Exhibit 7.3
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT, dated as of May 26, 2000, is entered into by
and between The Wiser Oil Company, a Delaware corporation (the "Company"), Wiser
Investment Company, LLC, a Delaware limited liability company ("WIC"), and
Dimeling, Xxxxxxxxx and Park, a Pennsylvania general partnership ("DS&P" and,
together with WIC, "Purchaser").
RECITALS:
WHEREAS, the parties hereto have entered into the Stock Purchase Agreement
(such term and certain other capitalized terms used in this Agreement are
defined in Section 1.1 hereof) pursuant to which Purchaser has agreed to acquire
shares of Series C Preferred Stock, subject to the satisfaction of the
conditions set forth therein; and
WHEREAS, the execution and delivery of this Agreement is a condition to
Purchaser's obligation to purchase the shares of Series C Preferred Stock
pursuant to the Stock Purchase Agreement;
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements hereinafter contained and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
"Advice" shall have the meaning provided in Section 3.7 hereof.
"Affiliate" means, with respect to any Person, any other Person directly,
or indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person. For purposes of this definition and this
Agreement, the term "control" (and correlative terms) means the power, whether
by contract, equity ownership or otherwise, to direct the policies or management
of a Person.
"Affiliated Group", with respect to any Person, means such Person and each
Affiliate and Associate of such Person and each other Person with whom such
Person is acting "as a partnership, limited partnership, syndicate, or other
group for the purpose of acquiring, holding,
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or disposing of" Shares (within the meaning of Section 13(d)(3) of the Exchange
Act, regardless of whether the Company shall at any time be subject to the
requirements of the Exchange Act).
"Agreement" means this Stockholder Agreement, as the same may be amended,
supplemented or modified from time to time in accordance with the terms hereof.
"Annual Budget" shall have the meaning provided in Section 2.6 hereof.
"Associate" means (i) any corporation or entity (other than the Company or
a Subsidiary of the Company) of which such Person is an officer or partner or
is, directly or indirectly, the Beneficial Owner of 10 percent or more of any
class of equity securities, (ii) any trust or other estate in which such Person
has a substantial beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity, and (iii) any relative or spouse of
such Person, or any relative of such Person, or any relative of such spouse, who
has the same home as such Person or who is a director or officer of the Company
or any of its Subsidiaries.
"Beneficial Owner" and "Beneficially Own" mean, with respect to any Person,
any securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly; or
(ii) which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has
(A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange
rights, rights (other than Wiser Rights), warrants or options,
or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to Beneficially Own,
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or
(B) the right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from an
immediately revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
of the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or an
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equivalent form); or
(iii) which are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except to the extent
permitted by subparagraph (ii)(B) of this definition) or disposing
of any voting securities of the same issuer.
"Board" means the Board of Directors of the Company.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in New York, New
York or Dallas, Texas generally are authorized or required by law to close.
"Certificate of Designation" means the Certificate of Designation for the
Series C Preferred Stock.
"Closing" means the closing of the transactions contemplated by the Stock
Purchase Agreement.
"Closing Date" means the date on which the Closing takes place.
"Common Stock" means the Company's Common Stock, $0.01 par value per share,
and, except where the context otherwise requires, the accompanying Wiser Rights.
"Common Stock Equivalents" means (without duplication with any other Common
Stock or Common Stock Equivalents) any rights (other than Wiser Rights),
warrants, options, convertible securities or indebtedness, exchangeable
securities or indebtedness, or other rights, exercisable for or convertible or
exchangeable into, directly or indirectly, Common Stock of the Company and
securities convertible or exchangeable into Common Stock (at the time of
issuance or upon the passage of time or the occurrence of some future event);
including the Underlying Common Shares.
"Company" has the meaning set forth in the introductory paragraph hereof.
"Conversion Shares" means all shares of the Common Stock issuable upon
conversion of the Preferred Shares in accordance with the terms of the
Certificate of Designation.
"Deferral Event" shall have the meaning set forth in Section 3.1(d) hereof.
"Demand Registration" shall have the meaning set forth in Section 3.1(a)
hereof.
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"Demand Request" shall have the meaning set forth in Section 3.1(a) hereof.
"Dividend Shares" means the shares of Common Stock issuable in payment of
dividends payable on the Preferred Shares in accordance with the terms of the
Certificate of Designation.
"Equity Securities" means any capital stock of the Company, any securities
directly or indirectly convertible into, or exercisable or exchangeable for, any
capital stock of the Company, or any right (other than Wiser Rights), option,
warrant or other security which, with the payment of additional consideration,
the expiration of time or the occurrence of any event shall give the holder
thereof the right to acquire any capital stock of the Company or any security
convertible into or exercisable or exchangeable for, any capital stock of the
Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Excluded Registration" means a registration under the Securities Act of
(i) securities issuable under employee compensation or benefit programs or
otherwise on Form S-8 or an equivalent form, or (ii) securities issuable under
an exchange offer or an offering of securities solely to the existing
stockholders or employees of the Company or to the existing stockholders of
another company in connection with a merger or acquisition or otherwise on Form
S-4 or an equivalent form.
"Executive Committee" shall have the meaning set forth in Section 2.1(b)
hereof.
"Fully-Diluted Shares" means, at any time, the then outstanding shares of
Common Stock plus (without duplication) all shares of Common Stock issuable (at
the time of issuance or upon passage of time or the occurrence of some future
event), upon the exercise, conversion or exchange of all then-outstanding Common
Stock Equivalents. The percentage of the Fully-Diluted Shares held by a Person
at any time shall be determined so that a Person is deemed the Beneficial Owner
of the then outstanding shares of Common Stock attributable to such Person plus
(without duplication) all shares of Common Stock issuable (whether at the time
of issuance or upon passage of time or the occurrence of some future event),
upon the exercise, conversion or exchange of all then-outstanding Common Stock
Equivalents attributable to such Person, which shares of Common Stock (but not
Common Stock issuable under any other outstanding Common Stock Equivalents)
shall be deemed to be outstanding for purposes of this determination.
"Inspectors" shall have the meaning set forth in Section 3.6(j) hereof.
"Management Agreement" means the Management Agreement to be entered into by
and between the Company and WIC at the Closing.
"Material Adverse Effect" shall have the meaning set forth in the Stock
Purchase Agreement.
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"NASD" shall have the meaning provided in Section 3.6(m) hereof.
"Nasdaq" shall have the meaning set forth in Section 3.6(l) hereof.
"Option" shall have the meaning set forth in the Stock Purchase Agreement.
"Option Closing" shall have the meaning set forth in the Stock Purchase
Agreement.
"Option Closing Date" shall have the meaning set forth in the Stock
Purchase Agreement.
"Option Term" shall have the meaning set forth in the Stock Purchase
Agreement.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint-stock company, government or other agency or political
subdivision thereof or other entity of any kind.
"Piggyback Registration" shall have the meaning set forth in Section 3.2(a)
hereof.
"Preferred Shares" means the shares of Series C Preferred Stock to be
purchased by Purchaser at the Closing and any Option Closings pursuant to the
Stock Purchase Agreement.
"Purchaser" shall have the meaning set forth in the introductory paragraph
hereof.
"Purchaser Designee" shall have the meaning set forth in Section 2.1(a)
hereof.
"Purchaser Group" means each Purchaser together with its respective
Affiliates.
"Purchaser Representative" shall have the meaning set forth in Section
3.1(a) hereof.
"Records" shall have the meaning set forth in Section 3.6(j) hereof.
