EXHIBIT 10.14
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WARRANT AGREEMENT
Among
ASSOCIATED HOLDINGS, INC.
and
CHASE MANHATTAN INVESTMENT HOLDINGS, INC.
and, for certain purposes
ASSOCIATED STATIONERS, INC.
Dated as of January 31, 1992
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions; Accounting Terms and Determinations.......... 1
1.01 Definitions............................................... 1
1.02 Accounting Terms and Determinations....................... 20
SECTION 2. Purchase and Sale of Warrants............................. 20
2.01 Authorization and Issuance of Shares and
Warrants............................................... 20
2.02 The Purchase of the Underwriting Warrants................. 20
2.03 Right to Purchase the Tranche B Warrants.................. 21
2.04 Purchase for the Investor's Account....................... 23
2.05 Securities Act Compliance................................. 23
SECTION 3. Representations and Warranties............................ 23
3.01 Existence; Qualification.................................. 23
3.02 No Breach................................................. 24
3.03 Corporate Action.......................................... 24
3.04 Approvals................................................. 25
3.05 Investment Company Act.................................... 25
3.06 Public Utility Holding Company Act........................ 26
3.07 Capitalization............................................ 26
3.08 Private Offering.......................................... 27
3.09 No Litigation............................................. 27
3.10 Brokers................................................... 28
SECTION 4. Restrictions on Transferability........................... 28
4.01 Transfers Generally....................................... 28
4.02 Transfers of Restricted Securities Pursuant to
Registration Statements, Rule 144 and Rule
144A................................................... 28
4.03 Notice of Certain Private Transfers....................... 28
4.04 Restrictive Legends....................................... 28
4.05 Termination of Restrictions............................... 29
SECTION 5. Certain Dispositions of Securities; Regulation Y
Matters................................................ 29
5.01 Certain Dispositions of Securities........................ 29
5.02 Regulation Y Restrictions................................. 30
5.03 Cancellation and Issuance................................. 31
SECTION 6. Issuer's Right of Repurchase.............................. 31
6.01 Repurchase Right.......................................... 31
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6.02 Procedures................................................ 32
SECTION 7. Put Rights................................................ 33
7.01 Put Rights................................................ 33
7.02 Procedures................................................ 33
7.03 Guarantee of the Operating Company........................ 36
SECTION 8. Call Rights; Look Back.................................... 37
8.01 Call Rights............................................... 37
8.02 Look Back Events.......................................... 38
SECTION 9. Right to Join in Sale..................................... 42
9.01 Tag-Along Rights.......................................... 42
9.02 Procedures................................................ 43
9.03 Issuer's Covenants........................................ 43
SECTION 10. Obligation to Join in Sale................................ 44
10.01 Go-Along Obligations...................................... 44
10.02 Procedures................................................ 45
10.03 Issuer's Covenants........................................ 45
10.04 Definition of Go-Along Sale............................... 45
SECTION 11. Earn Back................................................. 47
11.01 Calculation of Earn Back.................................. 47
11.02 Payment of Earn Back...................................... 47
11.03 Applicability of Earn Back Provision...................... 48
11.04 Special Definitions....................................... 48
SECTION 12. Holders' Rights........................................... 50
12.01 Delivery Expenses......................................... 50
12.02 Taxes..................................................... 50
12.03 Replacement of Instruments................................ 50
12.04 Certain Restrictions...................................... 51
12.05 Transactions with Affiliates.............................. 51
12.06 Certain Covenants......................................... 52
12.07 Indemnification........................................... 54
12.08 Preemptive Rights......................................... 54
12.09 Board Observers........................................... 55
12.10 Financial Statements, Etc. ............................... 56
12.11 Holders' Rights in Case of Other Securities............... 58
SECTION 13. Miscellaneous............................................. 58
13.01 Home Office Payment....................................... 58
13.02 Waiver.................................................... 58
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13.03 Notices................................................... 58
13.04 Expenses, Etc. ........................................... 60
13.05 Amendments, Etc. ......................................... 60
13.06 Successors and Assigns.................................... 60
13.07 Survival.................................................. 61
13.08 Specific Performance...................................... 61
13.09 Captions.................................................. 61
13.10 Counterparts.............................................. 61
13.11 Governing Law............................................. 61
13.12 Severability.............................................. 62
13.13 Adjustment Of Common Stock................................ 62
13.14 Covenant of Wingate and Cumberland........................ 62
SCHEDULE I - CAPITAL STOCK AND EQUITY SECURITIES
SCHEDULE II- CERTAIN TRANSFEREES
ANNEX 1 - FORM OF WARRANT
ANNEX 2 - REGISTRATION RIGHTS AGREEMENT
ANNEX 3 - FIRST LEGAL OPINION
ANNEX 4 - CERTIFICATE OF INCORPORATION OF ISSUER
ANNEX 5 - JOINDER AGREEMENT
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WARRANT AGREEMENT
WARRANT AGREEMENT dated as of January 31, 1992, among ASSOCIATED
HOLDINGS, INC., a corporation duly organized and validly existing under the laws
of the State of Delaware ("Issuer") and CHASE MANHATTAN INVESTMENT HOLDINGS,
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INC., a corporation duly organized and validly existing under the laws of the
State of Delaware (the "Investor"), and for purposes of Section 7 only,
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ASSOCIATED STATIONERS, INC., a corporation duly organized and validly existing
under the laws of the State of Delaware (the "Operating Company").
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Issuer and certain of the Subsidiaries (as hereinafter defined),
certain banks and The Chase Manhattan Bank (National Association), as agent for
said banks, are parties to a Credit Agreement or even date herewith (as
originally executed, the "Credit Agreement"; references to the Credit Agreement
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herein shall apply whether or not the Credit Agreement is then in force and
without regard to amendments thereto), providing, subject to the terms and
conditions thereof, for extensions of credit to be made by said banks thereunder
in an aggregate amount not exceeding, initially, $95,000,000 at any one time
outstanding. To induce The Chase Manhattan Bank (National Association), which is
an Affiliate of the Investor, to enter into the Credit Agreement and to make the
extensions of credit thereunder, and for other good and valuable consideration
(including the payment of $13.00 by the Investor), the receipt and sufficiency
of which are hereby acknowledged, Issuer has agreed to issue Warrants (as
hereinafter defined) to the Investor providing for the purchase of shares of
Common Stock (as hereinafter defined) of Issuer, in the manner hereinafter
provided. Accordingly, the parties hereto agree as follows:
SECTION 1. Definitions; Accounting Terms and Determinations.
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1.01 Definitions.
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"Accruing Liability" shall have the meaning assigned to such term in
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Section 7.02(c).
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"Acquisition Costs" shall have the meaning assigned to such term in
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Section 1.01 of the Credit Agreement.
"Affiliate" shall mean, as to any Person (the "Relevant Person"), any
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other Person that directly or indirectly controls, or is under common control
with, or is controlled by, the Relevant Person and, if such Person is an
individual, an member
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of the immediate family (including parents, spouse and children) of such
individual and any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is controlled by
any such member or trust. As used in this Agreement, "control" (including,
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with its correlative meanings, "controlled by" and "under common control
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with") shall mean possession, directly or indirectly, of the power to direct
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or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person that owns or has the right
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to acquire directly or indirectly (including as part of a group) 5% or more of
the Voting Capital Stock in a corporation or 5% or more of a partnership or
other ownership interests of any other Person, other than as a limited partner
of such other Person, will be deemed to control such corporation or other
Person. In addition, any Person in whom an Affiliate of a Relevant Person has a
10% or greater equity interest shall also be deemed an Affiliate of such
Relevant Person. Notwithstanding the foregoing, (a) no individual shall be
deemed to be an Affiliate of a Relevant Person, solely by reason of his or her
being a director, officer or employee of such Relevant Person or any Subsidiary,
(b) none of the Subsidiaries shall be Affiliates of Issuer or any other
Subsidiary, (c) Issuer shall not be an Affiliate of any Subsidiary, (d) neither
Investor nor any bank, bank holding company or subsidiary of either shall be an
Affiliate of Issuer or any Subsidiary, and (e) Boise Cascade Office Products and
Boise Cascade shall be Affiliates of Issuer and each Subsidiary.
"Annual Management Fees" shall have the meaning assigned to such term
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in Section 12.05(e).
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"Applicable Earn Back Percentage" shall have the meaning assigned to
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such term in Section 11.04.
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"Bank Holding Company Affiliate" shall mean, with respect to any
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Holder subject to the provisions of Regulation Y, (i) if such Holder is a bank
holding company, any company directly or indirectly controlled by such bank
holding company, and (ii) otherwise, the bank holding company that controls such
Holder and any Person (other than such Holder) directly or indirectly controlled
by such bank holding company.
"Base Rate" shall have the meaning assigned to such term in Section
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1.01 of the Credit Agreement.
"Board" shall mean the Board of Directors of Issuer.
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"Boise Cascade" shall mean Boise Cascade Corporation, a Delaware
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corporation.
"Boise Warrants" shall mean the warrants issued to Boise Cascade
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covering 23,129 shares of Class A Common Stock pursuant to the Other Warrant
Agreement.
"Business Day" shall mean any day on which commercial banks are not
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authorized or required to close in New York City.
"Calculation Date" shall have the meaning assigned to such term in
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Section 11.04.
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"Call Notice" shall have the meaning assigned to such term in
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Section 8.01(b).
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"Call Notice Data" shall mean the date on which a Call Notice shall
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be received by the Holders.
"Call Right" shall mean the right of Issuer to purchase Warrants and
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Warrant Stock pursuant to, and in accordance with, Section 8.01.
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"Change in Control" shall mean the earliest to occur of: (i) the date
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on which Wingate shall have sold, transferred or otherwise disposed of full
power to vote, dispose of and receive the pecuniary benefit of, at least 53,524
shares of Common Stock other than the Employee Shares; (ii) the date on which
Wingate shall cease to have the power to vote a majority of Issuer's Voting
Capital Stock, and (iii) the date after which any two of James T. Callier, Jr.,
Thomas W. Sturgess and Frederick B. Hegi, Jr. shall have ceased to be general
partners of Wingate Management Company, L.P. or Wingate Management Company, L.P.
shall have ceased to be directly or indirectly the general partner of Wingate
Partners, L.P.
"Class A Common Stock" shall have the meaning assigned to such term
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in Section 3.07.
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"Class B Common Stock" shall have the meaning assigned to such term
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in Section 3.07.
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"Closing Date" shall have the meaning assigned to such term in
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Section 1.01 of the Credit Agreement.
"Commission" shall mean the Securities and Exchange Commission or any
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other similar or successor agency of the
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Federal government administering the Securities Act and/or the Exchange Act.
