UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [S]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.1a-11(c) or ss.240.1a-12
WESTERN COUNTRY CLUBS, INC.
(Name of Registrant as Specified In Its Charter)
n/a
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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[X] No fee required
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Preliminary
WESTERN COUNTRY CLUBS, INC.
1601 N.W. Expressway, Suite 1610
Oklahoma City, Oklahoma 73118
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
August 31, 1999
To the Shareholders:
Western Country Clubs, Inc. (the "Company") will hold a Annual Meeting
of Shareholders (the "Annual Meeting") on Tuesday, August 31, 1999, at 2:30
p.m., CT, at 1601 N.W. Expressway, Suite 1910, Oklahoma City, Oklahoma. The
Shareholders will meet to consider:
(1) Electing four directors to serve until the 2000 Annual Meeting of
Shareholders;
(2) Reincorporating the Company into Oklahoma (which, if approved,
would also change the Company's name);
(3) Approving the Company's Omnibus Equity Compensation Plan; and
(4) Transacting such other business as may properly come before such
meeting or any adjournment.
The record date for the Annual Meeting is July 14, 1999. Only
Shareholders of record at the close of business on that date can vote at the
Annual Meeting.
We hope you will attend the Annual Meeting. IF YOU DO NOT PLAN TO
ATTEND, PLEASE SIGN AND RETURN THE ENCLOSED PROXY. TO ENCOURAGE THE USE OF
PROXIES, WE HAVE ENCLOSED A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE FOR YOUR USE.
Sincerely
Dominic W. Grimmett
Secretary
July 27, 1999
Preliminary
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
August 31, 1999
Western Country Clubs, Inc. ("Western", the "Company" or "We")
furnishes this Proxy Statement to inform its Shareholders about the upcoming
Annual Meeting. To encourage your participation, Western's Board of Directors is
soliciting proxies to be used at the Annual Meeting.
We are mailing this Proxy Statement and the accompanying proxy card to
Shareholders beginning July 27, 1999.
General Information
Who Votes. If you hold shares of Common Stock or Series A Preferred
Stock as of the Record Date, July 14, 1999, you may vote at the Annual Meeting.
Each share is entitled to one vote. All shares vote together as a single class.
On July 14, 1999, the Company had outstanding 3,749,721 shares of Common Stock
and 40,000 shares of Series A Preferred Stock.
How To Vote. We will vote your shares for you if you send us a signed
proxy before the Annual Meeting. You can tell us to vote for all, some, or none
of the nominees for director. You can also tell us to approve, disapprove, or
abstain from the Reincorporation, the Omnibus Plan or transacting incidental
business at the Annual Meeting. We have provided information about the director
nominees, the Reincorporation, and the Omnibus Plan in the following pages of
this proxy statement.
IF YOU DO NOT TELL US HOW YOU WANT TO VOTE, WE SHALL VOTE YOUR SHARES
"FOR" THE DIRECTOR NOMINEES, THE REINCORPORATION, AND THE OMNIBUS PLAN.
Canceling Your Proxy. You can cancel your proxy at any time before we
vote your shares in any of three ways:
(1) by giving the Secretary a written cancellation;
(2) by giving a later signed proxy; or
(3) by voting in person at the Annual Meeting.
Counting the Necessary Votes. Directors are elected by a plurality of
votes, which means that the four director nominees (the number of positions to
be filled) receiving the highest number of votes will be elected. To be
approved, the Reincorporation must receive the affirmative vote of shareholders
having a majority of the outstanding shares of Common Stock and Series A
Preferred Stock, voting together as a single class. The Omnibus Plan must
receive a majority of the votes that could be cast at the Annual Meeting to be
approved. If any incidental business is transacted at the Annual Meeting, the
incidental business must receive a majority of the votes that could be cast at
the Annual Meeting.
The votes that could be cast are the votes actually cast plus
abstentions. Abstentions are counted as "shares present" at the Annual Meeting
for purposes of determining whether a quorum exists and have the effect of a
vote "against" any proposal. Proxies submitted by brokers that do not indicate a
vote (usually because the brokers don't have discretionary voting authority and
haven't received instructions as to how to vote) are not considered "shares
present" and will not affect the outcome of the vote. These broker proxies are
referred to as "broker non-votes".
Incidental Business. Proxies customarily ask for authority to transact
other business that may come before the Annual Meeting. Much of this business is
procedural, such as a vote on adjournment. Except for the election of directors,
the Reincorporation and the Omnibus Plan, we do not know of any substantive
business to be presented or acted upon at the Annual Meeting. Under our Bylaws,
no substantive business besides that stated in the meeting notice may be
transacted at any meeting of Shareholders. If any matter is presented at the
Annual Meeting on which a vote may properly be taken, the designated proxies
will vote your shares as they think best unless you otherwise direct.
ITEM 1
ELECTION OF DIRECTORS
Four directors will be elected at this year's Annual Meeting. Each
director will serve until the next Annual Meeting or until he or she is
succeeded by another qualified director who has been elected.
We shall vote your shares as you tell us on the enclosed proxy form. If
you sign, date, and return the proxy form, but don't tell us how you want your
shares voted, we shall vote your shares for the election of the following
nominees. If unforeseen circumstances (such as death or disability) make it
necessary for the Board of Directors to substitute another person for any of the
nominees, we will vote your shares for that other person.
The four nominees for director are now members of the Board of
Directors.
The Board of Directors recommends voting "For" the nominees.
Biographical Information
The following table sets forth the name and age of each nominee listed
in the enclosed form of proxy, his principal position with the Company, and the
year he became a director.
Director
Name Age Since Position
---- --- ----- --------
James E. Blacketer 57 1996 President and Director
Joe R. Love 60 1996 Director
John R. Ritter 42 1997 Director
John E. Adams 60 1998 Director
James E. Blacketer has a marketing degree from Oklahoma City University
and extensive experience in the restaurant and night club business. During the
last five years, Mr. Blacketer has served as managing principal to several
hospitality entities including Yucatan Liquor Stands (Tulsa and Oklahoma City)
and InCahoots (Oklahoma City, Tulsa and Wichita). Previously, he was a multiple
franchisee of Steak & Ale Restaurants and Chi Chi Restaurants. Mr. Blacketer
also conceived and developed a chain of Hungry Lion Steak Houses located in the
Chicago, Milwaukee and Grand Rapids, Michigan areas.
Joe R. Love graduated from the University of Oklahoma in 1960 with a
degree in Finance. Since 1990 he has served as Chairman of C.H. Financial
Corporation, Oklahoma City, Oklahoma, a financial services company. Mr. Love has
served as a director of First Cash, Inc., Arlington, Texas, a public company
which owns a national chain of pawn shops, since 1991. Mr. Love also has served
since 1989 as a director of Tatonka Energy Corporation, Dallas, Texas, a public
company engaged in oil and gas exploration and production and in the management
of radiology and diagnostic imaging centers.
John R. Ritter currently serves as Vice President of Data Information
Services, Inc. a company specializing in pre-employment screening. He also is an
independent management consultant specializing in the restaurant industry, in
which he has been involved for over 15 years. From 1981 to 1994, Mr. Ritter was
employed by the McDonalds Corporation, both in the field and the corporate
offices. He last served as Senior Business Consultant, working with McDonalds
franchisees in the development of their businesses. He resides in Eureka
Springs, Arkansas.
John E. Adams currently works in the investment banking and research
division of LaSalle Street Securities, a Chicago-based, NASD-member
broker-dealer firm. Prior to his affiliation with LaSalle, he was with Capital
West Securities , an Oklahoma City broker-dealer in ITS investment banking
division. He was previously a principal in the broker dealer firm, Adams, James,
Foor & Company, and currently serves on the board of Super Corp., Inc. Mr. Adams
graduated from the University of Oklahoma in 1961 with a B.B.A. degree in
Finance.
Service on the Board
Board Meetings and Committees. The Board of Directors held five
meetings in 1998. Management also periodically conferred with directors between
meetings regarding Company affairs. During 1998, all directors attended 75% or
more of the total aggregate number of meetings of the Board of Directors and
meetings of the committees of the Board on which they served.
The Audit Committee is currently composed of Messrs. Adams and Love,
both of whom are non-employee directors. It met twice in 1998 with both members
attending. The Audit Committee recommends to the whole Board of Directors the
selection of independent certified public accountants to audit annually the
books and records of the Company, reviews the activities and report of the
independent certified public accountants, and reports the results of the review
to the whole Board of Directors. The Audit Committee also monitors the internal
controls of the Company.
The Board of Directors has appointed a Compensation Committee, which is
composed of Messrs. Love and Ritter, both of whom are non-employee directors.
The Compensation Committee met twice in 1998 with both members attending. It
provides a general review of Western's compensation and benefit plans to ensure
that the plans meet corporate objectives. In addition, the Compensation
Committee reviews the recommendations of the President on the (i) compensation
of all officers of Western, (ii) granting of awards under Western's stock option
and other benefit plans and (iii) adopting and changing major Company
compensation policies and practices. The Compensation Committee reports its
recommendations to the whole Board of Directors for approval.
The Board has not delegated its functions to any other standing
committees, and thus has not created executive, nominating or other similar
committees.
Director Compensation. The Company's non-employee directors (currently
Messrs. Adams, Love and Ritter) are reimbursed for all ordinary and necessary
expenses incurred in the conduct of the Company's business, but receive no cash
compensation for their service. Under the Omnibus Plan, each director receives
an annual grant of stock options covering 25,000 shares of Common Stock. The
exercise price of the options is the fair market price at date of grant. The
December 12, 1997 grants to directors covered options for a total of 75,000
shares with exercise prices of $.75 per share. The December 31, 1998 grants to
directors covered options for a total of 75,000 shares. These options also have
exercise prices of $.75 per share. The 1999 grants to directors have not yet
been made. The option grants are contingent upon approval of the Omnibus Plan by
the shareholders at the Annual Meeting.
See Item 3.
Liability of Directors and Officers and Indemnification. The Company's
Articles of Incorporation limit the liability of directors to shareholders for
monetary damages for breach of a fiduciary duty except in the case of liability:
(i) for any breach of their duty of loyalty to the Company or its shareholders;
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) for unlawful distributions as
provided in Section 7-108-403 of the Colorado Business Corporation Act ("CBCA");
or (iv) for any transaction from which the director derived an improper personal
benefit.
Under the Company's Bylaws, the directors and officers are indemnified
against all liability and expense (including attorneys' fees) incurred for
acting in the Company's behalf. The Company's obligation to indemnify its
directors and officers is limited by Section 7-109-102 of the CBCA (and the
Bylaws), which requires that the directors and officers have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the Company. The obligation to indemnify may also be limited by
public policy considerations. The Securities and Exchange Commission takes the
position that the indemnification of directors, officers and controlling persons
for liabilities arising under the Securities Act of 1933 (the "Act") is against
public policy and is unenforceable. The Bylaws or the CBCA are not the exclusive
source of indemnification for directors or officers. The Company may (but is not
obligated to) indemnify its directors or officers by agreement, by vote of
shareholders or disinterested directors or otherwise.
There is no pending litigation or proceeding involving a director,
officer, employee or other agent of the Company as to which indemnification is
being or may be sought, and the Company is not aware of any other pending or
threatened litigation that may result in claims for indemnification by any
director, officer, employee or other agent.
ITEM 2
REINCORPORATION OF THE COMPANY IN OKLAHOMA
AND CHANGES TO THE COMPANY'S NAME
General
The Board of Directors proposes that Western change its state of
incorporation from Colorado to Oklahoma (the "Reincorporation"). The
Reincorporation would also change the Company's name to "Atomic Burrito, Inc."
The reasons for the Reincorporation are explained below under the caption
"Purposes for the Reincorporation". The terms of the Reincorporation are set out
in the Plan and Agreement of Merger and Reorganization which is attached to this
proxy statement as Appendix A. The Board of Directors has unanimously approved
the Reincorporation, subject to shareholder approval.
The Reincorporation will be accomplished by merging Western into its
newly-formed Oklahoma subsidiary, Western Oklahoma, Inc. ("Western Oklahoma").
Western Oklahoma will then immediately be renamed "Atomic Burrito, Inc." and
continue conducting business as the successor to Western. If Western's
shareholders adopt and approve the Reincorporation, the Reincorporation will
take effect on the date on which a certificate of merger is filed with the
appropriate officers of the States of Oklahoma and Colorado (the "Effective
Date"). These filings are anticipated to be made within 48 hours after adoption
and approval of the Reincorporation at the Meeting.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR EXISTING
STOCK CERTIFICATES FOR STOCK CERTIFICATES OF WESTERN OKLAHOMA.
Following the Reincorporation, certificates representing previously
outstanding shares of Western Common Stock may be delivered in effecting sales
through a broker, or otherwise, of Western Oklahoma Common Stock. When presently
outstanding certificates are presented for transfer after the Reincorporation,
new certificates for the stock of Western Oklahoma will be issued. New
certificates will also be issued upon the request of any shareholders, subject
to normal requirements as to proper endorsement, signature guarantee, if
required, and payment of applicable taxes.
Approval of the Reincorporation will effect a change in the legal
domicile of the Company and certain other changes of a legal nature, as
described in this Proxy Statement. Reincorporation of the Company will not
result in any change in the business, management, location of the principal
executive offices, assets, liabilities or shareholders' equity of the Company.
Western Oklahoma will possess all of the assets and be responsible for all of
the liabilities of the Company. The Reincorporation will not change the
financial condition of the Company.
Western is currently governed, and the shareholders rights are defined,
by the corporate law of Colorado, the Company's state of incorporation, and by
the Colorado Articles and the Colorado Bylaws, which have been adopted pursuant
to Colorado law. In addition, the Company has adopted an Omnibus Equity
Compensation Plan, under which stock options have been granted to directors,
officers and certain employees, and has issued warrants to purchase shares of
its Common Stock.. All of these instruments will be substantially the same for
Western Oklahoma as they were for the Company. Some of the items will be exactly
the same. Some changes will be made to the others.
The officers and directors of Western Oklahoma will be the same people
who currently serve as officers and directors of the Company. The Western
Oklahoma Bylaws will be the same as the Bylaws of Western in all respects, as
will the preferred stock designations. The Omnibus Equity Compensation Plan and
warrants will be remain the same. The certificate of incorporation for Western
Oklahoma will be changed somewhat. Although substantially the same, the statutes
governing corporations in Oklahoma and Colorado are different in some respects.
The changes and differences are set forth below under the caption "Principal
Differences between Western and Western Oklahoma".
Purposes for the Reincorporation
Greater Flexibility and Predictability Under Oklahoma Law. The Board
also believes that the Oklahoma General Corporation Act ("Oklahoma law") will
afford the Company greater flexibility and predictability than is afforded by
Colorado Business Corporation Act ("Colorado law"). The Oklahoma law is modeled
after the General Corporation Law of the State of Delaware, which is generally
recognized as the preeminent situs for large U.S. corporations.
Delaware has achieved its pre-eminence for several reasons. Delaware
has encouraged incorporation in that state by revising its corporate laws
regularly to meet changing business circumstances. The Delaware legislature has
attempted to balance equitably the competing needs of shareholders, directors
and officers, and persons doing business with Delaware corporations. The
Delaware courts have developed considerable expertise in dealing with corporate
issues, and Delaware corporations are guided by a substantial body of case law
construing Delaware corporate law. Delaware's success in achieving its goals is
evidenced by the incorporation within Delaware of over half of the Fortune 500
companies within the U.S.
Oklahoma has encouraged incorporation by emulating Delaware. The
Oklahoma General Corporation Act, adopted in 1986, was patterned after the
Delaware General Corporation Law, and the Oklahoma legislature has continued to
follow the Delaware example by regularly adopting the Delaware corporate law
changes in Oklahoma. By following the Delaware example, the Oklahoma courts have
and will look to Delaware corporate case law as highly persuasive in construing
the meaning of the Oklahoma law. In contrast, the Colorado law is not patterned
after the Delaware General Corporation Law, and Delaware case law would be no
more persuasive in Colorado than the case law of other states. As a result of
these factors, it is anticipated that Oklahoma law will provide greater
predictability in the Company's legal affairs than is presently available under
Colorado law.
Under the Colorado Articles and the Colorado Bylaws, the affirmative
vote of a majority of the outstanding shares of the Company's voting stock is
required for approval of the Reincorporation. If approved by the shareholders,
it is anticipated that the Reincorporation will be completed as soon thereafter
as practicable. The Reincorporation may be abandoned or the Merger Agreement may
be amended (with certain exceptions), either before or after shareholder
approval has been obtained if, in the opinion of the Board of Directors,
circumstances arise that make such action advisable; provided, that any
amendment that would effect a material change from the charter provisions
discussed in this Proxy Statement would require further approval by the holders
of at least a majority of the outstanding voting shares.
Name Change. In 1998, the Company implemented its "Atomic Burrito"
restaurant concept, with licensed restaurants in Stillwater and Norman,
Oklahoma. Since then, the Company has licensed or entered into joint ventures
for the development of up to 15 restaurants. Management expects that the Atomic
Burrito restaurants will surpass the Company's country-western nightclubs in
importance. To reflect this development, the Board of Directors proposes to
change the Company name to "Atomic Burrito, Inc." A change in the Company's name
will relate to the Corporation's "Atomic Burrito" food concept and better
reflect the direction of the Corporation's future operations.
Significant Changes Caused by Reincorporation
In general, the Company's corporate affairs are governed at present by
the corporate law of Colorado, the Company's state of incorporation, and by the
Colorado Articles and the Colorado Bylaws, which have been adopted pursuant to
Colorado law. The Colorado Articles and Colorado Bylaws are available for
inspection during business hours at the principal executive offices of the
Company. In addition, copies may be obtained by writing to the Company at
Western Country Clubs, Inc., 1601 N.W. Expressway, Suite 1610, Oklahoma City,
Oklahoma 73118, Attention: Corporate Secretary.