"Registrable Shares" means at any time the Underlying Common Shares and any
other Equity Securities issued or issuable with respect thereto by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise;
provided, however, that Registrable Shares shall not include any shares (i) the
sale of which has been registered pursuant to the Securities Act and which
shares have been sold pursuant to such registration, or (ii) which have been
sold to the public pursuant to Rule 144 of the SEC under the Securities Act.
"Registration Expenses" shall have the meaning set forth in Section 3.8
hereof.
"Required Filing Date" shall have the meaning set forth in Section 3.1(a)
hereof.
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"Restated Bylaws" means the Restated Bylaws of the Company, as amended from
time to time following the Closing Date.
"Restated Certificate" means the Restated Certificate of Incorporation of
the Company approved by the stockholders of the Company at the Stockholders'
Meeting (as defined in the Stock Purchase Agreement), as amended from time to
time following the Closing Date.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"Series C Preferred Stock" means the Company's Series C Cumulative
Convertible Preferred Stock, par value $10.00 per share, which shall have the
terms set forth in the Certificate of Designation.
"Shares" means the Preferred Shares, Warrant Shares, Conversion Shares
and/or Dividend Shares.
"Shelf Registration" shall have the meaning set forth in Section 3.4(a)
hereof.
"Stock Purchase Agreement" means that certain Amended and Restated Stock
Purchase Agreement dated as of December 13, 1999 between WIC and the Company, as
the same may be amended, supplemented or modified from time to time in
accordance with the terms hereof.
"Subsidiary" of any Person means (i) a corporation, a majority of whose
stock with voting power, under ordinary circumstances, to elect directors is at
the date of determination thereof, directly or indirectly, owned by such Person,
by one or more subsidiaries of such Person or by such Person and one or more
subsidiaries of such Person, and (ii) any other Person (other than a
corporation) in which such Person, a subsidiary of such Person or such Person
and one or more subsidiaries of such Person, directly or indirectly, at the date
of determination thereof, has (x) at least a majority ownership interest or (y)
the power to elect or direct the election of the directors or other governing
body of such Person.
"Suspension Notice" shall have the meaning provided in Section 3.7 hereof.
"Underlying Common Shares" means the Warrant Shares, the Conversion Shares
and the Dividend Shares.
"Warrant Agreement" means each Warrant Agreement to be entered into by and
between the Company and WIC at the Closing and any Option Closings.
"Warrants" means the Common Stock purchase warrants issued under the
Warrant
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Agreement.
"Warrant Shares" means all shares of Common Stock issuable upon exercise of
the Warrants in accordance with the terms of the Warrant Agreement.
"WIC" shall have the meaning set forth in the introductory paragraph
hereof.
"Wiser Rights" means rights to purchase Series B Preferred Stock of the
Company pursuant to the Wiser Rights Agreement.
"Wiser Rights Agreement" means the Rights Agreement dated as of October 25,
1993 by and between the Company and ChaseMellon Shareholder Services, L.L.C., as
successor rights agent, as amended.
Section 1.2 References and Titles. Titles appearing at the beginning of
any Articles, Sections, subsection, or other subdivisions of this Agreement are
for convenience only, do not constitute any part of such Articles, Sections,
subsections or other subdivisions, and shall be disregarded in construing the
language contained therein. The words "this Agreement," "herein," "hereby,"
"hereunder," and "hereof" and words of similar import, refer to this Agreement
as a whole and not to any particular subdivision unless expressly so limited.
The words "this Section," "this subsection," and words of similar import, refer
only to the Sections or subsections hereof in which such words occur. The word
"including" (in its various forms) means "including without limitation."
Pronouns in masculine, feminine or neuter genders shall be construed to state
and include any other gender, and words, terms and titles (including terms
defined herein) in the singular form shall be construed to include the plural
and vice versa, unless the context otherwise expressly requires. Unless the
context otherwise requires, all defined terms contained herein shall include the
singular and plural and the conjunctive and disjunctive forms of such defined
terms.
ARTICLE II
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
Section 2.1 Board of Directors; Executive Committee.
(a) Board Representation. At the Closing, the Company shall fill the
vacancies on the Board created by the resignation of Xxxxxx X. Xxxxx, Xx.,
Xxxxxx Xxxxxxxx and Xxxx X. Xxxxxxx III (executed originals of which have been
delivered to the Company on the date hereof) with three nominees designated by
Purchaser (each, a "Purchaser Designee"), one of which shall also be designated
to serve as the Chairman of the Board. Subject to Section 2.1(e) hereof, from
and after the Closing and any Option Closings Purchaser shall have the
continuing right to designate the Purchaser Designees and the Chairman of the
Board. Each Purchaser Designee shall serve until the annual meeting of the
Company's stockholders at which the term of the class to which such Purchaser
Designee has been appointed expires, and until his or her respective
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successor is elected and qualified or until his or her earlier death,
resignation or removal from office. Unless Purchaser advises the Board in
writing of one or more replacement Purchaser Designees for the Company's next
annual or special meeting of stockholders at which directors are elected and the
term of one or more Purchaser Designee expires, then the Purchaser Designee(s)
for any such meeting shall be deemed to be the incumbent Purchaser Designee(s).
During the term of the Management Agreement, designations under this Section
2.1(a) shall be made by WIC on behalf of Purchaser.
(b) Executive Committee. At the Closing, an executive committee for the
Company (the "Executive Committee") shall be created and the Company shall take
all actions so that the three Purchaser Designees and X. Xxxxxx Xxxxxxx, III,
are appointed to serve on the Executive Committee. The President of the Company
shall serve as an advisory member of the Executive Committee. The Executive
Committee shall have and may exercise all the powers and authority of the Board
in the management of the business and affairs of the Company on matters which by
law do not need whole Board approval. The affirmative vote of a majority of the
members of the Executive Committee must approve a particular matter for it to be
the act of the Executive Committee. If the affirmative vote of a majority of
the members of the Executive Committee on a particular matter submitted to the
Executive Committee for approval cannot be obtained, such matter shall be
submitted to the whole Board for approval. Executive Committee approval shall
be required to approve operating or capital expenditures exceeding $1,000,000
per transaction, unless such expenditures were specifically approved by the
Board as part of the Annual Budget. Whole Board approval shall be required to
approve (i) any operating or capital expenditure or series of related
expenditures exceeding $2,500,000, unless such expenditure or expenditures were
specifically approved by the Board as a part of the Annual Budget, (ii) the
nomination of members for election to the Board, (iii) the filling of vacancies
in the Board, the Executive Committee or other Board committee, and (iv)
transactions between the Company, on the one hand, and any Purchaser or any
Affiliate of any Purchaser, on the other hand. Written or printed notice
stating the place, day and hour of any meeting of the Executive Committee and
the purpose or purposes for which the meeting is called shall be delivered to
each member of the Executive Committee so that it is received by such member not
less than three days before the date of the meeting. Any action required or
permitted to be taken at a meeting of the Executive Committee may be taken
without a meeting if a consent in writing, setting forth the action so taken, is
signed by all the members of the Executive Committee.
(c) Other Committees. At the Closing, the Company shall take all necessary
action so that one Purchaser Designee who is not an executive officer of the
Company is appointed to serve as a member of each committee of the Board, other
than the Executive Committee.
(d) Certain Officers. Subject to Section 2.1(e), at and after the Closing
and any Option Closings Purchaser shall have the right to make all nominations
of individuals for election to the offices of Chief Executive Officer and Chief
Financial Officer of the Company. During the term of the Management Agreement,
nominations under this Section 2.1(d) shall be made by WIC on behalf of
Purchaser.