"Commitments" shall have the meaning assigned to such term in
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Section 1.01 of the Credit Agreement.
"Common Stock" shall mean Issuer's authorized Class A Common Stock
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and Class B Common Stock as constituted on the date of original issuance of the
Warrants and any stock into which such Common Stock may thereafter be converted
or changed, and also shall include any other stock of Issuer of any other class,
which is not preferred as to dividends or assets over any other class of any
other stock of Issuer. References herein and in the Warrants to the Common Stock
outstanding "on a fully diluted basis" at any time shall mean the number of
Common Stock then issued and outstanding, assuming full conversion, exercise and
exchange of all Convertible Securities and Options that are (or may become)
exchangeable for, or exercisable or convertible into, Common Stock, including
the Warrants, provided, that the number of shares of Common Stock deemed to be
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outstanding "on a fully diluted basis" shall be reduced by the number of shares
of Common Stock purchasable or issuable upon exercise, conversion or exchange of
Options or Convertible Securities at the time of calculation which are Out of
the Money.
"Company Notice Date" shall have the meaning assigned to such term in
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Section 7.01(b).
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"Company Permitted Financing" shall have the meaning assigned to such
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term in Section 1.01 of the Credit Agreement.
"Control" for purposes of Section 5.02 shall mean, with respect to
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any Person, the power to exercise, directly or indirectly, a controlling
influence over the management or policies of such Person.
"Convertible Securities" shall mean evidences of indebtedness, shares
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of stock or other securities or rights which are exchangeable for or exercisable
or convertible into a specified security of Issuer either immediately or upon
the arrival of a specified date or the occurrence of a specified event.
"Credit Agreement" shall have the meaning set forth at the head of
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this Agreement.
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"Cumberland" shall mean Cumberland Capital Corporation, a Delaware
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corporation and, so long as Cumberland is its general partner, ASI Partners,
L.P.
"Date of Issuance" shall have the meaning assigned to such term
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in Section 2.03(c).
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"Defaults" shall have the meaning assigned to such term in
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Section 7.02(b).
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"Earn Back" shall have the meaning assigned to such term in
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Section 11.01.
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"EBITD" shall mean, at any date of determination, the sum, for
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Issuer and the Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) net profits after
taxes for the most recent 12 months, plus (b) Interest Expense for such period,
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together with any pay-in-kind interest paid on the Exchange Notes and any
accrued but unpaid interest on the Exchange Notes and any original issue
discount to the extent deducted in calculating net profits, plus (c) income
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taxes for such period, plus (d) extraordinary and unusual items of loss for such
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period, plus (e) losses attributable to equity in Affiliates for such period,
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plus (f) depreciation and amortization (to the extent deducted in computing net
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profits after taxes) for such period, plus (g) management fees for such period,
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minus (h) extraordinary and unusual items of income or gain for such period,
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minus (i) gains attributable to equity in Affiliates for such period, plus (j)
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all Monitoring Costs for such period, plus (k) all non-cash charges related to
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employee compensation to the extent deducted in calculating net profits.
"EBITDA" for purposes of Section 12.05, shall have the meaning
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assigned to such term in Section 1.01 of the Credit Agreement.
"Election Notice" shall have the meaning assigned to such term in
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Section 12.08.
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"Employee Shares" shall mean 56,935 shares of Common Stock owned by
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Wingate and 21,725 shares of Common Stock owned by Cumberland on the date
hereof, which in their discretion may be sold to certain yet to be identified
management employees of the Operating Company.
"Equity Value" shall mean, as at any date of determination, with
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respect to Issuer and the Subsidiaries (determined on
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a consolidated basis without duplication in accordance with GAAP), the sum of
(i) the product of 5.0 and EBITD, minus (ii) such amount of non-convertible
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indebtedness of Issuer and the Subsidiaries at such date as would appear in a
balance sheet, except in the case of revolving loans, the amount which would
appear in such balance sheet shall be replaced by an amount which is equal to
the average outstanding balances for all revolving loans of Issuer and the
Subsidiaries during the preceding 12 months, minus (iii) the value of
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outstanding shares of Preferred Stock of Issuer as would appear in a balance
sheet, plus (iv) the amount of cash and cash equivalents (assuming receipt of
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applicable consideration for conversion, exchange or exercise of any Convertible
Securities or Options which are convertible or exercisable into or exchangeable
for Common Stock unless they are Out of the Money) of Issuer and the
Subsidiaries outstanding at such date (including inter-company receivables).
References to "balance sheet" in (ii) through (iv) above are to balance sheets
prepared in accordance with GAAP; and amounts to be determined in (ii) through
(iv) above shall be determined in accordance with GAAP.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Exchange Notes" shall mean the Class A Exchange Notes, the Class B
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Exchange Notes and the Class C Exchange Notes all as set forth in Issuer's
certificate of incorporation which is attached as Annex 4 hereto.
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"Executive Stock Purchase Agreements" shall mean the Associated
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Holdings, Inc. Executive Stock Purchase Agreements among Issuer, Wingate,
Cumberland and each Key Executive dated January 31, 1992.
"Exercise Price" shall have the meaning assigned to such term in the
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form of Warrant attached as Annex 1 hereto.
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"Expiration Date" shall mean the date 10 years from the Closing Date.
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"Fair Market Value" shall mean, as at any Put Notice Date, Call
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Notice Date or Subsequent Asset Sale Date, as the case may be, the price for
which all the outstanding shares of Common Stock (on a fully diluted basis,
assuming receipt of applicable consideration for any conversion, exchange or
exercise of any Convertible Securities or Options which are exchangeable for or
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convertible or exercisable into Common Stock unless they are Out of the Money)
could be sold in an arm's length transaction to a third party which is not an
Affiliate within 12 months after such Put Notice Date, Call Notice Date or
Subsequent Asset Sale Date, as the case may be, treating Issuer and the
Subsidiaries as a going concern and without regard to (i) the lack of liquidity
of the Common Stock due to any restrictions or other limitations contained in
this Agreement, the Registration Rights Agreement, the Warrants or otherwise,
(ii) any discount for minority interests, (iii) the fact that some of the issued
and outstanding shares of the Common Stock may not have any voting rights or may
not have full voting rights, (iv) the fact that one or more of the holders of
the Common Stock may be unable to exercise in full any of its voting rights
due to regulatory, contractual or other restrictions, or (v) the fact that
contractual or regulatory approvals, consents, waivers, licenses, permits or
notifications may need to be obtained in connection with such sale and the
time required to obtain the same. For purposes of determining the Fair Market
Value, it shall be assumed that, in such an arm's length transaction, (A) the
seller would not be under any compulsion to sell, and (B) the purchaser would
not be under any compulsion to purchase. The Fair Market Value shall be
determined by agreement or appraisal in accordance with the procedures
described below.
If the Fair Market Value is being determined in connection with the
exercise of a Put Right, within 20 days after the applicable Company Notice
Date, Issuer and the Holders of a majority of the Warrant Stock issued or
issuable upon exercise of the Warrants who have given Put Notices in connection
with such Put Right (the "Majority Put Holders") shall each designate a
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representative and such representatives will meet and use their best efforts to
reach an agreement on the Fair Market Value. If the Fair Market Value is being
determined in connection with the exercise by Issuer of a Call Right, within 20
days after the applicable Call Notice Date, Issuer and the Majority Warrant
Stockholders shall each designate a representative and such representatives will
meet and use their best efforts to reach an agreement on the Fair Market Value.
If the Fair Market Value is being determined in connection with the occurrence
of any Subsequent Asset Sale, within 20 days after the applicable Subsequent
Asset Sale Date, Issuer and the Holders of a majority of the Warrant Stock sold
in the applicable Prior Sale, including Warrant Stock issuable upon the exercise
of Warrants sold in such Prior Sale (the "Majority Look Back Holders"), shall
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each designate a representative and such representatives will meet and use their
best efforts to reach an agreement on the Fair Market Value. The Majority Put
Holders (in the case of the exercise of
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a Put Right), the Majority Warrant Stockholders (in the case of the exercise by
Issuer of a Call Right) and the Majority Look Back Holders (in the case of any
Subsequent Asset Sale), as the case may be, are herein called the "Relevant
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Majority Holders". The Company Notice Date (in the case of the exercise of a Put
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Right), the Call Notice Date (in the case of the exercise by Issuer of a Call
Right) and the Subsequent Asset Sale Date (in the case of a Subsequent Asset
Sale) is each herein called the "Relevant Notice Date".
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If the representatives designated by Issuer and the Relevant Majority
Holders are unable to reach such agreement within 15 days after the date on
which the later of the two representatives are designated, then (A) the Relevant
Majority Holders shall immediately designate one Independent Appraiser; (B)
Issuer shall immediately designate one Independent Appraiser; (C) the two
Independent Appraisers so selected shall, within 20 days after the date on which
the later of the two Independent Appraisers are appointed, determine
independently the Fair Market Value using the parameters established in the
first paragraph of this definition; (D) if the lesser of the two appraised
values exceeds or is equal to 90% of the other appraised value, then the Fair
Market Value will be the average of the two, which average amount shall be
conclusive and binding upon all the applicable parties; (E) if the lesser of the
two appraised values is less than 90% of the other appraised value, then the two
appraisers shall, within 20 days of the date of the later of the two appraisals
appoint a third Independent Appraiser; and (F) the third Independent Appraiser
so selected shall, within 15 days of its appointment, determine independently
the Fair Market Value using the parameters established in the first paragraph of
this definition, which determination shall be conclusive and binding upon all
the applicable parties.
Issuer will provide each Independent Appraiser with all information
about Issuer and the Subsidiaries which such Independent Appraiser reasonably
deems necessary for determining the Fair Market Value. The fees and expenses of
the appraisal process (including those of the Independent Appraisers) will be
paid by Issuer, provided, however, that half of the fees and expenses of the
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third Independent Appraiser, if any, shall be paid, in the event that Fair
Market Value is being determined for the purpose of determining a Put Price Per
Share, by the Holders of the Warrant Stock and Warrants who have given Put
Notices. Issuer may require that the Independent Appraisers keep confidential
any non-public information received as a result of this paragraph pursuant to
reasonable confidentiality arrangements.
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"Fair Price" shall have the meaning assigned to such term in Section
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10.04.
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"Financing" shall mean the borrowing of money by Issuer (including in
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connection with any refinancing of existing indebtedness of Issuer), the sale or
issuance of Additional Shares of Common Stock (as defined in the Warrant), a
recapitalization of Issuer, a revaluation of Issuer's assets (to the extent
permitted under Delaware corporate law and GAAP), transfers by Issuer from its
capital to its surplus accounts, effecting the sale of the Warrants and/or the
Warrant Stock required to be purchased by Issuer under Section 7 to one or more
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third parties or any other transaction (other than a sale of a majority of the
assets of Issuer) pursuant to which Issuer makes available funds in an amount
sufficient to satisfy in cash all its obligations under Section 7.
