-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Uhf7lf5ctaZsDi5dHVVy8TX0bTz/R3E9PdMPeIkM3MQxaEzioXHRPMCtEz2WknS3 VPH/Q/9AB8UyLvRCbW3lTA== 0000930661-01-501729.txt : 20010914 0000930661-01-501729.hdr.sgml : 20010914 ACCESSION NUMBER: 0000930661-01-501729 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20010913 GROUP MEMBERS: DOUGLAS P. HELLER GROUP MEMBERS: GEORGE K. HICKOK, JR. GROUP MEMBERS: SCOTT W. SMITH GROUP MEMBERS: WISER INVESTMENT COMPANY, LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: WISER OIL CO CENTRAL INDEX KEY: 0000107874 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 550522128 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-39093 FILM NUMBER: 1736465 BUSINESS ADDRESS: STREET 1: 8115 PRESTON RD STE 400 CITY: DALLAS STATE: TX ZIP: 75225 BUSINESS PHONE: 2142650080 MAIL ADDRESS: STREET 1: 8115 PRESTON ROAD STREET 2: SUITE 400 CITY: DALLAS STATE: TX ZIP: 75225 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WISER INVESTORS LP CENTRAL INDEX KEY: 0001159054 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 233081834 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1629 LOCUST ST CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2155466595 MAIL ADDRESS: STREET 1: 1629 LOCUST ST CITY: PHILADELPHIA STATE: PA ZIP: 19103 SC 13D 1 dsc13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Schedule 13D Under the Securities Exchange Act of 1934* THE WISER OIL COMPANY (Name of Issuer) Common Stock, par value $.01 per share (Title of Class of Securities) 977284 10 8 (CUSIP Number) Wiser Investors, L.P. c/o George K. Hickox, Jr. 1629 Locust Street Philadelphia, PA 19103 (215) 546-6595 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copies to: Steven K. Cochran Thompson & Knight L.L.P. 1700 Pacific Avenue, Suite 3300 Dallas, TX 75201 (214) 969-1700 and Anne K. Hill Thompson & Knight L.L.P. 1700 Pacific Avenue, Suite 3300 Dallas, TX 75201 (214) 969-1700 June 1, 2001 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of (S)(S) 240.13d-1(e), 240.13d-1(f) or 204.13d-1(g), check the following box. [ ] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See (S) 240.13d-7(b) for other parties to whom copies are to be sent. *The remainder of the cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP NO. 977284108 ----------------- - ------------------------------------------------------------------------------ NAMES OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only). Wiser Investors, L.P. 23-3081834 - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) 2 (a) [X] (b) [_] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (See Instructions) 4 OO - ------------------------------------------------------------------------------ CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 2,329,411 SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 0 OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 2,329,411 REPORTING PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 0 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 2,329,411 - ------------------------------------------------------------------------------ CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (See Instructions) - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 20.3% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (See Instructions) 14 PN - ------------------------------------------------------------------------------ 2 SCHEDULE 13D CUSIP NO. 977284108 ----------------- - ------------------------------------------------------------------------------ NAMES OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only). Wiser Investment Company, LLC 74-2936582 - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) 2 (a) [X] (b) [_] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (See Instructions) 4 OO - ------------------------------------------------------------------------------ CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 2,329,411 NUMBER OF SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 0 OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 2,329,411 REPORTING PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 0 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 2,329,411 /1/ - ------------------------------------------------------------------------------ CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (See Instructions) - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 20.3% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (See Instructions) 14 OO - ------------------------------------------------------------------------------ - ---------------------- /1/See the Schedule 13D filed by Wiser Investment Company, LLC on June 25, 2001, as amended on June 1, 2001 and August ____, 2001 for further information about the aggregate amount of shares beneficially owned by WIC. 3 SCHEDULE 13D CUSIP NO. 977284108 ----------------- - ------------------------------------------------------------------------------ NAMES OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only). George K. Hickox, Jr. - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) 2 (a) [X] (b) [_] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (See Instructions) 4 OO, PF - ------------------------------------------------------------------------------ CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States of America - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 0 NUMBER OF SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 2,329,411 OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 0 REPORTING PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 2,329,411 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 2,329,411 /2/ - ------------------------------------------------------------------------------ CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (See Instructions) - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 20.3% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (See Instructions) 14 IN - ------------------------------------------------------------------------------ - --------------- /2/ See the Schedule 13D filed by Wiser Investment Company, LLC on June 25, 2001, as amended on June 1, 2001 and August ____, 2001 for further information about the aggregate amount of shares beneficially owned by Mr. Hickox. 4 SCHEDULE 13D CUSIP NO. 977284108 ----------------- - ------------------------------------------------------------------------------ NAMES OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only). Douglas P. Heller - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) 2 (a) [X] (b) [_] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (See Instructions) 4 OO, PF - ------------------------------------------------------------------------------ CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States of America - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 0 NUMBER OF SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 2,329,411 OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 0 REPORTING PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 2,329,411 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 2,329,411 /3/ - ------------------------------------------------------------------------------ CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (See Instructions) - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 20.3% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (See Instructions) 14 IN - ------------------------------------------------------------------------------ - --------------- /3/ See the Schedule 13D filed by Wiser Investment Company, LLC on June 25, 2001, as amended on June 1, 2001 and August ____, 2001 for further information about the aggregate amount of shares beneficially owned by Mr. Heller. 5 SCHEDULE 13D CUSIP NO. 977284108 ----------------- - ------------------------------------------------------------------------------ NAMES OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only). Scott W. Smith - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) 2 (a) [X] (b) [_] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (See Instructions) 4 OO, PF - ------------------------------------------------------------------------------ CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States of America - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 0 NUMBER OF SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 2,329,411 OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 0 REPORTING PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 2,329,411 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 2,329,411 /4/ - ------------------------------------------------------------------------------ CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (See Instructions) - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 20.3% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (See Instructions) 14 IN - ------------------------------------------------------------------------------ - ---------------- /4/ See the Schedule 13D filed by Wiser Investment Company, LLC on June 25, 2001, as amended on June 1, 2001 and August ____, 2001 for further information about the aggregate amount of shares beneficially owned by Mr. Smith. 6 Item 1. Security and Issuer This Statement on Schedule 13D relates to shares of the common stock, par value $0.01 per share (the "Common Stock"), of The Wiser Oil Company (the "Issuer"). This Statement is being filed by the Reporting Persons (as defined herein) to report a transaction by virtue of which the Reporting Persons may be deemed to be the beneficial owners of more than 5% of the outstanding shares of Common Stock. The address of the principal executive offices of the Issuer is 8115 Preston Road, Suite 400, Dallas, Texas 75225. Item 2. Identity and Background This Statement is being filed by Wiser Investors, L.P., a Delaware limited partnership ("Investors"), Wiser Investment Company, LLC, a Delaware limited liability company ("WIC"), Mr. George K. Hickox, Jr. ("Mr. Hickox"), Mr. Douglas P. Heller ("Mr. Heller") and Mr. Scott W. Smith ("Mr. Smith", and together with Mr. Hickox and Mr. Heller, the "Individual Filers"; Investors, WIC and the Individual Filers are collectively referred to as the "Reporting Persons"). The principal business offices of Investors are located at 1629 Locust Street, Philadelphia, Pennsylvania 19103. Investors is a Delaware limited partnership formed for the purpose of completing the transactions described in Items 3 and 4. WIC is the general partner and a limited partner of Investors. WIC, as the general partner of Investors, has sole voting and dispositive power with respect to the business, properties and affairs of Investors. The principal business offices of WIC are located at 1629 Locust Street, Philadelphia, Pennsylvania 19103. WIC is a Delaware limited liability company formed for the purpose of entering into that certain Amended and Restated Stock Purchase Agreement dated as of December 13, 1999 (the "Stock Purchase Agreement"), attached as Exhibit 7.1, pursuant to which Issuer agreed to sell, and WIC agreed to purchase 180,000 shares of Issuer's Series C Cumulative Convertible Preferred Stock, par value $10.00 per share, (the "Preferred Stock") for an aggregate purchase price of $4.5 million (the "WIC and DS&P Transaction"). The managers of WIC are Mr. Hickox, Mr. Heller and Mr. Smith. Messrs. Hickox, Heller and Smith have shared voting power and shared dispositive power with respect to the business, properties and affairs of WIC. Mr. Hickox, Mr. Heller and Mr. Smith are principally occupied in private investing activities in energy-related businesses and assets. Messrs. Hickox and Heller conduct such activities primarily as principals of Heller, Hickox, Dimeling Schreiber & Park, 1629 Locust Street, Philadelphia, Pennsylvania 19103. Mr. Smith conducts such activities primarily as a principal of Sabine Energy Company, L.L.C., 910 Travis Street, Suite 2130, Houston, Texas 77002. The principal occupation of Mr. Hickox is Chairman and Chief Executive Officer of the Issuer, and the principal occupation of Mr. Smith is his participation in the transaction advisory services that WIC provided the Issuer pursuant to the Management Agreement arising from the transactions related to the Stock Purchase Agreement as well as serving on the Board of Directors of the Issuer. Each of the Individual Filers is a United States citizen. Pursuant to the regulations promulgated under Section 13(d) of the Act, each of the Individual Filers, in his capacity as one of the managers of WIC, may be deemed a beneficial owner of the shares of Common Stock. During the past five years, none of the Reporting Persons has been (a) convicted in a criminal proceeding, or (b) a party to any civil proceeding as a result of which it or he has been subject to a judgment, decree or final order enjoining future violations of, or prohibiting, or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration Investors and the Issuer have entered into a Subscription Agreement, dated June 1, 2001 (the "Subscription Agreement"), attached hereto as Exhibit 7.2. Pursuant to the Subscription Agreement, the Issuer issued and sold to Investors 396,000 shares of Preferred Stock for an aggregate purchase price of $9.9 million (the "Investors Purchase Price"). The source of funds for the Investors Purchase Price is from the investment of personal funds by Mr. Hickox, Mr. Heller and Mr. Smith and an investment of funds by one of the limited partners of Investors. 7 Item 4. Purpose of Transaction Under the Stock Purchase Agreement, the Issuer granted WIC or any of its permitted assignees an option to purchase 400,000 Preferred Shares that were not purchased at the closing of the Stock Purchase Agreement (the "Option"). The securities reported by this Schedule 13D were acquired pursuant to the Option. Effective May 31, 2001, WIC and Investors entered into an Assignment whereby WIC, pursuant to the Stock Purchase Agreement, assigned to Investors all of WIC's rights to purchase 396,000 shares of Preferred Stock (the "Assignment"). On June 1, 2001, Investors and the Issuer entered into the Subscription Agreement pursuant to which the Issuer agreed to issue and sell, and Investors agreed to purchase 396,000 shares of Preferred Stock. Each share of Preferred Stock is convertible into a number of shares of Common Stock computed by dividing (x) the total amount of Liquidation Value (the number of Preferred Shares multiplied by the liquidation value of $25.00) plus any aggregate accrued but unpaid dividends, if any, by (y) the Conversion price of $4.25 (subject to customary anti-dilution adjustments). Therefore, by reason of its conversion rights in the Preferred Stock, Investors currently has beneficial ownership of 2,329,411 shares of Common Stock. On June 1, 2001, Investors and the Issuer entered into an Adoption Agreement, attached as Exhibit 7.3, whereby Investors agreed to be bound and subject to the Stock Purchase Agreement and to adopt the Stock Purchase Agreement as if it was originally a party thereto (the "Adoption Agreement"). As of June 1, 2001, there were 9,161,133 shares of the Issuer's Common Stock outstanding. The number of shares of Common Stock underlying the Preferred Stock issued by the Issuer to Investors (2,329,411 shares) would constitute approximately 20.3% of the number of shares of the Issuer's Common Stock that will be outstanding following the closing under the Subscription Agreement (the "Investors Closing"). On June 1, 2001, Investors executed an Acknowledgment whereby it became a party to that certain Stockholder Agreement dated as of May 26, 2000 by and between the Company, WIC and Dimeling, Schreiber and Park, a Pennsylvania general partnership ("DS&P") (the "Stockholder Agreement"), to the same extent as if it had been an original signatory party thereto. Pursuant to the Stockholder Agreement, the Issuer granted WIC and DS&P certain demand registration rights as described more fully in the Stockholder Agreement attached hereto as Exhibit 7.4 in connection with shares issued or issuable pursuant to the Subscription Agreement ("Registrable Securities"). The purpose of such registration rights is to facilitate WIC and DS&P's ability to dispose of their Registrable Securities in a public sale. The grant of such registration rights to WIC and DS&P does not represent any present intention on behalf of WIC or DS&P to dispose of any Registrable Securities to be covered by such a registration statement, although such rights may be exercised in the future. See Item 6 for a description of the Stockholder Agreement. The Preferred Stock entitles the holder to receive cumulative dividends of 7% per annum of the liquidation value (the "Liquidation Value") of such shares. The Liquidation Value is $25.00. Dividends are payable quarterly in arrears on the last day of March, June, September and December, beginning on the first such date immediately following the Investors Closing. The Issuer has the option of paying dividends accruing on the Preferred Stock in either cash, by the issuance or delivery of shares of Common Stock ("PIK Dividends") or by any combination thereof. The value of the PIK Dividends will be determined by dividing the amount of cash that would otherwise be paid by the average market price of the Common Stock for the ten days immediately preceding the date of payment of such PIK Dividend. Subject to the actual declaration of dividends by the Board of Directors and any applicable legal restrictions, Investors would increase its beneficial ownership of the Common Stock by virtue of any future receipt of PIK Dividends on the Preferred Stock. The holders of the Preferred Stock shall vote together as a single class with the holders of the Common Stock on all matters submitted to a vote of the holders of the Common Stock. In addition, so long as the Preferred Stock remains outstanding, (i) the holders of at least two-thirds of the Preferred Stock outstanding must approve, voting separately as a class, any amendment to the Certificate of Incorporation that would adversely affect the rights of holders of the Preferred Stock and (ii) the holders of a majority of the Preferred Stock outstanding must approve, voting separately as a class, any proposed issuance of capital stock of the Issuer that ranks pari passu with or senior to the Preferred Stock as to dividends or assets, or any proposed issuance of capital stock of the Issuer that is required to be redeemed by the Issuer at any time that any shares of Preferred Stock are outstanding. 8 Investors acquired the securities herein reported as a means to complete the acquisition of Preferred Shares under the Stock Purchase Agreement pursuant to the Option. Depending on market conditions, general economic conditions, and other factors that each may deem significant to his or its respective investment decisions, any of the Reporting Persons may purchase shares of Common Stock in the open market or in private transactions or may dispose of all or a portion of the shares of Common Stock that they or any of them may hereafter acquire; provided, that such purchases and sales are otherwise made in compliance with the terms and conditions of the Stock Purchase Agreement and to the extent applicable, the Certificate of Incorporation and Bylaws of the Issuer and any credit agreements and indentures to which the Issuer is a party. Except as set forth in this Item 4, none of the Reporting Persons have present plans or proposals that relate to or that would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. The filing of this Statement on Schedule 13D shall not be construed an admission by any of the Reporting Persons that, for purposes of Section 13(d) and 13(g) of the Act, any of the Reporting Persons is the beneficial owner of the shares of Common Stock to which this Statement on Schedule 13D relates. The summary set forth in this Item 4 of Schedule 13D of certain aspects of the transactions reported in this Schedule 13D does not purport to be a complete description of, and is qualified in its entirety by reference to, the provisions of the various agreements and documents attached as exhibits to this Schedule 13D and incorporated herein by reference for all purposes. Item 5. Interest in Securities of the Issuer. (a) As of the date of this Statement, the Reporting Persons may be deemed to have beneficial ownership of 2,329,411 shares of Common Stock, assuming conversion of the Preferred Stock. Such shares would represent approximately 20.3% of the issued and outstanding shares of the Issuer's Common Stock as of June 1, 2001. (b) Investors has the sole power to vote or to direct the vote and has the sole power to dispose or direct the disposition of the 2,329,411 shares of Common Stock underlying the 396,000 shares of Preferred Stock purchased by Investors, subject to the terms of the Stockholder Agreement described in Item 6. WIC, as the general partner of Investors, has the sole power to vote or to direct the vote and has the sole power to dispose or direct the disposition of the 2,329,411 shares of Common Stock underlying the Preferred Stock purchased by Investors, subject to the terms of the Stockholder Agreement described in Item 6./5/ Mr. Hickox, Mr. Heller and Mr. Smith, as managers of WIC, have shared power to vote or to direct the vote and have shared power to dispose or direct the disposition of the 2,329,411 shares of Common Stock underlying the Preferred Stock purchased by Investors./5/ (c) None of the Reporting Persons have acquired any shares of Common Stock of the Issuer during the past sixty days, other than the purchases reported herein. (d) To the best knowledge of the Reporting Persons, no person other than the Reporting Persons has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock of the Issuer. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to the Securities of the Issuer. - ---------------- /5/ See the Schedule 13D filed by Wiser Investment Company, LLC on June 25, 2001, as amended on June 1, 2001 and September 12, 2001 for further information about the aggregate amount of shares beneficially owned by WIC, Mr. Hickox, Mr. Heller and Mr. Smith. 9 Concurrently with the execution of the Assignment, (i) Investors executed an Acknowledgment pursuant to which it acknowledged and agreed that it had become a party to the Stockholder Agreement, (ii) Investors and the Issuer entered into the Subscription Agreement and (iii) Investors and the Issuer entered into the Adoption Agreement. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Stockholder Agreement. (a) Stockholder Agreement. The Stockholder Agreement contemplates that WIC will appoint three Designees to the Board of Directors of the Issuer and the Issuer and WIC will take all actions necessary to cause such Designees to become members of the Board of Directors as soon as practicable after receiving stockholder approval. The Stockholder Agreement provides that three Designees along with C. Frayer Kimball III will be appointed to the Executive Committee. In addition, the Issuer shall take all actions necessary to ensure that one Designee who is not an executive officer of the Issuer is appointed to serve as a member of each committee of the Board of Directors, other than the Executive Committee. As long as WIC and DS&P (the "Purchaser Group") beneficially own 4,600,000 or more of the number of fully-diluted shares existing as of the closing of the transactions contemplated by the Stock Purchase Agreement (the "WIC and DS&P Closing"), which number may be adjusted from time to time, WIC shall be entitled to designate three Designees to serve on the Issuer's Board of Directors (the "Board") and the Executive Committee and one Designee who is not an executive officer of the Company to each other committee of the Board. Otherwise, the Purchaser Group shall be entitled to designate that number of Designees to the Board and the Executive Committee corresponding to the Purchaser Group's beneficial ownership of Common Stock as set forth below: Number of Fully-Diluted Shares Number of as of the WIC and DS&P Closing Date Purchaser Group Designees ----------------------------------- ------------------------- From 2,800,000 to 4,600,000 Two From 800,000 to 2,800,000 One Less than 800,000 Zero If at any point the Purchaser Group beneficially owns less than 6,624,069 Fully-Diluted shares, excluding shares owned by the Purchaser Group prior to the WIC and DS&P Closing, then 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 the Purchaser Group at the WIC and DS&P Closing and any Option Closings, and the denominator is $25,000,000. Pursuant to the Stockholder Agreement, the Issuer has granted WIC demand registration rights to facilitate the resale of the shares of Common Stock (i) issued upon conversion of the Preferred Stock, (ii) exercise of the Warrants and (iii) received as PIK Dividends (collectively, with the Preferred Stock, the "Shares"). The Issuer has also granted WIC certain piggyback rights to sell a portion of its Shares in connection with the offerings of securities by the Issuer for its account. DS&P and WIC have agreed with the Issuer, subject to certain exceptions, not to (i) deposit any Shares in a voting trust or grant a proxy to any person not designated by the Issuer, (ii) act with one or more persons as a partnership, limited partnership, syndicate or "group" (as such term is used in Section 13(d)(3) of the Act) for the purpose of acquiring, voting or disposing of Shares, (iii) sell or transfer any of the Preferred Stock or the Warrants, (iv) prior to the second anniversary of the WIC and DS&P Closing, sell any of the Shares to any person who is not a member of the Purchaser Group and (v) following the second anniversary of the WIC and DS&P Closing, sell any of the Shares to any person who is not a member of the Purchaser Group other than pursuant to a public offering or pursuant to Rule 144 of the Securities Act of 1933, as amended. (b) Subscription Agreement. Pursuant to the Subscription Agreement, Investors bought 396,000 shares of Preferred Stock at $25.00 per share. The Subscription Agreement contains customary representations and warranties. (c) Adoption Agreement. Pursuant to the Adoption Agreement, Investor acknowledged that the Preferred Shares are bound by and subject to the terms of the Stock Purchase Agreement and adopted the Stock Purchase Agreement with the same force and effect as if it were originally a party thereto. (d) Stock Purchase Agreement. For a description of the Stock Purchase Agreement, see Item 2. 