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(e) Continuation of Rights. (i) As long as the Purchaser Group
Beneficially Owns 4,600,000 or more Fully-Diluted Shares (excluding shares owned
by the Purchaser Group prior to the Closing Date), Purchaser shall be entitled
to designate in accordance with the provisions hereof three Purchaser Designees
to serve on the Board and the Executive Committee and one Purchaser Designee who
is not an executive officer of the Company to each other committee of the Board.
Otherwise, Purchaser shall be entitled to designate that number of Purchaser
Designees to the Board and the Executive Committee corresponding to the
Purchaser Group's Beneficial Ownership (excluding shares owned by the Purchaser
Group prior to the Closing Date) of Common Stock as set forth below:
Number of Fully-Diluted Shares Number of Purchaser Designees
------------------------------ -----------------------------
From 2,800,000 to 4,600,000 Two
From 800,000 to 2,800,000 One
Less than 800,000 Zero
(ii) At such time as the Purchaser Group Beneficially Owns fewer than
2,800,000 of the Fully-Diluted Shares, Purchaser shall no longer be entitled to
(A) designate the Chairman of the Board, (B) designate a Purchaser Designee to
serve on other committees of the Board in accordance with subsection (c) above
or (C) nominate the Chief Executive Officer and the Chief Financial Officer in
accordance with subsection (d) above.
(iii) As long as Purchaser is entitled to designate Purchaser Designees in
accordance with this Section 2.1, the Company agrees to continue to cause such
Purchaser Designee(s) (or their respective successor(s) designated by Purchaser)
to be nominated for election to the Board at each annual or special meeting of
stockholders at which directors are elected after the Closing when the term of
office of any Purchaser Designee expires. To the extent the Company's proxy
statement for any meeting of stockholders includes a recommendation regarding
the election of any other nominees to the Board, the Company agrees to include a
recommendation that the stockholders also vote in favor of the Purchaser
Designee(s) that are nominated for election to the Board in accordance with this
Section 2.1.
(iv) (A) Unless clause (B) of this Section 2.1(e)(iv) is applicable,
at any time that the number of Purchaser Designees that Purchaser may
designate decreases by operation of Section 2.1(e)(i) hereof (a
"Designee Reduction"), a Purchaser Designee (or Purchaser Designees,
as the case may be) selected by Purchaser shall cease to be a
Purchaser Designee, though such individual shall continue to serve on
the Board until his successor is duly elected and qualified.
(B) If at the time of a Designee Reduction the Restated Certificate
provides for a classified Board, (1) a Purchaser Designee (or
Purchaser Designees, as the case may be) whose term of office expires
at the next annual meeting of stockholders at which directors are
elected (each an "Expiring Designee") shall cease to be a
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Purchaser Designee, though any such individual shall continue to serve
on the Board until his successor is duly elected and qualified,
provided that if the number of Expiring Designees exceeds the amount
of the Designee Reduction, Purchaser shall select the Expiring
Designee(s) that shall cease to be a Purchaser Designee(s) and (2) if
the number of Expiring Designees is less than the amount of the
Designee Reduction, Purchaser shall select an additional Purchaser
Designee (or Purchaser Designees, as the case may be) who shall
promptly resign from the Board, the Executive Committee and any other
Board committee of which he is a member, provided that upon the
affirmative vote of a majority of the remaining members of the Board,
any such individual shall continue to serve on the Board until his
successor is duly elected and qualified. The provisions of this clause
(B) shall automatically terminate at such time as the Restated
Certificate no longer provides for a classified Board.
(v) Notwithstanding anything in this Section 2.1(e) to the contrary, if at
the time of the Closing or any Option Closings the Purchaser Group Beneficially
Owns less than 6,624,069 Fully-Diluted Shares (excluding shares owned by the
Purchaser Group prior to the Closing Date), then for purposes of this Section
2.1(e) the number of Fully-Diluted Shares that must be Beneficially Owned by the
Purchaser Group in order for it to maintain a specified designation or related
right shall be adjusted by multiplying such number of Fully-Diluted Shares by a
fraction of which the numerator is the aggregate purchase price paid by
Purchaser at the Closing and any Option Closings, and the denominator is
$25,000,000. Any calculation made under this Section 2.1(e)(v) shall be rounded
to the nearest whole Fully-Diluted Share.
(vi) In addition to any adjustment that is required under Section
2.1(e)(v), for purposes of this Section 2.1(e) the number of Fully-Diluted
Shares that must be Beneficially Owned by the Purchaser Group in order for it to
maintain a specified designation or related right shall be appropriately
adjusted from time to time in case the Company shall (A) pay a dividend on
Common Stock in Common Stock, (B) subdivide its outstanding shares of Common
Stock into a greater number of such shares or (C) combine its outstanding shares
of Common Stock into a smaller number of such shares.
(f) Vacancies. If, following an election or appointment to the Board or
committee thereof pursuant to this Section 2.1, any Purchaser Designee shall
resign or be removed or be unable to serve for any reason (other than as a
result of a Designee Reduction) prior to the expiration of his term as a
director of the Company or member of the Executive Committee and any other
applicable committee, then WIC on behalf of Purchaser shall, within 30 days of
such event, notify the Board in writing of a replacement Purchaser Designee, and
the Company shall cause such replacement Purchaser Designee to be appointed to
the Board and the Executive Committee and any other applicable committee to fill
the unexpired term of the Purchaser Designee who such new Purchaser Designee is
replacing.
Section 2.2 Costs and Expenses. The Purchaser Designees shall be
entitled to receive
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the same compensation and reimbursement of expenses, and to participate in the
same benefit and incentive plans, as the Company provides to non-employee
members of its Board of Directors generally. In addition, the Company will pay
all reasonable out-of-pocket expenses incurred by Purchaser Designees in
connection with their participation in meetings of the Board of Directors (and
committees thereof) of the Company and the Boards of Directors (and committees
thereof) of the Subsidiaries of the Company.
Section 2.3 Series C Preferred Directors. Notwithstanding anything
herein to the contrary, the Company and the Board shall approve of and shall
take all actions as may be necessary to elect the directors that the holders of
the Series C Preferred Stock are entitled to elect upon an Event of
Noncompliance (each as defined in the Certificate of Designations) pursuant to
Section 10B of the Certificate of Designations.
Section 2.4 Restated Certificate; Bylaws. The Company shall ensure that
the Restated Certificate and Restated Bylaws as in effect immediately following
the date hereof do not, at any time thereafter, conflict in any respect with the
provisions of this Agreement. In addition, the Company agrees that it will not
amend the Restated Bylaws or adopt a resolution in accordance with the Restated
Bylaws to increase the size of the Board from seven members without the approval
of a majority of the Purchaser Designees, or if only one Purchaser Designee
remains, approval by such remaining Purchaser Designee.
Section 2.5 Other Activities of Purchaser Affiliates; Fiduciary Duties.
It is understood and accepted by the parties to this Agreement that each
Purchaser and its Affiliates have interests in other business ventures which may
be in conflict with the activities of the Company and its Subsidiaries and that,
subject to applicable law, nothing in this Agreement shall limit the current or
future business activities of Affiliates of each Purchaser, whether or not such
activities are competitive with those of the Company and its Subsidiaries;
provided, however, that nothing in this Agreement, express or implied, shall (i)
relieve any officer or director of the Company (including any Purchaser
Designee) or any of its Subsidiaries of any fiduciary or other duties or
obligations they may have to the Company's stockholders or (ii) affect the
obligations of WIC and its Affiliates under the Management Agreement.