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"GAAP" shall mean generally accepted accounting principles,
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consistently applied throughout the specified period.
"Go-Along Notice Date" shall mean the date on which the Go-Along
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Notice is given.
"Go-Along Sale" shall have the meaning assigned to such term in
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Section 10.04.
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"Good Capital" shall mean Good Capital Co., Inc., a Delaware
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corporation.
"Governmental Authority" shall mean any nation or government, any
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state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled (whether through ownership of securities or other ownership
interests, by contract or otherwise) by any of the foregoing.
"Holder" shall mean any Person who acquires Warrants or Warrant Stock
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pursuant to the provisions of this Agreement, including any transferees of
Warrants or Warrant Stock, provided, however, that a holder of Warrant Stock
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purchased pursuant to an effective registration statement or in an ordinary
brokerage transaction pursuant to Rule 144 shall not be deemed a Holder.
"include" and "including" shall be construed as if followed by the
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phrase "without being limited to".
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"Indebtedness" shall have the meaning assigned to such term in
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Section 1.01 of the Credit Agreement.
"Independent Appraiser" shall mean an appraiser which is a recognized
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independent expert (including any Investment Banking Firm) experienced in
valuing businesses similar or related to the principal business of Issuer and
the Subsidiaries.
"Interest Expense" shall have the meaning assigned to such term in
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Section 1.01 of the Credit Agreement.
"Interim Dividends" shall have the meaning assigned to such term in
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Section 8.02(a)(iii).
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"Investment" shall have the meaning assigned to such term in Section
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1.01 of the Credit Agreement.
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"Investment Banking Firm" shall mean a nationally recognized
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investment banking firm.
"Investor" shall have the meaning set forth at the head of this
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Agreement.
"IPO" shall mean the initial public offering of any equity securities
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(including Convertible Securities and Options that are (or may become)
exchangeable for or convertible or exerciseable into equity securities) of
Issuer under an effective registration statement under the Securities Act.
"IRR" shall have the meaning assigned to such term in Section 11.04.
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"Issuer" shall have the meaning set forth at the head of this
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Agreement.
"Joinder Agreement" shall mean a Joinder Agreement between Issuer and
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a Stockholder, which shall be substantially in the form attached as Annex 5
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hereto.
"Key Executives" shall mean Michael D. Rowsey, Robert B. Eberspacher,
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Daniel J. Schleppe and Lawrence E. Miller.
"Key Executive Options" shall mean the options which may be granted
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to the Key Executives under the MAnagement Stock Option Plan, which, upon
exercise will give such Key Executives the right to purchase, in the aggregate,
a maximum of 21,684 shares of Class A Common Stock.
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"Lender" shall have the meaning set forth at the head of the Credit
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Agreement.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
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pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For purposes of this Agreement, a Person shall be deemed to own subject
to a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Loans" shall have the meaning assigned to such term in Section 1.01
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of the Credit Agreement.
"Look Back Event" shall have the meaning assigned to such term in
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Section 8.02(b).
"Look Back Holder" shall have the meaning assigned to such term in
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Section 8.02(a).
"Look Back Period" shall have the meaning assigned to such term in
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Section 8.02(a).
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"Majority Look Back Holders" shall have the meaning assigned to such
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term in the definition of Fair Market Value in this Section 1.
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"Majority Put Holders" shall have the meaning assigned to such term
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in the definition of Fair Market Value in this Section 1.
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"Majority Warrant Stockholders" shall mean the Holders of a majority
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of the Warrant Stock issued or issuable upon exercise of the Warrants. For
purposes of giving notices, waivers and consents hereunder, Holders of Warrants
shall be deemed holders of Common Stock issued on exercise thereof.
"Management Options" shall mean the options which may be granted to
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certain managers of the Operating Company under the Management Stock Option
Plan, and which, upon exercise, will give such managers the right to purchase,
in the aggregate, a maximum of 65,051 shares of Class A Common Stock.
"Management Stock Option Plan" shall mean the Associated Holdings,
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Inc. 1992 Management Stock Option Plan in effect on January 31, 1992.
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"Marketable Securities" shall mean any security that is listed or
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admitted to trading on a national securities exchange or quoted by NASDAQ or at
least three market makers, and can be sold by the recipient within 30 days of
receipt without incurring a significant discount from the average of the bid and
asked prices for such shares of stock or other securities at the time of
receipt.
"Monitoring Costs" shall have the meaning assigned to such term in
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Section 1.01 of the Credit Agreement.
"Monthly Management Fees" shall have the meaning assigned to such
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term in Section 12.05(e).
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"NASDAQ" shall mean the National Association of Securities Dealer
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automated quotation system.
"Net Consideration" shall have the meaning assigned to such term in
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Section 8.02(b).
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"New Securities" shall mean any capital stock of Issuer (including
--------------
any Common Stock or Preferred Stock), all Convertible Securities or Options that
are (or may become) exchangeable for, or exerciseable or convertible into, such
capital stock, any voting security, and any Participating Security; provided,
--------
however, that New Securities shall not include the Warrants, the Warrant Stock
- -------
and the Other Equity Securities.
"Notes" shall have the meaning assigned to such term in Section 1.01
-----
of the Credit Agreement.
"Notice of Non-Acceptance" shall have the meaning assigned to such
------------------------
term in Section 2.03(e).
---------------
"Observer" shall have the meaning assigned to such term in Section
-------- -------
12.09.
- -----
"Offeree" shall have the meaning assigned to such term in Section
------- -------
12.08.
- -----
"Offer Notice" shall have the meaning assigned to such term in
------------
Section 12.08.
- -------------
"Offer Period" shall have the meaning assigned to such term in
------------
Section 12.08.
- -------------
"Operating Company" shall have the meaning set forth at the head of
-----------------
this Agreement.
Warrant Agreement
-----------------
-13-
"Option" shall mean any warrant, option or other right to subscribe
------
for or purchase a specified security of Issuer.
"Other Equity Documents" shall mean the Stockholders Registration
----------------------
Rights Agreement, the Management Stock Option Plan and options thereunder, the
Other Warrant Agreement and the warrants issued thereunder, the Executive Stock
Purchase Agreement, the Stockholders Agreement, the Transition Services
Agreement, the Preferred Stock Purchase Agreements, the Securities Purchase
Agreement and the Voting Trust Agreement.
"Other Equity Securities" shall mean the Key Executive Options, the
-----------------------
Management Options, the Boise Warrants, the Employee Shares and the shares of
Common Stock purchased or purchaseable by the holders of the Other Equity
Securities upon the exercise thereof.
"Other Securities" shall mean any stock (other than Warrant Stock)
----------------
and other securities of Issuer or any other Person (corporate or otherwise)
which the holders at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants or pursuant to Section 5 thereof, in
lieu of or in addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of Warrant Stock or
Other Securities received in an earlier exchange, exercise or replacement of
Warrant Stock.
"Other Warrant Agreement" shall mean the Warrant Agreement dated as
-----------------------
of January 31, 1992, between Boise Cascade and Issuer.
"Out of the Money" shall mean (a) in the case of an Option, that the
----------------
fair market value of the shares of Common Stock which the holder thereof is
entitled to purchase or subscribe for is less than the exercise price of such
Option and (b) in the case of a Convertible Security, that the quotient
resulting from dividing the fair market value of such Convertible Security by
the number of shares of Common Stock into or for which such Convertible Security
is exerciseable, convertible or exchangeable is greater than the fair market
value of a share of Common Stock.
"Participating Securities" shall mean any security the rights of the
------------------------
holders of which are not limited to a fixed sum or percentage of liquidation
preference or principal amount, a sum determined by reference to a formula based
on a published index of interest rates, an interest rate publicly announced by a
financial institution or a similar index of interest rates in
Warrant Agreement
-----------------
-14-
respect of interest or dividends, and to a fixed sum or percentage of principle
amount or liquidation preference in any distribution of assets.
"Person" shall mean a corporation, an association, a partnership, a
------
joint venture, an organization, a business, an individual or a Governmental
Authority.
"Preferred Stock" shall mean, as to any Person, any capital stock of
---------------
such Person which is preferred as to dividends or assets over any other class of
any other stock of such Person.
"Preferred Stock Purchase Agreements" shall mean the Preferred Stock
-----------------------------------
Purchase Agreement dated January 31, 1992, between Issuer and Boise Cascade and
the Purchase Agreement dated January 31, 1992, between Issuer and Affiliated
Computer Services, Inc.
"Prior Amount" shall have the meaning assigned to such term in
------------
Section 8.02(a)(i).
- ------------------
"Prior Sale" shall have the meaning assigned to such term in
----------
Section 8.02(a).
- ---------------
"Proportionate Share" shall have the meaning assigned to such term in
-------------------
Section 2.03(e).
- ---------------
"Proposed Purchaser" shall have the meaning assigned to such term in
------------------
Section 9.02.
- ------------
"Proposed Sale" shall have the meaning assigned to such term in
-------------
Section 12.08.
- -------------
"Purchasing Offeree" shall have the meaning assigned to such term in
------------------
Section 12.08.
- -------------
"Put Notice" shall have the meaning assigned to such term in
----------
Section 7.01(b).
- ---------------
"Put Notice Date" shall mean, with respect to a Put Notice, the date on
---------------
which such Put Notice is given or deemed given, as the case may be, to Issuer.
"Put Postponement" shall have the meaning assigned to such term in
----------------
Section 7.02(c).
- ---------------
"Put Price Per Share" shall mean, as at any date, (i) the greater of
-------------------
Fair Market Value or Equity Value, divided by
----------
Warrant Agreement
-----------------
-15-
(ii) the number of shares of Common Stock then outstanding on a fully diluted
basis.
"Put Reactivation Date" shall have the meaning assigned to such term
---------------------
in Section 7.02(c).
---------------
"Put Response Notice" shall have the meaning assigned to such term in
Section 7.02(b).
- ---------------
"Put Right" shall mean the right of a Holder to require Issuer to
---------
purchase Warrants and Warrant Stock pursuant to, and in accordance with,
Section 7.
- ---------
"Put Withdrawal Notice" shall have the meaning assigned to such term
---------------------
in Section 7.02(b).
