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Exhibit C
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SHAREHOLDER AGREEMENT
between
New Oneok,
an Oklahoma corporation
and
Western Resources, Inc.,
a Kansas corporation
Dated as of ______________, 1997
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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................. 11
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 3.8. Rights Agreement........................................... 18
Section 3.9. Agreement Not to Convert................................... 18
Section 3.10. Taxes Upon Conversion or Exchange.......................... 19
Section 3.11. Make Whole Payment......................................... 19
Section 3.12. Prohibition on Senior Securities........................... 19
ARTICLE IV
Board Representation and Voting
Section 4.1. Directors Designated by the Shareholder.................... 19
Section 4.2. Resignation of Shareholder Nominees........................ 22
Section 4.3. Voting..................................................... 22
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ARTICLE V
Effectiveness and Termination
Section 5.1. Effectiveness.............................................. 23
Section 5.2. Termination................................................ 23
ARTICLE VI
Miscellaneous
Section 6.1. Compliance With Law........................................ 25
Section 6.2. Regulatory Matters......................................... 25
Section 6.3. Injunctive Relief.......................................... 25
Section 6.4. Successors and Assigns..................................... 26
Section 6.5. Amendments; Waiver......................................... 26
Section 6.6. Notices.................................................... 26
Section 6.7. APPLICABLE LAW............................................. 27
Section 6.8. Headings................................................... 27
Section 6.9. Integration................................................ 27
Section 6.10. Severability............................................... 27
Section 6.11. Consent to Jurisdiction.................................... 28
Section 6.12. Counterparts............................................... 28
Exhibit A Registration Rights Agreement
Exhibit B Shareholder Protection Rights Agreement
Exhibit C Initial Shareholder Nominee Notice
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SHAREHOLDER AGREEMENT, dated as of ________, 1997 (this "Agreement"),
between New Oneok, 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 Company, the Shareholder, and ONEOK, Inc., a Delaware
corporation ("ONEOK") have entered into an Agreement, dated as of December 12,
1996 (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, concurrently with 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%.
"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
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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 3.5(a) hereof.
"Buyout Tender Offer" shall have the meaning assigned to such term in
Section 3.6(b) hereof.
"Buy/Sell Notice" shall have the meaning assigned to such term in
Section 3.6(a) hereof.
"Buy/Sell Option" shall have the meaning assigned to such term in
Section 3.6(a) hereof.
"Buy/Sell Price" shall have the meaning assigned to such term in
Section 3.6(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
3.6(c)(i) hereof.
"Company Repurchase Notice" shall have the meaning assigned to such
term in Section 3.5(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
3.3(a)(iii)of this Agreement.
"Dilutive Issuance Right" shall have the meaning assigned in Section
3.3(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 3.5(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 4.1(b) of this Agreement.
"Initial Shareholder Nominees" shall have the meaning assigned in
Section 4.1(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,
as reported by the National
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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.
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
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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 3.4(b)(i)
of this Agreement.
"Sale Option" shall have the meaning assigned in Section 3.4(b) of this
Agreement.
"Sale Period" shall have the meaning assigned in Section ? of this
Agreement.
"Sale Securities" shall have the meaning assigned in Section 3.4(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.
"Shareholder Affiliate" shall mean any Affiliate of the Shareholder.
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"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
4.1(d) of this Agreement.
"Successor Shareholder Nominee Notice" shall have the meaning assigned
in Section 4.1(d) of this Agreement.
"Successor Shareholder Nominees" shall have the meaning assigned in
Section 4.1(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 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 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.
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"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.
(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.
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(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, 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
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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.
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
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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
3.3(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 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
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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 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:
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(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.
(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
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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.
(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.
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(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) 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
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(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 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
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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.
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
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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 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 4.1(b) below) who have been
designated by the Shareholder in the Initial Shareholder Nominee Notice (as
defined in Section 4.1(b)
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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 4.1(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 4.1(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
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 4.1(d) below).
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(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 4.1(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.
(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
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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) 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).
(c) 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
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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
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.
(d) 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.
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(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.
(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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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.
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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 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:
New Oneok, Inc.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
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Tulsa, Oklahoma 74103
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Shareholder:
Western Resources, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Western Resources, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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 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
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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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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.
NEW ONEOK, INC.
By: _________________________
Name:
Title:
WESTERN RESOURCES, INC.
By: _________________________
Name:
Title:
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