limitations in subsection (c) shall apply.
Section 3.3. Additional Agreements. Anything in this Agreement to the
contrary notwithstanding, if at any time the Company shall obtain a written
opinion of legal counsel reasonably satisfactory to the Shareholder and
addressed to the Company and the Shareholder to the effect that the Shares may
be publicly offered for sale in the United States by the Shareholder without
restriction as to manner of sale and amount of securities sold and without
registration under the Securities Act, the Company shall no longer be obligated
to file or maintain a registration statement with respect to the Shares pursuant
to this Agreement. In such case, the Company shall issue to the Shareholder
certificates representing the Shares without any legend restricting transfer and
shall remove all stop transfer orders relating to the Shares.
Section 3.4. Registration Procedures. (a) In connection with each
registration statement prepared pursuant to this Agreement, and in accordance
with the intended method or methods of distribution of the Shares as described
in such registration statement, the Company shall, as soon as reasonably
practicable (and, in any event, subject to the terms of this Agreement,
including, without limitation, Section 3.1(a), at or before the time required by
applicable laws and regulations):
(i) Prepare and file with the SEC a registration statement on an
appropriate registration form of the SEC, with respect to such Shares,
which form shall be selected by the Company with the Shareholder's
reasonable consent, and use its best efforts to cause such registration
statement to become and remain effective promptly; provided that before
filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish to one counsel selected by
the Shareholder, and the sales or placement agent or agents, if any, for
the Shares and the managing underwriter or underwriters, if any, draft
copies of all such documents proposed to be filed at least seven (7) days
prior to such filing, which documents will be subject to the reasonable
review of the Shareholder, the sales or placement agent or agents, if any,
for the Shares and the managing underwriter or underwriters, if any, and
their respective agents and representatives and (x) the Company will not
include in any registration statement information concerning or relating to
the Shareholder to which the Shareholder shall reasonably object in writing
(unless the inclusion of such information is required by applicable law or
the regulations of any securities exchange to which the Company may be
subject), and (y) the Company will not file any Demand Registration or
amendment thereto or any prospectus or any supplement thereto to which the
Shareholder shall reasonably object in writing;
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(ii) Furnish without charge to the Shareholder, the sales or placement
agent or agents, if any, and the managing underwriter or underwriters, if
any, such number of copies of such registration statement and of each
amendment and supplement thereto (in each case including all exhibits),
such number of copies of the summary, preliminary, final, amended or
supplemented prospectuses included in such registration statement in
conformity with the requirements of the Securities Act and any regulations
promulgated thereunder and (upon the reasonable request by the Shareholder)
any documents incorporated therein by reference and such other documents as
the Shareholder may reasonably request in order to facilitate the public
sale or other disposition of such Shares (the Company hereby consenting to
the use in accordance with all applicable law of the prospectus or any
amendment or supplement thereto by the Shareholder in connection with the
offering and sale of the Shares covered by the prospectus or any amendment
or supplement thereto);
(iii) Use its reasonable best efforts to keep such registration
statement effective for at least 180 days (the "Effective Period"); prepare
and file with the SEC such amendments, post-effective amendments and
supplements to the registration statement and the prospectus as may be
necessary to maintain the effectiveness of the registration for the
Effective Period and to cause the prospectus (and any amendments or
supplements thereto) to be filed pursuant to Rules 424 and 430A under the
Securities Act and/or any successor rules that may be adopted by the SEC,
as such rules may be amended from time to time; and comply with the
provisions of the Securities Act with respect to the disposition of all
Shares covered by such registration statement during the applicable period
in accordance with the intended method or methods of distribution thereof,
as specified in writing by the Shareholder;
(iv) Except during any Blackout Period, make available for inspection
by the Shareholder or by any underwriter, attorney, accountant or other
agent retained by the Shareholder (collectively, the "Inspectors")
financial and other records and pertinent corporate documents of the
Company (collectively, the "Records"), provide the Inspectors with
opportunities to discuss the business of the Company with its officers and
provide opportunities to discuss the business of the Company with the
independent public accountants who have certified its most recent annual
financial statements, in each case to the extent customary for transactions
of the size and type intended, as specified by the Shareholder, but only to
the extent reasonably necessary to enable the Shareholder or any
underwriter retained by the Shareholder to conduct a "reasonable
investigation" for purposes of Section 11(a) of the Securities Act. Records
which the Company determines, in good faith, to be confidential and which