---------------
"Qualified Public Offering" shall mean an offering or offerings of
-------------------------
Common Stock under one or more effective registration statements under the
Securities Act such that, after giving effect thereto, (i) at least 20% of the
outstanding Common Stock (on a fully diluted basis) has been sold pursuant to
such offerings, and (ii) such offerings result in aggregate cash proceeds being
received by Issuer and any selling Stockholders of at least $37,500,000
exclusive of underwriter's discounts and other expenses, as a result of which
Common Stock is listed or admitted to trading on a national securities exchange
or quoted by NASDAQ.
"Registration Rights Agreement" shall mean the Registration Rights
-----------------------------
Agreement of even date herewith, between Issuer and the Investor, relating to
the registration of the Registrable Securities (as defined therein) under and
pursuant to the Securities Act, which shall be in the form attached as Annex 2
-------
hereto, as said Registration Rights Agreement shall be modified and supplemented
and in effect from time to time.
"Regulation Y" shall mean Regulation Y promulgated by the Board of
------------
Governors of the Federal Reserve System (12 C.F.R. (S) 225) or any successor
regulation.
"Relevant Majority Holders" shall have the meaning assigned to such
-------------------------
term in the definition of Fair Market Value in this Section 1.
---------
"Repurchase Notice" shall have the meaning assigned to such term in
-----------------
Section 6.01.
- ------------
Warrant Agreement
-----------------
-16-
"Repurchase Notice Date" shall mean the date on which a Repurchase
----------------------
Notice shall be received by the Holders.
"Repurchase Price" shall mean (a) prior to the day which is six months
----------------
following the Closing Date, $10.81 per Stock Unit, and (b) thereafter and until
the first anniversary of the Closing Date, $17.29 per Stock Unit.
"Repurchase Right" shall have the meaning assigned to such Term in
----------------
Section 6.01(a).
- ---------------
"Restricted Certificate" shall mean a certificate for shares of
----------------------
Warrant Stock or Warrants bearing or required to bear the restrictive legend set
forth in Section 4.04.
------------
"Restricted Securities" shall mean Restricted Stock and Restricted
---------------------
Warrants.
"Restricted Stock" shall mean Warrant Stock evidenced by a Restricted
----------------
Certificate.
"Restricted Warrants" shall mean Warrants evidenced by a Restricted
-------------------
Certificate.
"Revolving Credit Loans" shall have the meaning assigned to such term
----------------------
in Section 1.01 of the Credit Agreement.
"Rule 144" shall mean Rule 144 promulgated by the Commission under the
--------
Securities Act (or any successor or similar rule then in force).
"Rule 144A" shall mean Rule 144A promulgated by the Commission under
---------
the Securities Act (or any successor or similar rule then in force).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
--------------
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Securities Purchase Agreement" shall mean the Securities Purchase
-----------------------------
Agreement dated January 31, 1992, among Wingate, Cumberland, Good Capital and
Issuer.
"Selling Stockholder" shall have the meaning assigned to such term in
Section 9.01.
Warrant Agreement
-----------------
-17-
"Sponsor Management Fees" shall have the meaning assigned to such
-----------------------
term in Section 12.05(e).
----------------
"Stockholder" shall mean any Person who directly or indirectly owns
-----------
any shares of Common Stock (including any shares of Warrant Stock).
"Stockholders Agreement" shall mean the Associated Holdings, Inc.
----------------------
Stockholders Agreement dated January 31, 1992, among Wingate, Cumberland, Good
Capital and the other Persons whose names appear on the signature pages thereto.
"Stockholders Registration Rights Agreement" shall mean the
------------------------------------------
Associated Holdings, Inc. Registration Rights Agreement dated as of January
31, 1992 by and among Issuer and the Persons whose names appear on the
signature pages thereto.
"Stock Unit" shall have the meaning assigned to such term in the form
----------
of Warrant attached as Annex 1 hereto.
-------
"Subject Holder" shall have the meaning assigned to such term in
--------------
Section 11.04.
- -------------
"Subsequent Asset Sale" shall have the meaning assigned to such term
---------------------
in Section 8.02(b).
---------------
"Subsequent Asset Sale Date" shall mean the date upon which a
--------------------------
Subsequent Asset Sale shall occur.
"Subsequent Share Value" shall have the meaning assigned to such term
----------------------
in Section 8.02(b).
---------------
"Subsequent Stock Sale" shall have the meaning assigned to such term
---------------------
in Section 8.02(b).
---------------
"Subsidiary" shall mean any Person in which Issuer, directly or
----------
indirectly through Subsidiaries or otherwise, beneficially owns more than 50%
of either the equity interests in or the Voting Capital Stock of such Person.
"Wholly-Owned Subsidiary" shall have the meaning assigned to such term under the
-----------------------
definition of "Subsidiary" in Section 1.01 of the Credit Agreement.
"Tag-Along Purchase Offer" shall have the meaning assigned to such
------------------------
term in Section 9.02.
------------
"Tag-Along Sale" shall have the meaning assigned to such term in
--------------
Section 9.01(a).
- ---------------
Warrant Agreement
-----------------
-18-
"Term Loans" shall have the meaning assigned to such term in Section
----------
1.01 of the Credit Agreement.
"Third Party" shall have the meaning assigned to such term in
-----------
Section 10.04.
- -------------
"Tranche B Term Loans" shall have the meaning assigned to such term
--------------------
in Section 1.01 of the Credit Agreement.
"Tranche B Term Loan Commitment" shall have the meaning assigned to
------------------------------
such term in Section 1.01 of the Credit Agreement.
"Tranche B Term Loan Lenders" shall have the meaning assigned to such
---------------------------
term in Section 1.01 of the Credit Agreement.
"Tranche B Warrants" shall have the meaning assigned to such term in
------------------
Section 2.03(a).
- ---------------
"Tranche B Warrant Repurchase Right" shall have the meaning assigned
----------------------------------
to such term in Section 2.03(d).
---------------
"Tranche B Warrant Stock" shall mean (i) the shares of Common Stock
-----------------------
purchased or purchasable by the Holders of the Tranche B Warrants upon the
exercise thereof, including any Common Stock into which such Common Stock may
thereafter be changed or converted, and (ii) any additional shares of Common
Stock issued or distributed by way of a dividend, stock split or other
distribution in respect of the Common Stock referred to in clause (i) above, or
----------
acquired by way of any rights offering or similar offering made in respect of
the Common Stock referred to in clause (i) above. Any Tranche B Warrant Stock
----------
purchased by Issuer shall, upon such purchase, except for purposes of Section 6
---------
cease to be Tranche B Warrant Stock, cease to be outstanding and Issuer, upon
such purchase, shall not be deemed a Holder.
"Transition Services Agreement" shall mean the Transition Services
-----------------------------
Agreement among Boise Cascade, Boise Cascade Office Products Corporation, the
Operating Company and Issuer dated January 31, 1992.
"Triggering Event" shall mean the earliest to occur of: (i) the fifth
----------------
anniversary of the Closing Date; (ii) a merger, share exchange or consolidation
involving Issuer, unless Issuer is the survivor and the shares of capital stock
outstanding immediately prior to such merger, share exchange or consolidation
are not subject to purchase, redemption, exchange, cancellation or any other
change, as a result thereof; (iii) a sale, lease or
Warrant Agreement
-----------------
-19-
other disposition in a single transaction or series of related transactions of
all or a majority of the assets of Issuer, including, without limitation, by or
through the sale, lease or other disposition of the capital stock or assets of,
or a merger or consolidation involving, any Subsidiary or a liquidation or
distribution, but excluding a sale/leaseback of, or the creation of a Lien on,
such assets in connection with a Company Permitted Financing; (iv) any Change in
Control; and (v) repayment in full of the Tranche B Term Loans, unless such
repayment occurs within one year of the Closing Date.
"Underwriting Warrants" shall have the meaning assigned to such term
---------------------
in Section 2.02(a).
---------------
"Undistributed Warrants" and "Undistributed Warrant Repurchase Notice"
---------------------- ---------------------------------------
shall have the respective meanings assigned to such terms in Section 2.03(d).
---------------
"Voting Capital Stock" with respect to any corporation shall mean its
--------------------
common stock and Preferred Stock entitled to vote generally for the election of
directors.
"Voting Trust Agreement" shall mean that certain Voting Trust
----------------------
Agreement, of even date herewith, among Issuer, Daniel J. Good, Gary G. Miller,
Thomas W. Sturgess, Frederick B. Hegi, Jr. and either of James A. Johnson or
James T. Callier, Jr. and the beneficial owners of shares of Common Stock whose
names are set forth on the signature pages thereto.
"Warrant Income" shall have the meaning assigned to such term in
--------------
Section 11.04.
- -------------
"Warrant Purchase Notice" shall have the meaning assigned to such term
-----------------------
in Section 2.03(b).
---------------
"Warrant Purchase Right" shall have the meaning assigned to such term
----------------------
in Section 2.03(a).
---------------
"Warrant Stock" shall mean (i) the shares of Common Stock purchased or
-------------
purchasable by the Holders of the Warrants upon the exercise thereof, including
any Common Stock into which such Common Stock may thereafter be changed or
converted, and (ii) any additional shares of Common Stock issued or distributed
by way of a dividend, stock split or other distribution in respect of the Common
Stock referred to in clause (i) above, or acquired by way of any rights offering
----------
or similar offering made in respect of the Common Stock referred to in clause
------
(i) above. Any Warrant Stock purchased by Issuer shall, upon such purchase,
- ---
Warrant Agreement
-----------------
-20-
cease to be Warrant Stock, cease to be outstanding and Issuer, upon such
purchase, shall not be deemed a Holder.
"Warrants" shall have the meaning assigned to such term in Section
-------- -------
2.01.
- ----
"Wingate" shall mean Wingate Partners, L.P., and Wingate Management
-------
Company, L.P., so long as it is a general partner of Wingate Partners, L.P., and
Wingate Affiliates L.P., so long as Wingate Partners, L.P. is a general partner
thereof.
1.02 Accounting Terms and Determinations. Except as otherwise may be
-----------------------------------
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Holders hereunder and under
the Warrants shall be prepared, in accordance with GAAP. All calculations made
for the purposes of determining compliance with the terms of this Agreement and
the Warrants shall (except as otherwise may be expressly provided herein) be
made by application of GAAP.
SECTION 2. Purchase and Sale of Warrants.
-----------------------------
2.01 Authorization and Issuance of Shares and Warrants. Issuer has
-------------------------------------------------
authorized: (a) the issuance of warrant certificates covering the purchase of
Stock Units representing shares of Common Stock in the form of Annex 1 to this
-------
Agreement (such certificates, together with the rights to purchase Common Stock
provided thereby and all warrant certificates covering such stock issued upon
transfer, division or combination of, or in substitution for, any thereof,
sometimes called the "Warrants") for issuance to the Investor pursuant to this
--------
Agreement; and (b) the issuance of such number of shares of Class A and Class B
Common Stock as shall be necessary to permit Issuer to comply with its
obligations to issue Common Stock pursuant to the Warrants and Class A Common
Stock upon conversion of the Class B Common Stock.