Section 2.6 Annual Budget. The senior management of the Company shall
submit to the Board for its approval a strategic plan and budget, including
operating and capital budgets, as may be amended from time to time (the "Annual
Budget"), within 45 days following the date hereof (with respect to calendar
year 2000) and at least 60 days prior to the beginning of each succeeding
calendar year period.
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ARTICLE III
REGISTRATION RIGHTS
Section 3.1 Demand Registration.
(a) Request for Registration. At any time WIC on behalf of Purchaser may
request the Company, in writing (a "Demand Request"), to effect the registration
under the Securities Act of all or part of its Registrable Shares (a "Demand
Registration"). Each Demand Request shall specify the number of Registrable
Shares proposed to be sold. Subject to subsection (d) of this Section 3.1, the
Company shall file the Demand Registration within 30 days after receiving a
Demand Request (the "Required Filing Date"), and shall use all commercially
reasonable efforts to cause such Demand Registration to be declared effective by
the SEC as promptly as practicable after such filing; provided, that the Company
need effect only two Demand Registrations (any of which may be a Shelf
Registration pursuant to Section 3.4 below). It is specifically agreed that the
Demand Registration rights set forth in this Section 3.1 shall be assignable to
any transferee of the Registrable Shares who is a member of the Purchaser Group,
but not otherwise; provided, however, that only WIC or such other Person duly
designated by WIC by written notice to the Company as agent to Purchaser (the
"Purchaser Representative") for the purposes of the giving and receipt of
demands, requests and other communications pursuant to this Section 3.1, shall
be entitled to request the Company to effect the Demand Registration.
(b) Effective Registration and Expenses. A registration will not count as
a Demand Registration until it has become effective; provided, that if, after it
has become effective, an offering of Registrable Shares pursuant to a
registration is interfered with by any stop order, injunction, or other order or
requirement of the SEC or other governmental agency or court, such registration
will be deemed not to have been effected and will not count as a Demand
Registration. Subject to the following sentence, in the event that a Demand
Request is made by WIC or the Purchaser Representative that is subsequently
withdrawn by such persons, all Registration Expenses incurred in connection
therewith shall be borne by Purchaser and such withdrawn Demand Request shall
not be counted as a Demand Registration in determining the number of Demand
Registrations to which Purchaser is entitled pursuant to subsection (a) of this
Section 3.1. In the event that a Demand Request is made by WIC or the Purchaser
Representative that is subsequently withdrawn by such persons, all Registration
Expenses shall be borne by the Company if (i) the Company has not performed its
obligations hereunder in all material respects or (ii) there has been any event,
change or effect which, individually or in the aggregate, has had or would be
reasonably likely to have a Material Adverse Effect; and in such case a
withdrawn Demand Request shall not be counted as a Demand Registration in
determining the number of Demand Registrations to which Purchaser is entitled
pursuant to subsection (a) of this Section 3.1.
(c) Selection of Underwriters. If Purchaser intends to distribute the
Registrable Shares pursuant to a Demand Registration by means of an
underwriting, WIC on behalf of Purchaser shall so advise the Company as part of
the Demand Request and provide the name of the
12
investment banking firm or firms to manage the underwritten offering; provided
that such selection shall be subject to the consent of the Company, which
consent shall not be unreasonably withheld. If the managing underwriter of such
underwritten offering shall inform the Company and WIC by letter of its belief
that the amount of Registrable Shares requested to be included in such
registration exceeds the amount which can be sold in (or during the time of)
such offering within a price range acceptable to WIC on behalf of Purchaser,
then the Company shall only be required to include in such registration such
amount of Registrable Shares which the Company is so advised can be sold in (or
during the time of) such offering.
(d) Deferral of Filing. The Company may defer the filing (but not the
preparation) of a registration statement required by Section 3.1 until a date
not later than 120 days after the Required Filing Date (or, if longer, 120 days
after the effective date of the registration statement contemplated by clause
(ii) below) if at the time the Company receives the Demand Request, (i) the
Company or any of its Subsidiaries are engaged in or propose to engage in
confidential negotiations or other confidential business activities, disclosure
of which would be required in such registration statement (but would not be
required if such registration statement were not filed), and the Board
determines in good faith that such disclosure would be materially detrimental to
the Company and its stockholders or would have a material adverse effect on any
such confidential negotiations or other confidential business activities, or
(ii) the Company is engaged in or the Board has determined to effect a
registered underwritten public offering of the Company's securities for the
Company's account and the Company had taken substantial steps (including, but
not limited to, selecting a managing underwriter for such offering) and is
proceeding with reasonable diligence to effect such offering (in either case, a
"Deferral Event"). A deferral of the filing of a registration statement
pursuant to this subsection (d) shall be lifted, and the requested registration
statement shall be filed forthwith, if, in the case of a deferral pursuant to
clause (i) of the preceding sentence, the negotiations or other activities are
disclosed or terminated, or, in the case of a deferral pursuant to clause (ii)
of the preceding sentence, the registration for the Company's account is either
consummated or abandoned. In order to defer the filing of a registration
statement pursuant to this subsection (d), the Company shall promptly (but in
any event within five Business Days), upon determining to seek such deferral,
deliver to WIC a certificate signed by an executive officer of the Company
stating that the Company is deferring such filing pursuant to this subsection
(d) and a general statement of the reason for such deferral and an approximation
of the anticipated delay. Within 20 days after receiving such certificate, WIC
on behalf of Purchaser may withdraw such Demand Request by giving notice to the
Company; if withdrawn, the Demand Request shall be deemed not to have been made
for all purposes of this Agreement.
Section 3.2 Piggyback Registrations.
(a) Right to Piggyback. Until such time as the Purchaser Group ceases to
Beneficially Own at least 5% (which percentage may be adjusted in accordance
with Section 2.1(e)(v)) of the Fully-Diluted Shares, each time the Company
proposes to register any of its Common Stock (other than pursuant to an Excluded
Registration) under the Securities Act for sale to the public
13
(whether for the account of the Company or the account of any securityholder of
the Company) or proposes to make such an offering of Common Stock pursuant to a
previously filed registration statement pursuant to Rule 415 under the
Securities Act and the form of registration statement to be used permits the
registration of Registrable Shares, the Company shall give prompt written notice
to WIC (which notice shall be given not less than 30 days prior to the effective
date of the Company's registration statement), which notice shall offer each
Purchaser the opportunity to include any or all of its Registrable Shares in
such registration statement, subject to the limitations contained in subsection
(b) of this Section 3.2 (a "Piggyback Registration"). If Purchaser desires to
have its Registrable Shares included in such registration statement, WIC on
behalf of Purchaser shall so advise the Company in writing (stating the number
of shares desired to be registered) within 20 days after the date of such notice
from the Company. WIC shall have the right to withdraw its request for inclusion
of Registrable Shares in any registration statement pursuant to this subsection
(a) by giving written notice to the Company of such withdrawal. Subject to
subsection (b) of this Section 3.2, the Company shall include in such
registration statement all such Registrable Shares so requested to be included
therein; provided, however, that the Company may at any time withdraw or cease
proceeding with any such registration if it shall at the same time withdraw or
cease proceeding with the registration of Common Stock originally proposed to be
registered. It is specifically agreed that the Piggyback Registration rights set
forth in this Section 3.2 shall not be assignable to any transferee of the
Registrable Shares other than members of the Purchaser Group who own more than
10% of the Registrable Shares; provided, however, that no member of the
Purchaser Group (other than WIC or the Purchaser Representative) shall be
entitled to receive or make notices under this Section 3.2 and; provided,
further, that, for purposes of this Section 3.2 only, all notices delivered to
WIC or the Purchaser Representative shall be deemed to have been given to all
members of the Purchaser Group and all notices delivered to the Company by WIC
or the Purchaser Representative shall be deemed to have been given by the
members of the Purchaser Group, except to the extent explicitly specified in
such notice.