it notifies the Inspectors are confidential shall not be disclosed by the
Inspector unless (A) the disclosure of
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such Records is necessary to avoid or correct a misstatement of a
material fact or omission to state a material fact in the Registration, (B)
the disclosure of such Records is required by any court or governmental
body with jurisdiction over the Shareholder or Inspector or (C) all of the
information contained in such Records has been made generally available to
the public. The Shareholder agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction
or by any governmental body, promptly give prior notice to the Company and
allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of those Records deemed confidential;
(v) If requested by the Shareholder, promptly incorporate in a
prospectus, prospectus supplement or post-effective amendment such
information as the Shareholder reasonably specifies should be included
therein, including, without limitation, information relating to the planned
distribution of Shares, the number of Shares being sold by the Shareholder,
the name and description of the Shareholder, the offering price of such
Shares and any discount, commission or other compensation payable in
respect of the Shares being sold, the purchase price being paid therefor to
the Shareholder and information with respect to any other terms of the
underwritten offering of the Shares to be sold in such offering, except to
the extent that the Company is advised in a written opinion of outside
counsel that the inclusion of such information is reasonably likely to
violate applicable securities laws; and make all required filings of such
prospectus, prospectus supplement or post-effective amendment promptly
after notification of the matters to be incorporated in such prospectus,
prospectus supplement or post-effective amendment;
(vi) If requested by the Shareholder, use reasonable efforts to
participate in and assist with a "road show" and other customary marketing
efforts in connection with the sale of Shares pursuant to such registration
statement, at such times and in such manner as the Company and the
Shareholder mutually may determine (and as do not unreasonably interfere
with the Company's operations);
(vii) Use its best efforts to register or qualify the Shares covered by
such registration statement under such other securities or "blue sky" laws
of such jurisdictions in the United States as the Shareholder shall
reasonably request, keep such registrations or qualifications in effect for
so long as the registration statement remains in effect, and do any and all
other acts and things which may be reasonably necessary to enable the
Shareholder or any underwriter to consummate the public sale or other
disposition of the Shares in such jurisdictions; provided, however, that in
no event shall the Company be required to qualify to do business as a
foreign corporation in any jurisdiction where it is not so qualified; to
execute or file any general consent to service of process under the laws of
any jurisdiction;
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to take any action that would subject it to service of process in suits
other than those arising out of the offer and sale of the Shares
covered by the registration statement; or to subject itself to taxation
in any jurisdiction where it would not otherwise be obligated to do so,
but for this paragraph (vii);
(viii) Use its best efforts to cause the Shares to be registered
with or approved by such other governmental agencies or authorities as
may be necessary to enable the Shareholder to consummate the public sale or
other disposition of the Shares;
(ix) Use its best efforts to cause all Shares covered by such
registration statement to be approved for trading on a national interdealer
quotation system or listed on the securities exchanges on which similar
securities issued by the Company are then listed or traded;
(x) Promptly notify the Shareholder, at any time when a prospectus
relating to any of the Shares covered by such registration statement is
required to be delivered under the Securities Act, of the Company's
becoming aware that the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing, and, at the request of the Shareholder,
promptly prepare and furnish to the Shareholder a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter
delivered to the pur chasers of such Shares, such prospectus shall not
include 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 in the light of the circumstances then existing;
(xi) Promptly notify the Shareholder, the sales or placement agent or
agents, if any, for the Shares and the managing underwriter or
underwriters, if any, thereof, after becoming aware thereof, when the
registration statement or any related prospectus or any amendment or
supplement has been filed, and, with respect to the registration statement
or any post-effective amendment, when the same has become effective, (A) of
any request by the SEC for amendments or supplements to the registration
statement or the related prospectus or for additional information, (B) of
the issuance by the SEC of any stop order suspending the effectiveness of
the registration statement or the initiation of any proceedings for that
purpose, (C) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation of any proceeding for such purpose or (D)
within the Effective Period of the happening of any event which makes any
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statement in the registration statement or any post-effective amendment
thereto, prospectus or any amendment or supplement thereto, or any
document incorporated therein by reference untrue in any material