2.02 The Purchase of the Underwriting Warrants.
-----------------------------------------
(a) On the date hereof:
(i) Issuer shall issue to the Investor Warrants
covering 34,694 Stock Units, which represents 3% of the outstanding
shares of Common Stock on a fully diluted basis (the "Underwriting
------------
Warrants") on the date of original issuance of the Underwriting
--------
Warrants;
Warrant Agreement
-----------------
-21-
(ii) The Investor shall pay Issuer $3.00 for the Underwriting
Warrants;
(iii) Issuer shall deliver to the Investor a single certificate
for the Underwriting Warrants to be acquired by the Investor
hereunder, registered in the name of the Investor, except that, if
the Investor shall notify Issuer in writing prior to such issuance
that it desires certificates for Warrants to be issued in other
denominations or registered in the name or names of any Affiliate,
nominee or nominees of the Investor for its or their benefit, then the
certificates for Warrants shall be issued to the Investor in the
denominations and registered in the name or names specified in such
notice; and
(iv) Issuer shall deliver to the Investor a legal opinion from
counsel to Issuer in the form attached as Annex 3 hereto.
-------
(b) On or before the date hereof, Issuer shall have adopted a
certificate of incorporation substantially in the form of Annex 4 hereto.
-------
2.03 Right to Purchase the Tranche B Warrants.
----------------------------------------
(a) On or prior to the first anniversary of the Closing Date, the
Investor shall have the right to purchase, on one or more occasions, such number
of Warrants covering such number of Stock Units as is equal to 10% of the
outstanding shares of Common Stock on a fully diluted basis (the "Tranche B
---------
Warrants") on the Date of Issuance (the "Warrant Purchase Right").
- -------- ----------------------
(b) The Investor may exercise the Warrant Purchase Right by delivering
a notice to Issuer indicating that the Investor wishes to purchase the Tranche B
Warrants (the "Warrant Purchase Notice").
-----------------------
(c) The purchase and sale of the Tranche B Warrants pursuant to the
Warrant Purchase Right shall be consummated on a date selected by the Investor
by giving Issuer at least two days' prior written notice thereof, which date
shall be not later than 30 days after delivery of the Warrant Purchase Notice to
the Issuer (the "Date of Issuance"). On the Date of Issuance:
----------------
(i) Issuer shall deliver to the Investor a single certificate for
the Tranche B Warrants, registered in
Warrant Agreement
-----------------
-22-
the name of the Investor, except that, if the Investor shall
notify Issuer in writing prior to such issuance that it desires
certificates for the Tranche B Warrants to be issued in other
denominations or registered in the name or names of any Affiliate of
the Investor, any Tranche B Lender or any Affiliate of a Tranche B
Lender or any nominee or nominees for its or their benefit, then the
certificates for the Tranche B Warrants shall be issued to the
Investor in the denominations and registered in the name or names
specified in such notice.
(ii) The Investor shall pay $10.00 in total for the Tranche B
Warrants;
(iii) Issuer will deliver to each Person that receives a
certificate for Tranche B Warrants a favorable legal opinion from
D'Ancona & Pflaum or Weil, Gotshal & Manges or other counsel to
Issuer acceptable to the Investor, covering the matters set forth in
the opinion of counsel to Issuer attached hereto as Annex 3;
-------
(iv) The Investor and each other Person that receives a
certificate for Tranche B Warrants will deliver a certificate to
Issuer affirming the representations and warranties contained in
Section 2.04 as of the Tranche B Warrant Issuance Date; and
------------
(v) Issuer will deliver a certificate to each Person that
receives a certificate for Tranche B Warrants affirming the
representations and warranties contained in Section 3 as of the Date
---------
of Issuance.
(d) In the event that any Tranche B Term Loan Lender declines to
accept its proportionate share of the Tranche B Warrants, based upon the ratio
of the dollar amount of such Tranche B Term Loan Lender's Tranche B Term Loan
Commitment to the total dollar amount of the Tranche B Term Loans
("Proportionate Share"), Issuer shall have the right ("Tranche B Warrant
------------------- -----------------
Repurchase Right") to repurchase such Tranche B Term Loan Lender's Proportionate
- ----------------
Share of the Tranche B Warrants from the Investor (the "Undistributed
-------------
Warrants"). Within 30 days after the first anniversary of the Closing Date, the
- --------
Investor shall give Issuer a written notice identifying each Tranche B Loan
Lender which has declined to accept its Proportionate Share of the Tranche B
Warrants ("Notice of Non-Acceptance"). Issuer may exercise the Tranche B Warrant
------------------------
Repurchase Right by delivering a written notice to the Investor within 30 days
after receipt of
Warrant Agreement
-----------------
-23-
the Notice of Non-Acceptance indicating that Issuer wishes to repurchase the
Undistributed Warrants ("Undistributed Warrant Repurchase Notice"). The purchase
---------------------------------------
and sale of the Undistributed Warrants shall be consummated on a date selected
by Issuer by giving the Investor at least 10 days' prior written notice thereof,
which date shall be not later than 30 days after receipt of the Undistributed
Warrant Repurchase Notice by the Investor. Issuer shall purchase from the
Investor, and Investor shall sell to Issuer, the Undistributed Warrants at a
purchase price equal to $.0000865 per Stock Unit covered thereby. Payment of
the purchase price for the Undistributed Warrants so purchased by Issuer shall
be made in immediately available funds.
2.04 Purchase for the Investor's Account. The Investor represents and
-----------------------------------
warrants to Issuer as follows:
(a) The Investor is purchasing and shall purchase the Warrants for its
own account, without a view to the distribution thereof, all without prejudice,
however, to the right of the Investor at any time, in accordance with this
Agreement or the Registration Rights Agreement, lawfully to sell or otherwise to
dispose of all or any part of the Warrants or the Warrant Stock held by it.
(b) The Investor is an "accredited investor" within the meaning of
Regulation D under the Securities Act.
2.05 Securities Act Compliance. The Investor understands that Issuer
-------------------------
has not registered the Warrants or the Warrant Stock under the Securities Act,
and the Investor agrees that neither the Warrants nor the Warrant Stock shall be
sold or transferred or offered for sale or transfer without registration under
the Securities Act or the availability of an exemption therefrom, all as more
fully provided in Section 4.
---------
SECTION 3. Representations and Warranties. Issuer represents and
------------------------------
warrants as follows:
3.01 Existence; Qualification. Each of Issuer and the Operating
------------------------
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of Issuer and the Operating
Company is duly qualified, licensed or admitted to do business and is in good
standing as a foreign corporation in every jurisdiction where the failure to be
so qualified would have a material adverse effect on the business, financial
condition, operations or assets of Issuer and the Operating Company taken as a
whole and has all
Warrant Agreement
-----------------
-24-
requisite corporate power and authority to transact its business in all such
jurisdictions.
3.02 No Breach. The execution, delivery and performance of this
---------
Agreement, the Warrants and the Registration Rights Agreement by Issuer and the
consummation by it of the transactions contemplated hereby and thereby and the
execution, delivery and performance of this Agreement by the Operating Company
and the consummation by it of the transactions contemplated hereby will not (a)
violate the certificate of incorporation or by-laws of Issuer or the Operating
Company, (b) violate any loan or credit agreement to which Issuer or the
Operating Company is a party or is bound, or result in a breach of or default
under any other instrument or agreement to which Issuer or the Operating Company
is a party or is bound in a way which could reasonably be expected to have a
material adverse effect on (i) the property, business, operations, financial
condition, prospects, liabilities or capitalization of Issuer and the
Subsidiaries taken as a whole, (ii) the ability of either Issuer or the
Operating Company to perform its obligations under any of this Agreement, the
Warrant and the Registration Rights Agreement to which it is a party, (iii) the
validity or enforceability of this Agreement, the Warrant and the Registration
Rights Agreement, or (iv) the rights and remedies of the Holders under any of
this Agreement, the Warrant, and the Registration Rights Agreement, (c) violate
any judgment, order, injunction, decree or award against or binding upon Issuer
or the Operating Company, (d) result in the creation of any material Lien upon
any of the properties or assets of Issuer or the Operating Company, or (e)
violate any law, rule or regulation relating to Issuer or the Operating Company.
3.03 Corporate Action. Each of Issuer and the Operating Company has
----------------
all necessary corporate power and authority to execute, deliver and perform its
respective obligations under this Agreement, the Warrants and the Registration
Rights Agreement; the execution, delivery and performance by Issuer of this
Agreement, the Warrants and the Registration Rights Agreement and by the
Operating Company and this Agreement have been duly authorized by all necessary
corporate action (including all stockholder action) on the part of Issuer and
the Operating Company, respectively; this Agreement, the Underwriting Warrant
and the Registration Rights Agreement have been duly executed and delivered by
Issuer and this Agreement has been duly executed and delivered by the Operating
Company and constitute, the legal, valid and binding obligations of Issuer and
the Operating Company, respectively, enforceable against Issuer and the
Operating Company in accordance with their respective terms, except as
enforceability
Warrant Agreement
-----------------
-25-
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting the rights of creditors generally as applicable to
Issuer, or in the case of the Operating Company, as applicable to it, and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law); the Tranche B Warrants when
executed, issued and delivered pursuant to this Agreement will constitute the
legal, valid and binding obligations of Issuer, enforceable against Issuer in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the rights of creditors generally as applicable to Issuer or in the
case of the Operating Company, as applicable to it, and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law); the Class A Common Stock and Class B Common
Stock constituting the Warrant Stock initially covered by the Warrants have
been duly and validly authorized and reserved for issuance and shall, when
paid for, issued and delivered in accordance with the Warrants, and the Class
A Common Stock when issued on conversion of Class B Common Stock will be,
be duly and validly issued, fully paid and nonassessable and free and clear
of any Liens; and none of the Warrant Stock issued pursuant to the terms
hereof will be in violation of any preemptive rights of any Stockholder.
3.04 Approvals. Except in connection with the registration of the
---------
Warrant Stock pursuant to the Registration Rights Agreement and for the filing
of Form D with the Commission in connection with the issuance of the Warrants
pursuant to this Agreement (which Issuer will duly file), no authorizations,
approvals or consents of, and no filings or registrations with, any Governmental
Authority or any other Person are necessary for (i) the execution, delivery or
performance by Issuer of this Agreement, the Warrants or the Registration Rights
Agreement or for the validity or enforceability thereof, or (ii) the execution,
delivery or performance by the Operating Company of this Agreement. Any such
action required to be taken as a condition to the execution and delivery of this
Agreement and the Registration Rights Agreement, or the execution, issuance and
delivery of the Warrants, has been duly taken by all such Governmental
Authorities or other Persons, as the case may be.