(b) Priority on Registrations. If (i) a registration pursuant to
subsection (a) of this Section 3.2 involves an underwritten offering of the
securities being registered to be distributed (on a firm commitment basis) by or
through one or more underwriters of recognized standing under underwriting terms
customary and appropriate for such a transaction and (ii) the lead managing
underwriter of such underwritten offering shall inform the Company and WIC by
letter of its belief that the amount of Registrable Shares requested to be
included in such registration exceeds the amount which can be sold in (or during
the time of) such offering within a price range acceptable to Purchaser, then
the Company will include in such registration such amount of securities which
the Company is so advised can be sold in (or during the time of) such offering
pro rata on the basis of the amount of such Registrable Shares so proposed to be
--- ----
sold and so requested to be included by the members of the Purchaser Group;
provided, however, that (A) if the underwritten Piggyback Registration is a
primary offering on behalf of the Company, any shares requested to be included
in the registration statement (or registration statements) for any Person other
than members of the Purchaser Group shall be eliminated first prior to any such
pro rata reduction, (B) if the underwritten Piggyback Registration is a
secondary offering on behalf of
14
any holder(s) of Common Stock, the shares requested to be included therein by
the holders requesting such registration and the Registrable Shares requested to
be included by the members of the Purchaser Group shall be included pro rata on
the basis of the number of shares held by each such holder, and (C) no such
reduction shall reduce the securities being offered by the Company for its own
account.
Section 3.3 Obligations of Purchaser. Purchaser shall not participate in
any registration statement hereunder unless each Purchaser agrees to (i) sell
its Registrable Shares on the basis provided in any customary underwriting
arrangements approved by the Company and (ii) complete and execute all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents reasonably required under the terms of such underwriting
arrangements; provided, however, that Purchaser shall not be required to make
any representations or warranties in connection with any such registration other
than representations and warranties as to (A) Purchaser's ownership of
Registrable Shares to be sold or transferred free and clear of all liens,
claims, and encumbrances, (B) Purchaser's power and authority to effect such
transfer, and (C) such matters pertaining to compliance with securities laws as
may be reasonably requested.
Section 3.4 Shelf Registration.
(a) Upon the written request of WIC on behalf of Purchaser, the Company
shall promptly prepare and file with the SEC (in any case within 30 days of such
written request) a shelf registration statement pursuant to Rule 415 under the
Securities Act and shall include therein such Registrable Shares as WIC shall
request (the "Shelf Registration"). The Company shall use commercially
reasonable efforts to cause such Shelf Registration statement to be declared
effective by the SEC. The Company shall keep such Shelf Registration statement
effective until the earlier of such time as (i) all Registrable Shares have been
sold or (ii) one year has elapsed from the effective date of such Shelf
Registration statement (plus a number of days equal to the aggregate number of
days that the Company suspends the disposition of Registrable Shares under any
Shelf Registration pursuant to subsection (b) below). A Shelf Registration
effected pursuant to this Section 3.4 shall count as a Demand Registration.
(b) The Company may suspend the disposition of Registrable Shares under any
Shelf Registration on any number of occasions for an aggregate period of up to
120 days in any one-year period with respect to a Deferral Event; provided,
however, that the 120 day period referred to in the immediately preceding clause
shall be reduced for each day the filing of such registration statement is
delayed pursuant to Section 3.1(d) hereunder and; provided further that a
suspension pursuant to this Section 3.4 shall be lifted if such negotiations or
other activities relating to such Deferral Event are disclosed by the Company or
terminated or, in the case of a registered underwritten public offering for the
Company's account, the registration is either consummated or abandoned. In
order to suspend the disposition of Registrable Shares under this subsection
(b), the Company shall promptly but in any event within five Business Days, upon
determining to seek such suspension, deliver to each Holder a certificate signed
by an executive
15
officer of the Company stating that the Company is suspending the disposition of
Registrable Shares hereunder and, subject to applicable confidentiality
agreements, a general statement of the reason for such suspension and an
approximation of the anticipated delay.
Section 3.5 Holdback Agreement. In connection with any underwritten
registration, the Company and each Purchaser agrees, and the Company and each
Purchaser agrees to use their reasonable efforts to cause their respective
Affiliates to agree, not to effect any public sale or private offer or
distribution of any Common Stock or Common Stock Equivalents during the ten
business days prior to the effectiveness under the Securities Act of any
underwritten registration and during such time period after the effectiveness
under the Securities Act of any underwritten registration (not to exceed 90
days) (except, if applicable, as part of such underwritten registration or in
connection with an Excluded Registration) as the Company and the managing
underwriter may agree.
Section 3.6 Registration Procedures. Whenever WIC on behalf of Purchaser
has requested that any Registrable Shares be registered pursuant to this
Agreement, the Company will use its commercially reasonable efforts to effect
the registration and the sale of such Registrable Shares in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the SEC a registration statement on any
appropriate form under the Securities Act with respect to such Registrable
Shares and use its commercially reasonable efforts to cause such registration
statement to become effective (provided that at least five days before filing a
registration statement or prospectus or at least two days before filing any
amendments or supplements thereto, the Company shall furnish to the counsel
selected by WIC or the Purchaser Representative copies of all such documents
proposed to be filed, which documents shall be subject to the review and comment
of such counsel);
(b) prepare and file with the SEC such amendments, post-effective
amendments, and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 180 days (or such lesser
period as is necessary for the underwriters in an underwritten offering to sell
unsold allotments or, in the case of a Shelf Registration, such period of time
set forth in Section 3.4(a)) and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
(c) furnish to each seller of Registrable Shares and the underwriters of
the securities being registered such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus), any
documents incorporated by reference therein and such other documents as such
seller or underwriters may reasonably request in order to facilitate the
disposition of the Registrable Shares owned by such seller or the sale of such
securities by such
16
underwriters (it being understood that, subject to Section 3.7 and the
requirements of the Securities Act and applicable state securities laws, the
Company consents to the use of the prospectus and any amendment or supplement
thereto by each seller and the underwriters in connection with the offering and
sale of the Registrable Shares covered by the registration statement of which
such prospectus, amendment or supplement is a part);
(d) use its commercially reasonable efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
jurisdictions as the managing underwriter reasonably requests; use its
commercially reasonable efforts to keep each such registration or qualification
(or exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each seller to
consummate the disposition of the Registrable Shares owned by such seller in
such jurisdictions (provided, however, that the Company will not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph or (ii) consent to
general service of process in any such jurisdiction);
(e) promptly notify each seller and each underwriter and (if requested by
any such Person) confirm such notice in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed and, with
respect to a registration statement or any post-effective amendment, when the
same has become effective, (ii) of the issuance by any state securities or other
regulatory authority of any order suspending the qualification or exemption from
qualification of any of the Registrable Shares under state securities or "blue
sky" laws or the initiation of any proceedings for that purpose, and (iii) of
the happening of any event which makes any statement made in a registration
statement or related prospectus untrue or which requires the making of any
changes in such registration statement, prospectus or documents 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 not misleading, and, as promptly as practicable thereafter, prepare and
file with the SEC and furnish a supplement or amendment to such prospectus so