If the Reincorporation proposal is adopted, the Company will merge
into, and its business will be continued by, Western Oklahoma. Following the
merger, issues of corporate governance and control would be controlled by
Oklahoma law rather than Colorado law. The Colorado Articles and Colorado Bylaws
will, in effect, be replaced by the Certificate of Western Oklahoma (the
"Oklahoma Certificate") and the Bylaws of Western Oklahoma (the "Oklahoma
Bylaws"), copies of which are attached as Appendixes B and C to this Proxy.
Accordingly, the differences among these documents and between Oklahoma and
Colorado law are relevant to your decision whether to approve the
Reincorporation proposal.
A number of differences between Colorado and Oklahoma law and between
provisions of the Colorado and Oklahoma charter documents are summarized in the
chart below. Shareholders are requested to read the following chart in
conjunction with the discussion following the chart and the Merger Agreement,
the Oklahoma Certificate and the Oklahoma Bylaws attached to this Proxy
Statement.
Issue Oklahoma Colorado
----- -------- --------
Limitation of Liability of Oklahoma limitation of liability Colorado law permits the
Directors and Officers of statute permits the directors limitation of liability of
and officers to the same extent directors and officers to a
as Colorado law; however, the corporation except in connections
Oklahoma courts are expected to with (i) breaches of the duty of
rely upon Delaware's case law loyalty; (ii) acts or omissions
defining a director's fiduciary not in good faith or involving
duty to the Company. Delaware's intentional misconduct or knowing
case law is much more extensive violations of law; (iii) the
than Colorado's. The Oklahoma payment of unlawful dividends or
Certificate provides that the unlawful stock repurchases or
liability of directors shall be redemptions; or (iv) transactions
eliminated or limited to the in which a director received an
fullest extent permissible by the improper personal benefit. The
Oklahoma law, as it currently Colorado Articles provide for the
exists and as it may be amended. elimination or limitation of
liability to the fullest extent
permitted by the Colorado law.
Number of Directors The number of directors are fixed The number of directors must be
by the bylaws unless otherwise set forth in a corporation's
determined by the certificate of bylaws, amendment of which can be
incorporation. The Oklahoma effected by either the board of
Certificate provides the number directors or the shareholders
as that to be fixed exclusively separately. The Colorado Bylaws
by the Board. fix the number of directors at no
less than three and such greater
number as the Board may determine.
Calling of Special Shareholder Shareholders may call special The Colorado Bylaws provide that
Meeting meetings only if a corporation's the Board, the President or
certificate of incorporation or shareholders holding at least 10%
bylaws so provide. The Oklahoma of the shares entitled to vote at
Certificate provides that only a meeting may call a special
the Board, the Chairman of the meeting of the shareholders.
Board or the Chief Executive
Officer may call special meetings.
Shareholder Action by Written Unless the certificate of Unless the articles of
Consent in Lieu of a Shareholder incorporation provides otherwise, incorporation provide otherwise,
Vote at a Shareholder Meeting any action that may be taken at a any action that may be taken at a
shareholders' meeting may be shareholders' meeting may be
taken without a meeting if taken without a meeting upon the
consents in writing are signed by unanimous consent of the
shareholders having a majority of shareholders. The Colorado
the outstanding voting stock. Articles do not permit
The Oklahoma Certificate does not shareholder action by less than
limit shareholder action by unanimous consent, which
written consent. effectively prohibits shareholder
action by written consent.
Advance Notice Requirement for Under Oklahoma law, there is no Under Colorado law, there is no
Shareholder Proposals and Director specific requirement with regard specific requirement with regard
Nominations to advance notice of director to advance notice of director
nominations and shareholder nominations and shareholder
proposals. The Oklahoma Bylaws proposals. The Colorado Bylaws
provide that in order for do not restrict director
director nominations and nominations.
shareholder proposals to be
properly brought before the
meeting, the shareholder must
have delivered timely notice to
the Secretary of the Company.
Amendment of Certificate The Oklahoma Certificate may be The Colorado Articles may be
amended by a majority of the amended by a majority of the
Board and shareholders having a Board and shareholders having a
majority of the outstanding majority of the outstanding
voting stock. voting stock.
Amendment of Bylaws The Oklahoma Bylaws may be The Colorado Bylaws may be
amended or repealed either by the amended or repealed either by the
Board or by shareholders having a Board or by shareholders having a
majority of the outstanding majority of the outstanding
voting stock. voting stock.
Loans to Officers and Directors The Board of Directors may The Board of Directors must
authorize loans or guarantees to provide at least ten-day notice
officers, including officers who to shareholders prior to offering
are directors, in the proper loans or guarantees for the
exercise of the Board's business benefit of directors or
judgment. The Oklahoma Bylaws officers. The Colorado Bylaws do
provide that the Company may not address the making of loans
authorize loans or guarantees to to or guarantees for the benefit
officers, including those who are of directors.
directors.
Other The link to Delaware's larger A limited body of corporate
body of corporate case law case law in Colorado provides
provides a more predictable less guidance for corporations
corporate legal environment in in Colorado.
Oklahoma.
Indemnification and Limitation of Liability
Colorado and Oklahoma have similar laws respecting indemnification by a
corporation of its directors, employees and other agents. Under both Colorado
and Oklahoma law, corporations may limit the liability of directors, except in
connection with the following instances: (a) breaches of the director's duty of
loyalty to the corporation or its shareholders; (b) acts or omissions not in
good faith, or involving intentional misconduct or knowing violations of law;
(c) the payment of unlawful dividends or unlawful stock repurchases or
redemptions; or (d) transactions in which the director received an improper
personal benefit. Such limitation of liability provision also may not limit
director's liability for violation of, or otherwise relieve the Company or its
directors from the necessity of complying with, Federal or state securities laws
or affect the availability of non-monetary remedies such as injunctive relief or
rescission.
The Colorado Articles eliminate the liability of directors to the
Company to the fullest extent permissible under Colorado law. The Oklahoma
Certificate also eliminates the liability of directors to the fullest extent
permissible under Oklahoma law, as such law currently exists or as it may be
amended in the future. Furthermore, a provision of Oklahoma law states that the
indemnification provided by statute shall not be deemed exclusive of any other
rights under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise.
Other Matters Relating To Directors
Number of Directors. Colorado law requires that the number of persons
constituting the Company's Board of Directors, whether a specific number or a
range of size, be fixed by the Bylaws. Colorado law permits either the Board or
the shareholders to amend the provision in the Bylaws that establishes the
number of directors. The Colorado Bylaws provide for a Board numbering no less
than three directors and such greater number as the Board may determine. The
Bylaws also provide that either the Board or the shareholders may amend the
Bylaws at any annual or special meeting.
Oklahoma law permits the fixing of the number of directors in the
certificate of incorporation, in which case the number of directors may be
changed only by the manner specified in the Certificate of Incorporation or by
amendment of the Certificate of Incorporation, which would require approval of
both the shareholders and the Board. The Oklahoma Certificate provides that the
number of directors shall be fixed exclusively by the Board of Directors by
resolution.
Capitalization; Blank Check Preferred
The Company's capital stock consists of (i) 25,000,000 authorized
shares of Common Stock, par value $.01 per share, of which 2,675,958 shares were
issued and outstanding as of April 10, 1999, and (ii) 10,000,000 authorized
shares of Preferred Stock, par value $.10 per share, of which none 40,000 shares
of Company's Series A 10% Cumulative Convertible Preferred Stock is issued and
outstanding.
Upon the effectiveness of the Reincorporation, Western Oklahoma will
have the same number of outstanding shares of Common Stock that the Company had
outstanding immediately prior to the Reincorporation.
The capitalization of Western Oklahoma is identical to the
capitalization of the Company. The Company believes these levels of
capitalization are consistent with maintaining adequate capitalization for the
expected needs of the Company. Western Oklahoma's authorized but unissued shares
of Common Stock and Preferred Stock will be available for future issuance.
On March 31, 1999, the Western shareholders approved a series of
amendments to the Colorado Articles to effect reverse stock splits of the Common
Stock. The amendments would convert each 1.5, 2, 2.5, 3, 3.5, 4, 4.5, and 5
outstanding shares into one share of Common Stock. Whether to effect one of the
amendments and abandon the other amendments, or to abandon all of the amendments
was left for the Board to determine prior to January 1, 2000. The Company, as
the sole shareholder of Western Oklahoma, has approved a like authorization
under Oklahoma law. As a result, the Reincorporation will not change the Board's
ability to effect a reverse stock split. By implementing a reverse split, the
Company would expect an increase in the per share price of its Common Stock.
Authorization of the reverse splits is intended to aid the Company in meeting
the Nasdaq listing requirements, which requires a minimum trading price of $1.00
per share.
Under the Oklahoma Certificate, as under the Colorado Articles, the
Board of Directors has the authority to determine or alter the rights,
preferences, privileges and restrictions to be granted to or imposed upon any
wholly unissued series of Preferred Stock and to fix the number of shares
constituting any such series and to determine the designation thereof. See
"Anti-Takeover Measures".
The Board may authorize the issuance of Preferred Stock in connection
with various corporate transactions, including corporate partnering
arrangements. The Board may also authorize the issuance of Preferred Stock for
the purpose of adopting a shareholder rights plan. If the Reincorporation is
approved, it is not the present intention of the Board of Directors to seek
shareholder approval prior to any issuance of Preferred Stock, except as
required by law or regulation.
Shareholder Power To Call Special Shareholders' Meeting
Under Colorado law, a special meeting of shareholders may be called by
the Board of Directors, a person authorized by the Board of Directors or Bylaws,
or shareholders holding shares representing at least 10% of all votes entitled
to be cast at such meeting. The Colorado Bylaws provide that the Board, the
President, or holders of at least 10% of all shares entitled to be cast at such
a meeting may call a special meeting. Under Oklahoma law, a special meeting of
shareholders may be called by the Board of Directors or by any other person
authorized to do so in the Certificate of Incorporation or the Bylaws. The
Oklahoma Certificate provides that such a meeting may be called only by the
Board, the Chairman of the Board, or the Chief Executive Officer. Elimination of
the ability of shareholders holding 10% of the voting power of all shareholders
to call a special meeting may lengthen the amount of time required to take
shareholder actions because the Company and the Board of directors are only
required to hold one meeting of shareholders per year. Such elimination of a
shareholder power to call special meetings may deter hostile takeover attempts
because, without the ability to call a special meeting, a holder or group of
holders controlling a majority in interest of a corporation's capital stock will
not be able to amend the Bylaws or remove directors until the annual meeting of
shareholders is held.
Actions by Written Consent of Shareholders in Lieu of a Shareholder Vote at a
Shareholder Meeting
Under Colorado law, unless the articles of incorporation provide
otherwise, any action that may be taken at a shareholders' meeting may be taken
without a meeting if all shareholders entitled to vote thereon consent to such
action in writings. The Colorado Articles do not permit shareholder action by
less than unanimous consent. Because it would be virtually impossible to achieve
unanimous shareholder consent in a publicly-held company such as Western, the
unanimous consent requirement under Colorado law effectively prohibits
shareholder action by written consent.
Oklahoma law is more liberal in this regard. Under Oklahoma law, unless
the certificate of incorporation provides otherwise, any action that may be
taken at a shareholders' meeting may be taken without a meeting if consents in
writing are signed by holders of outstanding stock having not less than the
minimum number of votes that would be necessary to take such action if a meeting
at which all shares entitled to vote thereon were present. The Oklahoma
Certificate does not change the statutory provisions for shareholder consents.
Oklahoma law does limit the use of shareholder consents in certain
large, publicly-held companies. This limitation is not expected to effect
Western Oklahoma. The limitation provides that shareholder consent must be
unanimous in a company whose stock is traded on a national exchange or is
registered under Section 12(g) of the Securities Exchange Act of 1934 and whose
stock is held of record by more than 1,000 shareholders. This restriction
effectively prohibits the use of shareholder consents in such corporations.
While the Company's Common Stock is registered under Section 12(g), its
shareholders of record are much fewer than 1,000 and it does not expect to have
more than 1,000 shareholders of record. Thus, the Company believes this
limitation will not effect its shareholders.
Because Oklahoma law and the Oklahoma Certificate will permit the use
of shareholder consents, Reincorporation will provide shareholders with a
benefit that they lacked under Colorado law.
Advance Notice Requirement For Shareholder Proposals and Director Nominations
There is no specific statutory requirement under either Colorado or
Oklahoma law with regard to advance notice of director nominations and
shareholder proposals. Absent a bylaw restriction, director nominations and
shareholder proposals may be made without advance notice at the annual meeting.
However, Federal securities laws generally provide that shareholders who wish to
include proposals in the Company's proxy materials must submit such proposals
not less than 120 days in advance of the date of the proxy statement released in
connection with the next annual meeting.
The Colorado Bylaws do not restrict director nominations. The Oklahoma
Bylaws provide that in order for director nominations or shareholder proposals
to be properly brought before the meeting, the shareholder must have delivered
timely notice to the Secretary of the corporation. To be timely, notice must
have been delivered not later than the close of business on the 60th day nor
earlier than the close of business on the 90th day prior to the first
anniversary of the preceding year's annual meeting. In the event that no annual
meeting was held in the previous year or the date of the annual meeting was
changed by more than 30 days from the date contemplated at the time of the
previous year's proxy statement, notice by the shareholder must be received not
earlier than the close of business on the 90th day prior to such annual meeting
and not later than the close of business on the later of the 60th day prior to
such annual meeting or, in the event public announcement of the date of such
annual meeting was first made by the Company fewer than 70 days prior to the
date of such annual meeting, the close of business on the 10th day following the
day on which public announcement of the date of such meeting is first made by
the Company. Proper notice under the Federal securities laws for a proposal to
be included in the Company's proxy materials will constitute proper notice under
the Oklahoma Bylaws. These notice requirements help ensure that shareholders are
aware of all proposals to be voted on at the meeting and have the opportunity to
consider each proposal in advance of the meeting.
Anti-Takeover Measures
The Company believes that Oklahoma law permits a corporation greater
flexibility in governing its internal affairs and its relationships with
shareholders and other parties than does the laws of many other states,
including Colorado. In particular, Oklahoma law permits a corporation to adopt a
number of measures designed to reduce a corporation's vulnerability to hostile
takeover attempts. Such measures may be more narrowly drawn under Colorado law.
For example, using the ample Delaware law for guidance, the Company expects that
Oklahoma courts will uphold certain types of "poison pill" defenses (such as
shareholder rights plans), while Colorado courts have yet to decide on the
validity of such defenses, thus rendering their effectiveness in Colorado less
certain.
As discussed herein, certain provisions of the Oklahoma Certificate
could be considered to be anti-takeover measures. The Company does not have any
present intention of adopting any further anti-takeover measures (such as a
shareholder rights plan), nor does the Board of Directors have knowledge that
any attempt to gain control of the Company is being contemplated. However, as
discussed above, numerous differences between Colorado and Oklahoma law,
effective without additional action by Western Oklahoma, could have a bearing on
unapproved takeover attempts.
One such difference is the existence of a Oklahoma statute regulating
certain business combinations, which statute is intended to limit coercive
takeovers of companies incorporated in Oklahoma. Colorado has no comparable
statute. The Oklahoma law provides that a corporation may not engage in any
business combination with any interested shareholder for a period of three years
following the date that such shareholder became an interested shareholder,
unless (i) prior to the date the shareholder became an interested shareholder
the Board approved the business combination or the transaction that resulted in
the shareholder becoming an interested shareholder, or (ii) upon consummation of
the transaction that resulted in the shareholder becoming an interested
shareholder, the interested shareholder owned at least 85% of the voting stock,
or (iii) the business combination is approved by the Board and authorized by 66
2/3% of the outstanding stock that is not owned by the interested shareholder.
Any Oklahoma corporation may decide to opt out of the statute at any time by
action of its shareholders. This statute will apply to the Company following the
Reincorporation, and the Company has no present intention of opting out of the
statute.
There can be no assurance that the Board of Directors would not adopt
any further anti-takeover measures available under Oklahoma law (some of which
may not require shareholder approval). Moreover, the availability of such
measures under Oklahoma law, whether or not implemented, may have the effect of
discouraging a future takeover attempt that a majority of Western Oklahoma's
shareholders may deem to be in their best interests or that might provide
shareholders with a premium for their shares over then current market prices. As
a result, shareholders who might desire to participate in such transactions
might not have the opportunity to do so. Shareholders should recognize that, if
adopted, the effect of such measures, along with the possibility of discouraging
takeover attempts, might be to limit in certain respects the rights of
shareholders of Western Oklahoma compared with the rights of shareholder of the
Colorado Company.
The Board of Directors recognizes that hostile takeover attempts do not
always have unfavorable consequences or effects and may frequently be beneficial
to the shareholders, providing all of the shareholders with considerable value
for their shares. However, the Board of Directors believes that the potential
disadvantages of unapproved takeover attempts (such as disruption of the
Company's business and the possibility of terms that may be less than favorable
to all of the shareholders than would be available in a Board approved
transaction) are sufficiently great such that prudent steps to reduce the
likelihood of such takeover attempts and to enable the Board to fully consider
the proposed takeover attempt and actively negotiate its terms are in the best
interests of the Company and its shareholders.
In addition to the various anti-takeover measures that would be
available to Western Oklahoma after the Reincorporation due to the application
of Oklahoma law, Western Oklahoma would retain the rights currently available to
the Company under Colorado law to issue shares of its authorized but unissued
capital stock. Following the effectiveness of the proposed Reincorporation,
shares of authorized and unissued Common Stock and Preferred Stock of Western
Oklahoma could (within the limits imposed by applicable law) be issued in one or
more transactions, or Preferred Stock could be issued with terms, provisions and
rights that would make more difficult and, therefore, less likely, a takeover of
Western Oklahoma. Any such issuance of additional stock could have the effect of
diluting the earnings per share and book value per share of existing shares of
Common Stock and Preferred Stock, and such additional shares could be used to
dilute the stock ownership of persons seeking to obtain control of Western
Oklahoma.