3.05 Investment Company Act. Issuer is not an "investment company",
----------------------
or a company "controlled by" an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
Warrant Agreement
-----------------
-26-
3.06 Public Utility Holding Company Act. Issuer is not a "holding
----------------------------------
company", or an "affiliate" of a "holding company" or a "subsidiary company" of
a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
3.07 Capitalization.
--------------
(a) On the date hereof, the total number of shares of capital stock
which Issuer has authority to issue is 10,245,000 shares, consisting of (i)
15,000 shares of Class A Preferred Stock, par value $.01 per share; (ii) 15,000
shares of Class B Preferred Stock, par value $.01 per share; (iii) 15,000 shares
of Class C Preferred Stock, par value $.01 per share; (iv) 200,000 shares of
other Preferred Stock, par value of $.01 per share, as to which the Board shall
have the authority set forth in Article Five of the certificate of incorporation
of Issuer; and (v) 10,000,000 shares of Common Stock, of which 5,000,000 shares
shall be Class A Common Stock, par value $.01 per share ("Class A Common
--------------
Stock"), and 5,000,000 shares shall be Class B Common Stock, par value $.01 per
- -----
share ("Class B Common Stock"). Schedule I hereto correctly sets forth the
-------------------- ----------
capital stock and equity securities owned of record and the names of the owners
of record on the date hereof. Upon the issuance of the Warrants under this
Agreement, other than (A) the Warrants to be issued pursuant to this Agreement,
(B) the Boise Warrants, (C) the Key Employee Options, (D) the Management
Options, and (E) pursuant to this Agreement or the Other Equity Documents and
(F) Class B Common Stock which may be issued pursuant to this Agreement, Issuer
shall not have outstanding any Convertible Securities or Options exercisable or
convertible into or exchangeable for any shares of capital stock or
Participating Securities of Issuer, nor shall it have outstanding any agreements
providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, any capital stock or
Participating Securities of Issuer or Convertible Securities exercisable or
convertible into or exchangeable for any capital stock or Participating
Securities of Issuer, or obligations of the type specified in
Section 12.06(d)(iii).
- ---------------------
(b) Other than the Other Equity Documents, there is not in effect on
the date hereof any agreement by Issuer pursuant to which any holders of
securities of Issuer have a right to cause Issuer to register such securities
under the Securities Act, other than the Registration Rights Agreement, or any
agreement to which Issuer or (to its knowledge) any of its stockholders are a
party relating to the voting, transfer or sale of such securities.
Warrant Agreement
-----------------
-27-
(c) On the date hereof, none of the Subsidiaries has any equity
security, Participating Security or obligation of the type referred to in
Section 12.06(d)(iii) outstanding other than capital stock owned by Issuer.
- ---------------------
(d) As of the date hereof, all certificates representing issued and
outstanding shares of Common Stock which have been issued to Wingate, Cumberland
and Good Capital bear the legend set forth in Section 9.03 on the reverse side
------------
thereof.
3.08 Private Offering.
----------------
(a) Assuming the truth and accuracy of the Investor's representations
and warranties contained in Section 2.04, the issuance and sale of the Warrants
------------
to the Investor hereunder are exempt from the registration and prospectus
delivery requirements of the Securities Act.
(b) All stock and securities of Issuer heretofore issued and sold by
Issuer were and all securities of Issuer issued and sold by Issuer on the date
hereof are being issued and sold in accordance with, or were exempt from, the
registration and prospectus delivery requirements of the Securities Act.
(c) Issuer agrees that neither Issuer nor any Person acting on its
behalf has offered or will offer the Warrants or shares of Warrant Stock or any
part thereof or any similar securities for issue or sale to, or has solicited or
will solicit any offer to acquire any of the same from, any Person so as to
bring the issuance and sale of the Warrants or shares of Warrant Stock within
the provisions of the registration and prospectus delivery requirements of the
Securities Act.
3.09 No Litigation.
-------------
(a) There is no action, suit, proceeding or investigation pending or,
to the best of Issuer's knowledge after due inquiry, threatened against Issuer
before any Governmental Authority seeking to enjoin the transactions
contemplated by this Agreement, the Warrants or the Registration Rights
Agreement.
(b) There are no legal or arbitral proceedings or any proceedings by
or before any Governmental Authority, now pending or (to the knowledge of
Issuer) threatened against Issuer or any of the Subsidiaries which, if adversely
determined, could have a material adverse effect on Issuer's business, financial
condition, operations or assets.
Warrant Agreement
-----------------
-28-
3.10 Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby have been carried out by Issuer directly with
Investor without the intervention of any Person on behalf of Issuer in such
manner as to give rise to any valid claim by any Person against Investor or any
Holder for a finder's fee, brokerage commission or similar payment.
SECTION 4. Restrictions on Transferability.
-------------------------------
4.01 Transfers Generally. Except as otherwise provided in Section 5,
------------------- ---------
the Restricted Securities shall be transferable only upon the conditions
specified in this Section 4 and in the Registration Rights Agreement, which
---------
conditions are intended to insure compliance with the provisions of the
Securities Act and applicable state securities laws in respect of the transfer
of any Restricted Securities.
4.02 Transfers of Restricted Securities Pursuant to Registration
-----------------------------------------------------------
Statements, Rule 144 and Rule 144A. The Restricted Securities may be offered or
- ----------------------------------
sold by the Holder thereof pursuant to (a) an effective registration statement
under the Securities Act, or (b) to the extent applicable, Rule 144 or Rule
144A.
4.03 Notice of Certain Private Transfers. If any Holder of any
-----------------------------------
Restricted Security desires to transfer such Restricted Security other than
pursuant to an effective registration statement under the Securities Act or
pursuant to Rule 144 or Rule 144A, then such Holder shall deliver, at such
Holder's expense, to Issuer a notice with respect to the proposed transfer,
together with an opinion of Milbank, Tweed, Hadley & McCloy, or other counsel
reasonably satisfactory to Issuer, to the effect that an exemption from
registration under the Securities Act is available.
4.04 Restrictive Legends. Until otherwise permitted by Section 4.05,
------------------- ------------
each certificate for Warrants issued under this Agreement, each certificate for
any Warrants issued to any subsequent transferee of any such certificate, each
certificate for any Warrant Stock issued upon exercise of any Warrant and each
certificate for any Warrant Stock issued to any subsequent transferee of any
such certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THAT CERTAIN WARRANT AGREEMENT DATED
AS OF JANUARY 31, 1992 (THE
Warrant Agreement
-----------------
-29-
"WARRANT AGREEMENT"), BETWEEN ASSOCIATED HOLDINGS, INC., A DELAWARE
-----------------
CORPORATION ("ISSUER"), AND CHASE MANHATTAN INVESTMENT HOLDINGS, INC., A
------
DELAWARE CORPORATION, AS THE WARRANT AGREEMENT MAY BE MODIFIED AND
SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME, AND NO TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE
UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF THE FORM OF THE
WARRANT AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL
EXECUTIVE OFFICE OF ISSUER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE
OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF THE WARRANT
AGREEMENT."
4.05 Termination of Restrictions. All the restrictions imposed by this
---------------------------
Section 4 upon the transferability of the Restricted Securities shall cease and
- ---------
terminate as to any particular Restricted Security when such Restricted Security
shall have been effectively registered under the Securities Act and applicable
state securities laws and sold by the Holder thereof in accordance with such
registration or sold under and pursuant to Rule 144 or is eligible to be sold
under and pursuant to paragraph (k) of Rule 144. Whenever the restrictions
imposed by this Section 4 shall terminate as to any Restricted Security as
---------
hereinabove provided, the Holder thereof shall be entitled to receive from
Issuer, without expense, a new certificate evidencing such Restricted Security
not bearing the restrictive legend otherwise required to be borne by a
certificate evidencing such Restricted Security.
SECTION 5. Certain Dispositions of Securities; Regulation Y Matters.
--------------------------------------------------------
5.01 Certain Dispositions of Securities.
----------------------------------
(a) Notwithstanding anything in this Agreement or the Warrants to the
contrary, but subject to compliance with the Securities Act, applicable state
securities laws and the requirement as to placement of a legend on certificates
for Restricted Securities specified in Section 4.04, any Holder shall have the
------------
right to transfer any or all of its Restricted Securities:
(i) to any Person who at the time owns (directly or indirectly)
at least a majority of the Voting Capital Stock of such Holder;
(ii) to any Person at least a majority of whose Voting Capital Stock
shall at the time be owned (directly or indirectly) by such Holder or by
any Person who owns
Warrant Agreement
-----------------
(directly or indirectly) at least a majority of the Voting Capital Stock of
such Holder;
(iii) to another Holder; or
(iv) in the case of any Holder which is an insurance company, pension
fund, bank, bank holding company or a subsidiary of an insurance company,
pension fund, bank or bank holding company, to a third party, if, in the
reasonable judgment of such Holder, such transfer is required to be
effected by such Holder because (A) its investment in Warrants or shares of
Warrant Stock may exceed any limitation to which it is subject, or is
otherwise not permitted, under any law, rule or regulation of any
Governmental Authority, or (B) restrictions are imposed on such Holder
under any law, rule or regulation which, in the reasonable judgment of such
Holder, make it illegal or unduly burdensome to continue to hold such
Warrants or shares of Warrant Stock or a portion thereof.
The party to which Restricted Securities are transferred pursuant to the
immediately preceding sentence shall be deemed to be a Holder of such Restricted
Securities and bound by the provisions of this Agreement applicable to Holders
so long as he, she or it continues to own any of the Restricted Securities so
transferred to such transferee.
(b) If the circumstances described in clause (iv) of Section 5.01(a)
----------- ---------------
arise, Issuer shall assist such Holder in disposing of its Warrants and Warrant
Stock in a prompt and orderly manner.
(c) In the event of any underwritten public offering of Restricted
Securities in which a Holder which is subject to the provisions of Regulation Y
is participating pursuant to the Registration Rights Agreement or otherwise,
Issuer shall use its best efforts to assist the underwriter in ensuring that any
Warrants or Warrant Stock sold by such Holder are widely disseminated.