that, as thereafter deliverable to the purchasers of such Registrable Shares,
such prospectus will not contain any untrue statement of a material fact or omit
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(f) make generally available to the Company's security holders an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act as
soon as practicable but no later than 90 days after the end of the 12-month
period beginning with the first day of the Company's first fiscal quarter
commencing after the effective date of a registration statement, which earnings
statement shall cover said 12-month period, and which requirement will be deemed
to be satisfied if the Company timely files complete and accurate information on
Forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with Rule
158 under the Securities Act;
(g) if requested by the managing underwriter or any seller promptly
incorporate in a
17
prospectus supplement or post-effective amendment such information as the
managing underwriter or any seller reasonably requests to be included therein,
including, without limitation, with respect to the Registrable Shares being sold
by such seller, the purchase price being paid therefor by the underwriters and
with respect to any other terms of the underwritten offering of the Registrable
Shares to be sold in such offering, and promptly make all required filings of
such prospectus supplement or post-effective amendment;
(h) as promptly as practicable after filing with the SEC of any document
which is incorporated by reference into a registration statement (in the form in
which it was incorporated), deliver a copy of each such document to each seller;
(i) cooperate with the sellers and the managing underwriter to facilitate
the timely preparation and delivery of certificates (which shall not bear any
restrictive legends unless required under applicable law) representing
securities sold under any registration statement, and enable such securities to
be in such denominations and registered in such names as the managing
underwriter or such sellers may request and keep available and make available to
the Company's transfer agent prior to the effectiveness of such registration
statement a supply of such certificates;
(j) promptly make available for inspection by any seller, any underwriter
participating in any disposition pursuant to any registration statement, and any
attorney, accountant or other agent or representative retained by any such
seller or underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information requested by any
such Inspector in connection with such registration statement; provided, that,
unless the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement or the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, the Company shall not be required to provide any
information under this subparagraph (j) if (1) the Company believes, after
consultation with counsel for the Company, that to do so would cause the Company
to forfeit an attorney-client privilege that was applicable to such information
or (2) if either (A) the Company has requested and been granted from the SEC
confidential treatment of such information contained in any filing with the SEC
or documents provided supplementally or otherwise or (B) the Company reasonably
determines in good faith that such Records are confidential and so notifies the
Inspectors in writing unless prior to furnishing any such information with
respect to clause (1) or (2) each Purchaser agrees to enter into a
confidentiality agreement in customary form and subject to customary exceptions;
and provided, further that each Purchaser agrees that it will, upon learning
that disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company at its expense, to undertake
appropriate action and to prevent disclosure of the Records deemed confidential;
18
(k) furnish to each seller underwriter a signed counterpart of (i) an
opinion or opinions of counsel to the Company, and (ii) a comfort letter or
comfort letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the sellers or managing
underwriter reasonably requests;
(l) cause the Registrable Shares included in any registration statement to
be (i) listed on each securities exchange, if any, on which similar securities
issued by the Company are then listed, or (ii) authorized to be quoted and/or
listed (to the extent applicable) on the National Association of Securities
Dealers, Inc. Automated Quotation System ("Nasdaq") or the Nasdaq National
Market if the Registrable Shares so qualify;
(m) cooperate with each seller and each underwriter participating in the
disposition of such Registrable Shares and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. ("NASD");
(n) during the period when the prospectus is required to be delivered under
the Securities Act, promptly file all documents required to be filed with the
SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act;
(o) notify each seller of Registrable Shares promptly of any request by the
SEC for the amending or supplementing of such registration statement or
prospectus or for additional information;
(p) prepare and file with the SEC promptly any amendments or supplements to
such registration statement or prospectus which, in the opinion of counsel for
the Company or the managing underwriter, is required in connection with the
distribution of the Registrable Shares;
(q) enter into such agreements (including underwriting agreements in the
managing underwriter's customary form) as are customary in connection with an
underwritten registration; and
(r) advise each seller of such Registrable Shares, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for such purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.
Section 3.7 Suspension of Dispositions. Each Purchaser agrees that, upon
receipt of any notice (a "Suspension Notice") from the Company of the happening
of any event of the kind described in Section 3.6(e)(iii), each Purchaser will
forthwith discontinue disposition of Registrable Shares until Purchaser's
receipt of the copies of the supplemented or amended prospectus, or until it is
advised in writing (the "Advice") by the Company that the use of the
19
prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the prospectus, and,
if so directed by the Company, each Purchaser will deliver to the Company all
copies, other than permanent file copies then in Purchaser's possession, of the
prospectus covering such Registrable Shares current at the time of receipt of
such notice. In the event the Company shall give any such notice, the time
period regarding the effectiveness of registration statements set forth in
Sections 3.4 and 3.6(b) hereof shall be extended by the number of days during
the period from and including the date of the giving of the Suspension Notice to
and including the date when each seller of Registrable Shares covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus or the Advice. The Company shall use its commercially
reasonable efforts and take such actions as are reasonably necessary to render
the Advice as promptly as practicable.
Section 3.8 Registration Expenses. All expenses incident to the
Company's performance of or compliance with this Article III, including, without
limitation, (i) all registration and filing fees, (ii) all fees and expenses
associated with filings required to be made with the NASD (including, if
applicable, the fees and expenses of any "qualified independent underwriter" as
such term is defined in Schedule E of the By-Laws of the NASD, and of its
counsel), as may be required by the rules and regulations of the NASD, (iii)
fees and expenses of compliance with securities or "blue sky" laws (including
reasonable fees and disbursements of counsel in connection with "blue sky"
qualifications of the Registrable Shares), (iv) rating agency fees, (v) printing
expenses (including expenses of printing certificates for the Registrable Shares
in a form eligible for deposit with Depository Trust Company and of printing
prospectuses, (vi) messenger and delivery expenses, (vii) the Company's internal
expenses (including without limitation all salaries and expenses of its officers
and employees performing legal or accounting duties), (viii) the fees and
expenses incurred in connection with any listing of the Registrable Shares, (ix)
fees and expenses of counsel for the Company and fees and expenses of the
Company's independent certified public accountants (including the expenses of
any special audit or "cold comfort" letters required by or incident to such
performance), (x) securities acts liability insurance (if the Company elects to
obtain such insurance), (xi) the fees and expenses of any special experts
retained by the Company in connection with such registration, (xii) the fees and
expenses of other Persons retained by the Company and (xiii) the reasonable fees
and expenses of one counsel selected by WIC and the Purchaser Representative
(all such expenses being herein called "Registration Expenses"), subject to
Section 3.1(b), will be borne by the Company whether or not any registration
statement becomes effective; provided that, Purchaser shall bear 50% of all of
the Registration Expenses incurred in connection with the second Demand
Registration that becomes effective hereunder up to a maximum of $100,000 and;
provided, further, that, except as expressed otherwise provided above, in no
event shall Registration Expenses include (i) any expenses incurred by each
Purchaser to retain any counsel, accountant or other advisor, (ii) underwriting
discounts, (iii) selling commissions and (iv) transfer taxes.
Section 3.9 Indemnification.