It should be noted that the voting rights to be accorded to any
unissued series of Preferred Stock of Western Oklahoma ("Oklahoma Preferred
Stock") remain to be fixed by the Oklahoma Board. Accordingly, if the Oklahoma
Board so authorizes, the holders of Oklahoma Preferred Stock may be entitled to
vote separately as a class in connection with approval of certain extraordinary
corporate transactions in circumstances where Oklahoma law does not ordinarily
require such a class vote, or might be given a disproportionately large number
of votes. Such Oklahoma Preferred Stock could also be convertible into a large
number of shares of Common Stock of Western Oklahoma under certain circumstances
or have other terms that might make acquisition of a controlling interest in
Western Oklahoma more difficult or more costly, including the right to elect
additional directors to the Oklahoma Board. Potentially, the Oklahoma Preferred
Stock could be used to create voting impediments or to frustrate persons seeking
to effect a merger or otherwise gain control of Western Oklahoma. Also, the
Oklahoma Preferred Stock could be privately placed with purchasers who might
side with the management of Western Oklahoma in opposing a hostile tender offer
or other attempt to obtain control.
The Board may also authorize the issuance of Preferred Stock in
connection with various corporate transactions, including corporate partnering
arrangements. The Board may also authorize the issuance of Preferred Stock for
the purpose of adopting a shareholder rights plan. However, future issuances of
Oklahoma Preferred Stock as an anti-takeover device might preclude shareholders
from taking advantage of a situation that might otherwise be favorable to their
interests. In addition (subject to the considerations referred to above as to
applicable law), the Oklahoma Board could authorize issuance of shares of Common
Stock of Western Oklahoma ("Oklahoma Common Stock") or Oklahoma Preferred Stock
to a holder who might thereby obtain sufficient voting power to ensure that any
proposal to alter, amend, or repeal provisions of the Oklahoma Certificate
unfavorable to a suitor would not receive the necessary vote of 66 2/3 percent
of the voting stock required for certain of the proposed amendments (as
described below).
If the Reincorporation is approved, it is not the present intention of
the Board of Directors to seek shareholder approval prior to any issuance of the
Oklahoma Preferred Stock or Oklahoma Common Stock, except as required by law or
regulation. Frequently, opportunities arise that require prompt action, and it
is the belief of the Board of Directors that the delay necessary for shareholder
approval of a specific issuance would be a detriment to Western Oklahoma and its
shareholders. The Board of Directors does not intend to issue any Preferred
Stock except on terms that the Board of Directors deems to be in the best
interests of Western Oklahoma and its then existing shareholders.
Amendment of Certificate
The Colorado Articles may be amended by the approval of a majority of
the members of the Board of Directors and by a majority of the outstanding
shares. The Oklahoma Certificate provides that the provisions relating to (i)
indemnification of officers and directors; (ii) the number of and election of
directors; and (iii) the amendment of the Oklahoma Certificate can only be
amended by the affirmative votes of the Board of Directors and the holders of at
least 66 2/3 percent of the voting power of the outstanding voting stock of
Western Oklahoma. By raising the vote required to amend the aforementioned
provisions, a holder or group of holders controlling a majority in interest of
the Company's capital stock will face greater obstacles in amending those
particular provisions in the Oklahoma Certificate.
Amendment of Bylaws
The Colorado Bylaws may be amended or repealed either by the Board of
Directors or by the holders of a majority in interest of the outstanding stock
of the Company. The Oklahoma Bylaws also may be amended or repealed either by
the Board of Directors or by the holders of a majority in interest of the
outstanding stock of Western Oklahoma.
Loans To Officers, Directors and Employees
Colorado law provides that a corporation may not authorize any loan or
guaranty for the benefit of any director until at least ten days after providing
written notice of the proposed authorization to shareholders who would be
entitled to vote thereon if the issue of the loan or guaranty were submitted to
a vote of the shareholders.
Under Oklahoma law, a corporation may make loans to, or guarantee the
obligations of, officers or other employees when the Board of Directors believes
such transactions are proper in the exercise of its business judgment. Both
Colorado law and Oklahoma law permit such loans or guaranties to be unsecured
and without interest.
The Company has made advances against future compensation to its
President, Mr. James E. Blacketer, in the amount of $143,340 as of December 31,
1998. In addition, the Company and Mr. Blacketer have entered into, but have not
consummated, a stock purchase agreement under which Mr. Blacketer would purchase
300,000 shares of the Common Stock in exchange for a three-year term note in the
principal amount of $225,000 and bearing interest at ten percent per annum.
Further, a limited partnership, of which the Company owns 80%, intends to
distribute in liquidation a $480,000 note to the Company. The note is made by
CCDC, Inc., and was issued when CCDC purchased 585,753 shares of Common Stock
from an unrelated person who had purchased the Company's former Indy club and
who had pledged the shares as collateral for the purchase indebtedness. CCDC,
Inc. is affiliated with Mr. Joe R. Love, a director of the Company. See "Certain
Transactions" below.
It is uncertain whether the Colorado restriction on director loans
would prohibit the foregoing transactions. By reincorporating, the legal
uncertainties relating to these transactions would be removed since Oklahoma law
does not restrict director loans if the loans are properly authorized by the
Board in the exercise of its business judgment. If the Reincorporation is
approved and consummated, the shareholders will lose a possible legal basis for
challenging the validity of some or all of these transactions.
Federal Income Tax Consequences of the Reincorporation
The Reincorporation provided for in the Merger Agreement is intended to
be a tax free reorganization under the Internal Revenue Code of 1986, as
amended. Assuming the Reincorporation qualifies as a reorganization, no gain or
loss will be recognized to the holders of capital stock of the Company as a
result of consummation of the Reincorporation, and no gain or loss will be
recognized by the Company or Western Oklahoma. Each former holder of capital
stock of the Company will have the same basis in the capital stock of Western
Oklahoma received by such holder pursuant to the Reincorporation as such holder
has in the capital stock of the Company held by such holder at the time of
consummation of the Reincorporation. Each shareholder's holding period with
respect to Western Oklahoma's capital stock will include the period during which
such holder held the corresponding Company capital stock, provided the latter
was held by such holder as a capital asset at the time of consummation of the
Reincorporation. The Company has not obtained a ruling from the Internal Revenue
Service or an opinion of legal or tax counsel with respect to the consequences
of the Reincorporation.
The foregoing is only a summary of certain Federal income tax
consequences. Shareholders should consult their own tax advisers regarding the
specific tax consequences to them of the merger, including the applicability of
the laws of any state or other jurisdiction.
Board Recommendation
The foregoing discussion is an attempt to summarize the more important
differences in the corporate laws of Oklahoma and Colorado and does not purport
to be an exhaustive discussion of all of the differences. Such differences can
be determined in full by reference to the Colorado law and to the Oklahoma law.
In addition, both Colorado and Oklahoma law provide that some of the statutory
provisions as they affect various rights of holders of shares may be modified by
provisions in the charter or bylaws of the Company.
A vote FOR the Reincorporation proposal will constitute approval of the
merger, the Oklahoma Certificate, the Oklahoma Bylaws, the loss of a possible
legal basis for challenging certain director loans, the adoption and assumption
by Western Oklahoma of each of the Company's employee benefit plans and all
other aspects of this proposal.
The Board of Directors Recommends a Vote in Favor of Reincorporation.
No Shareholders' Appraisal Rights
Under Section 7-113-102 of the Colorado law, shareholders of the
Company will not be entitled to dissent and obtain payment of the fair value of
their shares from the Company in connection with the Reincorporation because the
Company's shares are listed on the Nasdaq Stock Market at the time of the record
date for the Annual Meeting.
ITEM 2
APPROVAL OF
OMNIBUS EQUITY COMPENSATION PLAN
The Board of Directors proposes that the shareholders consider and
approve the adoption of the Company's Omnibus Equity Compensation Plan (the
"Omnibus Plan"). The Omnibus Plan authorizes the Company to grant "incentive
stock options" under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), non-qualified stock options (non-incentive stock options),
awards of restricted stock, stock appreciation rights, and other equity-based
awards for up to 15 percent of the outstanding shares of Common Stock. The
purpose of the Omnibus Plan is to enable the Company to offer its directors,
employees and agents who render services to the Company and its subsidiaries,
options to acquire equity interests in the Company and other incentive awards,
thereby attracting, retaining and rewarding such persons, and strengthening the
mutuality of interests between such persons and the Company's shareholders.
Subject to shareholder approval, options to purchase 547,000 shares have been
granted under the Omnibus Plan, and 13,208 shares are available for further
grants.
The Board of Directors recommends voting "For" the Omnibus Plan.
Administration
The Omnibus Plan is administered and interpreted by the Compensation
Committee of the Board (the "Committee"). The Committee has the authority to (i)
make regulations to carry out the Omnibus Plan; (ii) interpret the terms of the
Omnibus Plan and any award; and (iii) otherwise supervise the administration of
the Omnibus Plan. Any interpretation of the Omnibus Plan or any rule adopted or
action taken by the Committee will be final and binding upon all persons in
interest.
Eligible Participants
All employees of the Company and its subsidiaries are eligible to be
granted awards under the Omnibus Plan. Each Director of the Company receives an
annual grant of stock options covering 25,000 shares of the Common Stock. These
annual grants are made in recognition that the Directors receive no cash
compensation for their services. Directors are not otherwise eligible to receive
awards under the Omnibus Plan, although Directors who are also employees or
agents of the Company may receive awards in their other capacities. Agents to
the Company and its subsidiaries are only eligible to receive awards other than
incentive stock options. Agents include persons or entities performing services
for or selling goods to the Company or transacting business by or through the
Company's name. As of July 12, 1999, 13 persons were participating in the
Omnibus Plan.
Number Of Shares Subject To The Omnibus Plan
The maximum number of shares of Common Stock that may be issued under
the Omnibus Plan is an amount equal to 15 percent of the outstanding shares of
Common Stock (presently, 560,208 shares). The shares may be either authorized
and unissued shares or issued shares reacquired by the Company. The aggregate
number of shares issuable under the Omnibus Plan and the number of shares
subject to awards made under the Omnibus Plan are subject to change as the
number of outstanding shares of Common Stock changes. Increases of the
outstanding shares may occur through the issuance of Common Stock in
acquisitions or financings, in the conversion of other securities into Common
Stock and in the exercise of options, warrants or other rights to acquire Common
Stock. Adjustment to the number of available shares may also occur in the event
of a merger, reorganization, consolidation, recapitalization, dividend (other
than a regular cash dividend), stock split, or other change in corporate
structure affecting the shares. If any award granted under the Omnibus Plan is
forfeited or expires, the shares underlying the award will again be available
for use under the Omnibus Plan. Awards issued in substitution for awards made by
an acquired company do not reduce the number of shares available under the
Omnibus Plan.
Types Of Awards Under The Omnibus Plan
Stock Options. The terms of stock options granted under the Omnibus
Plan are determined by the Committee. The Committee determines the eligible
recipients, option price, the option expiration date, the number of shares
underlying the option, any conditions relating to the exercise of the option and
such other terms and conditions as the Committee, in its sole discretion, shall
determine. The Committee will also specify whether the option is intended to be
an incentive stock option ("ISO") under Section 422 of the Code or a
non-qualified stock option.
The option price for ISOs may not be less than the fair market value of
the Company's Common Stock on the date of grant. The option price for
non-qualified stock options is determined by the Committee at the time of grant.
To date, all stock options have been non-qualified options and the exercise
price has equaled the fair market value of the Company's Common Stock on the
date of grant. The Committee does not anticipate any departure from these
practices. The option exercise price may be paid (i) in cash, (ii) with Common
Stock or exercisable options (duly owned by the participant and free and clear
of any liens and encumbrances), based on the fair market value of the Common
Stock on the last trading date preceding payment, or (iii) by a combination of
cash and shares of Common Stock.
In the event of a Change of Control (as defined below), all
restrictions on outstanding awards will lapse and become fully vested. In the
Committee's discretion, all vested awards may be cashed out on bases determined
by the Committee. A "Change of Control" means a change of control of a nature
that would be required to be reported in response to Item 5(f) of Schedule 14A
of the Securities Exchange Act of 1934; provided that a change of control will
be deemed to have occurred if (i) a person, group or entity becomes the
beneficial owner of 20% or more of the Company's then outstanding securities
(excluding present owners), or (ii) during a consecutive two year period, the
individuals composing the Board of Directors at the beginning of such period and
new directors nominated or elected by at least three-fourths of the directors
cease to be a majority.
Restricted Stock, SAR's and Other Equity-Based Awards. Although no such
awards have been granted and the Committee does not anticipate such grants, the
Omnibus Plan authorizes awards of restricted stock, stock appreciation rights,
and other equity-based awards. Awards of restricted stock are shares granted to
a participant that are forfeited to the Company if the participant ceases to be
an employee of the Company or any of its subsidiaries during a restriction
period specified by the Committee. The Committee will determine the eligible
employees to whom, and the time or times at which, grants of restricted stock
will be made, the number of shares to be awarded, the time or times within which
such awards may be subject to forfeiture, the vesting schedule and rights to
acceleration thereof, and the other terms and conditions of the awards. The
provisions of the awards need not be the same with respect to each participant,
and awards to individual participants need not be the same in subsequent years.
Subject to the provisions of the Omnibus Plan, the Committee may provide for the
lapse of restrictions in installments and may waive such restrictions, in whole
or in part, at any time after the date of the award, based on such factors as
the Committee deems appropriate in its sole discretion. During the restricted
period, a participant may receive dividends and vote the restricted stock.
Stock appreciation rights ("SAR's") are awards whose value is based on
the appreciation of the underlying Common Stock. SAR's have an exercise price
established at date of grant, which is usually the fair market value of the
Common Stock. The value to participant is the fair market value of the
underlying Common Stock at exercise over the exercise price. Such value may be
paid in cash, in Common Stock, or restricted stock. SAR's may be granted in
conjunction with stock options (tandem SAR's) or separately (freestanding
SAR's). Subject to the provisions of the Omnibus Plan, the Committee may
determine eligibility, the number of SAR's to be awarded, the vesting schedule
and rights to acceleration thereof, and the other terms and conditions of the
awards.
Equity-based awards are awards whose value is based, in whole or in
part, by reference to the value of the Common Stock. Equity-based awards may be
issued in conjunction with stock options, restricted stock or SAR's or
separately. Subject to the provisions of the Omnibus Plan, the Committee may
determine eligibility, the number of equity-based awards to be granted, the
vesting schedule and rights to acceleration thereof, and the other terms and
conditions of the awards.
Federal Tax Consequences
The Federal income tax discussion set forth below is intended for
general information only. State and local income tax consequences are not
discussed and may vary from locality to locality.
Incentive Stock Options. In general, neither the grant nor the exercise
of an incentive stock option will result in taxable income to the option holder
or a deduction to the Company. Option holders exercising incentive stock options
may become subject to the alternative minimum tax by reason of that exercise.
If the stock received upon the exercise of an incentive stock option is
held for at least two years from the date of grant and at least one year after
the date of exercise, any gain or loss recognized upon a later disposition of
the stock will be considered long-term capital gain or loss and will be taxable
accordingly. If stock received upon exercise of an incentive stock option is
disposed of before the holding period requirements described above have been
satisfied (a "disqualifying disposition"), the option holder will realize
ordinary income, and the Company will be entitled to a deduction, equal in
general to the difference between the option price and the value of the stock on
the date of exercise. The amount of ordinary income realized on a disqualifying
disposition may be limited when the stock is sold for less than its value on the
exercise date. Incentive stock options will be treated for tax purposes as
non-qualified stock options (see below) to the extent the aggregate value
(determined at the time of grant) of the stock for which the options first
became exercisable in any calendar year exceeds $100,000.
Non-Qualified Stock Options. In the case of non-qualified options, no
income results upon the grant of the option. When an option holder exercises a
non-qualified option, he or she will realize ordinary income, subject to
withholding, equal in general to the excess of the then-fair market value of the
stock over the option price. The Company will in general be entitled to a
deduction equal to the amount of ordinary income realized by the optionee,
provided the Company satisfies certain withholding and reporting requirements.
Restricted Stock. An award of restricted stock will create no immediate
tax consequences for the employee or the Company unless the employee makes an
election pursuant to Section 83(b) of the Code. The employee will, however,
realize ordinary income when restricted stock becomes vested, in an amount equal
to the fair market value of the underlying shares of Common Stock on the date of
vesting less any consideration paid by the employee for such stock. If the
employee makes an election pursuant to Section 83(b) of the Code with respect to
a grant of restricted stock, the employee will recognize income at the time the
restricted stock is awarded (based upon the value of such stock at the time of
award), rather than when the restricted stock becomes vested. The Company will
be allowed a business expense deduction for the amount of any taxable income
recognized by the employee at the time such income is recognized (assuming the
Company complies with applicable reporting requirements).
Section 162(m) of the Code limits to $1 million the deduction a public
corporation may claim with respect to the remuneration paid in any year to any
of a corporation's chief executive officer and the other four most highly
compensated executive officers. The deduction limitation is subject to a number
of exemptions, including for "performance-based" compensation. It is anticipated
that options granted under the Omnibus Plan will be eligible for an exemption
from the $1 million deduction limitation.
The foregoing summary is limited to Federal income tax consequences and
does not purport to be a complete description of the tax consequences with
respect to the Omnibus Plan.