respect or which requires the making of any changes in the registration
statement or post-effective amendment thereto or any prospectus or
amendment or supplement thereto so that they 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;
(xii) During the Effective Period, use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement or any post-effective amendment thereto;
(xiii) Permit the Shareholder if, in its sole judgment exercised in
good faith, it believes it might be deemed to be a controlling person of
the Company, to participate in the preparation of such registration
statement and all discussions between the Company and the SEC or its staff
with respect to such registration statement, and to require the insertion
therein of material, furnished to the Company in writing, which in the
reasonable judgement of the Shareholder should be included;
(xiv) Deliver promptly to the Shareholder, upon the Shareholder's
request, copies of all correspondence between the SEC and the Company, its
counsel or auditors and all memoranda relating to discussions with the SEC
or its staff with respect to the registration statement and permit the
Shareholder to do such investigation, with respect to information contained
in or omitted from the registration statement, as it deems reasonably
necessary. The Shareholder agrees that it will use its best efforts not to
interfere unreasonably with the Company's business when conducting any such
investigation;
(xv) Provide a transfer agent and registrar for all such Shares
covered by such registration statement not later than the effective
date of such registration statement, which transfer agent and registrar may
be the Company, subject to any applicable law or regulations;
(xvi) Cooperate with the Shareholder and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing such Shares to be sold under the registration
statement, which certificates shall not bear any restrictive legends except
as required by law; and, in the case of an underwritten offering, enable
such Shares to be in such denominations and registered in such names as the
managing underwriter or
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underwriters, if any, may request in writing at least two (2) business days
prior to any sale of the Shares to the underwriters;
(xvii) Enter into such agreements (including, if the offering is an
underwritten offering, an underwriting agreement) as are customary in
transactions of such kind and take such other actions as are reasonably
necessary in connection therewith in order to expedite or facilitate the
disposition of such Shares; and (A) make such representations and
warranties with respect to the registration statement, post-effective
amendment or supplement thereto, prospectus or any amendment or supplement
thereto, and documents incorporated by reference, if any, to the managing
underwriter or underwriters, if any, of the Shares and, at the option of
the Shareholder, make to and for the benefit of such Shareholder the
representations, warranties and covenants of the Company which are being
made to the underwriters, in form, substance and scope as are customarily
made by the Company in connection with offerings of Shares in transactions
of such kind (representations and warranties by the participating holders
shall also be made as are customary in agreements of that type); provided
that the Company shall not be required to make any representations or
warranties with respect to information specifically provided by a holder
for inclusion in the registration documents; (B) obtain an opinion of
counsel to the Company (which counsel may be internal counsel for the
Company unless the managing underwriter or underwriters shall otherwise
reasonably request) in customary form and covering matters of the type
customarily covered by such an opinion, addressed to such managing
underwriter or underwriters, if any, and to the Shareholder and dated the
date of the closing of the sale of the Shares relating thereto; (C) obtain
a "comfort" letter or letters from the independent certified public
accountants who have certified the Company's most recent audited financial
statements that are incorporated by reference in the registration statement
which is addressed to the Shareholder and the managing underwriter or
underwriters, if any, and is dated the date of the prospectus used in
connection with the offering of such Shares and/or the date of the closing
of the sale of such Shares relating thereto, such letter or letters to be
in customary form and covering such matters of the type customarily covered
by "comfort" letters of such type; (D) deliver such documents and
certificates as may be reasonably requested by the Shareholder and the
managing underwriter or underwriters, if any, of the Shares to evidence
compliance with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company; and (E) undertake
such obligations relating to expense reimbursement, indemnification and
contribution as provided in Sections 3.5 and 3.6 hereof; and
(xviii) Comply with all applicable rules and regulations of the SEC and
generally make available to its security holders an earnings statement
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(which need not be audited), as soon as reasonably practicable but in
no event later than ninety (90) days after the end of the period of
twelve (12) months commencing on the first day of any fiscal quarter
next succeeding each sale by the Shareholder of Shares which have been
registered pursuant to this Agreement (the "Registered Shares") after
the date hereof, which earnings statement shall cover such twelve (12)
month period and shall satisfy the provisions of Section 11(a) of the
Securities Act and may be prepared in accordance with Rule 158 under
the Securities Act.