10 All references to the Stockholder Agreement, Subscription Agreement, Adoption Agreement and Stock Purchase Agreement are qualified in their entirety by the full text of such agreements and amendments, copies of which are attached as Exhibits hereto and are incorporated by reference herein. Item 7. Materials to be Filed as Exhibits. Exhibit 7.1: Amended and Restated Stock Purchase Agreement dated as of December 13, 1999, by and between WIC and the Issuer Exhibit 7.2: Subscription Agreement dated as of June 1, 2001, by and between Investors and Issuer. Exhibit 7.3: Adoption Agreement dated as of June 1, 2001, by and between Investor and Issuer. Exhibit 7.4: Stockholder Agreement dated as of May 26, 2001, by and between Issuer, WIC and DS&P. Exhibit 7.5: Joint Filing Agreement, dated September 13, 2001, among (i) Investors, (ii) WIC, (iii) Mr. Hickox, (iv) Mr. Heller and (v) Mr. Smith. 11 SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: September 13, 2001 WISER INVESTORS, L.P. By: WISER INVESTMENT COMPANY, LLC, as its general partner By: /S/ GEORGE K. HICKOX, JR. ------------------------------ George K. Hickox, Jr., Manager Date: September 13, 2001 WISER INVESTMENT COMPANY, LLC By: /S/ GEORGE K. HICKOX, JR. ----------------------------------- George K. Hickox, Jr., Manager Date: September 13, 2001 GEORGE K. HICKOX, JR. /S/ George K. Hickox, Jr. ------------------------------------------ Date: September 13, 2001 DOUGLAS P. HELLER /S/ Douglas P. Heller ------------------------------------------ Date: September 13, 2001 SCOTT W. SMITH /S/ Scott W. Smith ------------------------------------------ 12 EX-7.1 3 dex71.txt AMENDED AND RESTATED STOCK PUR. AGREEMENT EXHIBIT 7.1 AMENDED AND RESTATED STOCK PURCHASE AGREEMENT By And Between THE WISER OIL COMPANY And WISER INVESTMENT COMPANY, LLC Dated as of December 13, 1999 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS.............................................................. 1 Section 1.1 Definitions................................................. 1 Section 1.2 References and Titles....................................... 8 ARTICLE II PURCHASE OF PREFERRED SHARES............................................. 9 Section 2.1 Agreement to Sell and to Purchase Shares.................... 9 Section 2.2 Purchase Price and Payment.................................. 9 Section 2.3 Delivery of Shares.......................................... 9 Section 2.4 Deposit.....................................................10 Section 2.5 Option to Purchase Additional Preferred Shares..............10 ARTICLE III REPRESENTATIONS AND WARRANTIES...........................................12 Section 3.1 Representations and Warranties of the Company...............12 Section 3.2 Representations and Warranties of WIC and Purchaser.........35 ARTICLE IV COVENANTS................................................................37 Section 4.1 Stockholder Approval; Proxy Statement.......................37 Section 4.2 NYSE Listing................................................38 Section 4.3 Affirmative Covenants of the Company........................38 Section 4.4 Negative Covenants of the Company...........................39 Section 4.5 Reasonable Best Efforts; Financing..........................41 Section 4.6 Other Transaction Documents.................................42 Section 4.7 HSR Act Notification........................................42 Section 4.8 Notification of Certain Matters.............................43 Section 4.9 No Solicitation by Company..................................43 Section 4.10 Access; Confidentiality....................................44 Section 4.11 Transfer Restrictions......................................45 ARTICLE V CONDITIONS PRECEDENT TO CLOSING..........................................46 Section 5.1 Conditions Precedent to Each Party's Obligation.............46 Section 5.2 Conditions Precedent to Obligations of WIC and Purchaser....47 Section 5.3 Conditions Precedent to Obligation of Company...............48
-i- ARTICLE VI CLOSING..................................................................49 Section 6.1 Closing.....................................................49 Section 6.2 Actions to Occur at the Closing.............................49 ARTICLE VII TERMINATION..............................................................50 Section 7.1 Termination.................................................50 Section 7.2 Effect of Termination.......................................52 ARTICLE VIII INDEMNIFICATION..........................................................52 Section 8.1 Indemnification of WIC and Purchaser........................52 Section 8.2 Indemnification of Company..................................52 Section 8.3 Defense of Third-Party Claims...............................53 Section 8.4 Direct Claims...............................................54 Section 8.5 No Punitive Damages.........................................54 Section 8.6 Exclusivity.................................................54 ARTICLE IX MISCELLANEOUS............................................................55 Section 9.1 Survival of Provisions......................................55 Section 9.2 No Waiver; Modification in Writing..........................56 Section 9.3 Specific Performance........................................56 Section 9.4 Severability................................................56 Section 9.5 Fees and Expenses...........................................56 Section 9.6 Parties in Interest.........................................57 Section 9.7 Notices.....................................................57 Section 9.8 Counterparts................................................58 Section 9.9 Entire Agreement............................................58 Section 9.10 Governing Law..............................................58 Section 9.11 Public Announcements.......................................58 Section 9.12 Assignment.................................................59 Section 9.13 Independent Determination..................................60
Exhibits: Exhibit A - Form of Agreement and Irrevocable Proxy Exhibit B - Form of Certificate of Designation Exhibit C - Form of Employment Agreement Exhibit D - Form of Management Agreement Exhibit E - Form of Restated Certificate -ii- Exhibit F - Form of Stockholder Agreement Exhibit G - Form of Opinion of Thompson & Knight L.L.P. Exhibit H - Form of Opinion of Andrews & Kurth L.L.P. -iii- AMENDED AND RESTATED STOCK PURCHASE AGREEMENT AMENDED AND RESTATED STOCK PURCHASE AGREEMENT, dated as of December 13, 1999, by and between The Wiser Oil Company, a Delaware corporation (the "Company"), and Wiser Investment Company, LLC, a Delaware limited liability company ("WIC"). WHEREAS, the Company and WIC entered into a Stock Purchase Agreement as of December 13, 1999 (the "Original Stock Purchase Agreement"); and WHEREAS, the Company and WIC wish to enter into this Agreement and thereby amend and restate the Original Stock Purchase Agreement in its entirety; NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated: "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. "Agreement" means this Amended and Restated Stock Purchase Agreement, as the same may be amended, supplemented or modified from time to time in accordance with the terms hereof. "Agreement and Irrevocable Proxy" means an agreement in the form attached as Exhibit A hereto. --------- "Alternative Transaction" has the meaning set forth in Section 4.9(d). "Alternative Transaction Proposal" has the meaning set forth in Section 4.9(a). "Approval" means any approval, authorization, grant of authority, consent, order, qualification, permit, license, variance, exemption, franchise, concession, certificate, filing or registration, or any waiver of the foregoing, or any notice, statement or other communication, required to be obtained from, filed with or delivered to any Governmental Entity or other Person. "Benefit Arrangement" has the meaning set forth in Section 3.1(s)(i)(B). "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 Dallas, Texas generally are authorized or required by Law to close. "Bylaws" means the By-Laws of the Company as amended to the date of this Agreement. "Certificate of Cancellation" means a certificate, in form and substance reasonably satisfactory to WIC and Purchaser, effecting the cancellation of the Company's Series A Preferred Stock, in accordance with Section 151(g) of the Delaware General Corporation Law. "Certificate of Designation" means the Certificate of Designations for the Series C Preferred Stock, in the form attached as Exhibit B hereto. --------- "Certificate of Incorporation" means the Restated Certificate of Incorporation of the Company as amended to the date of this Agreement and as filed with the Secretary of State of Delaware. "Closing" has the meaning set forth in Section 6.1. "Closing Date" has the meaning set forth in Section 6.1. "Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder as in effect on the date hereof. "Commitment Letter" has the meaning set forth in Section 4.5(b). "Common Stock" means the Company's common stock, the par value of which is $3.00 per share on the date hereof but will be changed to $.01 per share on the Closing Date pursuant to the Restated Certificate. "Company" has the meaning set forth in the introductory paragraph hereof. "Company Agents" has the meaning set forth in Section 4.9(a). "Company Disclosure Schedule" means the disclosure schedule dated as of December 13, 1999, which was delivered by the Company to WIC concurrently with the execution of the Original Stock Purchase Agreement, as supplemented by a supplement thereto delivered by the Company to WIC concurrently with the execution of this Agreement. The references in the Company Disclosure -2- Schedule to the Original Stock Purchase Agreement and the Sections thereof shall be deemed to be references to this Agreement and the Sections of this Agreement. "Company Indemnified Costs" means any and all damages, losses (including diminution in value), claims, liabilities, demands, charges, suits, penalties, costs and expenses (including court costs and reasonable legal fees and expenses incurred in investigating and preparing for any litigation or proceeding) that any of the Company Indemnified Parties incurs and that arise out of (i) any breach by WIC or Purchaser of any of its representations or warranties under this Agreement or any other Transaction Document or (ii) any breach by WIC or Purchaser of any of its covenants or agreements under this Agreement or any other Transaction Document. "Company Indemnified Parties" means the Company, its Subsidiaries and each officer, director, employee, stockholder and Affiliate of the Company or its Subsidiaries (other than WIC, Purchaser and Persons who are also officers, directors, managers, employees, stockholders or Affiliates of WIC or Purchaser). "Company Options" has the meaning set forth in Section 3.1(c)(iii). "Company SEC Documents" has the meaning set forth in Section 3.1(i). "Contracts" means all agreements, contracts or other binding commitments, arrangements or plans, written or oral (including any amendments and other modifications thereto), to which the Company or any of its Subsidiaries is a party or is otherwise bound. "Conversion Shares" means the shares of Common Stock issuable upon conversion of the Preferred Shares in accordance with the terms of the Certificate of Designation. "Credit Facility" has the meaning set forth in Section 3.1(m). "Cure Period" has the meaning set forth in Section 7.1(b)(i). "Debt", without duplication, means (a) all indebtedness (including the principal amount thereof or, if applicable, the accreted amount thereof and the amount of accrued and unpaid interest thereon) of the Company and its Subsidiaries, whether or not represented by bonds, debentures, notes or other securities, for the repayment of money borrowed, (b) all deferred indebtedness of the Company and its Subsidiaries for the payment of the purchase price of property or assets purchased, (c) all obligations of the Company and its Subsidiaries to pay rent or other payment amounts under a lease of real or personal property which is required to be classified as a capital lease or a liability on the face of a balance sheet prepared in accordance with GAAP, (d) any outstanding reimbursement obligation of the Company or its Subsidiaries with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of the Company or its Subsidiaries, (e) any payment obligation of the Company or its Subsidiaries under any interest rate swap agreement, forward rate agreement, interest rate cap or collar agreement or other financial agreement -3- or arrangement entered into for the purpose of limiting or managing interest rate risks, (f) all indebtedness for borrowed money secured by any Lien existing on property owned by the Company or its Subsidiaries, whether or not indebtedness secured thereby shall have been assumed, (g) all guaranties, endorsements, assumptions and other contingent obligations of the Company or its Subsidiaries in respect of, or to purchase or to otherwise acquire, indebtedness for borrowed money of others, (h) all other short-term and long-term liabilities of the Company or its Subsidiaries of any nature, other than accounts payable and accrued liabilities incurred in the ordinary course of business, and (i) all premiums, penalties and change of control payments required to be paid or offered in respect of any of the foregoing as a result of the consummation of the transactions contemplated by the Transaction Documents regardless if any of such are actually paid. "Deposit" has the meaning set forth in Section 2.4(a). "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. "Employment Agreement" means the Employment Agreement to be entered into by and between the Company and George K. Hickox, Jr. at the Closing, in the form attached as Exhibit C hereto. --------- "Environmental Laws" has the meaning set forth in Section 3.1(w)(A). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Escrow Agreement" has the meaning set forth in Section 2.4(a). "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. "Financing" has the meaning set forth in Section 4.5(b). "Financing Commitment Date" has the meaning set forth in Section 4.5(b). "GAAP" has the meaning set forth in Section 3.1(i). "Governmental Entity" means any agency, bureau, commission, court, authority, department, official, political subdivision, tribunal or other instrumentality of any government, whether (i) regulatory, administrative or otherwise, (ii) federal, state or local or (iii) domestic or foreign. "Hazardous Materials" has the meaning set forth in Section 3.1(w)(B). "Hedge" and "Hedging" have the respective meanings set forth in Section 3.1(ii). -4- "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Indemnified Parties" means the Purchaser Indemnified Parties or the Company Indemnified Parties, as the case may be. "Indemnifying Party" has the meaning set forth in Section 8.3. "Indenture" means the Indenture between the Company and Texas Commerce Bank, N.A., as trustee, dated as of May 21, 1997, for the Company's 9 1/2% Senior Subordinated Notes due 2007. "Intangible Property" has the meaning set forth in Section 3.1(v). "IRS" means the Internal Revenue Service. "knowledge" (and corresponding derivative expressions) mean the actual knowledge of the executive officers, directors or senior managers of the Company, WIC or Purchaser, as the case may be, after reasonable inquiry. "Law" means any constitutional provision, statute or other law, ordinance, rule, regulation or interpretation of any thereof and any Order of any Governmental Entity (including Environmental Laws). "Lien" means, with respect to any asset, any mortgage, lien, pledge, encumbrance, charge or security interest of any kind in or on such asset or the revenues or income thereon or therefrom. "Litigation" has the meaning set forth in Section 3.1(o). "Management Agreement" means the Management Agreement to be entered into by and between the Company and WIC at the Closing, in the form attached as Exhibit ------- D hereto. - - "Material Adverse Effect" means any effect, change, event or occurrence that is materially adverse to the business, operations, properties, condition (financial or otherwise), results of operations, assets, liabilities or prospects of the Company and its Subsidiaries taken as a whole, other than as a result of (i) changes in oil or gas prices or (ii) general conditions in the Company's industry (or changes in such conditions) not relating solely to the Company or a Subsidiary in any specific manner. "Material Contracts" has the meaning set forth in Section 3.1(p)(i). "NYSE" means the New York Stock Exchange. "Oil and Gas Properties" has the meaning set forth in Section 3.1(k). -5- "Option", "Option Closing", "Option Closing Date" and "Option Term" have the respective meanings set forth in Section 2.5. "Order" means any decree, injunction, judgment, order, ruling, assessment or writ. "Person" means an individual or a corporation, partnership, trust, incorporated or unincorporated association, limited liability company, joint venture, joint stock company, Governmental Entity or other entity of any kind. "Plan" has the meaning set forth in Section 3.1(s)(i)(A). "Preferred Share Issuance" means the issuance of Preferred Shares to Purchaser at the Closing and at any Option Closings. "Preferred Shares" means the shares of Series C Preferred Stock to be purchased by Purchaser at the Closing pursuant to Section 2.1 and at any Option Closings pursuant to Section 2.5. "Proxy Statement" has the meaning set forth in Section 3.1(d)(iii). "Purchase Price" has the meaning set forth in Section 2.2(a). "Purchaser" means WIC; provided, however, that if a permitted assignment or assignments occur pursuant to Section 9.12(b) or 9.12(c), "Purchaser" shall mean and include, collectively, each assignee to whom such an assignment has been made (and shall continue to mean and include WIC unless WIC has assigned all of its rights, interests and obligations as Purchaser hereunder in accordance with the provisions of Section 9.12). "Purchaser Designees" has the meaning given to it in the Stockholder Agreement. "Purchaser Indemnified Costs" means any and all damages, losses (including diminution in value), claims, liabilities, demands, charges, suits, penalties, costs and expenses (including court costs and reasonable legal fees and expenses incurred in investigating and preparing for any litigation or proceeding) that any of the Purchaser Indemnified Parties incurs and that arise out of (i) any breach by the Company of any of its representations or warranties under this Agreement or any other Transaction Document or (ii) any breach by the Company of any of its covenants or agreements under this Agreement or any other Transaction Document. "Purchaser Indemnified Parties" means WIC, Purchaser and each officer, director, manager, employee, stockholder and Affiliate (other than the Company and its Subsidiaries) of WIC and Purchaser. "Release" has the meaning set forth in Section 3.1(w)(C). -6- "Remedial Action" has the meaning set forth in Section 3.1(w)(D). "Requisite Votes" has the meaning set forth in Section 3.1(g). "Reserve Reports" means the reserve information prepared by the Company's independent petroleum engineers estimating the proved reserves attributable to the Oil and Gas Properties as of December 31, 1998 and described in (i) the Appraisal Report as of December 31, 1998 on Certain Properties Owned by The Wiser Oil Company, prepared by DeGolyer and MacNaughton, and (ii) the Reserve Appraisal and Economic Evaluation for The Wiser Oil Company Canada Ltd. dated as of January 1, 1999, prepared by Gilbert Laustsen Jung Associates. "Restated Bylaws" has the meaning set forth in Section 4.6. "Restated Certificate" means the Restated Certificate of Incorporation of the Company to be submitted to the stockholders of the Company for their approval at the Stockholders' Meeting, in the form attached as Exhibit E hereto. --------- "Rights Agreement" means the Rights Agreement dated as of October 25, 1993, between the Company and ChaseMellon Shareholder Services, L.L.C., as successor rights agent, as amended. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated 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. "Stockholder Agreement" means the Stockholder Agreement to be entered into by and between the Company, WIC and Purchaser at the Closing, in the form attached as Exhibit F hereto. --------- "Stockholders' Meeting" has the meaning set forth in Section 4.1(a). "Stock Plans" means the Company's 1991 Stock Incentive Plan, 1991 Non- Employee Directors' Stock Option Plan, Equity Compensation Plan for Non-Employee Directors and 1997 Share Appreciation Rights Plan, all as amended. "Subsidiary" means (i) a corporation, a majority of whose stock with voting power to elect directors is at the date of determination thereof, directly or indirectly, owned by the Company, by a Subsidiary or by the Company and another Subsidiary or (ii) any other Person (other than a corporation) in which the Company, a Subsidiary or the Company and a Subsidiary, directly or indirectly, at the date of determination thereof have a majority ownership interest. -7- "Superior Proposal" has the meaning set forth in Section 4.9(a). "Tax" has the meaning set forth in Section 3.1(r). "Tax Return" has the meaning set forth in Section 3.1(r). "Third Party" has the meaning set forth in Section 4.9(d). "third-party action" has the meaning set forth in Section 8.3. "Transaction Documents" means this Agreement, the Certificate of Designation, the Employment Agreement, the Escrow Agreement, the Management Agreement, the Stockholder Agreement, the Warrant Agreement, the Warrant Purchase Agreement and, for purposes of Article III only, the Restated Certificate. "Transfer" has the meaning set forth in Section 4.11. "Underlying Common Shares" means the Conversion Shares, the Dividend Shares and the Warrant Shares. "Warrant Agreement" means each Warrant Agreement to be entered into by and between the Company and WIC at the Closing and at any Option Closings, in the form attached as Exhibit A to the Warrant Purchase Agreement. --------- "Warrant Issuance" means the issuance of Warrants to WIC pursuant to the Warrant Agreement. "Warrant Purchase Agreement" means the Amended and Restated Warrant Purchase Agreement dated of even date herewith between the Company and WIC, pursuant to which at the Closing and at any Option Closings WIC will purchase Warrants from the Company and both parties will enter into a Warrant Agreement. "Warrants" means the warrants issued pursuant to the terms of the Warrant Agreement. "Warrant Shares" means the shares of Common Stock issuable upon exercise of the Warrants in accordance with the terms of the Warrant Agreement. "WIC" has the meaning set forth in the introductory paragraph hereof. SECTION 1.2 References and Titles. All references in this Agreement to Exhibits, Schedules, Articles, Sections, subsections and other subdivisions refer to the corresponding Exhibits, Schedules, Articles, Sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Articles, Sections, subsections or other -8- 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 PURCHASE OF PREFERRED SHARES Section 2.1 Agreement to Sell and to Purchase Shares. Subject to the terms and conditions herein set forth, the Company will issue and sell to Purchaser, and Purchaser will purchase from the Company, at the Closing, such number of whole Preferred Shares as shall be designated by Purchaser by notice received by the Company at least three Business Days prior to the Closing Date; provided, however, that the total number of Preferred Shares to be purchased by Purchaser at the Closing shall not be less than 600,000 or more than 1,000,000 Preferred Shares. Section 2.2 Purchase Price and Payment. (a) The purchase price payable for the Preferred Shares shall be $25.00 per Preferred Share (the "Purchase Price"). (b) Payment of the aggregate Purchase Price for the Preferred Shares to be purchased at the Closing shall be made at the Closing by or on behalf of Purchaser by wire transfer of immediately available funds to an account of the Company (the number for which account shall have been furnished to Purchaser at least two Business Days prior to the Closing Date), provided that the Deposit shall be deemed a credit to such Purchase Price as provided in Section 2.4(b)(i). Section 2.3 Delivery of Shares. Delivery of the Preferred Shares to be purchased at the Closing shall be made at the Closing by delivery to Purchaser, against payment of the Purchase Price therefor as provided herein, of a share certificate (or share certificates in such denominations as Purchaser may reasonably request not later than three Business Days prior to the Closing Date) representing the total number of Preferred Shares. -9- Section 2.4 Deposit. (a) WIC has deposited in escrow the amount of $500,000 (the "Deposit") under an Escrow Agreement dated December 9, 1999 between the Company, WIC and Bank One, Texas, N.A., as escrow agent (the "Escrow Agreement"). (b) The Deposit shall be held by Bank One, Texas, N.A. in escrow under the Escrow Agreement and shall be disbursed only in accordance with the following terms and conditions: (i) If the purchase of the Preferred Shares at the Closing is consummated in accordance with the terms hereof, then concurrently with the Closing the Deposit shall be disbursed to the Company and applied to the Purchase Price to be paid by Purchaser for the Preferred Shares at the Closing. (ii) If this Agreement is