5.02 Regulation Y Restrictions. Notwithstanding anything in this
-------------------------
Agreement or the Warrants to the contrary, no Holder subject to the provisions
of Regulation Y shall, and no such Holder shall permit any of its Bank Holding
Company Affiliates to, transfer any Warrants or shares of Warrant Stock held by
it, if, by virtue of such transfer or the right to effect such transfer, such
Holder, together with its Bank Holding Company Affiliates, would Control Issuer
(and, for purposes of
Warrant Agreement
-----------------
-31-
this restriction, a reasoned opinion of counsel to such Holder based on facts
and circumstances deemed appropriate by such counsel to the effect that such
Holder does not so Control Issuer shall be conclusive).
5.03 Cancellation and Issuance. If any Holder or any of its Affiliates
-------------------------
assigns or otherwise transfers all or any of its Loans and/or Commitments
(including by selling participation therein), or assigns or otherwise transfers
any of its rights or obligations under the Credit Agreement or the Notes, to any
Person, such Holder may request (upon 10 days' prior notice to Issuer) that a
number of Warrants held by such Holder be canceled on the date of such
assignment and transfer and that a like number of Warrants be issued by Issuer
to the Person to whom such Loans and/or Commitments, or such rights or
obligations, are being assigned or otherwise transferred. Upon the date
specified in such request:
(a) Issuer shall issue, and the Holder shall surrender for
cancellation, such number of Warrants as aforesaid, provided that such
issuance shall not violate the Securities Act or any applicable state
securities laws;
(b) Issuer will deliver to each Person that receives a certificate for
Warrants a favorable legal opinion from D'Ancona & Pflaum or Weil, Gotshal
& Manges or other counsel to Issuer acceptable to such Person, covering the
matters set forth in the opinion of counsel to Issuer attached hereto as
Annex 3;
-------
(c) Each Person that receives a certificate for Warrants will deliver
a certificate to Issuer affirming the representations and warranties
contained in Section 2.04 as of such date; and
------------
(d) Issuer will deliver a certificate to each Person that receives a
certificate for Warrants affirming the representations and warranties
contained in Section 3 as of such date.
---------
SECTION 6. Issuer's Right of Repurchase.
----------------------------
6.01 Repurchase Right.
----------------
(a) At the time of a Company Permitted Financing, Issuer shall have
the right to repurchase on a pro rata basis from each holder of Tranche B
--- ----
Warrants and Tranche B Warrant Stock up to one-half (the "Buy-back Amount") of
the Tranche B ---------------
Warrant Agreement
-----------------
- 32 -
Warrants and Tranche B Warrant Stock held by such holder, based on the ratio of
the number of shares of Tranche B Warrant Stock (including Tranche B Warrant
Stock issuable upon the exercise of Tranche B Warrants) owned by each such
Holder to the number of shares of Tranche B Warrant Stock (including Tranche B
Warrant Stock issuable upon the exercise of Tranche B Warrants) owned by all of
the Holders (the "Repurchase Right"), provided, however, that in the event that
---------- ----- -------- -------
the Tranche B Term Loans are not repaid in full at the time of a Company
Permitted Financing, the Buy-back Amount shall be reduced to an amount equal to
the product of (i) one minus the quotient resulting from dividing the amount of
-----
the Tranche B Term Loan which remains unpaid immediately after the Company
Permitted Financing by $10,000,000, and (ii) the Buy-back Amount.
(b) Issuer may exercise the Repurchase Right by delivering an
irrevocable notice to the Holders indicating that Issuer will purchase the
Tranche B Warrants and/or the Tranche B Warrant Stock specified in such notice
and stating that a Company Permitted Financing will occur (a "Repurchase
----------
Notice").
- ------
6.02 Procedures. The purchase and sale of the Tranche B Warrants
----------
and/or the Tranche B Warrant Stock pursuant to the Repurchase Right shall be
consummated on a date selected by Issuer by giving the Holders at least 10 days'
prior written notice thereof, which date shall be set forth in the Repurchase
Notice and which in no event shall be earlier than the date of the closing for
the Company Permitted Financing nor later than three Business Days thereafter.
Issuer shall purchase from the Holders, and each Holder shall sell to Issuer,
Tranche B Warrants and/or Tranche B Warrant Stock: (i) in the case of each
share of Tranche B Warrant Stock so purchased, at a price equal to the
Repurchase Price on such date; and (ii) in the case of a Tranche B Warrant, at
a purchase price equal to (A) the product of (1) the Repurchase Price and (2)
the number of shares of Tranche B Warrant Stock for which such Tranche B
Warrant is exercisable as of the Repurchase Notice Date, minus (B) an amount
-----
equal to the aggregate Exercise Price as of the Repurchase Notice Date for
such number of Shares of Tranche B Warrant Stock. Payment of the purchase price
for the Tranche B Warrants and/or the Tranche B Warrant Stock so purchased by
Issuer shall be made by wire transfer in immediately available funds.
Warrant Agreement
-----------------
-33-
SECTION 7. Put Rights.
----------
7.01 Put Rights.
----------
(a) At any time on or after the occurrence of the Triggering Event,
but prior to the earlier to occur of (i) the Expiration Date and (ii) the
consummation of a Qualified Public Offering, each Holder will have the right to
require Issuer to purchase all of the Warrants and the Warrant Stock owned by
such Holder.
(b) A Holder may exercise a Put Right by delivering a notice to Issuer
stating that such Holder will require Issuer to purchase the Warrants or Warrant
Stock specified in such notice (a "Put Notice"). Within five days after receipt
----------
of a Put Notice by Issuer, Issuer shall give a notice to the Holders (other than
the Holder who gave such Put Notice) advising them of the receipt by Issuer of
such Put Notice, together with a copy of such Put Notice. The date upon which
Issuer shall so advise the other Holders is herein called the "Company Notice
--------------
Date". Within 15 days after the Company Notice Date, each other Holder also may
- ----
give a Put Notice to Issuer and each such Put Notice shall be deemed given as of
the date of the Put Notice given by the Holder initially exercising the Put
Right. The failure so to give a Put Notice by a Holder within such 15-day period
shall be without prejudice to the right of such Holder to give thereafter a Put
Notice pursuant to this Section 7.
---------
7.02 Procedures.
----------
(a) The purchase and sale of the Warrants and the Warrant Stock
pursuant to a Put Right shall be consummated on a date selected by Issuer upon
at least five days' prior written notice to such Holders, which date in no event
shall be earlier than the date five days, nor later than the date 10 days, after
the determination of Fair Market Value (the "Put Closing Date"). On the Put
----------------
Closing Date, Issuer shall purchase from the Holder which has given such Put
Notice, and such Holder shall sell to Issuer, the Warrants and/or the Warrant
Stock specified in such Put Notice: (i) in the case of each share of Warrant
Stock so purchased, at a purchase price equal to the Put Price Per Share as of
the Put Notice Date; and (ii) in the case of each Warrant, at a purchase price
equal to (A) the product of (1) the Put Price Per Share as of the Put Notice
Date and (2) the number of shares of Warrant Stock for which such Warrant is
exercisable as of the Put Notice Date, minus (B) an amount equal to the
-----
aggregate Exercise Price as of the Put Notice Date for such number of shares of
Warrant Stock. Payment of the purchase price for the
Warrant Agreement
-----------------
-34-
Warrants and/or the Warrant Stock so purchased by Issuer shall be made by wire
transfer in immediately available funds.
(b) If Issuer is prohibited from purchasing all Warrants and Warrant
Stock put to it pursuant to a Put Notice because (i) a default is then existing
under the provisions of the Credit Agreement in respect of the Term Loans or the
Revolving Credit Loans, or (ii) such purchase would result in any default under
the Credit Agreement in respect of the Term Loans or the Revolving Credit Loans
(the defaults described in clauses (i) and (ii) being herein referred to as
"Defaults"), or (iii) Issuer does not have sufficient funds legally available
--------
therefor under Delaware corporate law, then Issuer shall give notice (a "Put
---
Response Notice") to each Holder which has delivered such Put Notice of (x) the
- ---------------
reason that it is unable to purchase all Warrants and Warrant Stock put to it
pursuant to a Put Notice, including (1) if due to a deficiency, the computation
thereof, and/or (2) if due to a Default, the nature of the covenants which have
been or would be breached and if such provisions are financial covenants, a
computation of the amounts or ratios setting forth the deficiencies with respect
to such covenants, and (y) the aggregate amount of such Warrants and Warrant
Stock, if any, which it will be able to purchase, which Put Response Notice
shall be delivered within five days of the determination of Fair Market Value
and shall be given together with the notice of the Put Closing Date, if any,
given by Issuer pursuant to the first sentence of Section 7.02(a). Each such
---------------
Holder shall have the right to withdraw its Put Notice by delivering a notice (a
"Put Withdrawal Notice") to Issuer at any time prior to the Put Closing Date or
---------------------
if none is set in the Put Response Notice, prior to the last day on which a Put
Closing could occur pursuant to the first sentence of Section 7.02(a). If any
---------------
such Holders have not timely delivered Put Withdrawal Notices, unless prohibited
by a Default which has not been waived by the Lenders, Issuer thereupon shall
purchase from such Holders the aggregate amount of Warrants and Warrant Stock,
if any, it may purchase on such date with funds legally available under Delaware
corporate law for such purpose. Such purchase shall be allocated among the
Holders which have not timely delivered Put Withdrawal Notices pro rata, based
--- ----
on the ratio of the number of shares of Warrant Stock put to Issuer (including
Warrant Stock issuable upon the exercise of Warrants put to Issuer) by each such
Holder to the number of shares of Warrant Stock put to Issuer (including Warrant
Stock issuable upon the exercise of Warrants put to Issuer) by all such Holders.
If Issuer is prohibited from purchasing any Warrants and/or Warrant
Stock upon the exercise by a Holder of a Put Right
Warrant Agreement
-----------------
-35-
for any of the reasons described in the first sentence of this Section 7.02(b),
---------------
then Issuer shall use its best efforts to increase its legally available funds
under Delaware law to an amount sufficient to enable it to purchase legally all
Warrants and Warrant Stock put to it pursuant to a Put Notice and to obtain
relief from the Defaults in order to enable it to make the required payments,
including through effecting a Financing, obtaining the requisite consent of the
Lenders and/or the Agent under the Credit Agreement or otherwise, in each case,
as soon as possible.
(c) If Issuer is prohibited from purchasing some of or all Warrants
and/or Warrant Stock upon the exercise by a Holder of a Put Right for any of the
reasons described in the first sentence of Section 7.02(b) and such Holder shall
---------------
not have timely delivered a Put Withdrawal Notice, then: (i) the Put Price Per
Share for such Holder with respect to such unpurchased Warrants and/or Warrant
Stock shall become an accruing liability of Issuer with interest thereon
commencing on the date of exercise of such Put Right through the date on which
the related Warrants and/or Warrant Stock are purchased by Issuer at a rate per
annum equal to the Base Rate in effect from time to time plus 6%, compounded
----
quarterly (such liability and interest being herein called the "Accruing
--------
Liability"); and (ii) such obligation of Issuer to purchase shall otherwise be
- ---------
deemed suspended for so long as and only to the extent that Issuer is unable to
repurchase such Warrants and/or Warrant Stock after taking all the action
described in the last paragraph of Section 7.02(b) (a "Put Postponement").