(b) In the event that the Company would be required, pursuant to
Section 3.4(a)(xi)(D) above, to notify the Shareholder, the sales or placement
agent or agents, if any, for the Shares and the managing underwriter or
underwriters, if any, thereof, the Company shall, subject to the provisions of
Section 3.1(b) hereof, as promptly as practicable, prepare and furnish to the
Shareholder, to each placement or sales agent, if any, and to each underwriter,
if any, a reasonable number of copies of a prospectus supplemented or amended so
that, as thereafter delivered to purchasers of Registered Shares, such
prospectus shall 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, in the light of the circumstances under which they were
made, not misleading. The Shareholder agrees that, upon receipt of any notice
from the Company pursuant to Section 3.4(a)(xi)(D) hereof, the Shareholder
shall, and shall use its best efforts to cause any sales or placement agent or
agents for the Shares and the underwriters, if any, thereof, to forthwith
discontinue disposition of the Shares until such person shall have received
copies of such amended or supplemented prospectus and, if so directed by the
Company, to destroy or to deliver to the Company all copies, other than
permanent file copies, then in its possession of the prospectus (prior to such
amendment or supplement) covering such Shares as soon as practicable after the
Shareholder's receipt of such notice.
(c) The Shareholder shall furnish to the Company in writing such
information regarding the Shareholder and its intended method of distribution of
the Shares as the Company may from time to time reasonably request in writing,
but only to the extent that such information is required in order for the
Company to comply with its obligations under all applicable securities and other
laws and to ensure that the prospectus relating to such Shares conforms to the
applicable requirements of the Securities Act and the rules and regulations
thereunder. The Shareholder shall notify the Company as promptly as practicable
of any inaccuracy or change in information previously furnished by the
Shareholder to the Company or of the occurrence of any event, in either case as
a result of which any prospectus relating to the Shares contains or would
contain an untrue statement of a material fact regarding the Shareholder or its
intended method of distribution of such Shares or omits to state any material
fact regarding the Shareholder or its intended method of distribution of such
Shares required to be stated therein or
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necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and promptly furnish to the Company any
additional information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with respect
to the Shareholder or the distribution of the Shares, 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, in light of the circumstances under
which they were made, not misleading.
(d) Each Holder agrees not to effect any public sale or distribution of
any Shares, including any sale pursuant to Rule 144 under the Securities Act,
and not to effect any such public sale or distribution of any other equity
security of the Company or of any security convertible into or exchangeable or
exercisable for any equity security of the Company (in each case, other than as
part of such underwritten public offering) during the ten (10) days prior to,
and during the ninety (90) day period (or such longer period as each Holder
agrees with the underwriter of such offering) beginning on, the consummation of
any underwritten public offering of the Shares covered by a registration
statement referred to in Section 3.2 to the extent such Holder's Registered
Shares are being sold thereunder.
(e) In the case of any registration under Section 3.1 pursuant to an
underwritten offering, or in the case of a registration under Section 3.2 if the
Company has determined to enter into an underwriting agreement in connection
therewith, all Shares to be included in such registration shall be subject to an
underwriting agreement and no person may participate in such registration unless
such person agrees to sell such person's securities on the basis provided
therein and completes and executes all questionnaires, indemnities, underwriting
agreements and other document (other than powers of attorney) which must be
executed in connection therewith, and provides such other information to the
Company or the underwriter as may be necessary to register such Holder's Shares.