terminated by the Company pursuant to Section 7.1(f) or is terminated by any party pursuant to Section 7.1(e) (and provided that the Company is not then in material breach of any of its obligations hereunder), the Deposit shall be disbursed to the Company within three Business Days following such termination, to be retained by the Company as liquidated damages. The retention by the Company of the Deposit shall be the sole remedy available to the Company in any such case. (iii) If this Agreement is terminated pursuant to Article VII and the Company is not entitled to a disbursement of the Deposit pursuant to Section 2.4(b)(ii), WIC shall be entitled to a return of the Deposit within three Business Days following such termination. Section 2.5 Option to Purchase Additional Preferred Shares. (a) Provided (i) the Closing occurs and (ii) the total number of Preferred Shares purchased by Purchaser at the Closing is less than 1,000,000, then, subject to the terms and conditions set forth in this Section 2.5, the Company hereby grants to Purchaser an irrevocable option to purchase from the Company a total number of shares of Series C Preferred Stock equal to (i) 1,000,000 less (ii) the total number of Preferred Shares purchased by Purchaser at the Closing, at an exercise price per share equal to the Purchase Price (the "Option"). (b) The Option shall be exercisable at any time and from time to time following the Closing and shall remain in full force and effect until 11:59 p.m., Dallas time, on the six-month anniversary of the Closing Date or on such later date as may be mutually agreed to by the Company and WIC (the "Option Term"). (c) Purchaser may exercise the Option, in whole or in part, at any time and from time to time during the Option Term; provided, however, that each exercise of the Option must be for a whole number of Preferred Shares and for (i) at least 20,000 Preferred Shares in the aggregate or (ii) 100% of the then remaining shares subject to the Option. Each such exercise shall be irrevocable. -10- Notwithstanding the expiration of the Option Term, Purchaser shall be entitled to purchase those Preferred Shares with respect to which it has exercised the Option in accordance with the terms hereof prior to the expiration of the Option Term. If Purchaser wishes to exercise the Option, it must send a written notice of exercise to the Company specifying the total number of Preferred Shares it intends to purchase pursuant to such exercise and such notice must be received by the Company prior to the expiration of the Option Term. The closing of the sale and purchase of Preferred Shares pursuant to an exercise of the Option (an "Option Closing") shall be held at the principal executive offices of the Company on a Business Day (the "Option Closing Date") not earlier than three Business Days nor later than 10 Business Days after the date of receipt by the Company of the notice of exercise of the Option. (d) If an Option Closing cannot be effected by reason of the application of any Law, the Option Closing Date shall be extended to the fifth Business Day following the expiration or termination of the restriction imposed by such Law. Without limiting the foregoing, if prior notification to, or authorization of, any Governmental Entity is required in connection with the purchase of Preferred Shares at an Option Closing by virtue of the application of such Law, Purchaser and, if applicable, the Company shall promptly file the required notice or application for authorization and Purchaser, with the cooperation of the Company, shall expeditiously process the same. (e) At each Option Closing, Purchaser shall pay to the Company in immediately available funds by wire transfer to a bank account designated by the Company an amount equal to the Purchase Price multiplied by the total number of Preferred Shares to be purchased at such Option Closing. At each Option Closing, simultaneously with the delivery to the Company of immediately available funds as provided in the immediately preceding sentence, the Company shall deliver to Purchaser a share certificate or certificates (in such denominations as Purchaser may reasonably request) representing the total number of Preferred Shares to be purchased at such Option Closing. (f) At each Option Closing, if Purchaser is not already a party to the Stockholder Agreement, Purchaser shall execute and deliver to the Company a written acknowledgment, in form and substance satisfactory to the Company, that Purchaser has become a party to the Stockholder Agreement to the same extent as if it had been an original signatory party thereto and that it agrees to be bound by all the terms and provisions thereof. At each Option Closing, the Company shall deliver to Purchaser (i) a certificate dated the Option Closing Date and executed by the Company confirming the accuracy of its representations and warranties contained in Sections 3.1(e) and 3.1(f) and (ii) a written opinion of the Company's counsel dated the Option Closing Date as to the matters set forth in paragraphs 11(c), 11(d) and 11(e) of Exhibit G hereto, in each case --------- with respect to the Preferred Shares and Warrants purchased at such Option Closing. -11- ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.1 Representations and Warranties of the Company. The Company represents and warrants to WIC and Purchaser as follows: (a) Organization, Standing and Power. Each of the Company and its Subsidiaries is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or organized and has the requisite corporate or other such entity power and authority to carry on its business as now being conducted. Each of the Company and its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed or to be in good standing, individually or in the aggregate, has not had and could not reasonably be expected to have a Material Adverse Effect. The Company has delivered to WIC prior to the execution of this Agreement complete and correct copies of the Company's Certificate of Incorporation and Bylaws, as in effect on the date of this Agreement, and has made available to WIC the certificate of incorporation and bylaws (or comparable organizational documents) of each of its Subsidiaries, in each case as in effect on the date of this Agreement. (b) Subsidiaries. Schedule 3.1(b)(i) of the Company Disclosure Schedule sets forth a true and complete list, as of the date hereof, of each Subsidiary of the Company, together with the jurisdiction of incorporation or organization and the percentage of each Subsidiary's outstanding capital stock (or other voting or equity securities or interests, as applicable) owned by the Company or another Subsidiary of the Company. Except as set forth in Schedule 3.1(b)(ii) of the Company Disclosure Schedule, all the outstanding shares of capital stock (or other voting or equity securities or interests, as applicable) of each Subsidiary of the Company have been validly issued and (with respect to corporate Subsidiaries) are fully paid and nonassessable and are owned directly or indirectly by the Company, free and clear of all Liens. Except for the capital stock (or other voting or equity securities or interests, as applicable) of its Subsidiaries and except as set forth in Schedule 3.1(b)(iii) of the Company Disclosure Schedule, as of the date hereof, the Company does not own, directly or indirectly, any capital stock (or other voting or equity securities or interests, as applicable) of any corporation, limited liability company, partnership, joint venture or other entity. (c) Capital Structure. (i) The authorized capital stock of the Company consists of 20,000,000 shares of Common Stock (which will be increased on the Closing Date to 30,000,000 shares of Common Stock, par value $.01 per share, pursuant to the Restated Certificate) and 300,000 shares of preferred stock, par value $10.00 per share (which will be increased on the Closing Date to 1,300,000 shares of preferred stock pursuant to the Restated Certificate), which shares of preferred stock may be divided into and issued in one or more series upon the -12- creation thereof by the Board. As of the date hereof, 8,951,965 shares of Common Stock are issued and outstanding (including the associated preferred stock purchase rights issued pursuant to the Rights Agreement) and 176,204 shares of Common Stock are held by the Company in its treasury. No shares of Common Stock are held by any of the Company's Subsidiaries. An aggregate of (A) 10,000 shares of preferred stock of the Company have been designated as the Series A Preferred Stock as of the date hereof (which will be cancelled on the Closing Date pursuant to the Certificate of Cancellation) and (B) 20,000 shares of preferred stock of the Company have been designated as the Series B Preferred Stock and reserved for issuance pursuant to the Rights Agreement, but none of such shares of preferred stock has been issued and there is no commitment, arrangement or understanding to issue any such shares. (ii) There are no bonds, debentures, notes or other indebtedness issued or outstanding having the right to vote on any matters on which holders of capital stock of the Company may vote, including without limitation the approval of the Preferred Share Issuance, the Warrant Issuance and the Restated Certificate, and there is no commitment, arrangement or understanding to issue any of such bonds, debentures, notes or other indebtedness. (iii) Except as contemplated in the Transaction Documents or as set forth in Schedule 3.1(c)(iii) of the Company Disclosure Schedule and except for the preferred stock purchase rights issued pursuant to the Rights Agreement, there are no outstanding warrants, stock options, stock appreciation rights or other rights to receive any capital stock of the Company granted by the Company under the Stock Plans or otherwise. Schedule 3.1(c)(iii) of the Company Disclosure Schedule sets forth a complete and correct list, as of the date hereof, of the number, class and series of shares subject to all such outstanding warrants, options, stock appreciation rights or other rights to receive any capital stock of the Company (collectively, "Company Options"), and the current exercise, conversion or base prices thereof. Except for the Stock Plans and the Company Options and except as set forth above in this Section 3.1(c), as of the date hereof, there are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company or any of its Subsidiaries is a party or by which any of them is bound obligating the Company or any of its Subsidiaries under any circumstances to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock (or other voting or equity securities or interests, as applicable) of the Company or of any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. Except as set forth in Schedule 3.1(c)(iii) of the Company Disclosure Schedule, there are no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock (or other voting or equity securities or interests, as applicable) of the Company or any of its Subsidiaries under any circumstances. -13- (iv) All outstanding shares of capital stock (or other voting or equity securities or interests, as applicable) of the Company and its Subsidiaries are, and all shares which may be issued under the Company Options will be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive or similar rights. (v) Except as contemplated in the Transaction Documents or as set forth in the Stock Plans or in Schedule 3.1(c)(v) of the Company Disclosure Schedule, there are not as of the date hereof and there will not be at the time of the Closing any stockholder agreements, voting agreements or trusts, proxies or other agreements or contractual obligations to which the Company or any Subsidiary is a party or bound with respect to the voting or disposition of any shares of the capital stock (or other voting or equity securities or interests, as applicable) of the Company or any of its Subsidiaries and, to the Company's knowledge, as of the date hereof, there are no other stockholder agreements, voting agreements or trusts, proxies or other agreements or contractual obligations among the stockholders of the Company with respect to the voting or disposition of any shares of the capital stock (or other voting or equity securities or interests, as applicable) of the Company or any of its Subsidiaries. (d) Authority; No Violations; Approvals. (i) The Board has approved this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, has declared this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby to be in the best interests of the stockholders of the Company and has recommended to the Company's stockholders approval of the Preferred Share Issuance, the Warrant Issuance and the Restated Certificate. The Company has all requisite corporate power and authority to enter into this Agreement and the other Transaction Documents and, subject to receipt of the approval referred to in the next following sentence, to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company, other than the approval of the Preferred Share Issuance, the Warrant Issuance and the Restated Certificate by the Requisite Votes of the stockholders of the Company as provided in Section 4.1. This Agreement has been, and at the Closing and at any Option Closings, as applicable, the other Transaction Documents will be, duly executed and delivered by the Company and, assuming this Agreement and the other Transaction Documents constitute the valid, binding and enforceable obligations of the other parties thereto, constitute valid and binding obligations of the Company enforceable in accordance with their respective terms, subject, as to enforceability, to bankruptcy, insolvency, reorganization, moratorium and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). -14- (ii) Except as set forth in Schedule 3.1(d)(ii) of the Company Disclosure Schedule, the execution and delivery of this Agreement and the other Transaction Documents does not, and the consummation of the transactions contemplated hereby and thereby and compliance with the provisions hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any material obligation or to the loss of a material benefit under, or give rise to a right of purchase or "put" right under, or result in the creation of any Lien upon any of the properties or assets of the Company or any of its Subsidiaries under, any provision of (A) the Certificate of Incorporation or Bylaws of the Company or any provision of the comparable charter or organizational documents of any of its Subsidiaries, (B) the Indenture, (C) any other loan or credit agreement, note, bond, mortgage, indenture, lease or agreement to which the Company or any of its Subsidiaries is a party or is otherwise bound or any existing Approval applicable to the Company or any of its Subsidiaries, or (D) assuming the Approvals referred to in Section 3.1(d)(iii) are duly and timely obtained or made, any Law applicable to the Company or any of its Subsidiaries or any of their respective properties or assets, other than, in the case of clause (C) or (D), any such conflicts, violations, defaults, rights, losses, Liens or Laws that, individually or in the aggregate, have not and could not reasonably be expected to (x) have a Material Adverse Effect, (y) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (z) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. (iii) No Approval of or from any Governmental Entity is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement or any other Transaction Document by the Company or the consummation by the Company of the transactions contemplated hereby or thereby, except for: (A) the filing of a notification report by the Company under the HSR Act and the expiration or termination of the applicable waiting period with respect thereto; (B) the filing of the Restated Certificate, the Certificate of Designation and the Certificate of Cancellation with the Secretary of State of Delaware in accordance with Section 103 of the Delaware General Corporation Law; (C) the filing with the SEC of (1) a proxy statement in preliminary and definitive form relating to the Stockholders' Meeting to be held in connection with the approval of the Preferred Share Issuance, the Warrant Issuance and the Restated Certificate (the "Proxy Statement") and (2) such reports under Section 13(a) of the Exchange Act and such other compliance with the Exchange Act as may be required in connection with this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby; (D) such Approvals as are required under the Securities Act in connection with the registration rights granted to WIC and Purchaser under the Stockholder Agreement; (E) such Approvals as may be required by any applicable state securities or "blue sky" laws; (F) such Approvals as may be required by any foreign securities, corporate or other Laws; and (G) any such Approvals the failure of which to be made or obtained has not and could not reasonably be expected to (1) impair the ability of the Company to perform its obligations under any of -15- the Transaction Documents in any material respect or (2) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. (iv) The Company has received the executed, irrevocable resignation of each of Andrew J. Shoup, Jr., Howard Hamilton and John W. Cushing III, from the Board (and, in the case of Mr. Shoup, from the offices of President and Chief Executive Officer), in each case effective immediately following the Closing on the Closing Date. (e) Status of Preferred Shares, Conversion Shares and Dividend Shares. (i) Subject to receipt of the approval of the Preferred Share Issuance and the Restated Certificate by the Company's stockholders as contemplated by Section 4.1, the issuance and sale of the Preferred Shares have been duly authorized by all necessary corporate action on the part of the Company (other than the filing of the Restated Certificate and the Certificate of Designation with the Secretary of State of Delaware), and the Preferred Shares, when delivered to Purchaser at the Closing and any Option Closing against payment of the Purchase Price therefor as provided herein, will be validly issued, fully paid and nonassessable, and the issuance and sale of the Preferred Shares are not and will not be subject to preemptive rights of any stockholder of the Company. (ii) Subject to receipt of the approval of the Preferred Share Issuance and the Restated Certificate by the Company's stockholders as contemplated by Section 4.1, the reservation and issuance of the Conversion Shares and the Dividend Shares have been duly authorized by all necessary corporate action on the part of the Company (other than the filing of the Restated Certificate and the Certificate of Designation with the Secretary of State of Delaware), and the Conversion Shares, when issued upon conversion of the Preferred Shares in accordance with the terms of the Certificate of Designation, and the Dividend Shares, when issued in payment of dividends payable on the Preferred Shares in accordance with the terms of the Certificate of Designation, will be validly issued, fully paid and nonassessable, and the issuance of the Conversion Shares and the Dividend Shares are not and will not be subject to preemptive rights of any stockholder of the Company. (f) Status of Warrants and Warrant Shares. (i) Subject to receipt of the approval of the Warrant Issuance by the Company's stockholders as contemplated by Section 4.1, the issuance and sale of the Warrants have been duly authorized by all necessary corporate action on the part of the Company, and the Warrants, when issued, sold and delivered as provided in the Warrant Purchase Agreement and the Warrant Agreement, will be validly issued and will constitute valid and binding obligations of the Company enforceable in accordance with the terms of the Warrant Agreement, subject, as to enforceability, to bankruptcy, insolvency, reorganization, moratorium and other laws of general applicability relating to or affecting creditors' rights -16- and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (ii) Subject to receipt of the approval of the Warrant Issuance by the Company's stockholders as contemplated by Section 4.1, the reservation, issuance and sale of the Warrant Shares have been duly authorized by all necessary corporate action on the part of the Company, and the Warrant Shares, when issued and delivered upon exercise of the Warrants in accordance with the provisions of the Warrant Agreement, will be validly issued, fully paid and nonassessable, and the issuance and sale of the Warrant Shares are not and will not be subject to preemptive rights of any stockholder of the Company. (g) Requisite Votes. Pursuant to Section 4.1, the Company will seek, at the Stockholders' Meeting, the approval of (i) each of the Preferred Share Issuance and the Warrant Issuance by the affirmative vote of (A) a majority of the total votes cast on the proposal by the holders of Common Stock, in accordance with Paragraph 312.07 of the NYSE Listed Company Manual, and (B) a majority of the shares of Common Stock present in person or represented by proxy at the Stockholders' Meeting and entitled to vote thereon, in accordance with Section 216 of the Delaware General Corporation Law, and (ii) the Restated Certificate by the affirmative vote of the holders of a majority of the issued and outstanding shares of Common Stock entitled to vote thereon (the "Requisite Votes"). There are no approvals of the Transaction Documents and the transactions contemplated thereby that are required of the holders of any class or series of capital stock of the Company under the requirements of the NYSE or any Law other than the Requisite Votes. (h) Certain Anti-Takeover Provisions; Amendment to Rights Agreement. (i) The Board has duly approved each of WIC and Purchaser, and of WIC and Purchaser as a "group" (as such term is used in Rule 13d-5 of the rules and regulations promulgated under the Exchange Act), becoming an "interested stockholder" within the meaning of Section 203 of the Delaware General Corporation Law by reason of the acquisition by WIC and Purchaser of the Preferred Shares, the Conversion Shares, the Dividend Shares, the Warrants and the Warrant Shares, and such approval is sufficient to render inapplicable to the transactions contemplated by the Transaction Documents the restrictions contained in such Section 203. (ii) The Board has taken all necessary action to amend the Rights Agreement so that none of the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby (including, without limitation, the receipt of Conversion Shares or Dividend Shares in respect of the Preferred Shares or the receipt of Warrant Shares upon the exercise of the Warrants) will upon the lapse of any waiting period cause (A) any of WIC, Purchaser or any "group" consisting of WIC or Purchaser to constitute an "Acquiring Person" (as defined in the Rights Agreement), (B) the preferred stock purchase rights issued pursuant to the Rights -17- Agreement to become exercisable under the Rights Agreement or (C) the distribution of "Rights Certificates" (as defined in the Rights Agreement). (iii) The Board has taken, or will take, all necessary action to approve the appointment of the Purchaser Designees to the Board so that such appointment will not contribute to or result in a "Change of Control" as defined in the Indenture. (i) SEC Documents. The Company has made available to WIC a true and complete copy of each report, schedule, registration statement and definitive proxy statement filed by the Company with the SEC since December 31, 1997 and prior to or on the date of this Agreement (the "Company SEC Documents"), which are all the documents (other than preliminary materials) that the Company was required to file with the SEC between December 31, 1997 and the date of this Agreement. As of their respective dates, the Company SEC Documents complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Company SEC Documents, and none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Company SEC Documents complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC) and fairly present in all material respects and in accordance with applicable requirements of GAAP (subject, in the case of the unaudited statements, to normal, recurring adjustments, none of which is material) the consolidated financial position of the Company and its consolidated Subsidiaries as of their respective dates and the consolidated results of operations and the consolidated cash flows of the Company and its consolidated Subsidiaries for the periods presented therein. (j) Information Supplied. None of the information included or incorporated by reference in the Proxy Statement will, at the date mailed to stockholders of the Company or at the time of the Stockholders' Meeting or as of the Closing, contain any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact or omit to state any material fact necessary in order to make the statements therein not false or misleading. The Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act. The representations and warranties contained in this Section 3.1(j) shall not apply to statements or omissions in the Proxy Statement based upon information furnished in writing to the Company by WIC or Purchaser expressly for use therein. (k) Absence of Certain Changes or Events. Except as set forth in Schedule 3.1(k) of the Company Disclosure Schedule or as disclosed in, or reflected in the financial statements included in, the Company SEC Documents, or except as contemplated by this Agreement, since December 31, 1998 the Company and its Subsidiaries have conducted their business only in the ordinary course -18- consistent with past practice, and there has not occurred: (i) any event that would have been prohibited by Section 4.4 if the terms of such Section had been in effect as of and after December 31, 1998; (ii) any material casualties affecting the Company or any of its Subsidiaries or any material loss, damage or destruction to any of their respective properties or assets, including the Oil and Gas Properties; or (iii) any event, circumstance