Withholding
The Company has the right to reduce the number of shares otherwise
deliverable under the Omnibus Plan by an amount that would have a fair market
value on such date equal to the amount of all Federal, state and local taxes
required to be withheld by the Company, or to deduct the amount of such taxes
from any cash payment otherwise to be made to the participant. In connection
with such withholding, the Committee may make arrangements that it deems
appropriate and consistent with the Omnibus Plan.
OTHER INFORMATION ABOUT DIRECTORS, OFFICERS
AND CERTAIN SHAREHOLDERS
Beneficial Ownership Of Directors, Officers and Certain Shareholders
The following table sets forth certain information regarding the
beneficial ownership of Western's Common Stock as of July 14, 1999, by (i) each
director of Western, (ii) each named executive officer in the Summary
Compensation Table, (iii) each person known or believed by Western to own
beneficially five percent or more of the Common Stock and (iv) all directors and
executive officers as a group. Unless indicated otherwise, each person has sole
voting and dispositive power with respect to such shares.
Name of Shareholders Beneficial Ownership (1)
Holding 5% or More, ----------------------------------------------
Director or Executive Officer Number of Shares Percent
-------------------------------- ---------------------- --------------------
Joe R. Love (2) 1,194,503 25.1
James E. Blacketer (3) 778,000 18.5
Shane Investments, L.C. (4) 500,500 13.4
Joe Robert Love, Jr. (5) 500,500 13.4
Red River Concepts, Inc. 250,000 6.7
Dominic W. Grimmett (6) 150,000 3.8
John R. Ritter (7) 125,000 3.3
John E. Adams (8) 29,500 *
All directors and officers 2,002,003 43.1
as a group (5 persons)(9)
- --------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally includes
voting or investment power with respect to securities. In accordance
with SEC rules, shares which may be acquired upon exercise of options,
warrants, rights or conversion privileges that are currently
exercisable or which become exercisable within 60 days of the date of
the table are deemed beneficially owned by the holder. Except as
indicated by footnote, and subject to community property laws where
applicable, the persons or entities named in the table above have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(2) Reflects (i) 250,000 shares held of record by Red River Concepts, Inc.
("Red River"), a company of which Mr. Love serves a director, (ii)
150,000 shares covered by options granted under an employee plan in
1997 and 1998 to CCDC, Inc., a company owned by certain trusts for the
benefit of Mr. Love's adult sons, and (iii) 200,000 shares covered by a
warrant granted in 1998 to CCDC. Mr. Love disclaims beneficial
ownership of the warrants and options held by CCDC. He also disclaims
beneficial ownership of shares owned by Shane Investments, L.C., an
entity controlled by Joe Robert Love Jr., an adult son, and 122,500
shares held by a trust for the benefit of another adult son.
(3) Reflects (i) 63,000 shares owned indirectly, (ii) 250,000 shares held
of record by Red River, a company of which Mr. Blacketer serves as an
officer and a director, (iii) 165,000 shares covered by options under
an employee plan, and (iv) 300,000 shares issuable under a purchase
agreement in exchange for a three-year note with interest at 10%
payable quarterly. Mr. Blacketer disclaims beneficial ownership of
152,000 shares owned by two adult sons.
(4) Reflects indirect beneficial ownership of (i) 250,000 shares held of
record by Red River, a company owned 100% by Shane Investments, L.C.,
(ii) 600,000 shares that Red River has an option to acquire, and (iii)
250,500 shares owned directly.
(5) Reflects indirect beneficial ownership of shares held of record by Red
River, a company owned 100% by Shane Investments, L.C. Mr. Love is the
manager and 100% owner of Shane Investments, L.C., is an officer and
director of Red River and is the adult son of Joe R. Love, a director
of the Company.
(6) Includes options to purchase 125,000 shares held by Mr. Grimmett. (7)
Includes options and warrants to purchase 90,000 shares held by Mr. Ritter.
(8) Reflects options to purchase 25,000 shares held by Mr. Adams.
(9) Includes options, warrants and other rights to purchase 913,750 shares
held directly or indirectly by executive officers and directors of the
Company. See notes 2, 3, 6, 7 and 8 above.
The business address of Messrs. Blacketer and Grimmett is 1601 N.W.
Expressway, Suite 1610, Oklahoma City, Oklahoma 73118. The business address of
Messrs. Love and Adams is 1601 N.W. Expressway, Suite 1910, Oklahoma City,
Oklahoma 73118. The business address of Mr. Lowrie is 1601 West Evans Ave.,
Denver, Colorado 80223.
Executive Compensation
The following table sets forth the compensation paid or accrued to the
Chief Executive Officer and each other executive officer whose salary and bonus
exceeded $100,000 (these persons are sometimes called the "named executive
officers") for services performed in 1998, 1997 and 1996.
Summary Compensation Table
Long Term
Compensation
Annual Compensation (1) Awards
-------------------------------------- -----------
Other
Annual All Other
Name and Compen- Compen-
Principal Position Year Salary($) Bonus($) sation(2) Options(#) sation ($)
- --------------------------------- ------- -------------- ----------- ---------- ----------- ------------
James E. Blacketer, 1998 107,433 5,000 - 300,000 -
Chief Executive Officer (5) 1997 98,500 5,000 - 165,000 -
1996 12,500 - - - -
Dominic W. Grimmett 1998 86,083 15,000 - 25,000 -
Chief Operating Officer (5) 1997 77,500 5,000 - 100,000 -
1996 13,333 - - - -
- --------------
(1) Amounts shown include cash and non-cash compensation earned and
received by the named executive officers as well as amounts earned but
deferred at their election.
(2) The Company provides various perquisites to certain employees including
the named executive officers. In each case, the aggregate value of the
perquisites provided to the named executive officers did not exceed the
lesser of $50,000 or 10% of such named executive officers' annual
salary and bonus.
(3) Mr. Blacketer and Mr. Grimmett became executive officers of the Company
in 1996. The compensation amounts reflect a partial year. Mr.
Blacketer's options issued in 1998 reflect 300,000 shares issuable
under a purchase agreement in exchange for a three-year note with
interest at 10% payable quarterly. The shares have not been issued nor
has the note been delivered.
Stock Options Granted in 1998
The following table sets forth information concerning the grant of
stock options during 1998 to the named executive officers.
Individual Grants
-------------------------------------------------------------------
Number of % of Total Potential Realizable Value at
Securities Options Assumed Annual Rates of Stock
Underlying Granted Price Appreciation for
Options Employees Option Terms (1)
Exercise Expiration
Name Granted (#) in 1998 Price ($/sh) Date (2) 5% ($) 10% ($)
---- ----------- ------- ----------- ------------- ------ -------
Dominic W. Grimmett 25,000 19.7 $.75 12/30/03 $5,180 $11,447
James F. Blacketer 300,000 (2) $.75 n/a $62,163 $137,365
--------------
(1) The assumed annual rates of increase are based on an annually
compounded increase of the exercise price through the five year option
term. The calculation of potential realizable value for Mr. Blacketer
disregards the interest payable on the stock purchase note. See
footnote (2) below.
(2) Mr. Blacketer's option amount reflects an agreement with the Company to
purchase 300,000 shares of Common Stock in exchange for a three-year
note in the principal amount of $225,000 with interest at 10% payable
quarterly. The shares have not been issued nor has the note been
delivered.
Stock Option Holdings
The following table sets forth the number of unexercised options held
by named executive officers as of December 31, 1998.
Number of Unexercised
Options at 12/31/98 (1)
---------------------------------------
Name Exercisable Unexercisable
------------------- ------------- ---------------
James F. Blacketer 465,000 -
Dominic W. Grimmett 125,000 -
--------------
(1) These options are exercisable at $.75 per share. Mr. Blacketer's
options include 300,000 shares issuable under a purchase
agreement in exchange for a three-year note with interest at 10%
payable quarterly. The shares have not been issued nor has the
note been delivered.
Certain Transactions
Sale of the Indy Club. On February 6, 1998, the partnership that owned
the Company's Indianapolis club sold the Indy club to a partnership affiliated
with Mr. Troy H. Lowrie, a former President and principal shareholder of the
Company. The Company owns 80% of the partnership. In exchange for the Indy club,
the purchaser gave the partnership a $600,000 note, which was collateralized by
732,191 shares of the Company's common stock, and assumed $490,426 of the
Company's long term debt and $60,078 of its accrued interest and taxes. The note
was due on February 6, 1999, and provided that the purchaser could pay the note
by tendering the collateral shares. Although the purchaser assumed the long-term
debt, the partnership was not released and remained contingently liable. This
sale resulted in a gain to the Company of $64,861.
The note was not paid when due. On April 14, 1999, CCDC, Inc., a
corporation affiliated with Mr. Joe R. Love, a director of the Company,
purchased 585,753 of the collateral shares from the purchaser for a $480,000
note due in two years and bearing interest at 6% per year. The partnership took
remaining 146,438 shares of collateral stock and agreed to accept the $480,000
note from Mr. Love in full settlement of the purchaser's note. The partnership
intends to liquidate by distributing 146,438 shares of the Company's common
stock to unrelated partners and assigning the $480,000 note from CCDC to the
Company.
Bonus Compensation Plan; CEO Borrowings. On February 24, 1999, the
Company implemented a bonus compensation plan. Under the plan, the Company will
pay its President, Mr. James Blacketer, a bonus of $10,000 per Company-owned
store for each new Atomic Burrito store. This payment excludes licensed and
jointly-owned stores. Mr. Blacketer will also receive a bonus of $15,000 for
each ten new Atomic Burrito, whether Company-owned, licensed or jointly owned.
For each 50 stores that the Company opens, whether Company-owned, licensed or
jointly owned, Mr. Blacketer shall receive a bonus of $25,000. If pre-tax
earnings exceed $600,000, $30,000; if $800,000, $50,000; $1,000,000, Mr.
Blacketer shall receive a bonus of $75,000.
This bonus plan is effective for 1999 and 2000, provided that Mr.
Blacketer remain as president and CEO of the Company during that time. All
payments to be paid under this bonus plan will first be applied to any amounts
owed by Mr. Blacketer to the Company. At December 31, 1998, Mr. Blacketer owed
the Company $143,340. The borrowed amount excludes $225,000 payable by Mr.
Blacketer under a purchase agreement for 300,000 shares. The shares have not
been issued nor has the note under the purchase agreement been delivered.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons beneficially owning more than 10% of the
Company's stock to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission and with the Company.
Based solely on a review of the reports sent to the Company and written
responses from the executive officers and directors, the Company is aware of the
following filings and transactions that were not reported timely in 1998:
Number of Number of
Name Late Reports Transactions Affected
---- ------------ ---------------------
John E. Adams 1 1
Dominic W. Grimmett 1 1
Joe R. Love 4 4
John W. Ritter 2 2
In each case, the failures related to grants of options or warrants. The Company
believes these persons have not yet filed the reports relating to these
transactions.
OTHER INFORMATION ABOUT THE ANNUAL MEETING
Other Matters Coming Before The Meeting
As of the date of this Proxy Statement, the Company knows of no
business to come before the meeting other than that referred to above. The
Company's rules of conduct for the annual meeting prohibit the introduction of
substantive matters not previously presented to the shareholders in a proxy
statement. As to other business, such as procedural matters, that may come
before the meeting, the person or persons holding proxies will vote those
proxies in the manner they believe to be in the best interests of the Company
and its shareholders.
Shareholder Proposals for the Next Annual Meeting
Any shareholder who wishes to present a proposal at the Company's 2000
Annual Meeting of Shareholders must deliver such proposal to the Secretary of
the Company by January 21, 2000, for inclusion in the Company's proxy, notice of
meeting, and proxy statement for the 2000 Annual Meeting.
Additional Information
The Company will bear the cost of soliciting proxies. Officers and
regular employees of the Company may solicit proxies by further mailings,
personal conversations, or by telephone, facsimile or other electronic
transmission. They will do so without compensation other than their regular
compensation. The Company will, upon request, reimburse brokerage firms and
others for their reasonable expenses in forwarding solicitation material to the
beneficial owners of stock.
THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO, FOR THE YEAR ENDED DECEMBER 31, 1998, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED WITHOUT CHARGE TO
ANY SHAREHOLDER UPON WRITTEN REQUEST ADDRESSED TO MR. DOMINIC W. GRIMMETT,
SECRETARY, WESTERN COUNTRY CLUBS, INC., 1601 N.W. EXPRESSWAY, SUITE 1610,
OKLAHOMA CITY, OKLAHOMA 73118. SHAREHOLDERS REQUESTING EXHIBITS TO THE FORM
10-KSB WILL BE PROVIDED THE SAME UPON PAYMENT OF REPRODUCTION EXPENSES.
Sincerely,
Dominic W. Grimmett
Secretary
July 27, 1999
Western Country Clubs, Inc. This Proxy Is Solicited on Behalf of the
1601 N.W. Expressway, Suite 1610 Board of Directors
Oklahoma City, Oklahoma 73118 The undersigned hereby appoints James E.
Blacketer and Joe R. Love as Proxies, each
with the power to appoint his substitute,
and hereby authorizes them to represent
and to vote, as designated below, all the
shares of common stock of Western Country
Clubs, Inc. held of record by the
undersigned on July 14, 1999, at the
Annual Meeting of Shareholders to be held
on August 31, 1999, or any adjournment
thereof.
1. ELECTION OF DIRECTORS FOR all nominees listed below
(except as marked to the contrary below)
WITHHOLD AUTHORITY
to vote for all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee strike
through the nominee's name below.)
James E. Blacketer, Joe R. Love, John R. Ritter and John E. Adams
2. REINCORPORATION OF THE COMPANY IN OKLAHOMA (AND CHANGE OF NAME TO ATOMIC
BURRITO, INC.).
FOR AGAINST ABSTAIN
3. APPROVAL OF THE OMNIBUS EQUITY COMPENSATION PLAN.
FOR AGAINST ABSTAIN
4. TRANSACTION OF INCIDENTAL BUSINESS
FOR AGAINST ABSTAIN
(over)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH OF THE DIRECTOR NOMINEES AND FOR APPROVAL OF THE OMNIBUS EQUITY
COMPENSATION PLAN.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
DATED:____________________________, 1999
----------------------------------------
(Signature)
----------------------------------------
(Signature if held jointly)
Please mark, sign, date and return this Proxy Card promptly using the enclosed
envelope.
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is made as
of August __, 1999, by and between Western Country Clubs, Inc., a Colorado
corporation ("Western"), and Western Oklahoma, Inc., an Oklahoma corporation
("Western Oklahoma". Western and Western Oklahoma are called collectively the
"Constituent Corporations".
Recitals
A. Western's authorized capital stock consists of 25,000,000 shares of
Common Stock, par value of $.01 per share, and 10,000,000 shares of Preferred
Stock, par value of $.10 per share. Western Oklahoma's authorized capital stock,
upon effectuation of the transactions set forth in this Merger Agreement, will
consist of 25,000,000 shares of Common Stock, par value of $.01 per share, and
10,000,000 shares of Preferred Stock, par value of $.10 per share.
B. The directors of the Constituent Corporations deem it advisable and
to the advantage of the Constituent Corporations that Western merge with and
into Western Oklahoma upon the terms and conditions provided in this Merger
Agreement.
NOW, THEREFORE, the parties adopt the plan of reorganization
encompassed by this Merger Agreement and agree that Western shall merge with and
into Western Oklahoma on the following terms, conditions and other provisions:
Terms and Conditions
1. THE MERGER
1.1 Merger. Western shall be merged with and into Western Oklahoma (the
"Merger"), and Western Oklahoma shall be the surviving corporation (the
"Surviving Corporation") effective at 12:01 p.m., August ___, 1999 (the
"Effective Date").
1.2 Name Change. On the Effective Date, the name of Western Oklahoma
shall be Atomic Burrito, Inc.
1.3 Succession. On the Effective Date, Western Oklahoma shall continue
its corporate existence under the laws of the State of Oklahoma, and Western's
separate existence and corporate organization, except as it may be continued by
operation of law, shall be terminated and cease.
1.4 Transfer of Assets and Liabilities. On the Effective Date, the
rights, powers, privileges, and franchises of each of the Constituent
Corporations shall be vested in and possessed by the Surviving Corporation,
subject to all of the disabilities, duties and restrictions of or upon each of
the Constituent Corporations; and all singular rights, privileges, powers and
franchises of each of the Constituent Corporations, and all property, real,
personal and mixed, of each of the Constituent Corporations, and all debts due
to each of the Constituent Corporations on whatever account, and all things in
action or belonging to each of the Constituent Corporations shall be transferred
to and vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises, and all and every other interest, thereafter
shall be the property of the Surviving Corporation as they were of the
Constituent Corporations, and the title to any real estate vested by deed or
otherwise in either of the Constituent Corporations shall not revert or be in
any way impaired by reason of the Merger; provided, however, that the
liabilities of the Constituent Corporations and of their shareholders, directors
and officers shall not be affected and all rights of creditors and all liens
upon any property of either of the Constituent Corporations shall be preserved
unimpaired, and any claim existing or action or proceeding pending by or against
either of the Constituent Corporations may be prosecuted to judgment as if the
Merger had not been consummated, except as they may be modified with the consent
of such creditors, and all debts, liabilities and duties of or upon each of the
Constituent Corporations shall attach to the Surviving Corporation, and may be
enforced against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it.
1.5 Common Stock of Western and Western Oklahoma. On the Effective
Date, by virtue of the Merger and without any further action on the part of the
Constituent Corporations or their respective shareholders, (i) each share of
Common Stock of Western issued and outstanding immediately prior thereto shall
be combined, changed and converted into one share of Common Stock of Western
Oklahoma, in each case fully paid and nonassessable, and (ii) each share of
Common Stock of Western Oklahoma issued and outstanding immediately prior
thereto shall be canceled and returned to the status of authorized but unissued
shares.