Section 3.5. Registration Expenses. The Company agrees to bear and to
pay, or cause to be paid, promptly upon request being made therefor, all
expenses incident to the Company's performance of or compliance with this
Agreement, including, without limitation: (a) all fees and expenses in
connection with the qualification of the Registered Shares for offering and sale
under state securities or "blue sky" laws referred to in Section 3.4(a)(vii)
hereof, including reasonable fees and disbursements of counsel for any placement
or sales agent or underwriter in connection with such qualifications, (b) all
expenses relating to the preparation, printing, distribution and reproduction of
the registration statement, each prospectus included therein or prepared for
distribution pursuant hereto, each amendment or supplement to the foregoing, the
certificates representing the Shares and all other documents relating hereto,
(c) the costs and charges of any escrow agent, transfer agent, registrar, any
custodian or attorney-in-fact appointed
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to act on behalf of the Shareholder (including, without limitation, all salaries
and expenses of the Company's officers and employees performing legal or
accounting duties), (d) fees, disbursements and expenses of the Company's
counsel and its other advisors and experts and independent certified public
accountants of the Company (including the expenses of any opinions or "comfort"
letters required by or incident to such performance and compliance), (e) the
fees and expenses incurred in connection with the listing of the Shares on The
New York Stock Exchange, Inc. and any other stock exchange or national
securities exchange on which Shares shall at such time be listed, and (f)
reasonable fees and disbursements of counsel retained by the Shareholder in
connection with registration pursuant to this Agreement (collectively, the
"Registration Expenses"). To the extent that any Registration Expenses are
incurred, assumed or paid by the Shareholder, any sales or placement agent or
agents for the Shares and the underwriters, if any, thereof, the Company shall
reimburse such person for the full amount of the Registration Expenses so
incurred, assumed or paid promptly after receipt of a request therefor. Each
Holder of the Shares being registered shall pay all underwriting discounts and
commissions and any capital gains, income or transfer taxes, if any,
attributable to the sale of such Shares.
Section 3.6. Indemnification; Contribution. (a) Indemnification by the
Company. The Company shall, and it hereby agrees to, indemnify and hold harmless
the Shareholder, and each person who participates as a placement or sales agent
or as an underwriter in any offering or sale of the Shares, against any losses,
claims, damages or liabilities to which the Shareholder or such agent or
underwriter may become subject, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) (collectively,
"Claims") arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement, or any
preliminary or final prospectus contained therein, or any amendment or
supplement thereto, or any document incorporated by reference therein, or arise
out of or are 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, in light of the circumstances in which they were made, not misleading,
and the Company shall, and it hereby agrees to, reimburse the Shareholder or any
such agent or underwriter for any legal or other out-of-pocket expenses
reasonably incurred by them in connection with investigating or defending any
such Claims; provided, however, that the Company shall not be liable to any such
person in any such case to the extent that any such Claims arise out of or are
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, or preliminary or final
prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by the Shareholder
or any agent, underwriter or representative of the Shareholder expressly for use
therein, or by the Shareholder's failure to furnish the Company, upon request,
with the information with respect to the Share holder, or any agent, underwriter
or representative of the Shareholder, or the
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Shareholder's intended method of distribution, that is the subject of the untrue
statement or omission or if the Company shall sustain the burden of proving that
the Shareholder or such agent or underwriter sold securities to the person
alleging such Claims without sending or giving, at or prior to the written
confirmation of such sale, a copy of the applicable prospectus (excluding any
documents incorporated by reference therein) or of the applicable prospectus, as
then amended or supplemented (excluding any documents incorporated by reference
therein), if the Company had previously furnished copies thereof to the
Shareholder or such agent or underwriter, and such prospectus corrected such
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement.
(b) Indemnification by the Shareholder and Any Agents or Underwriters.