or fact that has or could reasonably be expected to (x) have a Material Adverse Effect, (y) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (z) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. (l) No Undisclosed Material Liabilities. Except as disclosed in the Company SEC Documents, there are no material liabilities or obligations of the Company or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, required by GAAP to be recognized or disclosed on a consolidated balance sheet of the Company and its consolidated Subsidiaries or in the notes thereto, other than: (i) liabilities adequately provided for on the balance sheet of the Company dated as of September 30, 1999 (including the notes thereto) contained in the Company's Quarterly Report on Form 10-Q for the three months ended September 30, 1999; (ii) liabilities incurred in the ordinary course of business consistent with past practice since September 30, 1999; and (iii) liabilities arising under the Transaction Documents. (m) No Default. Neither the Company nor any of its Subsidiaries is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of (i) the Certificate of Incorporation or Bylaws of the Company or the comparable charter or organizational documents of any of its Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease, instrument, permit, concession, franchise, license or any other contract, agreement, arrangement or understanding to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective properties or assets is bound, or (iii) any Law applicable to the Company or any of its Subsidiaries, except in the case of clauses (ii) and (iii), for violations or defaults that, individually or in the aggregate, have not and could not reasonably be expected to (x) have a Material Adverse Effect, (y) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (z) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. The Company (i) is not in breach of or default under any financial covenant under the Restated Credit Agreement dated May 10, 1999, among the Company, Bank One, Texas, N.A., as agent, and the other parties thereto (the "Credit Facility") and (ii) does not have any reason to believe that it will be in breach of or default under any financial covenant under the Credit Facility as of the next date on which the Company is required to be in compliance with any such financial covenant (other than any breaches or defaults which the Company reasonably believes will be waived by the lenders under the Credit Facility). -19- (n) Compliance with Applicable Laws. The Company and each of its Subsidiaries has in effect all Approvals of all Governmental Entities necessary for the lawful conduct of their respective businesses, and there has occurred no default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) under any such Approval, except for failures to obtain, or for defaults or violations under, Approvals which failures, defaults or violations, individually or in the aggregate, have not and could not reasonably be expected to (i) have a Material Adverse Effect, (ii) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (iii) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. Except as disclosed in the Company SEC Documents, the businesses of the Company and its Subsidiaries are in compliance with all applicable Laws, except for possible noncompliance which, individually or in the aggregate, has not had and could not reasonably be expected to have any effect referred to in clause (i), (ii) or (iii) above. No investigation or review by any Governmental Entity with respect to the Company, any of its Subsidiaries, the transactions contemplated by this Agreement and the other Transaction Documents, is pending or, to the knowledge of the Company, threatened, nor has any Governmental Entity indicated to the Company or any of its Subsidiaries any intention to conduct the same, other than those the outcome of which, individually or in the aggregate, has not had and could not reasonably be expected to have any effect referred to in clause (i), (ii) or (iii) above. (o) Litigation. Except as disclosed in the Company SEC Documents or set forth in Schedule 3.1(o) of the Company Disclosure Schedule, there is no suit, action, proceeding or claim, at law or in equity, pending before any Governmental Entity, or, to the knowledge of the Company, threatened, against the Company or any of its Subsidiaries ("Litigation"), and neither the Company nor any of its Subsidiaries is a party to any Litigation, and the Company and its Subsidiaries have no knowledge of any facts that are likely to give rise to any Litigation, that, individually or in the aggregate, has or could reasonably be expected to (i) have a Material Adverse Effect, (ii) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (iii) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents, nor is there any Order of any Governmental Entity or arbitrator outstanding against the Company or any of its Subsidiaries which, individually or in the aggregate, has had or could reasonably be expected to have any effect referred to in clause (i), (ii) or (iii) above. (p) Certain Agreements. (i) Except as set forth in Schedule 3.1(p)(i) of the Company Disclosure Schedule or as included as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 or Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999, respectively, there are no (A) employment or consulting Contracts (unless such employment or consulting Contracts are terminable without liability or penalty on 30 days or less notice), (B) Contracts under which the Company or any of its Subsidiaries remains obligated to provide goods or services having -20- a value, or to make payments aggregating (for Debt or otherwise), in excess of $500,000 per year with respect to any one Contract, (C) other Contracts that are material to the Company and its Subsidiaries, taken as a whole, and (D) Contracts with Affiliates, in any such case, to which the Company or any Subsidiary is a party or to which the Company or any Subsidiary or their respective assets are bound (such Contracts included as exhibits to such Company SEC Documents or disclosed or required to be disclosed in Schedule 3.1(p)(i), collectively the "Material Contracts"). Each Material Contract is a valid and binding obligation of the Company or one of its Subsidiaries and, to the knowledge of the Company, of each party thereto other than the Company or its respective Subsidiary and is in full force and effect. (ii) The Company or the relevant Subsidiary and, to the knowledge of the Company, each other party to the Material Contracts, has performed in all material respects the obligations required to be performed by it under the Material Contracts and is not (with or without lapse of time or the giving of notice, or both) in breach or default thereunder in any material respect. (iii) Schedule 3.1(p)(iii) of the Company Disclosure Schedule identifies, as to each Material Contract, (A) whether the consent of the other party thereto is required, (B) whether notice must be provided to any party thereto (and the length of such notice) and (C) whether any payments are required (and the amount of such payments), in each case in order for such Material Contract to continue in full force and effect upon the consummation of the transactions contemplated by the Transaction Documents, and (D) whether such Material Contract can be canceled by the other party without liability to such other party due to the consummation of the transactions contemplated by the Transaction Documents. (iv) A complete copy of each written Material Contract has been made available to WIC prior to the date of this Agreement. Schedule 3.1(p)(iv) sets forth a written description of each oral Material Contract. (v) The Company has made available to WIC (A) true and correct copies of all loan or credit agreements, notes, bonds, mortgages, indentures and other agreements and instruments pursuant to which any Debt of the Company or any of its Subsidiaries is outstanding or may be incurred and (B) accurate information regarding the respective principal amounts currently outstanding thereunder. (q) Title. (i) Except as disclosed in the Company SEC Documents or set forth in Schedule 3.1(q)(i) of the Company Disclosure Schedule, the Company and its Subsidiaries have good and indefeasible title to all leasehold and other interests in oil, gas and other mineral properties owned by the Company or its Subsidiaries (the "Oil and Gas Properties"), which are necessary for the Company or its Subsidiaries to receive from the wells or units to be -21- located on the Oil and Gas Properties, except as has not had and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, a percentage of the oil, gas and other hydrocarbons produced from such well or unit equal to not less than the percentage set forth as the "Net Revenue Interest" in those portions of the Reserve Reports attributable thereto, without reduction, suspension, or termination throughout the productive life of each such lease, well or unit, free and clear of any Liens except for (A) Liens for taxes not yet due or with respect to matters being contested by the Company or a Subsidiary in good faith and for which adequate reserves are reflected in the Company SEC Documents, (B) Liens arising under operating agreements securing payments not yet due and payable and (C) other Liens that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The Company's or a Subsidiary's expense bearing interest in any well or unit shall be, except as has not had and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, no greater than the percentage set forth as the "Working Interest" for such well or unit in those portions of the Reserve Reports attributable thereto, without a corresponding and proportional increase in the Company's or such Subsidiary's Net Revenue Interest applicable thereto. To the knowledge of the Company, the underlying historical information used for preparation of the Reserve Reports was, at the time of delivery, true and correct in all material respects. (ii) Except as disclosed in the Company SEC Documents or set forth in Schedule 3.1(q)(ii) of the Company Disclosure Schedule, the Company and its Subsidiaries have good and indefeasible title to all real property and good and marketable title to all other material properties and assets owned by the Company or its Subsidiaries and good and valid leasehold interests in all properties and assets, real or personal, leased by them (in all cases excluding the Oil and Gas Properties, which are the subject of the representations and warranties in Section 3.1(q)(i)), in each case free and clear of any Liens except for (A) Liens for taxes not yet due or with respect to matters being contested by the Company or a Subsidiary in good faith and for which adequate reserves are reflected in the Company SEC Documents, (B) statutory Liens arising in connection with the ordinary course of business securing payments not yet due and payable and (C) other Liens that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (r) Taxes. Except as disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 or set forth in Schedule 3.1(r) of the Company Disclosure Schedule and except for matters that, individually or in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect: (i) Each of the Company and its Subsidiaries has timely filed, or has had filed on its behalf in a timely manner (within any applicable extension periods), with the appropriate taxing authority all Tax Returns with respect to Taxes of the Company and its Subsidiaries; -22- (ii) All Taxes due and payable with respect to the Company and its Subsidiaries have been paid in full or have been adequately provided for in the Company SEC Documents in accordance with GAAP; (iii) There are no outstanding agreements or waivers extending the statutory period of limitations applicable to any Tax Returns required to be filed by or with respect to the Company or any of its Subsidiaries; (iv) None of the Tax Returns of or with respect to the Company or any of its Subsidiaries is currently being audited or examined by any taxing authority and there is no action, suit, proceeding, audit or claim now pending (or, to the knowledge of the Company, proposed) against or with respect to the Company or any of its Subsidiaries in respect of any Tax where there is a reasonable possibility of an adverse determination; (v) No deficiency for any Taxes has been assessed with respect to the Company or any of its Subsidiaries that has not been abated or paid in full; (vi) There are no Liens for Taxes upon any property or asset of the Company or any of its Subsidiaries, except for Liens for Taxes not yet due or with respect to matters being contested by the Company or a Subsidiary in good faith and for which adequate reserves are reflected in the Company SEC Documents; (vii) Neither the Company nor any of its Subsidiaries has been a member of an affiliated, consolidated, combined or unitary group other than one of which the Company is the common parent; and (viii) Neither the Company nor any of its Subsidiaries is a party to any agreement providing for the allocation or sharing of Taxes with any entity that is not, directly or indirectly, a wholly-owned subsidiary of the Company. For purposes of this Agreement, (i) "Tax" means any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, license, withholding on amounts paid by the Company or any of its Subsidiaries, payroll, employment, excise, production, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest and/or any penalty, addition to tax or additional amount imposed by any taxing authority, and (ii) "Tax Return" means all returns, declarations, reports, estimates, information returns and statements required to be filed by or with respect to the Company or any of its Subsidiaries in respect of any Taxes. (s) Employee Benefit Matters. -23- (i) Schedule 3.1(s) of the Company Disclosure Schedule lists each of the following which is sponsored, maintained or contributed to by the Company or a Subsidiary, or with respect to which the Company or any Subsidiary may have any liability, for the benefit of the employees of the Company or a Subsidiary, former employees of the Company or a Subsidiary, directors of the Company or a Subsidiary, former directors of the Company or a Subsidiary or any agents, consultants or similar representatives providing services to or for the Company or a Subsidiary, whether or not terminated prior to the Closing Date: (A) each "employee benefit plan," as such term is defined in Section 3(3) of ERISA ("Plan"); and (B) each personnel policy, stock option plan, stock purchase plan, stock appreciation rights plan, phantom stock plan, collective bargaining agreement, bonus plan or arrangement, incentive award plan or arrangement, vacation policy, severance pay plan, policy or agreement, deferred compensation agreement or arrangement, executive compensation or supplemental income arrangement, consulting agreement, employment agreement, change in control agreement and each other employee benefit plan, agreement, arrangement, program, practice or understanding which is not described in Section 3.1(s)(i)(A) ("Benefit Arrangement"). (ii) The Company has made available and will furnish to WIC true, correct and complete copies of: (A) each of the Plans, related trusts, insurance or group annuity contracts and each other funding or financing arrangement relating to any Plan, including all amendments thereto; (B) with respect to each Plan required to file such report or furnish such description, the most recent Form 5500 and summary plan description; (C) all Benefit Arrangements (or descriptions thereof) (other than any consulting Contracts that are terminable without liability or penalty on 30 days or less notice); (D) the most recent actuarial valuation report for each Plan subject to Title IV of ERISA; and (E) the most recent determination letter from the IRS for each of the Plans intended to be qualified under Section 401 of the Code, and any outstanding determination letter application for such Plans. (iii) Except as set forth in Schedule 3.1(s) of the Company Disclosure Schedule and except for matters that, individually or in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect: (A) The Company and the Subsidiaries have substantially performed all obligations, whether arising by operation of Law or by contract, required to be performed by them in connection with the Plans and the Benefit Arrangements, and to the knowledge of the Company and the Subsidiaries there have been no defaults or violations by any other party to the Plans or Benefit Arrangements; (B) All reports and disclosures relating to the Plans required to be filed with or furnished to Governmental Entities, Plan participants or Plan beneficiaries -24- have been filed or furnished in accordance with applicable Law in a timely manner, and each Plan and Benefit Arrangement has been administered in substantial compliance with its governing documents; (C) Each of the Plans intended to be qualified under Section 401 of the Code satisfies the requirements of such Section and has received a favorable determination letter from the IRS regarding such qualified status and has not, since receipt of the most recent favorable determination letter, been amended or, to the knowledge of the Company or any Subsidiary, operated in a way which would adversely affect such qualified status; (D) Each Plan and Benefit Arrangement has been administered in material compliance with its terms, the applicable provisions of ERISA, the Code and all other applicable Laws and the terms of all applicable collective bargaining agreements; (E) There are no actions, suits or claims pending (other than routine claims for benefits) or, to the knowledge of the Company or any Subsidiary, threatened against (or any basis therefor), or with respect to, any of the Plans or Benefit Arrangements or their assets; (F) All contributions required to be made by the Company or a Subsidiary to the Plans pursuant to their terms and provisions have been made timely; (G) No Plan is subject to Title IV of ERISA or is a multiemployer plan, as defined in Section 4001(a)(3) of ERISA; (H) As to any Plan intended to be qualified under Section 401 of the Code, there has been no termination or partial termination of the Plan within the meaning of Section 411(d)(3) of the Code; (I) No act, omission or transaction has occurred which would result (directly or indirectly through any indemnification agreement) in imposition on the Company or any Subsidiary of (1) breach of fiduciary duty liability damages under Section 409 of ERISA, (2) a civil penalty assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA or (3) a Tax imposed pursuant to Chapter 43 of Subtitle D of the Code; (J) To the knowledge of the Company and the Subsidiaries, there is no matter pending (other than routine qualification determination filings) with respect to any of the Plans before the IRS, the Department of Labor or the Pension Benefit Guaranty Corporation; -25- (K) Each trust funding a Plan, which trust is intended to be exempt from federal income taxation pursuant to Section 501(c)(9) of the Code, satisfies the requirements of such Section and has received a favorable exemption letter from the IRS regarding such exempt status and has not, since receipt of the most recent favorable exemption letter, been amended or operated in a way which would materially adversely affect such exempt status; (L) Each Plan that is subject to Section 414(l) of the Code is a separate plan (within the meaning of Section 414(l) of the Code) of the Company or a Subsidiary; and (M) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not (1) require the Company or a Subsidiary to make a larger contribution to, or pay greater benefits under, any Plan or Benefit Arrangement than would otherwise be required or (2) create or give rise to any additional vested rights or service credits under any Plan or Benefit Arrangement. (iv) Except as set forth in Schedule 3.1(s) of the Company Disclosure Schedule, neither the Company nor any Subsidiary is a party to any agreement, nor has it established any policy or practice, requiring it to make a payment or provide any other form of compensation or benefit to any Person performing services for the Company or any Subsidiary upon termination of such services which would not be payable or provided in the absence of the consummation of the transactions contemplated by this Agreement. (v) Except as set forth in Schedule 3.1(s) of the Company Disclosure Schedule, no payments have been or are expected to be made under the Plans and Benefit Arrangements which, in the aggregate, would result in all or part of such payments not being deductible by the payor under Section 280G or 162(m) of the Code. (vi) Except as set forth in Schedule 3.1(s) of the Company Disclosure Schedule, neither the Company nor any Subsidiary is a party to or bound by any severance agreement involving $50,000 or more with respect to any one Person. (vii) Except as set forth in Schedule 3.1(s) of the Company Disclosure Schedule, (1) no Plan or Benefit Arrangement provides retiree medical or retiree life insurance benefits to any Person and neither the Company nor any Subsidiary is contractually or otherwise obligated (whether or not in writing) to provide any Person with life insurance or medical benefits upon retirement or termination of employment, other than as required by the provisions of Sections 601 through 608 of ERISA and Section 4980B of the Code and (2) each Plan and Benefit Arrangement may be unilaterally terminated at any time by the Company or a Subsidiary without material liability, other than liability for benefits already accrued as of the date of such termination. -26- (viii) Except as set forth in Schedule 3.1(s) of the Company Disclosure Schedule, no Plan or Benefit Arrangement provides that payments pursuant to such Plan or Benefit Arrangement may be made in securities of the Company or a Subsidiary, nor does any trust maintained pursuant to any Plan or Benefit Arrangement hold any securities of the Company or a Subsidiary. (t) Employees. Schedule 3.1(t) of the Company Disclosure Schedule sets forth by number and employment classification the approximate numbers of employees employed by the Company and its Subsidiaries as of the date of this Agreement. None of said employees is subject to union or collective bargaining agreements with the Company or a Subsidiary. Except as set forth in Schedule 3.1(t) of the Company Disclosure Schedule, the Company and its Subsidiaries have not at any time on or after January 1, 1998 had or, to the knowledge of the Company, been threatened with any work stoppages or other labor disputes or controversies with respect to its employees. (u) Labor Matters. Except as set forth in Schedule 3.1(u) of the Company Disclosure Schedule or disclosed in the Company SEC Documents: (i) Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or other current labor agreement with any labor union or organization, and there is no current union representation question involving employees of the Company or any of its Subsidiaries, nor does the Company or any of its Subsidiaries know of any activity or proceeding of any labor organization (or representative thereof) or employee group (or representative thereof) to organize any such employees; (ii) There is no unfair labor practice charge or grievance arising out of a collective bargaining agreement or other grievance procedure against the Company or any of its Subsidiaries pending, or, to the knowledge of the Company, threatened, that, individually or in the aggregate, has or could reasonably be expected to (A) have a Material Adverse Effect, (B) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (C) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents; (iii) There is no complaint, lawsuit or proceeding in any forum by or on behalf of any present or former employee, any applicant for employment or any classes of the foregoing alleging breach of any express or implied contract of employment, any Law governing employment or the termination thereof or other discriminatory, wrongful or tortious conduct in connection with the employment relationship against the Company or any of its Subsidiaries pending, or, to the knowledge of the Company, threatened, that, individually or in the aggregate, has or could reasonably be expected to (A) have a Material Adverse Effect, (B) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (C) delay in any material respect or -27- prevent the consummation of any of the transactions contemplated by any of the Transaction Documents; (iv) There is no strike, dispute, slowdown, work stoppage or lockout pending, or, to the knowledge of the Company, threatened, against or involving the Company or any of its Subsidiaries that, individually or in the aggregate, has or could reasonably be expected to (A) have a Material Adverse Effect, (B) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (C) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents; (v) The Company and its Subsidiaries are in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, wages, hours of work and occupational safety and health, except for non-compliance that, individually or in the aggregate, has not and could not reasonably be expected to (A) have a Material Adverse Effect, (B) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (C) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents; and (vi) There is no proceeding, claim, suit, action or governmental investigation pending or, to the knowledge of the Company, threatened, in respect to which any current or former director, officer, employee or agent of the Company or any of its Subsidiaries is or may be entitled to claim indemnification from the Company or any of its Subsidiaries pursuant to the Certificate of Incorporation or Bylaws of the Company or any provision of the comparable charter or organizational documents of any of its Subsidiaries, as provided in any indemnification agreement to which the Company or any Subsidiary is a party or