20
(a) The Company agrees to indemnify and reimburse, to the fullest extent
permitted by law, any member of the Purchaser Group who is not deemed to control
the Company (within the meaning of the Securities Act or the Exchange Act) and
each of such member's employees, advisors, agents, representatives, partners,
members, officers and directors (A) against any and all losses, claims, damages,
liabilities, and expenses, joint or several (including, without limitation,
attorneys' fees and disbursements except as limited by subsection (c) of this
Section 3.9) based upon, arising out of, related to or resulting from any untrue
or alleged untrue statement of a material fact contained in any registration
statement, prospectus, or preliminary prospectus relating to the offer and sale
of Registrable Shares, or any amendment thereof or supplement thereto, or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, (B) against any and all
loss, liability, claim, damage, and expense whatsoever, as incurred, to the
extent of the aggregate amount paid in settlement (effected with the Company's
consent) of any litigation or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon,
arising out of or resulting from any such untrue statement or omission or
alleged untrue statement or omission, and (C) against any and all costs and
expenses (including reasonable fees and disbursements of counsel) as may be
reasonably incurred in investigating, preparing, or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon, arising out of or
resulting from any such untrue statement or omission or alleged untrue statement
or omission, to the extent that any such expense or cost is not paid under
subparagraph (A) or (B) above; except insofar as the same are made in reliance
upon and in strict conformity with information furnished in writing to the
Company by any Purchaser or any member of the Purchaser Group for use therein or
arise from any Purchaser's or any such members' failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
that would have corrected the actual or alleged untrue statement or omission
after the Company has furnished any Purchaser or any such member of the
Purchaser Group with a sufficient number of copies of the same. The
reimbursements required by this subsection (a) of this Section 3.9 will be made
by periodic payments during the course of the investigation or defense, as and
when bills are received or expenses incurred.
(b) In connection with any registration statement that includes Registrable
Shares, any Purchaser and any member of the Purchaser Group selling Registrable
Shares will furnish to the Company in writing such information and affidavits as
the Company reasonably requests for use in connection with any such registration
statement or prospectus and such Purchaser and such member of the Purchaser
Group agrees to indemnify and reimburse the Company and the Company's employees,
advisors, agents, representatives, officers and directors (A) against any and
all losses, claims, damages, liabilities, and expenses, joint or several
(including, without limitation, reasonable attorneys' fees and disbursements
except as limited by subsection (c) of this Section 3.9) based upon, arising out
of, related to or resulting from any untrue statement or alleged untrue
statement of a material fact contained in the registration statement,
prospectus, or any preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the
21
statements therein not misleading, (B) against any and all loss, liability,
claim, damage, and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement (effected with Purchaser's consent) of any
litigation or investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon, arising out of
or resulting from any such untrue statement or omission or alleged untrue
statement or omission, and (C) against any and all costs and expenses (including
reasonable fees and disbursements of counsel) as may be reasonably incurred in
investigating, preparing, or defending against any litigation, or investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon, arising out of or resulting from any such
untrue statement or omission or alleged untrue statement or omission, to the
extent that any such expense or cost is not paid under subparagraph (A) or (B)
above; but 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 any information or affidavit so furnished in writing by such
Purchaser or member of the Purchaser Group specifically for inclusion in the
registration statement provided that the obligation to indemnify will be
several, not joint and several, among the members of the Purchaser Group selling
Registrable Shares, and the liability of each such seller of Registrable Shares
will be in proportion to, and provided further that such liability will be
limited to, the net amount received by such seller from the sale of Registrable
Shares pursuant to such registration statement; provided, however, that such
seller of Registrable Shares shall not be liable in any such case to the extent
that prior to the filing of any such registration statement or prospectus or
amendment thereof or supplement thereto, such seller has furnished in writing to
the Company information expressly for use in such registration statement or
prospectus or any amendment thereof or supplement thereto which corrected or
made not misleading information previously furnished to the Company. The
reimbursement required by this subsection (b) of this Section 3.9 will be made
by periodic payments during the course of the investigation or defense, as and
when bills are received or expenses incurred.
(c) Any Person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided that the failure to give such notice shall not
limit the rights of such Person except to the extent that the indemnifying party
is prejudiced thereby) and (ii) unless such indemnified party has been advised
by counsel that a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, however, that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such Person unless (A) the indemnifying party
has agreed to pay such fees or expenses, (B) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such Person, (C) the named parties to any such action or
proceeding (including any impleaded parties) include both such indemnified party
and the indemnifying party, and such indemnified party shall have been advised
by counsel in writing that there is a conflict of interest on the part of
counsel employed by the indemnifying party to represent such indemnified party,
or (D) the indemnified party's counsel shall have advised the
22
indemnified party that there are defenses available to the indemnified party
that are different from or in addition to those available to the indemnifying
party and that the indemnifying party is not able to assert on behalf of or in
the name of the indemnified party (in which case of either (C) or (D), if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
or proceeding on behalf of such indemnified party but shall have the right to
participate through its own counsel. If such defense is not assumed by the
indemnifying party as permitted hereunder, the indemnifying party will not be
subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). If
such defense is assumed by the indemnifying party pursuant to the provisions
hereof, such indemnifying party shall not settle or otherwise compromise the
applicable claim unless (1) such settlement or compromise contains a full and
unconditional release of the indemnified party or (2) the indemnified party
otherwise consents in writing. An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim unless any indemnified party shall
have been advised by counsel in writing that a conflict of interest exists
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the reasonable fees and disbursements of such additional counsel or
counsels.
(d) Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by subsection (a) or (b) of this Section
3.9 are unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages, liabilities, or expenses (or actions in
respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, liabilities, or expenses (or actions in respect thereof)
(i) in such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, claims, damages, liabilities or expenses or (ii)
if the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect the relative benefits of the
indemnified party and the indemnifying party from the offering of the securities
covered by such registration statement 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 statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by such
indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by pro
rata allocation (even if the sellers or any underwriters or all of them were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to above shall be
23
deemed to include any legal or other fees or expenses reasonably incurred by
such indemnified party in connection with investigating or, except as provided
in subsection (c) of this Section 3.9, defending any such action or claim.
Notwithstanding the provisions of this Section 3.9(d), no member of the
Purchaser Group shall be required to contribute an amount greater than the
dollar amount by which the proceeds received by such Person with respect to the
sale of any Registrable Shares exceeds the amount of damages which such Person
has otherwise been required to pay by reason of such statement or omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. The obligations of the
members of the Purchaser Group in this Section 3.9(d) to contribute shall be
several in proportion to the amount of Registrable Shares registered by them and
not joint.
If indemnification is available under this Section 3.9, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in subsection (a) and (b) of this Section 3.9 without regard to the
relative fault of said indemnifying party or indemnified party or any other
equitable consideration provided for in this Section 3.9.
Section 3.10 Third Party Registration Rights. The Company is not
party, or otherwise subject, to any agreement granting registration rights to
any other Person with respect to the Equity Securities of the Company. The
Company will not, on or after the date of this Agreement, enter into any
agreement granting (i) demand registration rights to any other Person with
respect to the Equity Securities of the Company, or (ii) piggy-back registration
rights to any other Person that are not junior or subordinate to the rights
granted to the holders of Registrable Shares under Sections 3.1 and 3.2 hereof,
in either case without the prior written consent of WIC or the Purchaser
Representative; and any agreement, amendment, modification or supplement entered
into pursuant to such consent shall not be amended, modified or supplemented
without a further prior written consent.
ARTICLE IV
LIMITATIONS ON CERTAIN TRANSACTIONS
Section 4.1 Limitations on Certain Transactions.