The Shareholder shall, and hereby agrees, severally and not jointly, to (i)
indemnify and hold harmless the Company, its directors, officers, employees and
controlling persons, if any, and each underwriter, its partners, officers,
directors, employees and controlling persons, if any, in any offering or sale of
Shares, against any Claims to which the Company, its directors, officers,
employees and controlling persons, if any, may become subject, insofar as such
Claims (including any amounts paid in settlement as provided herein), or actions
or proceedings in respect thereof, arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, or any preliminary or final prospectus contained
therein, or any amendment or supplement thereto, or any document incorporated by
reference therein, or arise out of or are 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, in each case only to
the extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by the Shareholder or such agent or
underwriter (as the case may be) expressly for use therein, and (ii) reimburse
the Company for any legal or other out-of-pocket expenses reasonably incurred by
the Company in connection with investigating or defending any such Claim.
(c) Notice of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the commencement of
any action or proceeding for which indemnification under subsection (a) or (b)
may be requested, such indemnified party shall, without regard to whether a
claim in respect thereof is to be made against an indemnifying party pursuant to
the indemnification provisions of, or as contemplated by, this Section 3.6,
notify such indemnifying party and the underwriter in writing of the
commencement of such action or proceeding; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party in respect of such action or proceeding on account of the
indemnification provisions of or contemplated by Section 3.6(a) or 3.6(b) hereof
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unless the indemnifying party was materially prejudiced by such failure of the
indemnified party to give such notice, and in no event shall such omission
relieve the indemnifying party from any other liability it may have to such
indemnified party. In case any such action or proceeding shall be brought
against any indemnified party and it shall notify an indemnifying party of the
commencement thereof, unless in the reasonable opinion of outside counsel to the
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, such indem nifying
party shall be entitled to participate therein and, to the extent that it shall
determine, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party for any legal
or any other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of investigation
(unless such indemnified party reasonably objects to such assumption on the
grounds that there may be defenses available to it which are different from or
in addition to the defenses available to such indemnifying party, in which event
the indemnified party shall have the right to control its defense and shall be
reimbursed by the indemnifying party for the expenses incurred in connection
with retaining one separate counsel). If the indemnifying party is not entitled
to, or elects not to, assume the defense of a claim, it will not be obligated to
pay the fees and expenses of more than one counsel for each indemnified party
with respect to such claim. The indemnifying party will not be subject to any
liability for any settlement made without its consent, which consent shall not
be unreasonably withheld or delayed. No indemnifying party shall, without the
prior written consent of the indemnified party, compromise or consent to entry
of any judgment or enter into any settlement agreement with respect to any
action or proceeding in respect of which indemnification is sought under Section
3.6(a) or (b) (whether or not the indemnified party is an actual or potential
party thereto), unless such compromise, consent or settlement includes an
unconditional term thereof the giving by the claimant or plaintiff to the
indemnified party of a release from all liability in respect of such claim or
litigation and does not subject the indemnified party to any injunctive relief
or other equitable remedy.
(d) Contribution. The Shareholder and the Company agree that if, for
any reason, the indemnification provisions contemplated by Sections 3.6(a) or
3.6(b) hereof are unavailable to or are insufficient to hold harmless an
indemnified party in respect of any Claims referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such Claims in such proportion as is
appropriate to reflect the relative fault of, and benefits derived by, the
indemnifying party and the indemnified party, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue
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statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by such indemnifying party or by such
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The relative benefit derived by the parties shall be determined by reference to
the fact that the Company entered into this Agreement to induce the Shareholder
to engage in the transaction in which the Shares were acquired. The parties
hereto agree that it would not be just and equitable if contribution pursuant to
this Section 3.6(d) were determined (i) by pro rata allocation (even if the
Shareholder or any agents for, or underwriters of, the Shares, or all of them,
were treated as one entity for such purpose); or (ii) by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 3.6(d). The amount paid or payable by an indemnified party as
a result of the Claims referred to above shall be deemed to include (subject to
the limitations set forth in Section 3.6(c) hereof) any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action, proceeding or claim. 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.