1.6 Stock Certificates. On and after the Effective Date, all of the
outstanding certificates that had represented shares of Common Stock of Western
shall evidence ownership of and represent the shares of Western Oklahoma into
which the shares of Western have been converted, and shall be so registered on
the books and records of the Surviving Corporation or its transfer agents. Until
the Western certificates are surrendered and exchanged, the registered owner of
an outstanding Western certificate shall have and be entitled to exercise any
voting and other rights with respect to and to receive any dividend and other
distribution upon the shares of Western Oklahoma evidenced by such outstanding
certificate.
1.7 Options. On the Effective Date, if any options or rights granted to
purchase shares of Common Stock of Western under the 1995 Stock Option Plan and
the 1997 Omnibus Equity Compensation Plan remain outstanding, then the Surviving
Corporation will assume the outstanding and unexercised portions of such options
and such options shall be changed and converted into options to purchase Common
Stock of Western Oklahoma, such that an option to purchase one share of Common
Stock of Western shall be converted into an option to purchase one share of
Common Stock of Western Oklahoma. No other changes in the terms and conditions
of such options will occur.
1.8 Warrants. On the Effective Date, the Surviving Corporation will
assume the outstanding obligations of Western to issue Common Stock or other
capital stock pursuant to warrants or other contractual rights to purchase
granted by Western, and the outstanding and unexercised portions of all
outstanding warrants to purchase Common Stock or other capital stock of Western
shall be changed and converted into warrants to purchase Common Stock or other
capital stock, respectively, of Western Oklahoma such that a warrant to purchase
one share of Common Stock or other capital stock of Western shall be converted
into a contractual right to purchase one share of Common Stock or other capital
stock, respectively, of Western Oklahoma. No other changes in the terms and
conditions of such contractual purchase rights will occur.
1.9 Employee Benefit Plans. On the Effective Date, the Surviving
Corporation shall assume all obligations of Western under any and all employee
benefit plans in effect as of such date with respect to which employee rights or
accrued benefits are outstanding as of such date. On the Effective Date, the
Surviving Corporation shall adopt and continue in effect all such employee
benefit plans upon the same terms and conditions as were in effect immediately
prior to the Merger.
2. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of Western Oklahoma in effect on the Effective Date shall continue
to be the Certificate of Incorporation of the Surviving Corporation; provided
that Western Oklahoma's name shall be changed as provided in Section 1.2 above.
The Bylaws of Western Oklahoma in effect on the Effective Date shall continue to
be the Bylaws of the Surviving Corporation without change or amendment.
2.2 Directors. The directors of Western immediately preceding the
Effective Date shall become the directors of the Surviving Corporation to serve
until the expiration of their terms and until their successors are elected and
qualified.
2.3 Officers. The officers of Western immediately preceding the
Effective Date shall become the officers of the Surviving Corporation to serve
at the pleasure of its Board of Directors.
3. MISCELLANEOUS
3.1 Further Assurances. The Surviving Corporation shall execute and
deliver such deeds and other instruments, and take such further and other action
as shall be appropriate or necessary in order to vest or perfect in or to
conform of record or otherwise, in the Surviving Corporation the title to and
possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of Western Oklahoma and otherwise
to carry out the purposes of this Merger Agreement, and the officers and
directors of the Surviving Corporation are authorized fully in the name and on
behalf of Western Oklahoma or otherwise to take any and all such action and to
execute and deliver any and all such deeds and other instruments.
3.2 Amendment. At any time before or after approval by the shareholders
of Western, this Merger Agreement may be amended in any manner (except that,
after the approval of the Merger Agreement by the shareholders of Western, the
principal terms may not be amended without the further approval of the
shareholders of Western) as may be determined in the judgment of the respective
Board of Directors of Western Oklahoma and Western to be necessary, desirable,
or expedient in order to clarify the intention of the parties hereto or to
effect or facilitate the purpose and intent of this Merger Agreement.
3.3 Conditions to Merger. The obligation of the Constituent
Corporations to effect these transactions is subject to satisfaction of the
following conditions (any or all of which may be waived by either of the
Constituent Corporations in its sole discretion to the extent permitted by law):
(a) the Merger shall have been approved by the shareholders of Western
in accordance with applicable provisions of the Colorado Business Corporation
Act; and
(b) Western, as sole shareholder of Western Oklahoma, shall have
approved the Merger in accordance with the General Corporation Law of the State
of Oklahoma; and
(c) any and all consents, permits, authorizations, approvals, and
orders deemed in the sole discretion of Western to be material to consummation
of the Merger shall have been obtained.
3.4 Abandonment or Deferral. Notwithstanding the approval of this
Merger Agreement by the shareholders of Western or Western Oklahoma, at any time
before the Effective Date, (a) this Merger Agreement may be terminated and the
Merger may be abandoned by the Board of Directors of either Western or Western
Oklahoma or both, or (b) the consummation of the Merger may be deferred for a
reasonable period of time if, in the opinion of the Boards of Directors of
Western and Western Oklahoma, such action would be in the best interests of such
corporations. In the event of termination of this Merger Agreement, this Merger
Agreement shall become void and of no effect and there shall be no liability on
the part of either Constituent Corporation or their respective Board of
Directors or shareholders with respect thereto, except that Western shall pay
all expenses incurred in connection with the Merger or in respect of this Merger
Agreement or relating thereto.
3.5 Counterparts. To facilitate the filing and recording of this Merger
Agreement, it may be executed in any number of counterparts, each of which shall
be deemed to be an original.
IN WITNESS WHEREOF, this Merger Agreement, having first been duly
approved by the Board of Directors of Western and Western Oklahoma, hereby is
executed on behalf of each such corporations and attested by their respective
officers thereunto duly authorized.
WESTERN COUNTRY CLUBS, INC.
A Colorado corporation
Attest:
By: _______________________________
James A. Blacketer, President
By: __________________________________
Dominic W. Grimmett, Secretary
WESTERN OKLAHOMA, INC.
An Oklahoma corporation
Attest:
By: _______________________________
James A. Blacketer, President
By: __________________________________
Dominic W. Grimmett, Secretary
APPENDIX B
CERTIFICATE OF INCORPORATION
of
WESTERN OKLAHOMA, INC.
The undersigned, a natural person (the "Sole Incorporator"), for the
purpose of organizing a corporation to conduct the business and promote the
purposes hereinafter stated, under the provisions and subject to the
requirements of the laws of the State of Oklahoma hereby certifies that:
ARTICLE I.
The name of this Corporation is "Western Oklahoma, Inc."
ARTICLE II.
The address of the registered office of the Corporation in the State of
Oklahoma is 1601 N.W. Expressway, Suite 1910, Oklahoma City, Oklahoma County,
Oklahoma 73118, and the name of the registered agent of the Corporation in the
State of Oklahoma at such address is John Hudson.
ARTICLE III.
The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Act of the State of Oklahoma.
ARTICLE IV.
A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock". The total number
of shares which the Corporation is authorized to issue is 35,000,000 shares, of
which 25,000,000 shares shall be Common Stock, par value $.01 per share, and
10,000,000 shares shall be Preferred Stock, par value $.10 per share.
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Oklahoma General Corporation Act,
to fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions of any wholly unissued series of Preferred Stock, and to establish
from time to time the number of shares constituting any such series or any of
them; and to increase or decrease the number of shares of any series subsequent
to the issuance of shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be decreased in accordance with the foregoing sentence, the shares constituting
such decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
C. 1. Designation and Amount. The Corporation hereby creates a series
of its Preferred Stock that shall be designated "Series A Cumulative Convertible
Redeemable Preferred Stock" (the "Series A Preferred Stock") and the number of
shares constituting such series shall be forty thousand (40,000).
2. Dividends and Distributions. The holders of Series A Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first banking day of each January, April, July and
October in each year beginning April 1, 1998 (each such date being referred to
as a "Dividend Payment Date") at the rate of $.25 per share ($1.00 per share
annually). Dividends payable on shares of the Series A Preferred Stock for the
initial dividend period and for any period less than a full quarterly period
shall be computed on the basis of a 360-day year of twelve 30-day months.
Such dividends shall be cumulative and the Corporation shall
accrue an amount equal to the dividend payable if and when dividends are not
paid in full on the Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. The Board of Directors may fix a record date for the
determination of holders of Series A Preferred Stock entitled to receive payment
of a declared dividend, which record date shall be no more than 60 days prior to
the date fixed for payment.
The Corporation shall have declared and paid in full or set apart
for payment dividends on the Series A Preferred Stock at the annual rate of
$1.00 per share commencing upon issuance, less any cash dividends previously
declared and paid in full on the Series A Preferred Stock, before the
Corporation may:
(i) pay dividends on, make any other distributions on, or redeem
or purchase or otherwise acquire for consideration any class of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for, or out of the net cash proceeds from the sale
of, other shares of any such junior stock,
(ii) pay dividends on or make any other distributions on any stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and all such parity
stock on which dividends are payable in proportion to the total amounts to
which the holders of all such shares are then entitled,
(iii)redeem or purchase or otherwise acquire for consideration any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of the
Corporation ranking junior to the preferred stock,
(iv) purchase or otherwise acquire for consideration any shares of
the Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes. The Corporation shall not permit
any subsidiary of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the Corporation
could purchase such shares at such time and in such manner.
In case the Corporation at any time or from time to time shall (A)
issue immediately exercisable rights or warrants to all holders of shares of its
Common Stock entitling them to subscribe for or purchase shares of its Common
Stock (or securities convertible into its Common Stock) at a price per share (or
having a conversion price per share) less than the Current Market Price per
share of Common Stock (as defined in Section C.(7)) on the record date fixed for
the determination of shareholders entitled to receive such right or warrant, or
(B) declare, order, pay or make a dividend or other distribution (including,
without limitation, any distribution of other or additional stock or other
securities or property or rights or warrants to subscribe for securities of the
Corporation or any of its subsidiaries by way of dividend or spin-off,
reclassification, recapitalization or similar corporate rearrangement) on its
Common Stock, other than a dividend payable in cash or shares of the
Corporation's Common Stock or rights or warrants to subscribe for shares of the
Corporation's Common Stock, then the Board of Directors shall, at the same time
or times, declare, order, pay and make a dividend or other distribution on each
share of Series A Preferred Stock that is equivalent to such dividend or other
distribution declared, ordered, paid or made on each share of Common Stock,
multiplied by the number of shares of Common Stock into which a share of Series
A Preferred Stock would be convertible on the record date for such action.
3. Voting Rights. The holders of Series A Preferred Stock shall
have the following voting rights:
(i) Each share of Series A Preferred Stock shall entitle its
holder to one vote on all matters submitted to a vote of the Corporation's
shareholders;
(ii)Except as otherwise provided herein or by law, the holders of
Series A Preferred Stock and the holders of Common Stock shall vote
together as one class on all matters submitted to a vote of the
Corporation's shareholders;
(iii) The consent of the holders of at least a majority of the
outstanding shares of the Series A Preferred Stock, voting separately as a
single class, in person or by proxy, either in writing without a meeting or
at a special or annual meeting of shareholders called for the purpose,
shall be necessary to (a) create, authorize, or issue any stock ranking
senior to the Series A Preferred Stock as to dividends, liquidations,
dissolution, or winding up; (b) create, authorize, or issue any securities
convertible into, or warrants, options, or similar rights to acquire stock
ranking senior to the Series A Preferred Stock as to dividends,
liquidations, dissolution, or winding up; or (c) amend the preferences and
rights of the Series A Preferred Stock, in any manner that would materially
alter the relative rights and preferences of the Series A Preferred Stock
so as to adversely affect holders thereof. Notwithstanding the foregoing or
anything herein to the contrary, no approval by the holders of the Series A
Preferred Stock, voting as a class, shall be required for the approval of
any amendment that effects a division of the Series A Preferred Stock into
a greater number of shares or creates another series of Preferred Stock,
which may be on parity with or junior to the Series A Preferred Stock.
4. Reacquired Stock. Any shares of the Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors.
5. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (i)
to the holders of stock ranking junior to the Series A Preferred Stock as to
liquidations, dissolution, or winding up unless, prior thereto, the holders of
Series A Preferred Stock shall have received $10.00 per share plus an amount
equal to any declared but unpaid dividends thereon, or (ii) to the holders of
stock ranking on a parity with the Series A Preferred Stock as to liquidations,
dissolution, or winding up, unless distributions are made ratably on the Series
A Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
Neither the merger or consolidation or reorganization of this
Corporation with or into another corporation nor the sale, lease, or transfer of
all or substantially all the Corporation's assets shall be deemed to be a
liquidation, dissolution, or winding up within the meaning of this Section
C.(5).
6. Conversion. Each share of the Series A Preferred Stock shall
entitle its holder to certain conversion rights, subject to certain rights of
the Corporation, all of which are set forth below in this Section C.(6):
(A) At any time and from time to time after the first anniversary
of the issuance of the Series A Preferred Stock, the holder shall have the
right, at the holder's sole option and election, to convert each share of
the Series A Preferred Stock in the manner hereinafter set forth, into ten
fully paid and non-assessable shares of Common Stock of the Corporation
(the "Conversion Rate"). The Board of Directors of the Corporation may
appropriately adjust the Conversion Rate in light of stock splits or
combinations or Section C.(7) events and may establish procedures by which
this conversion shall occur.
(B) If less than all of the Series A Preferred Stock at the time
outstanding are to be converted, the shares to be converted shall be
converted on a pro rata basis;
(C) The holder of any shares of the Series A Preferred Stock may
exercise his option to convert such shares into shares of Common Stock by
surrendering for such purpose to the Corporation, at its principal office
or at such other office or agency maintained by the Corporation for that
purpose, a certificate of certificates representing the share of Series A
Preferred Stock to be converted accompanied by a written notice stating
that such holder elects to convert all or a specified whole number of such
shares in accordance with the provisions of this Section C.(6) and
specifying the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case such notice
shall specify a name or names other than that of such holder, such notice
shall be accompanied by payment of all transfer taxes payable upon the
issuance of shares of Common Stock in such name or names. As promptly as
practicable, and in any event within five business days after the surrender
of such certificates and the receipt of such notice relating thereto and,
if applicable, payment of all transfer taxes, the Corporation shall deliver
or cause to be delivered (i) certificates representing the number of
validly issued, fully paid and non-assessable shares of Common Stock of the
Corporation to which the holder of the Series A Preferred Stock so
converted shall be entitled and (ii) if less than the full number of shares
of the Series A Preferred Stock evidenced by the surrendered certificate or
certificates are being converted, a new certificate or certificates, of
like tenor, for the number of shares evidenced by such surrendered
certificate or certificates less the number of shares converted. Such
conversions shall be deemed to have been made at the close of business on
the date of giving of such notice of such surrender of the certificate or
certificates representing the shares of the Series A Preferred Stock to be
converted so that the rights of the holder thereof shall cease except for
the right to receive Common Stock of the Corporation in accordance
herewith, and the converting holder shall be treated for all purposes as
having become the record holder of such Common Stock of the Corporation at
such time;
(D) The Corporation shall not be required to issue fractional
shares of Common Stock upon conversion, but shall aggregate the number of
fractional shares otherwise issuable to a converting holder to maximize the
number of whole shares issuable, and shall pay any remaining fractional
share in cash based on the Current Market Price.
(E) The number of shares of Common Stock into which each share of
the Series A Preferred Stock is convertible shall be adjusted from time to
time as follows:
(i) In case the Corporation shall at any time or from time to
time declare or pay any dividend on its Common Stock payable in its
Common Stock or effect a subdivision of the outstanding shares of its
Common Stock into a greater number of shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in its
Common Stock), then, and in each such case, the number of shares of
Common Stock into which each share of the Series A Preferred Stock is
convertible shall be adjusted so that the holder of each share thereof
shall be entitled to receive, upon the conversion thereof, the number
of shares of Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event by (b) a fraction,
the numerator of which is the sum of (I) the number of shares of Common
Stock into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number of shares of Common Stock
which such holder would have been entitled to receive in connection
with the occurrence of such event had such share been converted
immediately prior thereto, and the denominator of which is the number
of shares of Common Stock determined in accordance with clause (I)
above. An adjustment made pursuant to this subparagraph (E)(i) shall
become effective (a) in the case of any such dividend, immediately
after the close of business on the record date for the determination of
holders of Common Stock entitled to receive such dividend, or (b) in
the case of any such subdivision, at the close of business on the day
immediately prior to the day upon which such corporate action becomes
effective;
(ii) In case the Corporation at any time or from time to time
shall combine or consolidate the outstanding shares of its Common Stock
into a lesser number of shares of Common Stock, by reclassification or
otherwise, then, and in each such case, the number of shares of Common
Stock into which each share of the Series A Preferred Stock is
convertible shall be adjusted so that the holder of each share thereof
shall be entitled to receive, upon the conversion thereof, the number
of shares of Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event by (b) a fraction,
the numerator of which is the number of shares which the holder would
have owned after giving effect to such event had such share been
converted immediately prior to the occurrence of such event and the
denominator of which is the number of Common Shares into which such
share was convertible immediately prior to the occurrence of such
event. An adjustment made pursuant to this subparagraph (E)(ii) shall
become effective at the close of business on the day immediately prior
to the day upon which such corporate action becomes effective;
(F) If any adjustment in the number of shares of Common Stock into
which each share of the Series A Preferred Stock may be converted required
pursuant to this Section C.(6) would result is an increase or decrease of
less than one percent of the number of shares of Common Stock into which
each share of the Series A Preferred Stock is then convertible, the amount
of any such adjustment shall be carried forward and adjustment with respect
thereto shall be made at the time of and together with any subsequent
adjustment which, together with such amount and any other amount or amounts
so carried forward, shall aggregate at least one percent of the number of
shares of Common Stock into which each share of the Series A Preferred
Stock is then convertible. All calculations under this paragraph (D) shall
be made to the nearest one-tenth of a share;
(G) The Corporation shall at all times reserve and keep available
out of its authorized Common Stock the full number of shares of Common
Stock of the Corporation issues upon the conversion of all outstanding
shares of the Series A Preferred Stock; and
(H) Shares of the Series A Preferred Stock may not be converted
between the close of business on the third business day preceding the date
fixed for redemption of such shares pursuant to Section C.(9) and the
redemption date.