pursuant to applicable Law that, individually or in the aggregate, has or could reasonably be expected to (A) have a Material Adverse Effect, (B) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (C) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. (v) Intangible Property. The Company and its Subsidiaries possess or have adequate rights to use all material trademarks, trade names, patents, trade secrets, service marks, brand marks, brand names, computer programs, databases, industrial designs and copyrights necessary for the operation of the businesses of each of the Company and its Subsidiaries as such businesses have been conducted during the three-year period prior to the date hereof (collectively, the "Intangible Property"), except where the failure to possess or have adequate rights to use such properties, individually or in the aggregate, has not and could not reasonably be expected to (i) have a Material Adverse Effect, (ii) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (iii) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. All -28- of the Intangible Property is owned or licensed by the Company or its Subsidiaries free and clear of any and all Liens, except those that, individually or in the aggregate, have not and could not reasonably be expected to (i) have a Material Adverse Effect, (ii) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (iii) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents, and neither the Company nor any such Subsidiary has forfeited or otherwise relinquished any Intangible Property which forfeiture, individually or in the aggregate, has had or could reasonably be expected to have any effect referred to in clause (i), (ii) or (iii) above. To the knowledge of the Company, the use of the Intangible Property by the Company or its Subsidiaries does not, in any material respect, conflict with, infringe upon, violate or interfere with or constitute an appropriation of any right, title, interest or goodwill, including any intellectual property right, trademark, trade name, patent, trade secret, service mark, brand mark, brand name, computer program, database, industrial design, copyright or any pending application therefor of any other Person. Neither the Company nor any of its Subsidiaries has received any notice of any claim or otherwise knows that any of the Intangible Property is invalid or conflicts with the asserted rights of any other Person or has been used or enforced or has failed to have been used or enforced in a manner that would result in the abandonment, cancellation or unenforceability of any of the Intangible Property, except for any such conflict, infringement, violation, interference, claim, invalidity, abandonment, cancellation or unenforceability that, individually or in the aggregate, has not and could not reasonably be expected to (i) have a Material Adverse Effect, (ii) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (iii) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. (w) Environmental Matters. For purposes of this Agreement: (A) "Environmental Laws" means all federal, state and local laws (including common laws), rules, regulations, ordinances, orders and decrees of any Governmental Entity, whether now in existence or hereafter enacted and in effect at the time of Closing, relating to pollution or the protection of health, safety, ecology or the environment of any jurisdiction in which the Company or any of its Subsidiaries owns or operates assets or conducts business or owned or operated assets or conducted business (whether or not through a predecessor entity) (including ambient air, surface water, groundwater, land surface, subsurface strata, natural resources or wildlife), including but not limited to laws and regulations relating to Releases or threatened Releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of solid waste or Hazardous Materials, and any similar laws, rules, regulations, ordinances, orders and decrees of any foreign jurisdiction in which the Company or any of its Subsidiaries owns or operates assets or conducts business; (B) "Hazardous Materials" means (x) any radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, -29- polychlorinated biphenyls or transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls, (y) any chemicals, materials or substances which are now defined as or included in the definition of "solid wastes," "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous substances," "restricted hazardous wastes," "toxic substances" or "toxic pollutants," or words of similar import, under any Environmental Law and (z) any other chemical, material, substance or waste, exposure to which is now prohibited, limited or regulated under any Environmental Law in a jurisdiction in which the Company or any of its Subsidiaries operates (for purposes of this Section 3.1(w)). (C) "Release" means any spill, effluent, emission, leaking, pumping, pouring, emptying, escaping, dumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, or into or out of any property owned, operated or leased by the Company or its Subsidiaries; and (D) "Remedial Action" means all actions, including any capital expenditures, required by a Governmental Entity or required under any Environmental Law, or voluntarily undertaken to (w) clean up, restore, remove, treat or in any other way ameliorate or address the presence or effect of any Hazardous Materials or other substance in the indoor or outdoor environment; (x) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Material so it does not endanger or threaten to endanger the public or employee health or welfare of the indoor or outdoor environment; (y) perform pre-remedial studies and investigations or post-remedial monitoring and care pertaining or relating to a Release; or (z) bring the Company or its Subsidiaries into compliance with any Environmental Law. Except as disclosed in the Company SEC Documents or set forth in Schedule 3.1(w) of the Company Disclosure Schedule: (i) The operations of the Company and its Subsidiaries have been conducted and are in compliance with all Environmental Laws, except where the failure to so comply, individually or in the aggregate, has not and could not reasonably be expected to (A) have a Material Adverse Effect, (B) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (C) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents; (ii) The Company and its Subsidiaries have obtained all permits, licenses and registrations, or applications relating thereto, and have made all filings, reports and notices required under applicable Environmental Laws for the continued operations of their respective businesses, except such matters the lack or failure of which, individually or in the aggregate, has not and could not reasonably be expected to (A) have a Material Adverse -30- Effect, (B) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (C) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents; (iii) The Company and its Subsidiaries are not subject to any outstanding written orders issued by, or contracts with, any Governmental Entity or other Person respecting (A) Environmental Laws, (B) Remedial Action, (C) any Release or threatened Release of a Hazardous Material or petroleum or petroleum products or (D) an assumption of responsibility for environmental liabilities of another Person, except such orders or contracts the compliance with which, individually or in the aggregate, has not and could not reasonably be expected to (x) have a Material Adverse Effect, (y) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (z) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents; (iv) The Company and its Subsidiaries have not received any written communication alleging, nor are aware of any facts that may reasonably indicate, a violation of or liability under any Environmental Law, which violation or liability, individually or in the aggregate, could or could reasonably be expected to (A) have a Material Adverse Effect, (B) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (C) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents; (v) To the knowledge of the Company, neither the Company nor any of its Subsidiaries has any contingent liability in connection with any existing Release of any Hazardous Material or petroleum or petroleum products into the indoor or outdoor environment (whether on-site or off- site) or employee or third party exposure to Hazardous Materials that, individually or in the aggregate, has or could reasonably be expected to (A) have a Material Adverse Effect, (B) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (C) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents; (vi) The operations of the Company or its Subsidiaries involving the generation, transportation, treatment, storage, recycling, reclaiming or disposal of hazardous or solid waste, as defined and regulated under 40 C.F.R. Parts 260-270 (in effect as of the date of this Agreement) or any applicable state equivalent, are in compliance with applicable Environmental Laws, except where the failure to so comply, individually or in the aggregate, has not and could not reasonably be expected to (A) have a Material Adverse Effect, (B) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect, or (C) delay in any material respect or prevent the -31- consummation of any of the transactions contemplated by any of the Transaction Documents; and (vii) There is not now on or in any property of the Company or any Subsidiary or, to the knowledge of the Company, any property for which the Company or any Subsidiary is potentially liable, any of the following: (A) any underground storage tanks or surface impoundments or (B) any on-site disposal of Hazardous Material, any of which ((A) or (B) preceding), individually or in the aggregate, has or could reasonably be expected to (x) have a Material Adverse Effect, (y) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (z) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. The effect of all material and immaterial inaccuracies in the underlying statements contained in the foregoing clauses (i) through (vii), if individually would not and would not reasonably be expected to (x) have a Material Adverse Effect, (y) impair the ability of the Company to perform its obligations under any of the Transaction Documents in any material respect or (z) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents, would not in the aggregate do so. (x) Insurance. The Company and its Subsidiaries maintain insurance in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to those of the Company and its Subsidiaries (taking into account the cost and availability of such insurance). Schedule 3.1(x) of the Company Disclosure Schedule sets forth a schedule of the Company's and each of its Subsidiaries' directors' and officers' liability insurance. (y) No Brokers or Finders. Schedule 3.1(y) of the Company Disclosure Schedule sets forth any engagement letter or similar arrangement with any agent, broker, finder or investment or commercial banker that is applicable to the transactions contemplated by this Agreement. Except as set forth in Schedule 3.1(y) of the Company Disclosure Schedule, no agent, broker, finder, investment or commercial banker or other Person engaged by or acting on behalf of the Company in connection with the negotiation, execution or performance of this Agreement is or will be entitled to any brokerage or finder's or similar fee or other commission as a result of this Agreement. (z) Oil and Gas Operations. In those instances in which the Company or a Subsidiary serves as operator of a well that is currently a producing well or undergoing drilling operations, it has drilled and completed (if applicable) such well, and operated and produced such well, in accordance with generally accepted oil and gas field practices and in compliance in all material respects with applicable oil and gas leases and all applicable Laws, except where any failure or violation could not reasonably be expected to have a Material Adverse Effect. All proceeds from the sale of oil, gas and other hydrocarbons produced by the Company or a Subsidiary are being received by the Company or such Subsidiary in a timely manner and are not being held in suspense -32- for any reason (except for amounts, individually or in the aggregate, not in excess of $500,000 and held in suspense in the ordinary course of business). (aa) Marketing of Production. Except for Contracts included as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 or Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999, respectively, or in Schedule 3.1(p) of the Company Disclosure Schedule (with respect to all of which Contracts the Company represents that, to the knowledge of the Company, it or its Subsidiaries are receiving a price for all production sold thereunder which is computed in accordance with the terms of the relevant Contract), there exist no Material Contracts for the sale of the Company's or any Subsidiary's production from the leasehold and other interests in the Oil and Gas Properties other than (i) Contracts pertaining to the sale of production at a price equal to or greater than a price that is the market price from time to time existing in the areas where the Oil and Gas Properties subject to such agreement or arrangement are located and (ii) Contracts that are cancelable on 30 days notice or less without penalty or detriment. (bb) Prepayments. Except as set forth in Schedule 3.1(bb) of the Company Disclosure Schedule, neither the Company nor any Subsidiary is obligated, by virtue of a prepayment arrangement, make-up right under a production sales Contract containing a "take or pay" or similar provision, production payment or any other arrangement, to deliver hydrocarbons, or proceeds from the sale thereof, attributable to any of the Oil and Gas Properties at some future time without then or thereafter being entitled to receive payment of the contract price therefor. The representations and warranties contained in this Section 3.1(bb) are not meant to apply to matters relating to gas imbalances, which are exclusively covered in Section 3.1(cc). (cc) Gas Imbalances. Schedule 3.1(cc) of the Company Disclosure Schedule sets forth, as of December 31, 1998, each gas imbalance and the aggregate, net gas imbalance position of the Company and its Subsidiaries. Except as disclosed in the Company SEC Documents or as set forth in Schedule 3.1(cc) of the Company Disclosure Schedule, neither the Company nor any Subsidiary has (i) any obligation to deliver gas from the Oil and Gas Properties (or cash in lieu thereof) to other owners of interests in those properties as a result of past production by the Company, any Subsidiary or any of their predecessors in excess of the share to which they were entitled nor (ii) any right to receive deliveries of gas from the Oil and Gas Properties (or cash in lieu there) from other owners of interests in those properties as a result of past production by the Company, any Subsidiary or any of their predecessors of less than the share to which they were entitled, in either case where the amount of any such gas imbalance would exceed $100,000. Any change in the aggregate, net gas imbalance position of the Company and its Subsidiaries as of December 31, 1999 from such position as of December 31, 1998 will not have a Material Adverse Effect. (dd) Customers and Suppliers. None of the current customers or suppliers of the Company or its Subsidiaries has refused, or communicated in writing to the Company or any Subsidiary that it will or may refuse, to purchase or supply products or services from or to the Company or its Subsidiaries or has communicated in writing to the Company or any Subsidiary that -33- it will or may substantially reduce the amount of production, goods or services that it is willing to purchase from or supply to the Company or its Subsidiaries, where any such refusal or reduction would have a Material Adverse Effect. (ee) Reserve Reports. The Company acknowledges and agrees that WIC has been provided with true and complete copies of the Reserve Reports. (ff) Nonconsent Operations. Except as set forth in Schedule 3.1(ff) of the Company Disclosure Schedule, there are no operations on the Oil and Gas Properties in which the Company or any Subsidiary has elected not to participate. (gg) Year 2000 Problem. The Company and its Subsidiaries have reviewed the areas within their business and operations (including computer software and hardware) which could be adversely affected by, and have developed or are developing programs to address on a timely basis, any "Year 2000 Problem" (that is, the risk that computer hardware or software used by the Company and its Subsidiaries may be unable to recognize and perform properly date-sensitive functions involving certain dates prior to and any dates after December 31, 1999). Based on such review and programs, the Company reasonably believes that any such "Year 2000 Problem" substantially caused by its business or operations will not, individually or in the aggregate, have, and no such problem or problems has had, a Material Adverse Effect. (hh) NYSE. The Company has not received any notification from the NYSE that it fails to meet the NYSE's minimum listing requirements for continued listing, nor does the Company have knowledge of any basis for such a notification. (ii) Hedging. Except as set forth in Schedule 3.1(ii) of the Company Disclosure Schedule, as of the date of this Agreement, neither the Company nor any of its Subsidiaries is bound by futures, hedge, swap, collar, put, call, floor, cap, option or other similar contracts that are intended to benefit from or reduce or eliminate the risk of fluctuations in the price of commodities, including hydrocarbons, or securities (each such contract herein called a "Hedge" and such activities herein called "Hedging"). (jj) Agreement and Irrevocable Proxy. The Company has obtained from each of its directors and executive officers and delivered to WIC an Agreement and Irrevocable Proxy. (kk) Supplemental Information Regarding the HSR Act. Except for certain assets of the Company or its Subsidiaries that neither the aggregate fair market value nor the aggregate book value of which exceed $15,000,000 in the aggregate, all assets of the Company and its Subsidiaries consist of "reserves of oil, natural gas, shale or tar sands, or rights to reserves of oil, natural gas, shale or tar sands, together with associated exploration or production assets" within the meaning of 16 C.F.R. (S) 802.3. -34- Section 3.2 Representations and Warranties of WIC and Purchaser. Each of WIC and Purchaser represents and warrants to the Company (but only as to itself and not as to any other party) as follows: (a) Organization, Standing and Power. WIC is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite limited liability company power and authority to carry on its business as now being conducted. Purchaser is a corporation, partnership or limited liability company, as the case may be, duly organized, validly existing and in good standing under the laws of the state of its formation, and has the requisite corporate, partnership or limited liability company power and authority to carry on its business as now being conducted. (b) Authority; No Violations; Approvals. (i) Each of WIC and Purchaser has approved the Transaction Documents to which it is a party and the transactions contemplated thereby. WIC has all requisite limited liability company power and authority, and Purchaser has all requisite corporate, partnership or limited liability company, as the case may be, power and authority, to enter into the Transaction Documents to which it is a party and to consummate the transactions contemplated thereby. The execution and delivery of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby have been duly authorized by all necessary limited liability company action on the part of WIC and all necessary corporate, partnership or limited liability company, as the case may be, action on the part of Purchaser. This Agreement has been, and at the Closing and at any Option Closings, as applicable, the other Transaction Documents to which it is a party will be, duly executed and delivered by WIC and Purchaser and, assuming this Agreement and the other Transaction Documents constitute the valid, binding and enforceable obligations of the Company, constitute valid and binding obligations of WIC and Purchaser enforceable in accordance with their respective terms, subject, as to enforceability, to bankruptcy, insolvency, reorganization, moratorium and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (ii) The execution and delivery of this Agreement and the other Transaction Documents does not, and the consummation of the transactions contemplated hereby and thereby and compliance with the provisions hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any material obligation or to the loss of a material benefit under, or give rise to a right of purchase or "put" right under, or result in the creation of any Lien upon any of the properties or assets of WIC or Purchaser under, any provision of (A) the organizational documents of WIC or Purchaser, (B) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement to which WIC or Purchaser is a party or is otherwise bound or any existing Approval -35- applicable to WIC or Purchaser or (C) assuming the Approvals referred to in Section 3.2(b)(iii) are duly and timely obtained or made, any Law applicable to WIC or Purchaser or any of their respective properties or assets, other than, in the case of clause (B) or (C), any such conflicts, violations, defaults, rights, losses, Liens or Laws that, individually or in the aggregate, have not and could not reasonably be expected to (x) have a material adverse effect on WIC or Purchaser, (y) impair the ability of WIC or Purchaser to perform its obligations under any of the Transaction Documents in any material respect or (z) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. (iii) No Approval of or from any Governmental Entity is required by or with respect to WIC or Purchaser in connection with the execution and delivery of this Agreement or any other Transaction Document by WIC or Purchaser or the consummation by WIC or Purchaser of the transactions contemplated hereby or thereby, except for: (A) the filing of a notification report by WIC and Purchaser under the HSR Act and the expiration or termination of the applicable waiting period with respect thereto; and (B) any such Approvals the failure of which to be made or obtained has not and could not reasonably be expected to (1) impair the ability of WIC or Purchaser to perform its obligations under any of the Transaction Documents in any material respect or (2) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. (c) Information Supplied. None of the information furnished by WIC or Purchaser in writing for inclusion in the Proxy Statement and which is so included in the Proxy Statement will, at the date mailed to stockholders of the Company or at the time of the Stockholders' Meeting or as of the Closing, contain any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact or omit to state any material fact necessary in order to make the statements therein not false or misleading. (d) Litigation. There is no claim, action, suit, inquiry or judicial or administrative proceeding pending or, to the knowledge of WIC or Purchaser, threatened against WIC or Purchaser that could reasonably be expected to (i) impair the ability of WIC or Purchaser to perform its obligations under any of the Transaction Documents in any material respect or (ii) delay in any material respect or prevent the consummation of any of the transactions contemplated by any of the Transaction Documents. (e) Investment Intent. The Preferred Shares, the Warrants and the Underlying Common Shares to be acquired by WIC or Purchaser are being acquired for its own account for investment and with no intention of distributing or reselling such Preferred Shares, Warrants or Underlying Common Shares or any part thereof or interest therein in any transaction which would be in violation of any applicable Laws. -36- (f) WIC and Purchaser Status. WIC and Purchaser represent and warrant to and covenant and agree with the Company that (i) at the time WIC and Purchaser were offered the Preferred Shares and the Warrants, each of them was, (ii) at the date of execution of this Agreement, WIC is and (iii) at the Closing Date and at any Option Closing Dates, as applicable, each of them will be, an accredited investor as defined in Rule 501(a) under the Securities Act. (g) No Brokers or Finders. No agent, broker, finder, investment or commercial banker or other Person engaged by or acting on behalf of WIC, Purchaser or their Affiliates in connection with the negotiation, execution or performance of this Agreement is or will be entitled to any brokerage or finder's or similar fee or other commission as a result of this Agreement, other than any such fees or commissions as to which WIC and Purchaser shall have full responsibility. (h) Access to Information. WIC and Purchaser represent and acknowledge that they (i) have had access to and the opportunity to review the Company's properties, assets, financial statements, contracts and other books and records and have made such investigation with respect thereto as they deem necessary to enter into the transactions contemplated hereby, (ii) have been afforded the opportunity to ask appropriate representatives of the Company questions concerning the business, assets, financial condition and prospects of the Company and (iii) have been solely responsible for their own due diligence investigation of the Company and its business, for their own analysis of the merits and risks of an investment in the Preferred Shares, the Warrants and the Underlying Common Shares, and for their own analysis of the terms of an investment in the Preferred Shares, the Warrants and the Underlying Common Shares. Nothing contained in this Section 3.2(h) shall in any way limit the representations and warranties of the Company