(e) The indemnification and contribution required by this Section 3.6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
(f) Beneficiaries of Indemnification. The obligations of the Company
under this Section 3.6 shall be in addition to any liability that it may
otherwise have and shall extend, upon the same terms and conditions, to each
officer, director and partner of the Shareholder and each agent and underwriter
of the Shares and each person, if any, who controls the Shareholder or any such
agent or underwriter within the meaning of the Securities Act; and the
obligations of the Shareholder and any agents or underwriters contemplated by
this Section 3.6, shall be in addition to any liability that the Shareholder or
its respective agent or underwriter may otherwise have and shall extend, upon
the same terms and conditions, to each officer and director of the Company
(including any person who, with his consent, is named in any registration
statement as about to become a director of the Company) and to each person, if
any, who controls the Company within the meaning of the Securities Act.
Section 3.7. Underwriters. If any of the Shares are to be sold pursuant
to an underwritten offering, the investment banker or bankers and the managing
underwriter or underwriters thereof shall be selected by the Company except in
the case of a Demand Registration, in which the managing underwriter or
underwriters shall be
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selected by the Shareholder, provided that such managing underwriter or
underwriters must be of recognized international standing.
Section 3.8. Exchange Act Filings; Rule 144; Rule 144A. (a) The Company
covenants to and with the Shareholder that to the extent it shall be required to
do so under the Exchange Act, the Company shall timely file the reports required
to be filed by it under the Exchange Act or the Securities Act (including, but
not limited to, the reports under Sections 13 and 15(d) of the Exchange Act
referred to in subparagraph (c)(1) of Rule 144 adopted by the SEC under the
Securities Act and the rules and regulations adopted by the SEC thereunder) and
shall take such further action as the Shareholder may reasonably request, all to
the extent required from time to time to enable the Shareholder to sell Shares
without registration under the Securities Act within the limitations of the
exemption provided by Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC. Upon the request of the Shareholder, the Company shall deliver to
the Shareholder a written statement as to whether it has complied with such
requirements.
(b) If at any time the Company is not subject to Section 13 or 15(d) of
the Exchange Act and is not exempt from reporting pursuant to Rule 12g3-2(b)
under the Exchange Act, the Company agrees, upon the request of the Shareholder
seeking to transfer Shares in conformity with Rule 144A under the Securities
Act, to furnish to the Shareholder or prospective purchasers of the Shares from
the Shareholder the information required by Rule 144A(d)(4)(i) under the
Securities Act in the manner and at the times contemplated by such Rule.
(c) The Company covenants to make available "adequate current public
information" concerning the Company within the meaning of Rule 144(c) under the
Securities Act.
Section 3.9. Agreement of the Shareholder. The Shareholder agrees not
to, and it shall cause its subsidiaries not to, make any sale, transfer or other
disposition of Shares of Company Common Stock except in compliance with the
registration requirements of the Securities Act and the rules and regulations
thereunder or in accordance with the terms of this Agreement.
Section 3.10. Legends. (a) Stop transfer restrictions will be given to
the Company's transfer agent(s) with respect to the Shares and there will be
placed on the
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certificates or instruments representing the Shares, and on any certificate or
instrument delivered in substitution therefor, a legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO SUCH REGISTRATION OR IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
(b) The Company hereby agrees that it will cause stop transfer
restrictions to be released with respect to any Shares that are transferred (i)
pursuant to an effective registration statement under the Securities Act, (ii)
pursuant to Rule 144 or 145 under the Securities Act, (iii) in accordance with
the requirements of Rule 903 or 904 of Regulation S under the Securities Act, or
(iv) pursuant to another exemption from the registration requirements of the
Securities Act; provided, however, that in the case of any transfer pursuant to
clause (ii), (iii) or (iv) above, the request for transfer is accompanied by a
written statement signed by the Shareholder confirming compliance with the
requirements of the relevant exemption from registration; and provided, further,
that in the case of any transfer pursuant to clause (iv) above, other than any
transfer by the Shareholder to one or more of its direct or indirect
subsidiaries, or among such subsidiaries, or by any such subsidiary to the
Shareholder, the Company shall have received a written opinion of counsel
reasonably satisfactory to the Company. The Company further agrees that it will
cause the legend described in subsection (a) of this Section 3.10 to be removed
in the event of any transfer as provided in clause (i), (ii) or (iii) above.