7. Adjustments For Consolidation, Merger, Etc. In case the
Corporation, (i) shall consolidate with or merge into any other person and shall
not be the continuing or surviving corporation of such consolidation or merger,
(ii) shall permit any other person to consolidate with or merge into the
Corporation and the Corporation shall be the continuing or surviving person,
but, in connection with such consolidation or merger, the Common Stock shall be
changed into or exchanged for stock or other securities of any other person or
cash or any other property, (iii) shall transfer all or substantially all of its
properties or its assets to any other person, or (iv) shall effect a capital
reorganization or reclassification of the Common Stock (other than a capital
reorganization or reclassification resulting in the issue of additional shares
of Common Stock for which adjustment is provided in Section C.(6)), then, and in
each such case, prior provisions shall be made so that each share of Series A
Preferred Stock then outstanding shall be converted into, or exchanged for, one
share of preferred stock (the "Substitute Preferred Stock") of the "Acquiring
Corporation" (as hereinafter defined) entitling the holder thereof to all of the
rights, powers, privileges and preferences with respect to the Acquiring
Corporation to which the holder of a share of Series A Preferred Stock is
entitled with respect to the Corporation, and being subject with respect to the
Acquiring Corporation to the qualifications, limitations and restrictions to
which a share of Series A Preferred Stock is subject with respect to the
Corporation, except that in lieu of and notwithstanding the provisions for
conversion set forth in Section C.(6), each share of Substitute Preferred Stock
shall be convertible at any time, at the option of the holder thereof, into the
number of shares of "Voting Common Stock" (as hereinafter defined) of the
Acquiring Corporation or, if the Acquiring Corporation shall not meet the
requirements of the proviso hereto, its "Parent" (as hereinafter defined),
subject to adjustments (subsequent to consummation of such transaction) as
nearly equivalent as possible to the adjustments provided for in Section C.(6)
and this Section C.(7), determined by multiplying the number of shares of Common
Stock into which each share of the Series A Preferred Stock was convertible
immediately prior to consummation of such transaction by a fraction, the
numerator of which is the "Acquisition Price" (as hereinafter defined) and the
denominator of which is the lesser of (a) the Current Market Price (as
hereinafter defined) per share of the Voting Common Stock of the Acquiring
Corporation or its Parent, as the case may be, on the date of such consummation
or (b) the Current Market Price per share of the Voting Common Stock of the
Acquiring Corporation or its Parent, as the case may be, on the date of such
conversion. Notwithstanding anything contained herein to the contrary, the
Corporation will not effect any of the transactions described in clauses (i)
through (iv) above unless, prior to the consummation thereof, each corporation,
including this Corporation, which may be required to deliver any stock,
securities, cash or other property to the holders of shares of the Series A
Preferred Stock shall assume, by written instrument delivered to each transfer
agent of the Series A Preferred Stock, the obligation to deliver to such holder
such shares of stock, securities, cash or other property to which, in accordance
with the foregoing provisions, such holder may be entitled and each such
corporation shall have furnished to each such transfer agent an opinion of
counsel for such corporation, stating that such assumption agreement is legal,
valid and binding upon such corporation.
For purposes of this Section C.(7), the term "Voting Common Stock"
with respect to any corporation shall mean the common stock of such corporation
ordinarily entitled to elect a majority of the directors constituting the full
board of directors of such corporation; the term "Acquiring Corporation" shall
mean the continuing or surviving corporation of a consolidation or merger with
the Corporation (if other than the Corporation), the transferee of all or
substantially all of the properties and assets of this Corporation, the
corporation consolidating with or merging into the Corporation in a
consolidation or merger in which the Corporation is the continuing or surviving
person, but in connection with which the Common Stock of the Corporation is
changed into or exchanged for the stock or other securities of any other person
or cash or any other property, or, in case of a capital reorganization or
reclassification, the Corporation; the term "Parent" shall mean, as to any
Acquiring Corporation, any corporation which (i) controls the Acquiring
Corporation directly or indirectly through one or more intermediaries, (ii) is
required to include the Acquiring Corporation in the consolidated financial
statements contained in such Parent's Annual Reports on Form 10-K and (iii) is
not itself included in the consolidated financial statements of any other person
(other than its consolidated subsidiaries); and the term "Acquisition Price"
shall mean, as applied to the Common Stock, the greatest of whichever of the
following are applicable: (1) the Current Market Price per share of Common Stock
on the date on which any transaction to which this Section C.(7) applies is
consummated; (2) if a purchase, tender or exchange offer is made by the
Acquiring Corporation (or by any of its Affiliates) to the holders of the Common
Stock and such offer is accepted by the holders of more than 50% of the
outstanding shares of Common Stock, the greater of (x) the price determined in
accordance with the provisions of the foregoing clause (1) of this definition
and (y) the Current Market Price per share of Common Stock on the date of
acceptance of such offer by the holders of more than 50% of the outstanding
shares of Common Stock; and (3) the highest price (in cash or Fair Market Value
of securities or other property) paid for a share of Common Stock of which the
Acquiring Person is the Beneficial Owner and acquired by the holder thereof
during the one year immediately preceding the Stock Acquisition Date or in the
transaction in which such Acquiring Person.
The term "Current Market Price" shall mean, as applied to any
class of stock on any date, the average of the daily "Closing Prices" (as
hereinafter defined) for the 20 consecutive "Trading Days" (as hereinafter
defined) immediately prior to the date in question; provided, however, that in
the event that the Current Market Price per share of Common Stock is determined
during a period following the announcement by the Corporation of a dividend or
distribution on its Common Stock payable in shares of its Common Stock or
securities convertible into shares of its Common Stock, and prior to the
expiration of twenty Trading Days after the ex-dividend date for such dividend
or distribution, then, and in each such case, the Current Market Price shall be
appropriately adjusted to reflect the Current Market Price per Common Stock
equivalent. The term "Closing Price" on any day shall mean the last sales price,
regular way, per share of such stock on such day, or, if no such sale takes
place on such day, the closing bid price, regular way, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of such
stock are listed or admitted to trading or, if the shares of such stock are not
listed or admitted to trading on any national securities exchange, the closing
bid price in the Nasdaq System. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which shares of such stock are
listed or admitted to trading is open for the transaction of business or, if the
shares of such stock are not listed or admitted to trading on any national
securities exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on which
national banking institutions are not authorized or obligated by law or
executive order to close.
8. Reports as to Adjustments. Whenever the number of shares of
Common Stock into which the shares of the Series A Preferred Stock are
convertible is adjusted as provided in Section C.(6), the Corporation shall
promptly compute such adjustment and furnish to each transfer agent for the
Series A Preferred Stock a certificate, signed by a principal financial officer
of the Corporation, setting forth the number of shares of Common Stock into
which each share of the Series A Preferred Stock is convertible as a result of
such adjustment, a brief statement of the facts requiring such adjustment and
the computation thereof and when such adjustment will become effective
9. Redemption. The Corporation shall redeem shares of Series A
Preferred Stock pursuant to the following provisions:
(A) Commencing upon the first anniversary of the issuance of the
Series A Preferred Stock, the Corporation shall redeem the shares of the
Series A Preferred Stock in four equal, annual installments (adjusted for
any capital reorganization, reclassification or recapitalization of the
Corporation that changes the number of the Series A Preferred Stock shares
outstanding) at a redemption price of $10.00 per share, plus an amount
equal to all declared but unpaid dividends thereon;
(B) In addition to the provisions of paragraph (A), (i) the
Corporation shall apply one-half of the proceeds from the payment on or
before June 1, 1998, of any notes receivable to redeem shares of the Series
A Preferred Stock; and (ii) either the Corporation or a holder of shares of
the Series A Preferred Stock shall have the right to redeem or compel the
redemption of shares (as the case may be) of the Series A Preferred Stock
out of the net proceeds of any public or private offering by the
Corporation of shares of its Common Stock or any other series of preferred
stock. The redemption rights set forth in proviso (ii) shall not apply to
sales of capital stock in connection with a merger or other acquisition,
the exercise of stock options, warrants or other rights, an exchange for
other securities or obligations, the cancellation or settlement of debt,
claims or other obligations, or offerings the net proceeds of which are
less than $500,000.
(C) In a redemption under paragraph (A) or (B) other than a
holder's exercise of the option to compel redemption under proviso (ii) of
paragraph (B), the Corporation shall mail a notice of redemption of the
Series A Preferred Stock at least 30, but not more than 60, days prior to
the date fixed for redemption to each holder of Series A Preferred Stock to
be redeemed, at such holder's address as it appears on the books of the
Corporation. In order to facilitate the redemption of the Series A
Preferred Stock, the Board of Directors may fix a record date for the
determination of holders of Series A Preferred Stock to be redeemed, or may
cause the transfer books of the Corporation to be closed for the transfer
of the Series A Preferred Stock, not more than 60 days prior to the date
fixed for such redemption. If a holder desires to exercise the option to
compel redemption under proviso (ii) of paragraph (B), the holder shall
mail a notice of redemption to the Corporation within 30 days after the
closing of the offering that gave rise to the redemption right. The notice
shall specify a redemption date between ten and 30 days after the notice
for payment of the redemption price.
(D) On the redemption date specified in the notice given pursuant
to paragraph (C), the Corporation shall, and at any time after such notice
shall have been mailed and before such redemption date the Corporation may,
deposit for the pro rata benefit of the holders of the shares of the Series
A Preferred Stock so called for redemption the funds necessary for such
redemption with a bank or trust company. Any monies so deposited by the
Corporation and unclaimed at the end of five years from the date designated
for such redemption shall revert to the general fund of the Corporation.
After such redemption, any such bank or trust company shall, upon demand,
pay over to the Corporation such unclaimed amounts and thereupon such bank
or trust company shall, upon demand, pay over to the Corporation such
unclaimed amounts and thereupon such bank or trust company shall be
relieved of all responsibility in respect thereto to such holder and such
holder shall look only to the Corporation for the payment of the redemption
price. In the event that monies are deposited pursuant to this paragraph
(D) in respect of shares of the Series A Preferred Stock that are converted
in accordance with the provisions of Section C.(6), such monies shall upon
such conversion, revert to the general funds of the Corporation and, upon
demand, such bank or trust company shall pay over to the Corporation such
monies and shall thereupon be relieved of all responsibility to the holders
of such shares in respect thereof. Any interest accrued on funds so
deposited pursuant to this paragraph (D) shall be paid from time to time to
the Corporation for its own account; and
(E) Upon the deposit of funds pursuant to paragraph (D) in respect
of shares of the Series A Preferred Stock called for redemption,
notwithstanding that any certificates for such shares shall not have been
surrendered for cancellation, the shares represented thereby shall no
longer be deemed outstanding, and all rights of the holders of the shares
of the Series A Preferred Stock called for redemption shall cease and
terminate, excepting only the right to receive the redemption price
therefor and the right to convert such shares into shares of Common Stock
until the close of business on the third business day preceding the
redemption date, as provided in Section C.(6).
10. Notices of Corporate Action. In the event of:
(A) Any taking by the Corporation by a record of the holders of
its Common Stock for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a dividend payable solely in
cash or shares of Common Stock) or other distribution, or any right or
warrant to subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities or property, or to receive any other
right;
(B) Any capital reorganization, reclassification or
recapitalization of the Corporation (other than a subdivision or
combination of the outstanding shares of its Common Stock), any
consolidation or merger involving the Corporation and any other person
(other than a consolidation or merger with a wholly-owned subsidiary of the
Corporation, provided that the Corporation is the surviving or the
continuing corporation and no change occurs in the Common Stock), or any
transfer of all or substantially all the assets of the Corporation to any
other person;
(C) Any voluntary or involuntary dissolution, liquidation or
winding up of the Corporation; or
(D) Any offering that gives rise to the redemption rights set
forth under paragraph (B)(ii) of Section C.(9);
then, and in each such case, the Corporation shall cause to be mailed to
each transfer agent for the shares of the Series A Preferred Stock and to
the holders of record of the outstanding shares of the Series A Preferred
Stock, at least 20 days (or ten days in case of any event specified in
clause (A) above) prior to the applicable record, effective or closing date
hereinafter specified, a notice stating (i) the date or expected date on
which any such record is to be taken for the purpose of such dividend,
distribution or right and the amount and character of such dividend,
distribution or right, (ii) the date or expected date on which any such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding up is to take place and the
time, if any such time is to be fixed, as of which the holders of record of
Common Stock shall be entitled to exchange their shares of Common Stock for
the securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding up, or (iii) the date or expected date
on which the offering is to close. Such notice shall also state whether
such transaction will result in any adjustment in the number of shares of
Common Stock into which shares of the Series A Preferred Stock are
convertible and, if so, shall state the new number of shares of Common
Stock into which each share of the Series A Preferred Stock shall be
convertible upon such adjustment and when such adjustment will become
effective. The failure to give any notice required by this Section C.(10),
or any defect therein, shall not affect the legality or validity of any
such action requiring such notice.
ARTICLE V.
For the management of the business and for the conduct of the affairs
of the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its shareholders or any class
thereof, as the case may be, it is further provided that:
A. 1. The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted by the Board of Directors.
2. Subject to the rights of the holders of any series of Preferred
Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the shareholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the shareholders. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such
director's successor shall have been elected and qualified.
B. 1. The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
2. Special meetings of the shareholders of the Corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption).
3. Advance notice of shareholder nominations for the election of
directors and of business to be brought by shareholders before any meeting of
the shareholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.
ARTICLE VI.
A. A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (i) for breach of the director's duty
of loyalty to the Corporation or its shareholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) pursuant to Section 1053 of the Oklahoma General Corporation Act
or (iv) for any transaction from which the director derived an improper personal
benefit. If the Oklahoma General Corporation Act is amended after approval by
the shareholders of this Article to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director shall be eliminated or limited to the fullest extent permitted by
the Oklahoma General Corporation Act, as so amended.
B. Any repeal or modification of this Article VI shall be prospective
and shall not affect the rights under this Article VI in effect at the time of
the alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
ARTICLE VII.
A. The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in Section B. of this
Article VII, and all rights conferred upon the shareholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least 66 2/3% of the voting power of all of the then outstanding
shares of the Voting Stock, voting together as a single class, shall be required
to alter, amend or repeal Articles V, VI, and VII.
The name and the mailing address of the Sole Incorporator is as
follows:
Gary W. Derrick
Derrick & Briggs, LLP
Bank One Center, 20th Floor
100 N. Broadway Ave.
Oklahoma City, Oklahoma 73102
In Witness Whereof, this Certificate has been subscribed this July __,
1999, by the undersigned who affirms that the statements made herein are true
and correct.
---------------------------------------
Gary W. Derrick, Sole Incorporator
APPENDIX C
BYLAWS
of
Western Oklahoma, Inc.
(an Oklahoma corporation)
Section 1. Definitions
1.01. Definitions. Unless the context clearly requires otherwise, in
these Bylaws:
(a) "Act" means the Oklahoma General Corporation Act.
(b) "Board" means the Board of Directors of the Corporation.
(c) "Bylaws" means these Bylaws as adopted by the Board and
includes amendments subsequently adopted by the Board or by
the Shareholders.
(d) "Certificate of Incorporation" means the Certificate of
Incorporation of the Corporation as filed with the
Secretary of State of the State of Oklahoma and includes
all amendments subsequently filed.
(e) "Corporation" means Western Oklahoma, Inc..
(f) "Section" refers to a Section of these Bylaws.
(g) "Shareholder" means a Shareholder of record of the
Corporation.
1.02. Title of Office. The title of an office refers to the person or
persons who at any given time perform the duties of that particular office for
the Corporation.
Section 2. Offices
2.01. Principal Office. The Corporation may locate its principal office
within or without the state of incorporation as the Board may determine.
2.02. Registered Office. The registered office of the Corporation
required by law to be maintained in the state of incorporation may be, but need
not be, identical with the principal office of the Corporation. The Board may
change the address of the registered office from time to time.
2.03. Other Offices. The Corporation may have offices at such other
places, either within or without the state of incorporation, as the Board may
designate or as the business of the Corporation may require from time to time.
Section 3. Meetings of Shareholders
3.01. Place of Meetings. Meetings of the Shareholders of the
Corporation shall be held at such place, either within or without the State of
Oklahoma, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the principal office of the Corporation.
3.02. Annual Meetings.
(a) The annual meeting of the Shareholders of the Corporation, for the
purpose of election of directors and for such other business as may lawfully
come before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors.
(b) At an annual meeting of the Shareholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (B) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (C) otherwise properly brought
before the meeting by a Shareholder. For business to be properly brought before
an annual meeting by a Shareholder, the Shareholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be timely, a
Shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not later than the close of
business on the 60th day nor earlier than the close of business on the 90th day
prior to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that no annual meeting was held in the previous year
or the date of the annual meeting has been changed by more than 30 days from the
date contemplated at the time of the previous year's proxy statement, notice by
the Shareholder to be timely must be so received not earlier than the close of
business on the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or,
in the event public announcement of the date of such annual meeting is first
made by the Corporation fewer than 70 days prior to the date of such annual
meeting, the close of business on the 10th day following the day on which public
announcement of the date of such meeting is first made by the Corporation. A
Shareholder's notice to the Secretary shall set forth as to each matter the
Shareholder proposes to bring before the annual meeting: (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and address,
as they appear on the Corporation's books, of the Shareholder proposing such
business, (iii) the class and number of shares of the Corporation that are
beneficially owned by the Shareholder, (iv) any material interest of the
Shareholder in such business and (v) any other information that is required to
be provided by the Shareholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as a
proponent to a Shareholder proposal. Notwithstanding the foregoing, in order to
include information with respect to a Shareholder proposal in the proxy
statement and form of proxy for a Shareholder's meeting, Shareholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b). The chairman of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this paragraph (b), and, if he should so determine, he shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted.