set forth in this Agreement or the rights of WIC and Purchaser with respect to any breach of such representations and warranties. (i) No Other Shares. Except for such rights as are conferred on WIC and Purchaser by the Transaction Documents, neither WIC, Purchaser nor any of their Affiliates beneficially owns, directly or indirectly, any shares of capital stock of the Company. ARTICLE IV COVENANTS Section 4.1 Stockholder Approval; Proxy Statement. (a) The Company shall take all actions necessary in accordance with the Certificate of Incorporation, the Bylaws, the rules of the NYSE and other applicable Law to call a meeting of its stockholders (the "Stockholders' Meeting") to be held as promptly as practicable after the date hereof for the purpose of approving the Preferred Share Issuance, the Warrant Issuance and the Restated Certificate. The Company, WIC and Purchaser shall consult and cooperate with each other in connection with the Stockholders' Meeting. Subject to the provisions of Section 4.1(b), the Company shall cause the Board (i) not to withdraw, modify or change its recommendation that the Company's stockholders approve the Preferred Share Issuance, the Warrant Issuance and the -37- Restated Certificate and (ii) to continue to recommend to the stockholders of the Company the approval of such matters. As promptly as practicable after the execution of this Agreement, the Company shall prepare and file with the SEC the Proxy Statement with respect to the approval by the Company's stockholders of the Preferred Share Issuance, the Warrant Issuance and the Restated Certificate, which Proxy Statement shall contain the Board's recommendation that the Company's stockholders approve the Preferred Share Issuance, the Warrant Issuance and the Restated Certificate. As promptly as practicable after the clearance of the Proxy Statement by the SEC (but not earlier than the Financing Commitment Date, unless WIC and Purchaser have previously delivered to the Company the Commitment Letter), the Company shall mail the Proxy Statement to its stockholders of record at least 20 calendar days prior to the Stockholders' Meeting and shall from and after such mailing, unless the Board has taken the action permitted to be taken by it pursuant to the provisions of Section 4.1(b), use its reasonable best efforts to solicit and obtain the Requisite Votes of the stockholders of the Company with respect to approval of the Preferred Share Issuance, the Warrant Issuance and the Restated Certificate. The Company, WIC and Purchaser shall cooperate with each other in preparing the Proxy Statement, and the Company, WIC and Purchaser shall each use its reasonable best efforts to obtain and furnish as promptly as reasonably practicable the information required to be included in the Proxy Statement. The Company, WIC and Purchaser each agrees promptly to correct any information provided by it for use in the Proxy Statement if and to the extent that such information shall have become false or misleading in any material respect, and the Company further agrees to take all steps necessary to cause the Proxy Statement as so corrected to be filed with the SEC and to be disseminated promptly to its stockholders, in each case as and to the extent required by applicable Law. (b) Notwithstanding anything contained in this Agreement to the contrary, the Board may at any time prior to the Closing withdraw, modify or change any recommendation and declaration regarding the Transaction Documents and the transactions contemplated thereby, or approve, recommend or declare advisable any Alternative Transaction Proposal, if and only if, after receipt of a Superior Proposal, in the good faith opinion of the Board, after consultation with its outside legal counsel, the failure to so withdraw, modify or change its recommendation and declaration or the failure to so approve, recommend or declare advisable any Alternative Transaction Proposal will be inconsistent with the Board's fiduciary obligations under applicable Law. Section 4.2 NYSE Listing. The Company shall submit a listing application to the NYSE with respect to the Underlying Common Shares as promptly as practicable after the date hereof, and WIC and Purchaser shall be entitled to review and comment on such listing application and the submission of any other materials to the NYSE in connection with the listing of the Underlying Common Shares. The Company shall use its reasonable best efforts to cause the Underlying Common Shares to be approved for listing on the NYSE, subject to official notice of issuance. Section 4.3 Affirmative Covenants of the Company. The Company hereby covenants and agrees that, until the earlier of the Closing or the termination of this Agreement, except as set forth in Schedule 4.3 of the Company Disclosure Schedule, or unless otherwise expressly contemplated -38- by the Transaction Documents or consented to in writing by WIC and Purchaser (such consent not to be unreasonably withheld), the Company will and will cause each of its Subsidiaries to: (a) operate its business in the usual and ordinary course consistent with past practice; (b) use all reasonable efforts to preserve substantially intact its business organization, maintain its rights and franchises, retain the services of its respective officers and key employees and maintain its relationships with its respective customers and suppliers; (c) use all reasonable efforts to maintain and keep its properties and assets in as good a repair and condition as at present, ordinary wear and tear excepted, and use commercially reasonable efforts to maintain supplies and inventories in quantities consistent with its customary business practices; (d) use all reasonable efforts to keep in full force and effect insurance and bonds comparable in amount and scope of coverage to that currently maintained; (e) consult and cooperate with WIC in an effort to develop a mutually acceptable Hedging strategy for the Company effective upon the Closing; and (f) consult with WIC with respect to the advisability of amending or replacing the Credit Facility and cooperate in all reasonable respects with WIC in connection with any discussions between WIC and existing and potential lenders with respect thereto. Section 4.4 Negative Covenants of the Company. Except as expressly contemplated by the Transaction Documents or otherwise consented to in writing by WIC and Purchaser (such consent not to be unreasonably withheld) or as set forth in Schedule 4.4 of the Company Disclosure Schedule, from the date of this Agreement until the earlier of the Closing or the termination of this Agreement, the Company shall not do, and shall not permit any of its Subsidiaries to do, any of the following: (a) acquire, by merging or consolidating with, by purchasing an equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire any assets of any other Person (other than the purchase of assets in the ordinary course of business and consistent with past practice); (b) sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose of any of its assets, except for pledges or dispositions of assets in the ordinary course of business and consistent with past practice; (c) adopt or propose to adopt any amendments to the Company's Certificate of Incorporation or Bylaws; reclassify any shares of the Company's capital stock; adopt resolutions -39- authorizing a liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any Subsidiary; or make any other material changes in the Company's capital structure; (d) (i) change in any material respect any method of accounting or accounting practice, (ii) make or rescind any express or deemed election relating to Taxes, settle or compromise any Litigation, audit or controversy relating to Taxes, or change any of its methods of reporting income or deductions for federal or other income Tax purposes from those employed in the preparation of the federal or other income Tax Returns or other Tax Returns for the taxable year ended December 31, 1998, except, in the case of either clause (i) or clause (ii), as may be required by Law or GAAP or (iii) file any material amended Tax Return; (e) incur any Debt, whether or not evidenced by a note, bond, debenture or similar instrument or under any financing lease, whether pursuant to a sale-and- leaseback transaction or otherwise, other than (i) Hedging in the ordinary course and consistent with past practice, (ii) other Debt (which may include obligations under letters of credit or similar facilities obtained by the Company to secure its Hedging activities) not to exceed $2,000,000 in the aggregate at any time outstanding and (iii) other obligations and liabilities incurred in the ordinary course and consistent with past practice; (f) make any loans or advances to any Person, other than (i) advances to employees in the ordinary and usual course of business not to exceed $10,000 in the aggregate at any time outstanding and (ii) transactions among or between the Company and its Subsidiaries with respect to cash management conducted in the ordinary and usual course of the Company's business; (g) declare or pay any dividend or make any other distribution with respect to its capital stock, other than dividends paid by any Subsidiary to the Company or another Subsidiary in the ordinary and usual course of the Company's or such Subsidiary's business; (h) issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any of its capital stock or other securities except (i) pursuant to the Company Options, (ii) for awards granted automatically under or granted pursuant to elections made by participants under the Stock Plans after the date hereof or (iii) pursuant to the awards described in clause (ii); or purchase or otherwise acquire any of its capital stock, employee or director stock options, warrants or other equity securities or debt securities; (i) enter into, adopt or (except as may be required by Law) amend or terminate any collective bargaining agreement, Plan or Benefit Arrangement; approve or implement any employment severance arrangements (provided that this covenant shall not prohibit payments made in accordance with the Company's or a Subsidiary's severance policy as in effect on the date hereof and set forth on Schedule 3.1(s) of the Company Disclosure Schedule), authorize, enter into or amend any employment, severance, consulting services or other agreement with any officers or -40- executive management personnel; or change the compensation or benefits provided to any director, officer or (except in the ordinary and usual course of business) employee as of the date hereof; (j) materially amend, terminate or fail to use all commercially reasonable efforts to renew any Material Contract (provided that the Company or its Subsidiaries shall not be required to renew any Material Contract on terms that are less favorable to the Company or its Subsidiaries), or default in any material respect (or take or omit to take any action that, with or without the giving of notice or passage of time, would constitute a material default) under any Material Contract; (k) waive any material right relating to the Oil and Gas Properties that would not be waived by a reasonably prudent operator; (l) release or abandon any of the Oil and Gas Properties, except in the ordinary course of business; (m) convey, farmout or otherwise dispose of any interest in the Oil and Gas Properties or any part thereof, except in the ordinary course of business; (n) with respect to the period commencing on the date hereof and ending on December 31, 1999 and with respect to each three-month period thereafter, engage in any material operations, or series of related operations, on any Oil and Gas Properties that the Company or a Subsidiary has not previously committed to and that may be expected to cost the Company or a Subsidiary during such period in excess of $5,000,000 in the aggregate (except for emergency operations, in which case the Company will promptly notify WIC of such operations), except in the ordinary course of business; (o) enter into any Hedge, except in the ordinary course of business and consistent with past practice; (p) except in the ordinary course of business and consistent with past practice, enter into, assign, terminate or amend, in any material respect, any Material Contract or any other contract or agreement by which the Oil and Gas Properties are bound; or (q) agree in writing or otherwise to do any of the foregoing. Section 4.5 Reasonable Best Efforts; Financing. (a) The Company, WIC and Purchaser each agree to cooperate and use their reasonable best efforts to obtain (and will promptly prepare all registrations, filings and applications, requests and notices preliminary to) all Approvals that may be necessary or reasonably requested by the Company, WIC or Purchaser to consummate the transactions contemplated by this Agreement and the other Transaction Documents. -41- (b) WIC and Purchaser shall use their reasonable best efforts (i) to obtain for Purchaser debt or equity financing or other funds in an aggregate amount sufficient to consummate the purchase of the Preferred Shares in accordance with Section 2.1 (the "Financing") and (ii) in connection therewith, to deliver to the Company by the Financing Commitment Date a commitment letter (the "Commitment Letter") from WIC and Purchaser pursuant to which WIC and Purchaser represent and warrant to the Company that they have obtained the Financing or have received conditional assurances from other parties regarding the Financing, and that based upon such assurances they believe in good faith that they will be able to deliver the Financing by the Closing Date. Such representations and warranties shall be deemed to be representations and warranties made by WIC and Purchaser (including any Persons that have or thereafter become permitted assignees under Section 9.12) under Section 3.2. For purposes of this Agreement, the "Financing Commitment Date" means the later of (i) the 75th day following the date of this Agreement and (ii) the date the Proxy Statement has been cleared by the SEC for delivery to the Company's stockholders (either by written or oral notification to such effect delivered to the Company or its representative or as a result of the passage of time following the filing of preliminary proxy materials in accordance with the SEC's proxy rules) (it being understood and agreed that such clearance shall be deemed to have been obtained for purposes of this definition if all comments (if any) of the SEC regarding the Proxy Statement have been resolved and all disclosures therein finalized other than those relating to the status of the Financing, the identity of Purchaser and the time of the Stockholders' Meeting); provided, however, that the provisions of clause (ii) of this sentence shall operate to extend the Financing Commitment Date beyond the 75th day following the date of this Agreement only if and for so long as WIC and Purchaser remain in compliance with their covenants under Sections 4.1(a) and 4.5(a). Section 4.6 Other Transaction Documents. At (and subject to the occurrence of) the Closing, (a) the Company, WIC and Purchaser shall enter into the Stockholder Agreement, (b) the Company and WIC shall enter into the Management Agreement and the Warrant Agreement and (c) the Company shall file the Restated Certificate, the Certificate of Designation and the Certificate of Cancellation with the Secretary of State of Delaware in accordance with Section 103 of the Delaware General Corporation Law. The Company shall cooperate with WIC to replace the Bylaws of the Company with new bylaws of the Company effective as of the Closing. Such new bylaws shall be consistent with the provisions of the Management Agreement and the Stockholder Agreement and otherwise be mutually satisfactory to the Company and WIC (the "Restated Bylaws"). Section 4.7 HSR Act Notification. Each of WIC and the Company contemplates that, assuming the accuracy of the representation and warranty contained in Section 3.1(kk), no filing under the HSR Act will be required in connection with the transactions contemplated hereby. If at any time prior to the Closing, however, any facts come to the attention of WIC or the Company that cause it to reasonably believe that such representation and warranty is inaccurate, WIC and the Company shall immediately cooperate to determine whether such a filing under the HSR Act will in fact be required. If WIC and the Company cannot agree that such a filing will not be required, then each of the parties hereto shall as promptly as practicable (a) file or cause to be filed with the Federal Trade Commission and the United States Department of Justice, all reports and other -42- documents required to be filed by such party under the HSR Act concerning the transactions contemplated hereby and (b) comply with or cause to be complied with any requests by the Federal Trade Commission or the United States Department of Justice for additional information concerning such transactions, in each case so that the waiting period applicable to this Agreement and the transactions contemplated hereby under the HSR Act shall expire as soon as practicable after the execution and delivery of this Agreement. Each party hereto agrees to request, and to cooperate with the other party or parties in requesting, early termination of any applicable waiting period under the HSR Act. All filing fees required under the HSR Act shall be the responsibility of, and shall be paid by, the Company. Section 4.8 Notification of Certain Matters. The Company shall give prompt notice to WIC and Purchaser, and WIC and Purchaser shall give prompt notice to the Company, of (a) the occurrence, or failure to occur, of any event that causes any representation or warranty of such party contained in this Agreement to be untrue or inaccurate at any time from the date of this Agreement to the Closing Date and (b) any failure of such party to comply with or satisfy, in any material respect, any covenant, condition or agreement to be complied with or satisfied by such party under this Agreement. Section 4.9 No Solicitation by Company. (a) The Company agrees that (i) neither it nor any of its Subsidiaries shall, and it shall not knowingly permit any of its officers, directors, employees, agents or representatives (including, without limitation, any investment banker, attorney or accountant retained by it or any of its Subsidiaries) (collectively, "Company Agents") to, solicit, initiate or knowingly encourage (including by way of furnishing material non-public information) any inquiry, proposal or offer (including, without limitation, any proposal or offer to its stockholders) with respect to an Alternative Transaction (any such inquiry, proposal or offer herein called an "Alternative Transaction Proposal") or participate or engage in any discussions or negotiations concerning an Alternative Transaction Proposal; and (ii) it will immediately cease and cause to be terminated any existing negotiations with any third parties conducted heretofore with respect to any of the foregoing and shall advise its Company Agents to immediately cease all such activities; provided, however, that nothing contained in this Agreement shall prevent the Company or the Board from (A) complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to an Alternative Transaction Proposal, or (B) providing information to, or participating or engaging in any discussions or negotiations with, any Person (or group of Persons) who has made an unsolicited Alternative Transaction Proposal with respect to a potential Alternative Transaction if and only to the extent that (i) the Board determines in good faith (after consultation with its legal and financial advisors) that such Alternative Transaction Proposal is reasonably capable of being completed, taking into account all legal, financial, regulatory and other aspects of the Alternative Transaction Proposal and the Person making the Alternative Transaction Proposal, and would, if consummated, result in a transaction more favorable to the Company's stockholders than the transactions contemplated by the Transaction Documents (a "Superior Proposal"), (ii) the Board determines in good faith (after consultation with its outside legal counsel) that the failure to do so would be -43- inconsistent with its fiduciary obligations under applicable Law, (iii) prior to providing any information or data to any Person in connection with a Superior Proposal by any such Person, the Board receives from such Person an executed confidentiality agreement that is in reasonably customary form and consistent with the Company's obligations hereunder, and (iv) prior to providing any information or data to any Person or entering into discussions or negotiations with any Person, the Board notifies WIC and Purchaser promptly of such inquiries, proposals or offers received by, any such information requested from, or any such discussions or negotiations sought to be initiated or continued with, the Company, any of its Subsidiaries or any of their Company Agents indicating, in connection with such notice, the identity of such Person and the material terms and conditions of any proposals or offers. (b) The Company shall promptly notify WIC and Purchaser of the receipt of any Alternative Transaction Proposal, including the identity of the Person making such inquiry, proposal or offer, and the material terms and conditions of any such proposal, and shall keep WIC and Purchaser informed on a timely basis of any material changes with respect thereto. (c) Nothing in this Section 4.9 shall permit the Company to enter into any agreement with respect to an Alternative Transaction Proposal during the term of this Agreement, it being agreed that during the term of this Agreement, the Company shall not enter into any agreement with any Person that provides for, or in any way facilitates, an Alternative Transaction Proposal, other than a confidentiality agreement that is in reasonably customary form and consistent with the Company's obligations hereunder. (d) For purposes of this Agreement, "Alternative Transaction" means any of (i) a transaction pursuant to which any Person or Persons other than WIC, Purchaser or their Affiliates (a "Third Party") acquires or would acquire more than 5% of the outstanding shares of any class of equity securities of the Company, whether from the Company or pursuant to a tender offer or exchange offer or otherwise, (ii) a merger, consolidation or other business combination involving the Company pursuant to which any Third Party acquires more than 5% of the outstanding equity securities of the Company or the entity surviving such merger, consolidation or business combination, or (iii) any transaction pursuant to which any Third Party acquires or would acquire control of assets (including for this purpose the outstanding equity securities of Subsidiaries of the Company and securities of the entity surviving any merger, consolidation or business combination including any of the Company's Subsidiaries) of the Company, or any of its Subsidiaries, having a fair market value (as determined by the Board in good faith) equal to more than 5% of the fair market value of all the assets of the Company and its Subsidiaries, taken as a whole, immediately prior to such transaction. Section 4.1 Access; Confidentiality. (a) At all times during normal business hours from and after the date hereof until the earlier of the Closing or the termination of this Agreement, the Company shall afford WIC and Purchaser and their authorized representatives reasonable access to the properties, employees and -44- officers of the Company and to all books and records of every kind of the Company as WIC or Purchaser may reasonably request. (b) WIC, Purchaser and their Affiliates shall, and shall cause their representatives to, hold confidential all information relating to the Company or its Subsidiaries that they have received prior to the date hereof or may receive on or after the date hereof from the Company or any of its representatives; provided, however, that the foregoing shall not apply to (i) information that is or becomes generally available to the public other than as a result of a disclosure by WIC, Purchaser or any of their Affiliates or representatives in violation of this Section 4.10(b), (ii) information that is or becomes available to WIC or Purchaser or any of their representatives on a nonconfidential basis from a source other than the Company or its Affiliates or representatives, provided that such source is not known by WIC or Purchaser to be bound by a confidentiality agreement with or other obligation of secrecy to the Company or any other party, or (iii) information that is required to be disclosed by WIC or Purchaser or any of their representatives as a result of any applicable Law; provided further, however, that in the event information is required to be disclosed pursuant to clause (iii) above, the Person proposing such disclosure shall provide to the Company to the extent practicable an opportunity, reasonably in advance of any such disclosure, to review and comment on the form and content of such proposed disclosure. Section 4.11 Transfer Restrictions. If WIC or Purchaser should decide to dispose of any of the Preferred Shares, the Warrants or the Underlying Common Shares, WIC and Purchaser understand and agree that they may do so only pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from registration under the Securities Act. In connection with any offer, resale, pledge or other transfer (individually and collectively, a "Transfer") of any of the Preferred Shares, the Warrants or the Underlying Common Shares other than pursuant to an effective registration statement, the Company may require that the transferor of such Preferred Shares, Warrants or Underlying Common Shares provide to the Company an opinion of counsel, which opinion shall be reasonably satisfactory in form and substance to the Company, to the effect that such Transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any state or foreign securities Laws. WIC and Purchaser agree to the