Section 3.11. Treatment of Convertible Preferred Stock. Shares of
Convertible Preferred Stock owned by the Shareholder shall be treated in all
respects in the same manner as shares of Common Stock owned by the Shareholder
for the purposes of this Agreement. The Company and the Shareholder agree that
the Shareholder shall convert shares of Convertible Preferred Stock registered
and sold pursuant to this Agreement into shares of Common Stock
contemporaneously with the closing of any such sale.
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ARTICLE IV
MISCELLANEOUS
Section 4.1. Term of Agreement; Termination. The term of this Agreement
shall commence on the date hereof and such term and this Agreement shall
terminate upon the expiration of the Demand Period.
Section 4.2. Recapitalizations, Exchanges, Etc. Affecting the Shares.
The provisions of this Agreement shall apply to any and all shares of capital
stock of the Company or any successor or assign of the Company (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for, or in substitution of the Shares, by reason of a
stock dividend, stock split, stock issuance, reverse stock split, combination,
recapitalization, reclassification, merger, consolidation or otherwise. Upon the
occurrence of any such event, amounts hereunder shall be appropriately adjusted.
Section 4.3. Other Company Securities. The provisions of this Agreement
shall apply mutatis mutandis to any publicly traded security of the Company
other than the Common Stock which may be owned by the Shareholder from time to
time during the Demand Period.
Section 4.4. Amendment. This Agreement may not be amended except by a
written instrument, duly executed by the Company and the Shareholder.
Section 4.5. Notices. Except as otherwise provided in this Agreement,
all notices, requests, claims, demands, waivers and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered by hand, when delivered personally or by courier, three days after
being deposited in the mail (registered or certified mail, postage prepaid,
return receipt requested), or when received by facsimile transmission if
promptly confirmed by one of the foregoing means, as follows:
If to the Company:
ONEOK Inc.
100 West Fifth Street
Tulsa, Oklahoma 74103
Attention: President
with a copy to:
Gable Gotwals Mock Schwabe Khile Gaberino
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100 W. Fifth Street
Suite 1000
Tulsa, Oklahoma 74103
Attention: Donald A. Kihle, Esq.
and:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: F. William Reindel, Esq.
If to the Shareholder:
Western Resources, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
Attention: President
with a copy to:
Western Resources, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
Attention: John K. Rosenberg, Esq.
and:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Francis J. Aquila, Esq.
Section 4.6. Integration. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, representations, warranties, covenants or undertakings with respect to
its subject matter other than those expressly set forth or referred to herein.
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Section 4.7. Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, and their respective
successors and permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto, and
their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
Section 4.8. Assignability. This Agreement shall not be assignable by
any party hereto.
Section 4.9. Counterparts. This Agreement may be executed by the
parties hereto in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 4.10. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the state of Oklahoma without
giving effect to principles of conflicts of law.
Section 4.11. Shareholder Agreement. This Agreement shall remain in
effect in accordance with its terms notwithstanding the termination or lapse in
effectiveness of any other agreement between the Shareholder and the Company,
including, but not limited to, the Shareholder Agreement.
Section 4.12. Severability. In the event any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired, and such
unreasonable, unlawful or unenforceable provision shall be interpreted, revised
or applied in the manner that renders it lawful and enforceable to the fullest
extent possible under law.
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IN WITNESS WHEREOF, the parties named below have hereto set their hands
as of the day and year first above written.
NEWCORP, INC.
By:_______________________________
Name:
Title:
WESTERN RESOURCES, INC.
By:_______________________________
Name:
Title:
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