(c) Only persons who are nominated in accordance with the procedures
set forth in this paragraph (c) shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the Corporation
may be made at a meeting of Shareholders by or at the direction of the Board of
Directors or by any Shareholder of the Corporation entitled to vote in the
election of directors at the meeting who complies with the notice procedures set
forth in this paragraph (c). Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the Corporation in accordance with the provisions
of paragraph (b) of this Section 3.02. Such Shareholder's notice shall set forth
(i) as to each person, if any, whom the Shareholder proposes to nominate for
election or re-election as a director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the Corporation that are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the Shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the Shareholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required, in each case pursuant to Regulation 14A
under the 1934 Act (including without limitation such person's written consent
to being named in the proxy statement, if any, as a nominee and to serving as a
director if elected); and (ii) as to such Shareholder giving notice, the
information required to be provided pursuant to paragraph (b) of this Section
3.02. At the request of the Board of Directors, any person nominated by a
Shareholder for election as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in the Shareholder's
notice of nomination that pertains to the nominee. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth in this paragraph (c). The chairman of the meeting
shall, if the facts warrant, determine and declare at the meeting that a
nomination was not made in accordance with the procedures prescribed by these
Bylaws, and if he should so determine, he shall so declare at the meeting, and
the defective nomination shall be disregarded.
(d) For purposes of this Section 3.02, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
3.03. Special Meetings.
(a) Special meetings of the Shareholders of the Corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption), and shall be held at such place, on such date, and at
such time as the Board of Directors, shall fix.
(b) If a special meeting is called by any person or persons other than
the Board of Directors, the request shall be in writing, specifying the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the Chairman of the Board of Directors, the Chief Executive
Officer, or the Secretary of the Corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The Board of
Directors shall determine the time and place of such special meeting, which
shall be held not less than 35 nor more than 120 days after the date of the
receipt of the request. Upon determination of the time and place of the meeting,
the officer receiving the request shall cause notice to be given to the
Shareholders entitled to vote, in accordance with the provisions of Section 3.04
of these Bylaws. If the notice is not given within 60 days after the receipt of
the request, the person or persons requesting the meeting may set the time and
place of the meeting and give the notice. Nothing contained in this paragraph
(b) shall be construed as limiting, fixing, or affecting the time when a meeting
of Shareholders called by action of the Board of Directors may be held.
3.04. Notice of Meetings. The Board or a committee of the Board shall
give written notice of each meeting of Shareholders, whether annual or special,
not less than ten nor more than 60 days before the date of the meeting;
provided, however, that if the purpose of the meeting is to vote on a merger, a
consolidation, a share acquisition under Section 1090.1 of the Act, or the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, written notice shall be delivered not less than 20 nor more than 60 days
before the date of the meeting. An affidavit of the Secretary or an Assistant
Secretary or of the transfer agent of the Corporation that he or she has given
notice shall constitute, in the absence of fraud, prima facie evidence of the
facts stated in the affidavit.
Every notice of a meeting of the Shareholders shall state the place,
date and hour of the meeting and, in the case of a special meeting, the purpose
or purposes of the meeting. Furthermore, if the Corporation will maintain the
list at a place other than where the meeting will take place, every notice of a
meeting of the Shareholders shall specify where the Corporation will maintain
the list of Shareholders entitled to vote at the meeting.
Whenever these Bylaws require written notice, a written waiver of
notice, signed by the person entitled to notice, whether before or after the
time stated in the notice , shall constitute the equivalent of notice.
Attendance of a person at any meeting shall constitute a waiver of notice of
such meeting, except when the person attends the meeting for the express purpose
of objecting to the call of the meeting and makes such objection at the
beginning of the meeting. A written waiver of notice need not specify either the
business to be transacted at, or the purpose or purposes of any regular or
special meeting of the Shareholders, Directors or members of a committee of the
Board.
3.05. Quorum. At all meetings of Shareholders, except where otherwise
provided by statute or by the Certificate of Incorporation, or by these Bylaws,
the presence, in person or by proxy duly authorized, of the holders of a
majority of the outstanding shares of stock entitled to vote shall constitute a
quorum for the transaction of business. In the absence of a quorum, any meeting
of Shareholders may be adjourned, from time to time, either by the chairman of
the meeting or by vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted at such meeting. The
Shareholders present at a duly called or convened meeting, at which a quorum is
present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough Shareholders to leave less than a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws, all
action taken by the holders of a majority of the vote cast, excluding
abstentions, at any meeting at which a quorum is present shall be valid and
binding upon the Corporation; provided, however, that directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy at the meeting and entitled to vote on the election of directors. Where a
separate vote by a class or classes or series is required, except where
otherwise provided by the statute or by the Certificate of Incorporation or
these Bylaws, a majority of the outstanding shares of such class or classes or
series, present in person or represented by proxy, shall constitute a quorum
entitled to take action with respect to that vote on that matter and, except
where otherwise provided by the statute or by the Certificate of Incorporation
or these Bylaws, the affirmative vote of the majority (plurality, in the case of
the election of directors) of the votes cast, including abstentions, by the
holders of shares of such class or classes or series shall be the act of such
class or classes or series.
3.06. Adjournment and Notice of Adjourned Meetings. Any meeting of
Shareholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes, excluding abstentions. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the Corporation may transact any business that might have
been transacted at the original meeting. If the adjournment is for more than 30
days or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each Shareholder of
record entitled to vote at the meeting.
3.07. Fixing of the Record Date. To determine Shareholders entitled to
notice of or to vote at any meeting of Shareholders or any adjournment thereof,
or Shareholders entitled to receive payment of any dividend, or in order to make
a determination of Shareholders for any other proper purpose, the Board or a
committee of the Board may fix in advance a date as the record date for any such
determination of Shareholders. The Board shall not, however, fix such date more
than 60 days prior to the date of the particular action.
If the Board or a committee of the Board does not fix a record date for
the determination of Shareholders entitled to notice of or to vote at a meeting
of Shareholders, the date of the mailing of notice or the date on which the
Board adopts the resolution declaring a dividend, as the case may be, shall be
the record date for such determination of Shareholders. If the Board or a
committee of the Board does not fix a record date and action is to be taken by
the written consent of the Shareholders, the record date shall be the first date
on which a signed written consent is delivered to the Corporation; provided,
however, if prior action by the Board is required under the Act, the record date
shall be at the close of business of the day on which the Board adopts the
resolution taking such prior action.
3.08. Voting Rights. For the purpose of determining those Shareholders
entitled to vote at any meeting of the Shareholders, except as otherwise
provided by law, only persons in whose names shares stand on the stock records
of the Corporation on the record date, as provided in Section 3.11 of these
Bylaws, shall be entitled to vote at any meeting of Shareholders. Every person
entitled to vote shall have the right to do so either in person or by an agent
or agents authorized by a proxy granted in accordance with Oklahoma law. An
agent so appointed need not be a Shareholder. No proxy shall be voted after
three years from its date of creation unless the proxy provides for a longer
period. The attendance at any meeting of a Shareholder who previously has given
a proxy shall not revoke the proxy unless he notifies the Secretary in writing
before the voting of the proxy.
A plurality of the votes cast shall determine all elections and, except
when the law or a resolution of the Board requires otherwise, a majority of the
votes cast shall determine all other matters.
The Shareholders may vote by voice vote on all matters. Upon demand by
a Shareholder entitled to vote, or his proxy, however, the Shareholders shall
vote by ballot. In that event, each ballot shall state the name of the
Shareholder or proxy voting, the number of shares voted and such other
information as the Corporation may require under the procedure established for
the meeting.
3.09. Judges. At any meeting in which the Shareholders vote by ballot,
the Board may appoint a judge or judges. Each judge shall subscribe an oath to
execute the duties of a judge at such meeting faithfully, with strict
impartiality, and according to the best of his ability. The judge or judges
shall decide the qualification of the voters and shall report the number of
shares represented at the meeting and entitled to vote on any question, shall
conduct and accept the votes, and, when the Shareholders have completed voting,
ascertain and report the number of shares voted respectively for and against the
question. The judge or judges shall prepare a subscribed, written report and
shall deliver the report to the Secretary of the Corporation. A judge need not
be a Shareholder of the Corporation, and any officer of the Corporation may be a
judge on any question other than a vote for or against a proposal in which he
has a material interest.
3.10. Joint Owners of Stock. If shares or other securities having
voting power stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two or more persons have the same fiduciary
relationship respecting the same shares, unless the Secretary is given written
notice to the contrary and is furnished with a copy of the instrument or order
appointing them or creating the relationship wherein it is so provided, their
acts with respect to voting shall have the following effect: (a) if only one
votes, his act binds all; (b) if more than one votes, the act of the majority so
voting binds all; (c) if more than one votes, but the vote is evenly split on
any particular matter, each faction may vote the securities in question
proportionally, or may apply to the district court for relief as provided in the
Section 1062.A of the Act. If the instrument filed with the Secretary shows that
any such tenancy is held in unequal interests, a majority or even-split for the
purpose of subsection (c) shall be a majority or even-split in interest.
3.11. List of Shareholders. The Secretary shall prepare and make, at
least ten days before every meeting of Shareholders, a complete list of the
Shareholders entitled to vote at said meeting, arranged in alphabetical order,
showing the address of each Shareholder and the number of shares registered in
the name of each Shareholder. Such list shall be open to the examination of any
Shareholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not specified, at the place where the
meeting is to be held. The Secretary shall produce and keep the list at the
meeting during the entire duration of the meeting, and any Shareholder who is
present may inspect the list at the meeting. The list shall constitute
presumptive proof of the identity of the Shareholders entitled to vote at the
meeting and the number of shares each Shareholder holds.
The failure to comply with this Section shall not invalidate any action
taken at the meeting, provided that any director who has willfully neglected or
refused to produce the list shall be ineligible to stand for election at the
meeting. A determination of Shareholders entitled to vote at any meeting of
Shareholders pursuant to this Section shall apply to any adjournment thereof.
3.12. Consent of Shareholders in Lieu of Meeting. The Shareholders may
take any action that they could take at any annual or special meeting without a
meeting, prior notice, or a vote if the holders of outstanding stock having the
number of votes necessary to authorize or take the action at a meeting at which
all shares entitled to vote were present and voted, sign a written consent or
consents, setting forth the action taken, and deliver such consent or consents
to the Corporation. To be effective, a consent or consents representing the
required number of votes must be delivered to the Corporation within 60 days of
the day that the first consent was delivered with respect to the action taken.
The Secretary or an Assistant Secretary shall note the delivery date on
each written consent delivered to the Corporation, and shall give prompt notice
of the taking of any action by less than unanimous consent to the Shareholders
who have not delivered written consents.
3.13. Organization.
(a) At every meeting of Shareholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the President,
or, if the President is absent, a chairman of the meeting chosen by a majority
in interest of the Shareholders entitled to vote, present in person or by proxy,
shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary
directed to do so by the President, shall act as secretary of the meeting.
(b) The Board of Directors of the Corporation shall be entitled to make
such rules or regulations for the conduct of meetings of Shareholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to Shareholders of
record of the Corporation and their duly authorized and constituted proxies and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters that are to be voted
on by ballot. Unless and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of Shareholders shall not be required to
be held in accordance with rules of parliamentary procedure.
Section 4. Board of Directors
4.01. General Powers. The Board shall manage the property, business and
affairs of the Corporation.
4.02. Number. The number of Directors who shall constitute the Board
shall equal not less than one nor more than fifteen, as the Board may determine
by resolution from time to time. Unless an election is contested, a Board
resolution nominating persons for election shall suffice to evidence the fixing
of the number of Directors constituting the Board.
4.03. Election of Directors and Term of Office. The Shareholders of the
Corporation shall elect the Directors at the annual or adjourned annual meeting
(except as otherwise provided for the filling of vacancies). Each Director shall
hold office until his death, resignation, retirement, removal, or
disqualification, or until his successor shall have been elected and qualified.
4.04. Resignations. Any Director of the Corporation may resign at any
time by giving written notice to the Board or to the Secretary of the
Corporation. Any resignation shall take effect upon receipt or at the time
specified in the notice. Unless the notice specifies otherwise, the
effectiveness of the resignation shall not depend upon its acceptance.
4.05. Removal. Shareholders holding a majority of the outstanding
shares entitled to vote at an election of Directors may remove any Director at
any time with or without cause.
4.06. Vacancies. A majority of the remaining Directors, although less
than a quorum, may fill any vacancy in the Board, whether because of death,
resignation, disqualification, an increase in the number of Directors, or any
other cause. Each Director so chosen shall hold office until his death,
resignation, retirement, removal, or disqualification, or until his successor
shall have been elected and qualified.
4.07. Chairman of the Board. At the initial and annual meeting of the
Board, the Directors may elect from their number a Chairman of the Board. The
Chairman shall preside at all meetings of the Board and shall perform such other
duties as the Board may direct. The Board also may elect a Vice Chairman and
other officers of the Board, with such powers and duties as the Board may
designate from time to time.
4.08. Compensation. The Board may compensate Directors for their
services and may provide for the payment of all expenses the Directors incur by
attending meetings of the Board. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent, employee, or otherwise and receiving compensation therefor.
Section 5. Meetings of Directors
5.01. Regular Meetings. The Board may hold regular meetings at such
places, dates and times as the Board shall establish by resolution. If any day
fixed for a meeting falls on a legal holiday, the Board shall hold the meeting
at the same place and time on the next succeeding business day. The Board need
not give notice of regular meetings.
5.02. Place of Meetings. The Board may hold its meetings wherever
designated by the Board, the notice or waiver of notice of any such meeting, or
the persons calling the meeting.
5.03. Meetings by Telecommunications. The Board or any committee of the
Board may hold meetings by means of conference telephone, video conferencing or
similar telecommuni- cations equipment that enable all persons participating in
the meeting to hear and speak to each other. Such participation shall constitute
presence in person at such meeting.
5.04. Special Meetings. The Chairman of the Board, the President, or a
majority of the Directors then in office may call a special meeting of the
Board. The person or persons authorized to call special meetings of the Board
may fix any time during a business day as the time for the meeting, and may fix
a reasonable place, either in or out of the State of Oklahoma as the place for
the meeting.
5.05. Notice of Special Meetings. The person or persons calling a
special meeting of the Board shall give written notice to each Director of the
time, place, date and purpose of the meeting. Such notice shall be given not
less than three business days if by U.S. postal service, not less than two
business days if by overnight delivery service, and not less than 24 hours if by
telegraph, telecopy, facsimile transmission, email or in person. A Director may
waive notice of any special meeting. Any meeting shall constitute a legal
meeting without notice if all the Directors are present or if those not present
sign either before or after the meeting a written waiver of notice, a consent to
such meeting, or an approval of the minutes of the meeting. A notice or waiver
of notice need not specify the purposes of the meeting or the business that the
Board will transact at the meeting.
5.06. Waiver by Presence. Except when expressly for the purpose of
objecting to the legality of a meeting, a Director's presence at a meeting shall
constitute a waiver of notice of such meeting.
5.07. Quorum. A majority of the Directors then in office shall
constitute a quorum for all purposes at any meeting of the Board. In the absence
of a quorum, a majority of Directors present at any meeting may adjourn the
meeting to another place, date or time without further notice.
5.08. Conduct of Business. The Board shall transact business in such
order and manner as the Board may determine. Except as otherwise required, the
Board shall determine all substantive, procedural, or other matters by the vote
of a majority of the Directors present. Any Director may add to the Board's
agenda any item germane to the Corporation's property, business, or affairs.
The Directors shall act as a Board, and the individual Directors shall have no
power as such.
5.09. Action by Consent. The Board or a committee of the Board may take
any required or permitted action without a meeting if all members of the Board
or committee sign a written consent and file the consent with the minutes of the
proceedings of the Board.
Section 6. Committees
6.01. Committees of the Board. The Board may designate one or more
committees of the Board by a vote of a majority of the Directors then in office.
6.02. Selection of Committee Members. Committees of the Board shall be
composed of a Director or Directors selected by a vote of a majority of the
Directors then in office. By the same vote, the Board may designate other
directors as alternate members who may replace any absent or disqualified member
at any meeting of a committee. In the absence or disqualification of any member
of any committee and any alternate member in his place, the member or members of
the committee present at the meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may appoint by unanimous vote another
member of the Board to act at the meeting in the place of the absent or
disqualified member.
6.03. Conduct of Business. Each committee may determine the procedural
rules for meeting and conducting its business and shall act in accordance
therewith, except as the law or these Bylaws require otherwise. Each committee
shall make adequate provision for notice of all meetings to members. A majority
of the members shall constitute a quorum, unless the committee consists of one
or two members. In that event, one member shall constitute a quorum. A majority
vote of the members present shall determine all matters. A committee may take
action without a meeting if all the members of the Committee consent in writing
and file the consent or consents with the minutes of the proceedings of the
committee.
6.04. Authority. Subject to the limitations under the Act and to the
extent the Board provides, any committee of the Board shall have and may
exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation.
6.05. Minutes. Each committee shall keep regular minutes of its
proceedings and report the same to the Board when required.
6.06. Committees of the Corporation. In addition to committees of the
Board, the Board may designate committees of the Corporation for the purpose of
advising the Board about specific matters or undertaking specific tasks. To
accomplish such purposes, the Board may delegate to a committee of the
Corporation the authority that the Board could properly delegate to agents of
the Corporation, but such committee shall not have the general power and
authority of the Board in the management of the business and affairs of the
Corporation. A committee of the Corporation may be composed in whole or in part
by non-directors.