imprinting, so long as appropriate, of substantially the following legend on certificates representing the Preferred Shares, the Warrants and the Underlying Common Shares: THE SECURITIES (THE "SECURITIES") EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER (INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER") THE SECURITIES EVIDENCED HEREBY, EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (B) PURSUANT TO AN -45- EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT SUCH AS THE EXEMPTION SET FORTH IN RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE). IF THE PROPOSED TRANSFER IS TO BE MADE OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AND THE TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAW. The legend set forth above may be removed if and when the Preferred Shares or the Underlying Common Shares, as the case may be, represented by such certificate are disposed of pursuant to an effective registration statement under the Securities Act or pursuant to the exemption from registration set forth in Rule 144 under the Securities Act. The certificates representing the Preferred Shares, the Warrants and the Underlying Common Shares shall also bear any additional legends required by applicable Laws or by the Stockholder Agreement or the Warrant Agreement. Any such legend may be removed when, in the opinion of counsel reasonably satisfactory to the Company, such legend is no longer required under the applicable requirements of such Laws or is no longer required under the applicable provisions of such agreements, as the case may be. WIC and Purchaser agree that, in connection with any Transfer of Preferred Shares or Underlying Common Shares by them pursuant to an effective registration statement under the Securities Act, WIC and Purchaser will comply with any applicable prospectus delivery requirements of the Securities Act. The Company makes no representation, warranty or agreement as to the availability of any exemption from registration under the Securities Act with respect to any resale of Preferred Shares, Warrants or Underlying Common Shares. ARTICLE V CONDITIONS PRECEDENT TO CLOSING Section 5.1 Conditions Precedent to Each Party's Obligation. The respective obligations of the Company, WIC and Purchaser to effect the transactions contemplated hereby are subject to the satisfaction on or prior to the Closing Date of the following conditions: (a) Stockholder Approval. The stockholders of the Company shall have approved the Preferred Share Issuance, the Warrant Issuance and the Restated Certificate by the Requisite Votes at the Stockholders' Meeting. (b) Other Approvals. All Approvals of, or expirations of waiting periods imposed by, any Governmental Entity necessary for the consummation of the transactions contemplated by this -46- Agreement shall have been filed, occurred or been obtained, including the expiration or termination of any applicable waiting period under the HSR Act. (c) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby shall be in effect. (d) No Governmental Action. No action shall have been taken nor any statute, rule or regulation shall have been enacted by any Governmental Entity that makes the consummation of the transactions contemplated hereby illegal. Section 5.2 Conditions Precedent to Obligations of WIC and Purchaser. The obligations of WIC and Purchaser to effect the transactions contemplated by this Agreement to be consummated at the Closing is subject to the satisfaction of the following conditions unless waived, in whole or in part, by WIC and Purchaser. (a) Representations and Warranties. The representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects (provided that any representation or warranty of the Company contained herein that is qualified by a materiality standard or a Material Adverse Effect qualification shall not be further qualified hereby) as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except as otherwise expressly contemplated by this Agreement, and WIC and Purchaser shall have received a certificate to the foregoing effect signed on behalf of the Company by the chief executive officer or by the chief financial officer of the Company. (b) Performance of Obligations. The Company shall have performed in all material respects (provided that any covenant or agreement that is qualified by a materiality standard or Material Adverse Effect qualification shall not be further qualified hereby) all obligations required to be performed by it under this Agreement prior to the Closing, and WIC and Purchaser shall have received a certificate to such effect signed on behalf of the Company by the chief executive officer or by the chief financial officer of the Company. (c) Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any Material Adverse Effect. (d) Consents Under Agreements. WIC and Purchaser shall have been furnished with evidence reasonably satisfactory to them of the consent or approval of each Person that is a party to a Material Contract and whose consent or approval is required in order to prevent the consummation of the transactions contemplated by this Agreement from causing or resulting in (i) a breach of such Material Contract or (ii) the creation in favor of such Person of a right to terminate such Material Contract, and such consent or approval shall be in form and substance reasonably satisfactory to WIC and Purchaser; provided that no such consent or approval shall be required with respect to any -47- employment or consulting Contract identified on Schedule 3.1(s) of the Company Disclosure Schedule to which the provisions of clause (ii) above would otherwise apply. (e) Legal Opinion. WIC and Purchaser shall have received from Thompson & Knight L.L.P., corporate counsel to the Company and its Subsidiaries, an opinion dated the Closing Date, in substantially the form attached as Exhibit G hereto. --------- (f) Charter and Bylaws; Certificate of Designation; Certificate of Cancellation. The Restated Certificate, the Certificate of Designation and the Certificate of Cancellation shall have been filed by the Company with the Secretary of State of Delaware in accordance with Section 103 of the Delaware General Corporation Law. The Board shall have approved and adopted the Restated Bylaws effective as of the Closing. (g) Board Composition. The Company shall have taken all action required to be taken by it under Section 2.1(a) and (b) of the Stockholder Agreement with respect to the composition of the Board and the Executive Committee of the Board immediately following the Closing. (h) Financing. The proceeds of the Financing necessary to consummate the purchase of the Preferred Shares hereunder shall have been received by Purchaser. The condition set forth in the immediately preceding sentence shall be deemed irrevocably satisfied upon delivery to the Company of the Commitment Letter. (i) NYSE Listing. The Underlying Common Shares shall have been approved for listing on the NYSE, subject to official notice of issuance. (j) Closing Deliveries. All documents, instruments, certificates or other items required to be delivered by the Company pursuant to Section 6.2(b) shall have been delivered. Section 5.3 Conditions Precedent to Obligation of Company. The obligation of the Company to effect the transactions contemplated by this Agreement to be consummated at the Closing is subject to the satisfaction of the following conditions unless waived, in whole or in part, by the Company: (a) Representations and Warranties. The representations and warranties of WIC and Purchaser set forth in this Agreement shall be true and correct in all material respects (provided that any representation or warranty of WIC and Purchaser contained herein that is qualified by a materiality standard shall not be further qualified hereby) as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except as otherwise expressly contemplated by this Agreement, and the Company shall have received a certificate to the foregoing effect signed on behalf of WIC and Purchaser by one or more managing members or executive officers of WIC and Purchaser. -48- (b) Performance of Obligations. WIC and Purchaser shall have performed in all material respects (provided that any covenant or agreement that is qualified by a materiality standard shall not be further qualified hereby) all obligations required to be performed by them under this Agreement prior to the Closing, and the Company shall have received a certificate to such effect signed on behalf of WIC and Purchaser by one or more managing members or executive officers of WIC and Purchaser. (c) Legal Opinion. The Company shall have received from Andrews & Kurth L.L.P., corporate counsel to WIC and Purchaser, or from such other counsel to any Purchaser as is reasonably acceptable to the Company, an opinion or opinions dated the Closing Date, in substantially the form attached as Exhibit H hereto. --------- (d) Closing Deliveries. All documents, instruments, certificates or other items required to be delivered by WIC and Purchaser pursuant to Section 6.2(a) shall have been delivered. ARTICLE VI CLOSING Section 6.1 Closing. Subject to the satisfaction or waiver of the conditions set forth in Article V, the closing of the purchase and sale of the Preferred Shares pursuant to Section 2.1 (the "Closing") shall occur (a) at the offices of Thompson & Knight L.L.P., 1700 Pacific Avenue, Suite 3300, Dallas, Texas 75201, at 10:00 a.m., local time, on the second Business Day following the later of (i) satisfaction of the condition to the obligations of the parties set forth in Section 5.1(a) and (ii) expiration or earlier termination of any waiting period under the HSR Act applicable to the transactions contemplated hereby, or (b) at such other location and time as may be mutually agreed upon by the parties hereto. The date on which the Closing is required to take place is herein referred to as the "Closing Date". All closing transactions at the Closing shall be deemed to have occurred simultaneously. Section 6.2 Actions to Occur at the Closing. (a) At the Closing, WIC and Purchaser, as applicable, shall deliver to the Company the following: (i) the Purchase Price for the Preferred Shares to be purchased at the Closing, in accordance with Section 2.1; (ii) counterparts of the Management Agreement executed by WIC; (iii) counterparts of the Stockholder Agreement executed by WIC and Purchaser; (iv) (A) the purchase price for the Warrants in accordance with the Warrant Purchase Agreement and (B) counterparts of the Warrant Agreement executed by WIC; -49- (v) counterparts of the Employment Agreement executed by George K. Hickox, Jr.; (vi) the certificates described in Sections 5.3(a) and 5.3(b); and (vii) the opinion of counsel referred to in Section 5.3(c). (b) At the Closing, the Company shall deliver to WIC and Purchaser, as applicable, the following: (i) a share certificate or share certificates representing the Preferred Shares to be purchased at the Closing; (ii) counterparts of the Management Agreement executed by the Company; (iii) counterparts of the Stockholder Agreement executed by the Company; (iv) counterparts of the Warrant Agreement executed by the Company; (v) counterparts of the Employment Agreement executed by the Company; (vi) the certificates described in Sections 5.2(a) and 5.2(b); (vii) the original of each consent or approval, if any, pursuant to Section 5.2(d); (viii) the opinion of counsel referred to in Section 5.2(e); and (ix) a certificate or certificates of the secretary of state or similar authority of each of the jurisdictions referred to in the second sentence of Section 3.1(a), dated as of a date within five Business Days prior to the Closing Date, certifying as to the good standing of the Company or its Subsidiary (as the case may be) in such jurisdiction. ARTICLE VII TERMINATION Section 7.1 Termination. This Agreement may be terminated prior to the Closing: (a) by mutual consent of WIC, Purchaser and the Company; or (b) by either WIC and Purchaser, on the one hand, or the Company, on the other: -50- (i) in the event of a breach by the other party of any representation, warranty, covenant or agreement of such other party contained in this Agreement which (A) would give rise to the failure of a condition set forth in Section 5.2(a) or 5.2(b) or Section 5.3(a) or 5.3(b) with respect to the Closing, and (B) cannot be cured or, if it is capable of being cured, has not been cured within 20 days following receipt by the breaching party of written notice of such breach (the "Cure Period") (provided that in no event shall the Cure Period extend beyond the date on which the Closing is scheduled to take place pursuant to Section 6.1 and there shall not be a Cure Period for breaches of the covenants set forth in the third sentence of Section 4.1(a) or in Section 4.9); or (ii) if a court of competent jurisdiction or other Governmental Entity shall have issued an order, decree or ruling or taken any other action (which order, decree or ruling WIC, Purchaser and the Company shall use their reasonable best efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable; or (iii) if the required approval of the stockholders of the Company shall not have been obtained by reason of the failure to obtain the Requisite Votes upon a vote held at a duly held meeting of stockholders, or at any adjournment thereof; or (iv) if the Closing shall not have occurred by the later of (A) June 15, 2000, and (B) the date to which the Closing Date is extended pursuant to Section 6.1; provided, however, that the right to terminate this Agreement under this clause (iv) shall not be available to any party whose breach of this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date; or (c) by the Company, if, as a result of a Superior Proposal received by the Company, the Board determines in good faith that its fiduciary obligations under applicable Law require that such Superior Proposal be accepted; provided that the Company may not effect such termination pursuant to this Section 7.1(c) unless and until (i) WIC and Purchaser receive at least one week's prior written notice from the Company of its intention to effect such termination pursuant to this Section 7.1(c); (ii) during such week, the Company shall, and shall cause its respective financial and legal advisors to, consider any adjustment in the terms and conditions of the Transaction Documents that WIC and Purchaser may propose; and (iii) the Board shall have concluded in good faith, after considering applicable provisions of Law and after giving effect to all adjustments which may be offered by WIC and Purchaser pursuant to clause (ii) above, on the basis of advice of its outside counsel, that such action is necessary for the Board to act in a manner consistent with its fiduciary duties under applicable Law; provided further, that it shall be a condition to the effectiveness of termination by the Company pursuant to this Section 7.1(c) that the Company shall have made the payment of the fee to WIC required by Section 9.5(a); -51- (d) by WIC and Purchaser, if the Company or the Board shall withdraw, modify or change its recommendation of the Transaction Documents and the transactions contemplated thereby in a manner adverse to WIC and Purchaser or approve, recommend or declare advisable any Alternative Transaction Proposal; or (e) by WIC, Purchaser or the Company, if the Commitment Letter shall not have been received by the Company by the Financing Commitment Date; or (f) by the Company, (i) in the event of a breach by WIC or Purchaser of its representations and warranties referred to in clause (ii) of the first sentence of Section 4.5(b) or its covenants and agreements set forth in Section 4.6 or (ii) if Purchaser shall not have received the proceeds of the Financing by, or is otherwise unable or refuses to deliver the total Purchase Price of the Preferred Shares to be purchased at the Closing on, the date on which the Closing is scheduled to take place pursuant to Section 6.1. The right of any party hereto to terminate this Agreement pursuant to this Section 7.1 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any party hereto, any person controlling any such party or any of their respective officers, directors, employees, accountants, consultants, legal counsel, agents or other representatives, whether prior to or after the execution of this Agreement. Section 7.2 Effect of Termination. In the event of the termination by a party of this Agreement, written notice thereof shall forthwith be given to the other party specifying the provision hereof pursuant to which such termination is made, and this Agreement (except for the provisions of this Section 7.2, Section 2.4, Section 4.10(b), Article VIII and Article IX, which shall survive such termination) shall forthwith become null and void. Subject to the provisions of Sections 2.4 and 9.5, in the event of a termination of this Agreement by either the Company, WIC or Purchaser as provided above, there shall be no liability on the part of the Company, WIC or Purchaser except for liability arising out of a breach of, or misrepresentation under, this Agreement. ARTICLE VIII INDEMNIFICATION Section 8.1 Indemnification of WIC and Purchaser. Subject to the provisions of this Article VIII, the Company agrees to indemnify and hold harmless the Purchaser Indemnified Parties from and against any and all Purchaser Indemnified Costs. Section 8.2 Indemnification of Company. Subject to the provisions of this Article VIII, WIC and each Purchaser agree to indemnify and hold harmless the Company Indemnified Parties from and against any and all Company Indemnified Costs. The indemnification obligation of each Purchaser hereunder shall be several and not joint, and shall be further limited to a share of the total Company Indemnified Costs that is proportionate to such Purchaser's share of the total Purchase Price paid for the Preferred Shares. -52- Section 8.3 Defense of Third-Party Claims. An Indemnified Party shall give prompt written notice to any Person who is obligated to provide indemnification hereunder (an "Indemnifying Party") of the commencement or assertion of any action, proceeding, demand or claim by a third party (collectively, a "third-party action") in respect of which such Indemnified Party shall seek indemnification hereunder. Any failure so to notify an Indemnifying Party shall not relieve such Indemnifying Party from any liability that it may have to such Indemnified Party under this Article VIII unless the failure to give such notice materially and adversely prejudices such Indemnifying Party. The Indemnifying Party shall have the right to assume control of the defense of, settle or otherwise dispose of such third-party action on such terms as it deems appropriate; provided, however, that: (a) The Indemnified Party shall be entitled, at its own expense, to participate in the defense of such third-party action (provided, however, that the Indemnifying Party shall pay the attorney's fees of one counsel (provided that if any such third-party action is brought in a jurisdiction other than Texas, the Indemnifying Party shall also pay the attorney's fees of one local counsel) to the Indemnified Party if (i) the employment of separate counsel shall have been authorized in writing by such Indemnifying Party in connection with the defense of such third-party action, (ii) the Indemnifying Party shall not have employed counsel reasonably satisfactory to the Indemnified Party to have charge of such third-party action, (iii) counsel to the Indemnified Party shall have reasonably concluded that there may be defenses available to the Indemnified Party that are different from or additional to those available to the Indemnifying Party, (iv) counsel to the Indemnified Party and the Indemnifying Party shall have advised their respective clients in writing, with a copy delivered to the other party, that there is a conflict of interest that could make it inappropriate under applicable standards of professional conduct to have common counsel) or (v) the third-party action is a proceeding brought by a stockholder of the Company (in such stockholder's name or derivatively on behalf of the Company) in respect of the transactions contemplated by this Agreement); (b) The Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into or making any settlement, compromise, admission or acknowledgment of the validity of such third-party action or any liability in respect thereof if, pursuant to or as a result of such settlement, compromise, admission or acknowledgment, injunctive or other equitable relief would be imposed against the Indemnified Party or if, in the opinion of the Indemnified Party, such settlement, compromise, admission or acknowledgment could have a material adverse effect on its business; (c) No Indemnifying Party shall consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by each claimant or plaintiff to each Indemnified Party of a release from all liability in respect of such third-party action; and (d) The Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in the defense of), and the Indemnified Party shall be entitled to have sole control over, the defense or settlement, compromise, admission or acknowledgment of any -53- third-party action (i) as to which the Indemnifying Party fails to assume the defense within a reasonable length of time; or (ii) to the extent the third- party action seeks an order, injunction or other equitable relief against the Indemnified Party which, if successful, would materially adversely affect the business, operations, assets or financial condition of the Indemnified Party; provided, however, that the Indemnified Party shall make no settlement, compromise, admission or acknowledgment that would give rise to liability on the part of any Indemnifying Party without the prior written consent of such Indemnifying Party. The parties hereto shall extend reasonable cooperation in connection with the defense of any third-party action pursuant to this Article VIII and, in connection therewith, shall furnish such records, information and testimony and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested. Section 8.4 Direct Claims. In any case in which an Indemnified Party seeks indemnification hereunder which is not subject to Section 8.3 because no third-party action is involved, the Indemnified Party shall notify the Indemnifying Party in writing of any indemnified costs which such Indemnified Party claims are subject to indemnification under the terms hereof. The failure of the Indemnified Party to exercise promptness in such notification shall not amount to a waiver of such claim unless the resulting delay materially prejudices the position of the Indemnifying Party with respect to such claim. Section 8.5 No Punitive Damages. Notwithstanding anything contained in this Agreement to the contrary, in no event shall any party hereto be entitled to recover any exemplary or punitive damages from any other party hereto on account of any breach of or misrepresentation under any Transaction Document. Section 8.6 Exclusivity. The parties hereto agree that, in relation to any breach, default or nonperformance by a party of any of its representations, warranties, covenants or agreements contained in this Agreement or any certificates delivered pursuant hereto, the only relief and remedies available to the other parties hereto in respect of such breach, default or nonperformance shall be: (a) termination of this Agreement, but only if such termination is expressly permitted under the provisions of Article VII; (b) damages, but only to the extent properly claimable hereunder and as limited pursuant to this Article VIII or otherwise hereunder; (c) specific performance, but only if such specific performance is expressly permitted under the provisions of Section 9.3 and a court of competent jurisdiction in its discretion grants the same; and -54- (d) injunctive or declaratory relief if a court of competent jurisdiction in its discretion grants the same. The parties hereto also agree that no action for termination or rescission, or claiming repudiation, of this Agreement may be brought or maintained by any party against any other party following the Closing no matter how severe, grave or fundamental any such breach, default or nonperformance may be by such other party. Accordingly, the parties hereby expressly waive and forego any and all rights they may possess to bring any such action. ARTICLE IX MISCELLANEOUS Section 9.1 Survival of Provisions. (a) The representations and warranties of the Company, WIC and Purchaser made herein or pursuant hereto, and the covenants and agreements of the Company, WIC and Purchaser made herein that, by their terms, are to be performed or complied with at or prior to the Closing, shall remain operative and in full force and effect pursuant to their terms, regardless of (i) any investigation made by or on behalf of the Company, WIC or Purchaser, as the case may be, or (ii) acceptance of the Preferred Shares and payment by Purchaser therefor, until the date that is 12 months following the Closing Date (except as provided in the following sentence); provided that such representations, warranties, covenants and agreements shall survive as to any claim or demand made prior to their termination date until such claim or demand is fully paid or otherwise resolved. Notwithstanding the general expiration period set forth in the foregoing sentence, (i) the representations and warranties contained in Sections 3.1(a) (Organization, Standing and Power), 3.1(b) (Subsidiaries), 3.1(c) (Capital Structure), 3.1(d) (Authority; No Violations; Approvals), 3.1(e) (Status of Preferred Shares, Conversion Shares and Dividend Shares), 3.1(f) (Status of Warrants and Warrant Shares), 3.1(g) (Requisite Votes) and 3.1(h) (Certain Anti- Takeover Provisions; Amendment to Rights Agreement), and Sections 3.2(a) (Organization, Standing and Power) and 3.2(b) (Authority; No Violations; Approvals), shall survive indefinitely, and (ii) the representations and warranties contained in Sections 3.1(r) (Taxes) and 3.1(w) (Environmental Matters) shall survive for the term of the statute of limitations applicable to the underlying substantive matter. (b) The covenants and agreements of the Company, WIC and Purchaser contained in this Agreement that, by their terms, are to be performed or complied with after the Closing shall survive until the period specified herein (if any) with respect to such covenant or agreement; provided, however, that such covenants and agreements shall survive as to any claim or demand in respect thereof made prior to their termination date until such claim or demand is fully paid or otherwise resolved. -55- Section 9.2 No Waiver; Modification in Writing. No failure or delay on the part of the Company, WIC or 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 exercise of any other right, power or remedy. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented except by an instrument in writing signed by the Company, WIC and Purchaser, and waivers or consents to departures from the provisions hereof may not be given without the written consent of the Company, on the one hand, and WIC and Purchaser, on the other hand, provided that notice of any such waiver shall be given to each party hereto as set forth below. Any amendment, supplement or modification of or to any provision of this Agreement, or any waiver of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given. Section 9.3 Specific Performance. The parties recognize that in the event the Company should refuse to perform under the provisions of this Agreement or WIC or Purchaser should refuse to perform under the provisions of Section 2.4(b), 4.10(b), 4.11, 9.5(b), 9.13 or 9.14, monetary damages alone will not be adequate. The parties shall therefore be entitled, in addition to any other remedies which may be available hereunder, including money damages, to obtain specific performance of such provisions. In the event of any action to enforce such provisions specifically, the parties hereby waive the defense that there is an adequate remedy at Law. Section 9.4 Severability. If any provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of applicable Law, or public policy, all other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner materially adverse to any party. Upon such determination that any provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated herein are consummated as originally contemplated to the fullest extent possible. Section 9.5 Fees and Expenses. (a) If this Agreement is terminated by the Company pursuant to Section 7.1(c) or by WIC and Purchaser pursuant to Section 7.1(d) (and provided that neither WIC nor Purchaser is then in material breach of any of its obligations hereunder), the Company shall pay to WIC by wire transfer of immediately available funds, within three Business Days following the date of such termination (or, with respect to a termination by the Company pursuant to Section 7.1(c), prior to such termination), a fee in the amount of $500,000. (b) Except as otherwise expressly provided in this Agreement, all costs and expenses (including legal fees and expenses) incurred by a party in connection with this Agreement and the -56- other Transaction Documents and the transactions contemplated hereby and thereby shall be borne solely and entirely by such party. Section 9.6 Parties in Interest. This Agreement shall be binding upon and, except as provided below, inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and nothing in this Agreement, except as set forth in Article VIII (which is intended for the benefit of all Indemnified Parties), express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement. Section 9.7 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, sent by facsimile transmission, mailed by registered or certified United States mail (return receipt requested), or sent by nationally recognized overnight courier service, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) If to WIC or Purchaser, to: Wiser Investment Company, LLC c/o Douglas P. Heller 1629 Locust Street Philadelphia, Pennsylvania 19103 with a copy to: Andrews & Kurth L.L.P. 600 Travis Street, Suite 4200 Houston, Texas 77002 Attention: David P. Oelman (b) If to the Company, to: 8115 Preston Road Suite 400 Dallas, Texas 75225 Attention: President -57- with a copy to: Thompson & Knight L.L.P. 1700 Pacific Avenue, Suite 3300 Dallas, Texas 75201-4693 Attention: Steven K. Cochran Any of the above addresses may be changed at any time by notice given as provided above; provided, however, that any such notice of change of address shall be effective only upon receipt. All notices, requests or instructions given in accordance herewith shall be deemed received on the date of delivery, if hand delivered, on the date of receipt, if sent by facsimile transmission, three Business Days after the date of mailing, if mailed by registered or certified mail, return receipt requested, and one Business Day after the date of sending, if sent by nationally recognized overnight courier service. Section 9.8 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 9.9 Entire Agreement. This Agreement (which term, for purposes of this Section 9.9, shall be deemed to include the Exhibits and Schedules hereto and the other certificates, documents and instruments delivered hereunder) constitutes the entire agreement of the parties hereto and supersedes all prior agreements, letters of intent and understandings, both written and oral, including the Original Stock Purchase Agreement, between the parties with respect to the subject matter hereof. There are no representations, warranties, agreements or covenants other than those expressly set forth in this Agreement. Section 9.10 Governing Law. 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 9.11 Public Announcements. The Company, on the one hand, and WIC and Purchaser, on the other, shall consult with each other before issuing any press release or otherwise making any public statements with respect to the Transaction Documents or the transactions contemplated thereby, except for statements required by Law or by any listing agreements with any national securities exchange or the National Association of Securities Dealers, Inc., or made in disclosures filed pursuant to the Securities Act or the Exchange Act. -58- Section 9.12 Assignment. (a) Except as otherwise provided in this Section 9.12, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, whether by operation of Law or otherwise. Any attempted assignment in violation of this Section 9.12 shall be null and void. (b) With the prior written consent of the Company (which consent shall not be unreasonably withheld), WIC may assign all of its rights, interests and obligations (which shall include all its representations and warranties) as Purchaser hereunder to a corporation, partnership or limited liability company formed by WIC subsequent to the date of this Agreement and in connection with the Financing and in which WIC has a significant equity interest, provided that such assignee expressly assumes such rights, interests and obligations, and the Company agrees that following such assignment and assumption the Company shall look only to such assignee in satisfaction of the Company's rights against Purchaser or the enforcement of the obligations of Purchaser hereunder. (c) With the prior written consent of the Company (which consent shall not be unreasonably withheld), WIC may assign its rights as Purchaser under Sections 2.1 and 2.5 with respect to a portion of the Preferred Shares (which assignment shall include an assignment of a corresponding part of its rights, interests and obligations (including its representations and warranties) as Purchaser hereunder) to not more than eight other accredited investors (as defined in Rule 501(a) under the Securities Act), provided that each such assignee expressly assumes such rights, interests and obligations, and the Company agrees that following such assignment and assumption the Company shall look only to such assignee in satisfaction of the Company's rights against Purchaser or the enforcement of the obligations of Purchaser hereunder, to the extent of the obligations assumed by such assignee. (d) No assignment and assumption referred to in Section 9.12(b) or (c) shall be permitted unless (i) the documents evidencing such assignment and assumption are reasonably satisfactory to the Company in form and substance, (ii) such documents contain an acknowledgment that such assignee(s) have become parties to this Agreement in the capacity of Purchaser as if such assignee(s) had been original signatory parties hereto and agree as Purchaser to be bound by all the terms and provisions hereof and (iii) such documents have been delivered to the Company and are effective prior to the Closing Date (in the case of an assignment of rights under Section 2.1) and prior to the applicable Option Closing Date (in the case of an assignment of rights under Section 2.5). (e) An assignment by WIC pursuant to Section 9.12(b) or 9.12(c) shall not have any effect on the rights, interests or obligations hereunder that are applicable to WIC in its capacity other than as Purchaser. -59- Section 9.13 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 the Transaction Documents 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 9.13 shall prevent any Indemnified Party from receiving indemnification pursuant to some other source (such as, by way of example, the bylaws of the Company in the event that 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 a Transaction Document), and the determination as to whether indemnification pursuant to such other source is available shall be made in accordance with the procedures applicable thereto. -60- In Witness Whereof, each of the parties hereto has caused this Agreement to be executed by its duly authorized representative as of the date first written above. THE WISER OIL COMPANY By: /s/ Andrew J. Shoup, Jr. -------------------------------------- Name: Andrew J. Shoup --------------------------------- Title: President -------------------------------- WISER INVESTMENT COMPANY, LLC By: /s/ George K. Hickox, Jr. -------------------------------------- Name: George K. Hickox, Jr. --------------------------------- Title: Authorized signatory -------------------------------- -61- EX-7.2 4 dex72.txt SUBSCRIPTION AGREEMENT Exhibit 7.2 SUBSCRIPTION AGREEMENT ---------------------- This Subscription Agreement is made by and between The Wiser Oil Company, a Delaware corporation (the "Company") and the undersigned prospective purchaser who is subscribing hereby for shares of the Company's Series C Cumulative Convertible Preferred Stock (the "Preferred Stock"), par value $10.00 per Preferred Share. In consideration of the Company's agreement to accept the undersigned as a securityholder of the Company upon the terms and conditions set forth herein, the undersigned agrees and represents as follows: A. SUBSCRIPTION 1. The undersigned hereby irrevocably subscribes for and agrees to purchase the number of Preferred Shares indicated on the signature page below at $25.00 per Preferred Share. Simultaneously with the execution of this Subscription Agreement, the undersigned is paying and delivering to the Company the Total Purchase Price set forth on the signature page below, in the form of a wire transfer to the account specified by the Company (the "Payment"), in payment of the Preferred Shares. 2. Upon receipt by the Company of the payment provided for in section (1) for Preferred Shares to be purchased by the subscriber ("Purchaser"), the Company will issue to the Purchaser certificates representing the Preferred Shares purchased in the name of the Purchaser, and the name of such Purchaser will be registered on the books of the Company as the record owner of such Preferred Shares. B. INVESTOR REPRESENTATIONS AND WARRANTIES 1. The undersigned hereby represents and warrants to, and agrees with the Company, as follows: (a) The Preferred Shares are being purchased for the undersigned's own account, for investment purposes only, and not for the account of any other person, and not with a view to distribution, assignment, or resale to others or to fractionalization in whole or in part and that the offering and sale of the Preferred Shares is intended to be exempt from registration under the Securities Act of 1933 (the "Act") by virtue of Section 4(2) of the Act and the provisions of Regulation D promulgated thereunder ("Regulation D"). (b) The undersigned is an accredited investor, as such term is defined in Regulation D under the Act, as amended, a copy of which definition is attached hereto as Exhibit A. (c) The Company has made available to the undersigned all documents and information that the undersigned has requested relating to an investment in the Company. (d) The undersigned recognizes that an investment in the Company involves substantial risks, and it has taken full cognizance of and understands all of the risks related to the purchase of Preferred Shares, including the potential for the Preferred Shares to lose all or substantially all of their value. (e) The undersigned has carefully considered and has, to the extent the undersigned believes such discussion necessary, discussed with the undersigned's professional legal, tax and financial advisers the suitability of an investment in the Company for the undersigned's particular tax and financial situation and the undersigned has determined that the Preferred Shares are a suitable investment for the undersigned. (f) All information that the undersigned has provided to the Company concerning the undersigned and the undersigned's financial position is correct and complete as the date set forth below, and if there should be any change in such information prior to the undersigned's acceptance as a securityholder of the Company the undersigned will immediately provide such information to the Company and will promptly send confirmation of such information to the Company. (g) The person executing this Subscription Agreement on behalf of the undersigned has been duly authorized and is duly qualified to execute and deliver this Subscription Agreement and all other instruments executed and delivered on behalf of the undersigned in connection with the purchase of the Preferred Shares and the undersigned is duly qualified to purchase and hold Preferred Shares, and the signature of the person executing this Subscription Agreement on behalf of the undersigned is binding upon the undersigned. 2. The foregoing representations and warranties are true and accurate as of the date hereof, shall be true and accurate as of the date of the acceptance hereof by the Company and shall survive thereafter. If such representations and warranties shall not be true and accurate in any respect, the undersigned will, prior to such acceptance, give written notice of such fact to the Company, specifying which representations and warranties are not true and accurate and the reasons therefor. 3. The undersigned shall indemnify and hold harmless the Company, or any of its agents, officers, employees, registered representatives, directors, or control persons of any such entity who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of or arising from any actual or alleged misrepresentation or misstatement of facts or omission to represent or state facts made by the undersigned to the Company concerning itself or its financial position in connection with the offering or sale of the Preferred Shares which is not remedied by timely notice to the Company as provided above, against losses, liabilities and expenses for which the Company or any of its agents, officers, employees, registered 2 representatives, directors, or control persons of any such entity have not otherwise been reimbursed (including attorneys' fees, judgments, fines and amounts paid in settlement) as actually and reasonably incurred by such person or entity in connection with such action, suit, or proceeding. C. UNDERSTANDINGS 1. The undersigned understands, acknowledges and agrees with the Company as follows: (a) This subscription may be rejected, in whole or in part, by the Company in its sole discretion. (b) This subscription is and shall be irrevocable, except that the undersigned shall have no obligations hereunder in the event that (1) this subscription is rejected for any reason or (2) the purchase and sale of Preferred Shares is not consummated. (c) No federal or state agency has made any finding or determination as to the fairness of this offering for investment, nor any recommendation or endorsement of the shares. (d) There is no public market for the Preferred Shares and there is no certainty that such a market will ever develop. There can be no assurance that the undersigned will be able to sell or dispose of his Preferred Shares. Moreover, no assignment, sale, transfer, exchange or other disposition of the Preferred Shares can be made other than in accordance with all applicable securities laws. (e) There can be no assurance as to the federal or state tax results of an investment in Preferred Shares. (f) The undersigned has such knowledge and experience in financial and business matters that the undersigned is capable of evaluating the merits and risks of investment in the Company and of making an informed investment decision. (g) The undersigned has had prior personal or business relationships with the Company or its officers or directors or by reason of the undersigned's business or financial experience, has the capacity to protect the undersigned's own interest in connection with this transaction. 2. The representations, warranties, understandings, acknowledgments and agreements in this Agreement are true and accurate as of the date hereof, shall be true and accurate as of the date of the acceptance hereof by the Company and shall survive thereafter. 3 D. MISCELLANEOUS 1. Neither this Subscription Agreement nor any provisions hereof shall be waived, modified, changed, discharged, terminated, revoked, or canceled except by an instrument in writing signed by the party against whom any change, discharge, or termination is sought. 2. Notices required or permitted to be given hereunder shall be in writing and shall be deemed to be sufficiently given when personally delivered or sent by registered mail, return receipt requested, addressed to the subscriber at the address provided below or if to the Company, to 8115 Preston Road, Suite 400, Dallas, Texas 75225, Attn. CEO, or to such other address furnished by notice given in accordance with this Article D. 3. Failure of the Company to exercise any right or remedy under this Subscription Agreement or any other agreement between the Company and the undersigned, or otherwise, or delay by the Company in exercising such right or remedy, will not operate as a waiver thereof. No waiver by the Company will be effective unless and until it is in writing and signed by the Company. 4. This Subscription Agreement shall be enforced, governed and construed in all respects in accordance with the laws of the State of Delaware, and shall be binding upon the undersigned, the undersigned's heirs, estate, legal representatives, successors and assigns and shall inure to the benefit of the Company, and its successors and assigns. 5. In the event that any provision of this Subscription Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof. 6. This Subscription Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any and all prior or contemporaneous representations, warranties, agreements and understandings in connection therewith. 4 SUBSCRIPTION AGREEMENT SIGNATURE PAGE ------------------------------------- This page constitutes the Signature Page for the Subscription Agreement. The undersigned represents to the Company that (a) the information contained herein is complete and accurate on the date hereof and may be relied upon by you and (b) the undersigned will notify you immediately of any change in any of such information occurring prior to the acceptance of the subscription and will promptly send you written confirmation of such change. The undersigned hereby certifies that he has read and understands this Subscription Agreement. IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement this 1st day of June, 2001. 396,000 - -------------------------- Number of Preferred Shares Subscribed for WISER INVESTORS, L.P. at $25.00 per Preferred Share $9,900,000 - -------------------------- Total Purchase Price By:___________________________ delivered herewith George K. Hickox, Jr., Manager 23-3081834 ---------- Tax Identification Number of Purchaser Purchaser's Mailing Address: - --------------------------- 1629 Locust Street Philadelphia, PA 19103 Check here if payment is being made by wire transfer: X --- 5 EXHIBIT A --------- Accredited investor. Accredited investor shall mean any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person: (1) Any bank as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the "Act"), or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; any insurance company as defined in Section 2(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors; (2) Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; (3) Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; (4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; (5) Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000; (6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; (7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii); and (8) Any entity in which all of the equity owners are accredited investors. 6 EX-7.3 5 dex73.txt ADOPTION AGREEMENT Exhibit 7.3 ADOPTION AGREEMENT This Adoption Agreement ("Agreement"), dated as of June 1, 2001, is executed by the entity named as "Purchaser" below pursuant to the terms of the Amended and Restated Stock Purchase Agreement (the "Stock Purchase Agreement"), dated as of December 13, 1999, between The Wiser Oil Company, a Delaware corporation ("Wiser"), and Wiser Investment Company, LLC, a Delaware limited liability company ("WIC"). 1. Acknowledgment. Purchaser acknowledges that Purchaser is acquiring -------------- certain Preferred Shares (as defined in the Stock Purchase Agreement) from Wiser, subject to the terms and conditions of the Stock Purchase Agreement. 2. Agreement. Purchaser (i) agrees that Purchaser and the Preferred --------- Shares acquired by Purchaser shall be bound by and subject to the terms of the Stock Purchase Agreement, and (ii) adopts the Stock Purchase Agreement with the same force and effect as if Purchaser was originally a party thereto. 3. Notice. Any notice required or permitted by the Stock Purchase ------ Agreement shall be given to Purchaser at the address listed below the Purchaser's signature. IN WITNESS WHEREOF, Purchaser has executed or caused this Agreement to be executed by its duly authorized officer as of the date and year first above written. PURCHASER: WISER INVESTORS, L.P. By: /s/ GEORGE K. HICKOX, JR. ------------------------------------ Name: George K. Hickox, Jr. Title: Manager Address: 1629 Locust Street Philadelphia, PA 19103 EX-7.4 6 dex74.txt STOCKHOLDER AGREEMENT Exhibit 7.4 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, Schreiber 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, 1 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 2 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. 3 "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. 4 "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. 5 "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 6 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 Andrew J. Shoup, Jr., Howard Hamilton and John W. Cushing 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 7 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 C. Frayer Kimball, 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. 8 (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 9 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 10 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. 11 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 8115 Preston Road, Suite 400 Dallas, Texas 75225 Attention: President Fax: (214) 373-3610 26 With a copy to: Thompson & Knight L.L.P. 1700 Pacific Avenue, Suite 3300 Dallas, Texas 75201 Attention: Steven K. Cochran Fax: (214) 969-1751 If to any Purchaser, to: Wiser Investment Company, LLC c/o Douglas P. Heller 1629 Locust Street Philadelphia, PA 19103 Fax: (215) 546-1041 With a copy to: Andrews & Kurth L.L.P. 600 Travis Street, Suite 4200 Houston, Texas 77002 Attention: David P. Oelman Fax: (713) 238-7128 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/ ANDREW J. SHOUP, JR. --------------------------------------- Name: Andrew J. Shoup, Jr. Title: President WISER INVESTMENT COMPANY, LLC By: /S/ GEORGE K. HICKOX, JR. ------------------------------------ Name: George K. Hickox, Jr. Title: Manager DIMELING, SCHREIBER AND PARK By: /S/ STEVEN G. PARK ----------------------------------------- Name: Steve G. Park Title: Partner 30 EX-7.5 7 dex75.txt JOINT FILING AGREEMENT EXHIBIT 7.5 Joint Filing Agreement The undersigned hereby agree to the joint filing on behalf of such persons all filings, including the filing of an initial Schedule 13D and al amendments thereto pursuant to Rule 13d-2(f)(1)(iii) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), required under the Exchange Act pursuant to which joint filing of statements are permitted. This agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned have caused this Joint Filing Agreement to be signed as of this 13th day of September, 2001. WISER INVESTORS, L.P. By: WISER INVESTMENT COMPANY, LLC, as its general partner By: /S/ GEORGE K. HICKOX, JR. -------------------------------- George K. Hickox, Jr., Manager WISER INVESTMENT COMPANY, LLC By: /S/ GEORGE K. HICKOX, JR. -------------------------------------- George K. Hickox, Jr., Manager GEORGE K. HICKOX, JR. /S/ George K. Hickox, Jr. ------------------------------------------- DOUGLAS P. HELLER /S/ Douglas P. Heller ------------------------------------------- SCOTT W. SMITH /S/ Scott W. Smith ------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----