(a) Subject to the provisions of subsection (b) of this Section 4.1,
each Purchaser agrees with the Company that it will not, directly or indirectly,
except as specifically permitted by this Article IV or unless specifically
requested or permitted in writing by the whole Board:
(i) deposit any Shares in a voting trust or grant any proxy with
respect to any Shares to any Person not designated by the Company (other
than a member of the Purchaser Group) or subject any Shares to any
arrangement or agreement with respect to the voting of such Shares;
24
(ii) act with one or more Persons (other than a member of the
Purchaser Group) as a partnership, limited partnership, syndicate or
"group" (as such term is used in Section 13(d)(3) of the Exchange Act) for
the purpose of acquiring, holding, voting or disposing of Shares;
(iii) sell or transfer any of the Preferred Shares or the
Warrants at any time;
(iv) prior to the second anniversary of the Closing Date, sell
or transfer any of the Registrable Shares to any other Person who is not a
member of the Purchaser Group; and
(v) following the second anniversary of the Closing Date, sell
or transfer Registrable Shares to any Person who is not a member of the
Purchaser Group other than pursuant to a public offering conducted in
accordance with Article III hereof or an exemption from the registration
requirements of the Securities Act (including Rule 144 promulgated
thereunder); provided, that (x) no more than 10% of the Fully-Diluted
Shares shall be sold to any single Person (other than an underwriter in a
firm commitment underwriting) or Affiliated Group and (y) during any
calendar year no more than 1% of the Fully-Diluted Shares shall be sold to
any single Person (other than an underwriter in a firm commitment
underwriting) or Affiliated Group that to Purchaser's knowledge (which
knowledge shall be presumed if such Person filed with the SEC a Schedule
13D, Schedule 13G or successor form prior to the date of such sale)
Beneficially Owns at the time of such proposed sale or transfer more than
5% of the Fully-Diluted Shares.
(b) Notwithstanding subsection (a) of this Section 4.1, Purchaser may sell
or transfer (i) any of the Preferred Shares, the Warrants or any of the
Registrable Shares pursuant to, as a result of, in connection with (A) a tender
or exchange offer approved, or acceptance of which is recommended, by the Board
or (B) a merger or other business combination with a previously unaffiliated
entity in which the Company is not the surviving or acquiring entity, and (ii)
any of the Registrable Shares to a member of the Purchaser Group; provided that
no such sale or transfer to or among members of the Purchaser Group shall be
effective unless and until any transferee who is not already a party to this
Agreement (and such transferee's spouse, if applicable) shall execute and
deliver to the Company and each Purchaser an agreement in which such transferee
(and such transferee's spouse, if applicable) agrees to be bound by this
Agreement and to observe and comply with this Agreement and with all of the
obligations and restrictions imposed on Purchaser hereby.
Section 4.2 Restrictive Legends.
(a) In addition to any additional legends required by applicable laws or by
the Stock Purchase Agreement or the Warrant Agreement, each certificate
representing the Preferred Shares, the Warrants and the Underlying Common Shares
shall be stamped with the following legend:
25
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF AN AGREEMENT BETWEEN CERTAIN STOCKHOLDERS AND THE CORPORATION
WHICH INCLUDES RESTRICTIONS ON CERTAIN SALES OF THE SECURITIES. COPIES OF
THE AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
CORPORATION.
(b) Purchaser consents to the Company's making a notation on its records
and giving instructions to any transfer agent of the shares of Common Stock to
implement the restrictions on transfers established in this Agreement.
(c) In the event that any shares referred to in subsection (a) of this
Section 4.2 shall cease to be subject to the restrictions on transfer set forth
in this Agreement, the Company shall, upon the written request of the holder
thereof, issue to such holder a new certificate evidencing such shares without
the legend required by subsection (a) of this Section 4.2.
Section 4.3 Rule 144. The Company shall take all commercially reasonable
actions necessary to enable Purchaser to sell such securities without
registration under the Securities Act pursuant to the provisions of Rule 144.
Upon the request of Purchaser, the Company will deliver to Purchaser a written
statement as to whether it has complied with such requirements.
ARTICLE V
MISCELLANEOUS
Section 5.1 Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows (or at such
other address as may be substituted by notice given as herein provided):
If to the Company, to:
The Wiser Oil Company
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: President
Fax: (000) 000-0000
26
With a copy to:
Xxxxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
If to any Purchaser, to:
Wiser Investment Company, LLC
c/o Xxxxxxx X. Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to:
Xxxxxxx & Xxxxx L.L.P.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
Any notice or communication hereunder shall be deemed to have been given or
made as of the date so delivered if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if telecopied; one Business Day after the
date of sending if sent by Federal Express or other major overnight courier, and
five calendar days after mailing if sent by registered or certified mail (except
that a notice of change of address shall not be deemed to have been given until
actually received by the addressee). If a notice or communication is sent by
registered or certified mail, it is duly given, whether or not the addressee
receives it.
Section 5.2 Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER
OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
Section 5.3 Binding Effect; Assignment; No Third Party Benefit. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Except as otherwise
expressly provided in this Agreement, neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
27
parties hereto without the prior written consent of the other party. Nothing in
this Agreement, except as set forth in Section 3.9 (which is intended for the
benefit of the parties identified therein), express or implied, is intended to
or shall confer upon any other person other than the parties hereto, and their
respective successors and permitted assigns, any rights, benefits, or remedies
of any nature whatsoever under or by reason of this Agreement.
Section 5.4 Independent Determination. From and after the Closing Date, all
decisions on behalf of the Company as to the payment of indemnification pursuant
hereto and otherwise regarding the Company's rights and obligations pursuant to
this Agreement shall be made by majority vote of a committee of directors of the
Company consisting of all directors of the Company other than (a) the Purchaser
Designees and (b) any directors elected by the holders of the Series C Preferred
Stock pursuant to the provisions of the Certificate of Designation; provided,
however, that nothing contained in this Section 5.4 shall prevent any
indemnified party from receiving indemnification pursuant to some other source
(such as, by way of example, the Restated Bylaws of the Company in the event
such indemnified party is a director of the Company and such director seeks
indemnification due to circumstances that do not pertain to an alleged breach of
this Agreement), and the determination as to whether indemnification pursuant to
such other source is available shall be made in accordance with the procedures
applicable thereto.
Section 5.5 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same Agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
Section 5.6 Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and the remaining provisions shall not in any way be affected or
impaired thereby.
Section 5.7 Specific Performance. The parties recognize that in the event
any party should refuse to perform under the provisions of this Agreement,
monetary damages alone would not be adequate. Each of the parties shall
therefore be entitled, in addition to any other remedies which may be available,
including monetary damages, to obtain specific performance of the terms of this
Agreement. In the event of any action to enforce this Agreement specifically,
the parties hereby waive the defense that there is an adequate remedy at law.
Section 5.8 No Waivers; Amendments.
(a) No failure or delay on the part of the Company or any Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the
28
exercise of any other right, power or remedy. The remedies provided for herein
are cumulative and are not exclusive of any remedies that may be available to
the Company or any Purchaser at law or in equity or otherwise.
(b) Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the Company and each
Purchaser.
Section 5.9 No Affiliate Liability. The partners, members, officers,
directors, shareholders and Affiliates of each Purchaser, the Company or their
respective Affiliates shall not have any personal liability or obligation to any
Person arising under this Agreement in such capacities.
Section 5.10 Further Assurances. Each party hereto shall cooperate and
shall take such further action and shall execute and deliver such further
documents as may be reasonably requested by any other party in order to carry
out the provisions and purposes of this Agreement.
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first written above.
THE WISER OIL COMPANY
By: /S/ XXXXXX X. XXXXX, XX.
-----------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: President
WISER INVESTMENT COMPANY, LLC
By: /S/ XXXXXX X. XXXXXX, XX.
------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Manager
DIMELING, XXXXXXXXX AND PARK
By: /S/ XXXXXX X. XXXX
-----------------------------------
Name: Xxxxx X. Xxxx
Title: Partner
30