Section 7. Officers
7.01. Officers of the Corporation. The officers of the Corporation
shall consist of those that the Board may designate and elect from time to time.
The same person may hold any number of offices.
7.02. Election and Term. The Board shall elect the officers of the
Corporation. Each officer shall hold office until his death, resignation,
retirement, removal or disqualification, or until his successor shall have been
elected and qualified.
7.03. Compensation of Officers. The Board shall fix the compensation of
all officers of the Corporation. No officer shall serve the Corporation in any
other capacity and receive compensation, unless the Board authorizes the
additional compensation.
7.04. Removal of Officers and Agents. The Board may remove any officer
or agent it has elected or appointed at any time, with or without cause.
7.05. Resignation of Officers and Agents. Any officer or agent the
Board has elected or appointed may resign at any time by giving written notice
to the Board, the Chairman of the Board, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified. Unless otherwise specified in the
notice, the Board need not accept the resignation to make it effective.
7.06. Chairman of the Board of Directors. The Chairman of the Board of
Directors, when present, shall preside at all meetings of the Shareholders and
the Board of Directors. The Chairman of the Board of Directors shall perform
other duties commonly incident to his office and shall also perform such other
duties and have such other powers as the Board of Directors shall designate from
time to time. If there is no President, then the Chairman of the Board of
Directors shall also serve as the Chief Executive Officer of the Corporation and
shall have the powers and duties prescribed in Section 7.07.
7.07. President. The President shall preside at all meetings of the
Shareholders and at all meetings of the Board of Directors, unless the Chairman
of the Board of Directors has been appointed and is present. Unless some other
officer has been elected Chief Executive Officer of the Corporation, the
President shall be the chief executive officer of the Corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the Corporation. When
present, he shall sign (with or without the Secretary, an Assistant Secretary,
or any other officer or agent of the Corporation which the Board has authorized)
deeds, mortgages, bonds, contracts or other instruments that the Board has
specially or generally authorized an officer or agent of the Corporation to
execute. The President shall perform other duties commonly incident to his
office and shall also perform such other duties and have such other powers as
the Board of Directors shall designate from time to time.
7.08. Vice Presidents. The Vice Presidents may assume and perform the
duties of the President in the absence or disability of the President or
whenever the office of President is vacant. The Vice Presidents shall perform
other duties commonly incident to their office and shall also perform such other
duties and have such other powers as the Board of Directors or the President
shall designate from time to time.
7.09 Secretary. The Secretary shall attend all meetings of the
Shareholders and of the Board of Directors and shall record all acts and
proceedings thereof in the minute book of the Corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the Shareholders
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.
7.10. Chief Financial Officer. The Chief Financial Officer shall keep
or cause to be kept the books of account of the Corporation in a thorough and
proper manner and shall render statements of the financial affairs of the
Corporation in such form and as often as required by the Board of Directors or
the President. The Chief Financial Officer, subject to the order of the Board of
Directors, shall have the custody of all funds and securities of the
Corporation. The Chief Financial Officer shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time. The President may direct the Treasurer or any Assistant Treasurer,
or the Controller or any Assistant Controller to assume and perform the duties
of the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each Treasurer and Assistant Treasurer and each
Controller and Assistant Controller shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other
powers as the Board of Directors or the President shall designate from time to
time.
7.11. Delegation of Authority. Notwithstanding any provision of these
Bylaws to the contrary, the Board may delegate the powers or duties of any
officer to any other officer or agent.
7.12. Action with Respect to Securities of Other Corporations. Unless
the Board directs otherwise, the President shall have the power to vote and
otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of Shareholders of or with respect to any action of Shareholders of any
other corporation in which the Corporation holds securities. Furthermore, unless
the Board directs otherwise, the President shall exercise any and all rights and
powers that the Corporation possesses by reason of its ownership of securities
in another corporation.
7.13. Vacancies. The Board may fill any vacancy in any office because
of death, resignation, removal, disqualification or any other cause in the
manner that these Bylaws prescribe for the regular appointment to such office.
Section 8. Contracts, Loans, Drafts, Deposits and Accounts
8.01. Contracts. The Board may authorize any officer or officers, or
agent or agents, to enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation. The Board may make such
authorization general or special.
8.02. Loans. Unless the Board has authorized such action, no officer or
agent of the Corporation shall contract for a loan on behalf of the Corporation
or issue any evidence of indebtedness in the Corporation's name.
8.03. Drafts. The President, any Vice President, the Chief Financial
Officer, the Treasurer, any Assistant Treasurer, the Controller, and such other
persons as the Board shall determine shall issue all checks, drafts and other
orders for the payment of money, notes and other evidences of indebtedness
issued in the name of or payable by the Corporation.
8.04. Deposits. The Chief Financial Officer or the Controller shall
deposit all funds of the Corporation not otherwise employed in such banks, trust
companies, or other depositories as the Board may select or as any officer,
assistant, agent or attorney of the Corporation to whom the Board has delegated
such power may select. For the purpose of deposit and collection for the account
of the Corporation, the President, the Chief Financial Officer or the Controller
(or any other officer, assistant, agent or attorney of the Corporation whom the
Board has authorized) may endorse, assign and deliver checks, drafts and other
orders for the payment of money payable to the order of the Corporation.
8.05. General and Special Bank Accounts. The Board may authorize the
opening and keeping of general and special bank accounts with such banks, trust
companies, or other depositories as the Board may select or as any officer,
assistant, agent or attorney of the Corporation to whom the Board has delegated
such power may select. The Board may make such special rules and regulations
with respect to such bank accounts, not inconsistent with the provisions of
these Bylaws, as it may deem expedient.
Section 9. Certificated Shares and Transfer
9.01. Form and Execution of Certificates. Certificates for the shares
of stock of the Corporation shall be in such form as is consistent with the
Certificate of Incorporation and applicable law. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by or in the name of
the Corporation by the Chairman of the Board of Directors, or the President or
any Vice President and by the Treasurer or Assistant Treasurer or the Secretary
or Assistant Secretary, certifying the number of shares owned by him in the
Corporation. Any or all of the signatures on the certificate may be facsimiles.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued, it
may be issued with the same effect as if he were such officer, transfer agent,
or registrar at the date of issue. Each certificate shall state upon the face or
back thereof, in full or in summary, all of the powers, designations,
preferences, and rights, and the limitations or restrictions of the shares
authorized to be issued or shall, except as otherwise required by law, set forth
on the face or back a statement that the Corporation will furnish without charge
to each Shareholder who so requests the powers, designations, preferences and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights. Within a reasonable time after the issuance or
transfer of uncertificated stock, the Corporation shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to this section or otherwise required
by law or with respect to this section a statement that the Corporation will
furnish without charge to each Shareholder who so requests the powers,
designations, preferences and relative participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical.
9.02. Lost Certificates. A new certificate or certificates shall be
issued in place of any certificate or certificates previously issued by the
Corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The Corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the Corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
9.03. Transfers.
(a) Transfers of record of shares of stock of the Corporation shall be
made only upon its books by the holders thereof, in person or by attorney duly
authorized, and upon the surrender of a properly endorsed certificate or
certificates for a like number of shares.
(b) The Corporation shall have power to enter into and perform any
agreement with any number of Shareholders of any one or more classes of stock of
the Corporation to restrict the transfer of shares of stock of the Corporation
of any one or more classes owned by such Shareholders in any manner not
prohibited by the Act.
9.04. Regulations. The Board may make such rules and regulations, not
inconsistent with these Bylaws or the laws of the State of Oklahoma, as it deems
expedient concerning the issue, transfer and registration of certificated shares
of the stock of the Corporation. The Board may appoint or authorize any officer
or officers to appoint one or more transfer agents, or one or more registrars.
9.05. Holder of Record. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the owner in fact to receive
dividends, to vote, if entitled and for all other purposes and, accordingly,
shall not be bound to recognized any equitable or other claim to or interest in
such share or shares on the part of any other person, regardless of whether it
shall have express or other notice, except as expressly provided by law or
unless, in the case of a fiduciary, the fiduciary furnishes proof of his
appointment.
9.06. Treasury Shares. Treasury shares of the Corporation shall consist
of shares that the Corporation has issued and thereafter acquired but not
canceled by resolution of the Board. Treasury shares shall not carry voting or
dividend rights.
Section 10. Indemnification
10.01. Actions, Suits or Proceedings Other Than By or In the Right of
the Corporation. The Corporation shall indemnify any person 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 (other than an action by or in the right of the Corporation)
because he is or was or has agreed to become a Director or officer of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a Director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or because of any action alleged to have
been taken or omitted in such capacity, against costs, charges, expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with such
action, suit or proceeding and any appeal, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation.
10.02. Actions or Suits By or In the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor because he is or
was or has agreed to become a Director or officer of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
Director or officer of another corporation, partnership, joint venture, trust or
other enterprise, or because of any action alleged to have been taken or omitted
in such capacity, against costs, charges and expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
with the defense or settlement of such action or suit and any appeal therefrom,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, except that no indemnification
shall be made for any claim, issue or matters to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent that
a court of competent jurisdiction in the State of Oklahoma or the court or
arbitral proceeding in which such action or suit was brought shall determine
upon application that, despite the adjudication of such liability but in view of
all the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such costs, charges and expenses which the Oklahoma court or
such other court or arbitrator shall deem proper.
10.03. Indemnification for Costs, Charges and Expenses of Successful
Party. Notwithstanding the other provisions of this Section, to the extent that
a Director or officer of the Corporation has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit or proceeding referred to in Sections
10.01 and 10.02, or in defense of any claim, issue or matter therein, he shall
be indemnified against all costs, charges and expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf.
10.04. Determination of Right to Indemnification. Any indemnification
under Sections 10.01 and 10.02 (unless ordered by a court) shall be paid by the
Corporation unless a determination is made (i) by a disinterested majority of
the Board or, (ii) if the Board so directs, by independent legal counsel in a
written opinion, or (iii) by the Shareholders, that indemnification of the
Director or officer is not proper in the circumstances because he has not met
the applicable standard of conduct set forth in Sections 10.01 and 10.02.
10.05. Advance of Costs, Charges and Expenses. Costs, charges and
expenses (including attorneys' fees) incurred by a person referred to in
Sections 10.01 and 10.02 in defending a civil, criminal, administrative, or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding; provided,
however, that the payment of such costs, charges and expenses incurred by a
Director or officer in his capacity as a Director or officer (and not in any
other capacity in which service was or is rendered by such person while a
Director or officer) in advance of the final disposition of such action, suit or
proceeding shall be made only upon receipt of an undertaking by or on behalf of
the Director or officer to repay all amounts so advanced in the event that it
shall ultimately be determined that such Director or officer is not entitled to
be indemnified by the Corporation as authorized in this Section. Such costs,
charges and expenses incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board deems appropriate. The Board
may, in the manner set forth above, and upon approval of such Director, officer,
employer, employee or agent of the Corporation, authorize the Corporation's
counsel to represent such person, in any action, suit or proceeding, regardless
of whether the Corporation is a party to such action, suit or proceeding.
10.06. Procedure for Indemnification. The Corporation shall promptly
pay any indemnification under Sections 10.01, 10.02 and 10.03 or advance costs,
charges and expenses under Section 10.05, and in any event within 60 days after
the written request of the Director or officer. A Director or officer may
enforce his right to indemnification or advances as granted by this Section in
any court of competent jurisdiction, if the Corporation denies such request, in
whole or in part, or if no disposition thereof is made within 60 days. Such
person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for the advance
of costs, charges and expenses under Section 10.05 where the required
undertaking, if any, has been received by the Corporation) that the claimant has
not met the standard of conduct set forth in Sections 10.01 or 10.02, but the
burden of proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board, its independent legal counsel and its
Shareholders) to have made a determination before the claimant commences an
action alleging that indemnification is proper because he has met the applicable
standard of conduct set forth in Sections 10.01 or 10.02, nor an actual
determination by the Corporation (including its Board, its independent legal
counsel and its Shareholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
10.07. Settlement. If in any action, suit or proceeding, including any
appeal, within the scope of Sections 10.01 or 10.02, the person to be
indemnified shall have unreasonably failed to enter into a settlement, then,
notwithstanding any other provision, the Corporation's indemnification
obligation to such person shall not exceed the total of the amount at which
settlement could have been made and the expense incurred by such person prior to
the time such settlement could have been made.
10.08. Other Rights; Continuation of Right to Indemnification. The
indemnification provided by this Section shall not be deemed exclusive of any
other rights to which any Director, officer, employee or agent seeking
indemnification may be entitled under any law (common or statutory), agreement,
vote of Shareholders or disinterested Directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
office or while employed by or acting as agent for the Corporation. This
indemnification shall continue after a person has ceased to be a Director,
officer, employee or agent, and shall inure to the benefit of the estate, heirs,
executors and administrators of such person. All rights to indemnification under
this Section shall be deemed to be a contract between the Corporation and each
Director, officer, employee or agent of the Corporation who serves or served in
such capacity at any time while this Section is in effect. Any repeal or
modification of this Section or any repeal or modification of relevant
provisions of the Act or any other applicable laws shall not in any way diminish
any rights to indemnification of such Director, officer, employee or agent or
the obligations of the Corporation arising under this Section. This Section
shall be binding upon any successor corporation to this Corporation, whether by
way of acquisition, merger, consolidation or otherwise.
10.09. Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was or has agreed to become a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him or on his behalf in any such
capacity, or arising out of his status as such, regardless of whether the
Corporation would have the power to indemnify him against such liability under
the provisions of this Section.
10.10. Savings Clause. If this Section or any portion shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation (i) shall nevertheless indemnify each Director and officer of the
Corporation, and (ii) may nevertheless indemnify each employee and agent of the
Corporation, as to costs, charges and expenses (including attorneys' fees),
judgments, fine and amounts paid in settlement with respect to any action, suit
or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Corporation, to the full extent
permitted by any applicable portion of this Section that shall not have been
invalidated and to the full extent permitted by applicable law.
10.11. Subsequent Amendment. No amendment, termination or repeal of
this Section shall affect or impair in any way the rights of any Director or
officer of the Corporation to indemnification with respect to any action, suit
or proceeding arising out of, or relating to, any actions, transactions or facts
occurring prior to the final adoption of such amendment, termination or appeal.
10.12. Subsequent Legislation. If the Act is amended to further expand
the indemnification permitted to Directors, officers, employees or agents of the
Corporation, then the Corporation shall indemnify such persons to the fullest
extent permitted by the Act, as so amended.
Section 11. Notices
11.01. General. Unless these Bylaws expressly provide otherwise, the
Corporation may give effective notice under these Bylaws by U.S. postal service,
by overnight delivery service, by telegram or telegraph, or by electronic
transmission, such as telephone, telecopy, e-mail, voice mail, or other similar
medium. Effective notice may also be made in person. Receipt of effective notice
must not be contingent upon the recipient's payment of any charges as a
prerequisite to the notice's receipt. Effective notice must be posted or
transmitted to recipient's address, telephone number, facsimile number, or
e-mail address as shown on the books of the Corporation in a manner normally
used for the posting or transmission of information in the medium chosen.
Effective notice to the Corporation shall be posted or transmitted to the
President or Secretary at the Corporation's principal office. Unless these
Bylaws expressly provide to the contrary, the time when the person sends notice
shall constitute the time of the giving of notice, and the burden of proving
notice shall rest on the sender.
11.02. Waiver of Notice. Whenever the law or these Bylaws require
notice, the person entitled to said notice may waive such notice in writing,
either before or after the time stated in the notice.
11.03. Methods of Notice. It shall not be necessary that the same
method of giving notice be employed in respect of all Directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
11.04. Failure to Receive Notice. The period or limitation of time
within which any Shareholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such Shareholder or such Director to receive such
notice.
11.05. Notice to Person with Undeliverable Address. Whenever notice is
required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the Corporation, to any Shareholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the Corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting that shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the Corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
Corporation is such as to require the filing of a certificate under any
provision of the Act, the certificate need not state that notice was not given
to persons to whom notice was not required to be given pursuant to this Section.
Section 12. Miscellaneous
12.01. Facsimile Signatures. In addition to the use of facsimile
signatures which these Bylaws specifically authorize, the Corporation may use
such facsimile signatures of any officer or officers, agents or agent, of the
Corporation as the Board or a committee of the Board may authorize.
12.02. Corporate Seal. The Board may provide for a suitable seal
containing the name of the Corporation, of which the Secretary shall be in
charge. The Chief Financial Officer, any Assistant Secretary, the Treasurer, or
any Assistant Treasurer may keep and use the seal or duplicates of the seal if
and when the Board or a committee of the Board so directs. The absence of the
corporate seal in the execution of any instrument by an authorized officer or
officers of the Corporation shall not affect the validity of any such
instrument. All documents, instruments, contracts, and writings of all kinds
signed for the Corporation by any authorized officer or officers shall be as
effective and binding on the Corporation without the corporate seal as if the
execution had been evidenced by the corporate seal.
12.03. Fiscal Year. The Board shall have the authority to fix and
change the fiscal year of the Corporation.
Section 13. Amendments
Subject to the provisions of the Certificate of Incorporation, the
Shareholders or the Board may amend or repeal these Bylaws at any meeting or by
written consent. The Secretary shall record all amendments or repeals of these
Bylaws by making the required changes on the Corporation's copy of the Bylaws
and either noting the effective time of the change (and all other changes
following the last restatement of the Bylaws) in a parenthetical following the
amended or deleted section or restating and certifying an amended and restated
version of the then effective Bylaws.
The undersigned hereby certifies that the foregoing constitutes a true
and correct copy of the Bylaws of the Corporation as adopted by the Board on
July __, 1999.
Executed as of July __, 1999.
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Dominic W. Grimmett, Secretary