---------------- ----------------
On any Put Reactivation Date, the Put Price Per Share for such Warrants and
Warrant Stock shall be deemed to be the Accruing Liability. As used herein,
"Put Reactivation Date" shall mean a date when the Put Postponement lapses in
---------------------
whole or in part and the obligation of Issuer to purchase Warrants and Warrant
Stock shall no longer be deemed suspended to the same extent pursuant to
clause (ii) of this Section 7.02(c).
- ----------- ---------------
(d) If on the Expiration Date any Holder is prevented from exercising
its rights under this Section 7 for any of the reasons described in the first
---------
sentence of Section 7.02(b), Issuer's obligation to purchase Warrants and/or
---------------
Warrant Stock shall be extended until 5:00 p.m., New York City time, on the last
day of the calendar month next following by at least 120 days the date upon
which Issuer shall notify the Holders that such reason or reasons no long exist.
(e) Each Holder agrees, for the benefit of the Lenders, that any
Accruing Liability shall be subordinated in right of payment to the prior
payment in full of all the Loans
Warrant Agreement
-----------------
- 36 -
and that no payment shall be made in respect of the principal of or interest on
the Accruing Liability until the earliest to occur of: (i) the date on which
the Loans have been fully paid; (ii) the date on which the requisite consent
of the Lenders and/or the Agent under the Credit Agreement to such payment has
been given; and (iii) the first date on which such payment is permitted under
this Agreement.
(f) Notwithstanding the foregoing, at any time prior to the Put
Closing Date, the Majority Warrant Stockholders shall have the right to
countermand the Put Notices of all Holders. Issuer shall give notice as soon as
practicable to all Holders whose Put Notices were countermanded pursuant hereto.
(g) The calculations of the Put Price Per Share and Equity Value under
this Section 7, other than with respect to the determination of Fair Market
---------
Value, shall be subject to the reasonable approval of the applicable Majority
Put Holders.
7.03 Guarantee of the Operating Company.
----------------------------------
(a) The Operating Company irrevocably and unconditionally guarantees
to the Holders and their successors and permitted assigns, the full and punctual
payment, performance, satisfaction and discharge in full when due of all of the
obligations and liabilities of Issuer under and in accordance with Sections 7
----------
and 8, including without limitation all amounts payable hereunder or in
- -----
connection herewith. The Operating Company agrees that its obligations hereunder
shall be unconditional, absolute and independent, irrespective of the
value, genuineness, validity, regularity or enforceability of this Agreement,
the Warrants or any other agreement or instrument referred to herein or therein,
and, to the fullest extent permitted by applicable law, irrespective of any
other circumstance whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, it being the intent of
this Section 7.03 that the obligations of the Operating Company hereunder shall
------------
be absolute and unconditional under any and all circumstances, and that this
guaranty may be enforced against it without first pursuing of exhausting any
remedies or claims against Issuer or any other Person.
(b) The Operating Company waives promptness, diligence, notice of
acceptance, presentment, protest and dishonor with respect to obligations and
liabilities of Issuer under and in accordance with Sections 7 and 8 and notice
----------------
thereof and any other notice with respect to this guaranty and the obligations
guaranteed hereby.
Warrant Agreement
-----------------
-37-
(c) The guarantees set forth herein are continuing guarantees and
shall remain in full force and effect until all obligations of Issuer guaranteed
hereby have been paid, performed, satisfied, and discharged in full and shall
inure to the benefit of and be enforceable by the Holders or their respective
successors and permitted assigns. No failure to exercise, and no delay in
exercising, any right hereunder, shall operate as a waiver thereof. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
(d) The obligations of the Operating Company under this Section 7.03
------------
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of Issuer in respect of the guaranteed obligations is
rescinded or must be otherwise restored by any Holder, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise, and the Operating
Company agrees that it will indemnify each Holder on demand for all reasonable
costs and expenses (including, without limitation, fees of counsel) incurred by
such Holder in connection with such rescission or restoration.
(e) The Operating Company hereby agrees that until the payment and
satisfaction in full of all guaranteed obligations hereunder of the Holders it
shall not exercise any right or remedy arising by reason of any performance by
it of its guarantee in Section 7.03 hereof, whether by subrogation or otherwise,
------------
against Issuer.
SECTION 8. Call Rights; Look Back.
----------------------
8.01 Call Rights.
-----------
(a) At any time or from time to time after the seventh anniversary of
the Closing Date, but prior to the earlier to occur of (i) the Expiration Date
and (ii) a Qualified Public Offering, Issuer shall have the right to purchase
all or any part of the Warrants and Warrant Stock owned by the Holders.
(b) Issuer may exercise a Call Right by delivering an irrevocable
notice to the Holders indicating that Issuer wishes to purchase the Warrants
and/or the Warrant Stock specified in such notice (a "Call Notice").
-----------
(c) The purchase and sale of the Warrants and/or the Warrant Stock
pursuant to a Call Right shall be consummated on a date selected by Issuer by
giving the Holders at least 10 days' prior written notice thereof, which date
in no event shall be
Warrant Agreement
-----------------
-38-
earlier than the date five days, nor later than the date 10 days, after the
determination of the Fair Market Value pursuant to the procedure described in
the definition of such term in Section 1. Issuer shall purchase from the
---------
Holders, and each Holder shall sell to Issuer, Warrants and Warrant Stock:
(i) in the case of each share of Warrant Stock so purchased, at a price equal to
the Put Price Per Share; and (ii) in the case of a Warrant, at a purchase price
equal to (A) the product of (1) the Put Price Per Share and (2) the number of
shares of Warrant Stock for which such Warrant is exercisable as of the Call
Notice Date, minus (B) an amount equal to the aggregate Exercise Price as of the
-----
Call Notice Date for such number of shares of Warrant Stock. Payment of the
purchase price for the Warrants and the Warrant Stock so purchased by Issuer
shall be made by wire transfer in immediately available funds.
(d) In connection with an exercise of a Call Right, if Issuer elects
to purchase less than all of the Warrants and Warrant Stock then outstanding,
Issuer shall purchase Warrants and Warrant Stock from the Holders on a pro rata
--------
basis, based on the ratio of the number of shares of Warrant Stock (including
Warrant Stock issuable upon the exercise of Warrants) owned by each such Holder
to the number of shares of Warrant Stock (including Warrant Stock issuable upon
the exercise of Warrants) owned by all of the Holders.
(e) The calculations of the Put Price Per Share and Equity Value
under this Section 8.01, other than with respect to the determination of Fair
------------
Market Value, shall be subject to the reasonable approval of the Majority
Warrant Stockholders.
8.02 Look Back Events.
----------------
(a) If, within the 12-month period (a "Look Back Period") following
----------------
each date on which the Holders (each, a "Look Back Holder") shall have sold
----------------
Warrants or Warrant Stock to Issuer pursuant to Section 8.01 (the "Prior Sale"),
------------ ----------
Issuer, the Subsidiaries, or any holder of Common Stock or Options or
Convertible Securities with respect to such Common Stock shall have entered
into any contract, arrangement or understanding relating to a Look Back Event,
then upon occurrence of such Look Back Event Issuer shall forthwith pay to
each Look Back Holder, by wire transfer in immediately available funds:
(i) in the case of a Subsequent Asset Sale, an amount equal to the
excess (if any) of (A) the product of (1) the Subsequent Share Value on
the date of such Subsequent Asset Sale and (2) the number of shares of
Warrant Stock sold in
Warrant Agreement
-----------------
-39-
the Prior Sale (assuming that all Warrants sold in the Prior Sale by such
Look Back Holder had been exercised immediately before the Prior Sale and
were sold in the Prior Sale as Warrant Stock), over (B) the sum of (1) the
aggregate amount received by such Look Back Holder in the Prior Sale
("Prior Amount") and (2) the product of (I) the Prior Amount (II) the Base
------------
Rate and (III) the quotient determined by dividing the number of days
lapsed from the Prior Sale through and including the date of the Look Back
Event by 360; or
--
(ii) in the case of a Subsequent Stock Sale, an amount equal to the
excess (if any) if (A) the highest aggregate amount that such Look Back
Holder would have been entitled to receive in the Subsequent Stock Sale
had the Warrants or Warrant Stock sold in the Prior Sale been held by such
Look Back Holder at the time of the Subsequent Stock Sale and sold in the
Subsequent Stock Sale (assuming that all Warrants sold in the Prior Sale
by such Look Back Holder had been exercised immediately before the Prior
Sale and were sold in the Prior Sale as Warrant Stock) plus, all other
----
consideration to which such Look Back Holder would have been entitled
in connection with the Subsequent Stock Sale, over (B) the sum of (1)
the aggregate amount received by such Look Back Holder in the Prior Sale
and (2) the product of (I) the Prior Amount, (II) the Base Rate and (III)
the quotient determined by dividing the number of days lapsed from the
Prior Sale through and including the date of the Look Back Event by 360;
and
---
(iii) an amount equal to all dividends and distributions paid on any
date after the Prior Sale and to and including the date of the Look Back
Event to which such Look Back Holder would have been entitled pursuant to
Section 5.02 of the Warrant or otherwise if such Look Back Holder had been
a Holder of Warrants and/or Warrant Stock (the "Interim Dividends"), plus,
----------------- ----
an amount equal to the product of (A) the Interim Dividends, (B) the Base
Rate and (C) the quotient determined by dividing the number of days lapsed
from the date each such dividend or distribution would have been received
through and including the date of the Look Back Event by 360.
For purposes of this Section 8.02, it shall be assumed that (x) all
------------
adjustments required by the provisions of Section 4 and Section 5 of the form of
Warrant attached as Annex 1 to this Agreement will have been made in respect of
-------
Warrants (whether or not outstanding) through and including the date of the
relevant Look Back Event, (y) appropriate adjustments will have been made
Warrant Agreement
-----------------
-40-
in respect of the number of shares of Warrant Stock (and their character and
terms) through and including the date of the relevant Look Back Event by reason
of any stock dividend, subdivision, combination, consolidation, merger, sale,
lease, transfer or recapitalization, any amendment to the certificate of
incorporation of Issuer or any similar event effected on or after the Call
Notice Date; and (z) Issuer was in compliance through the Look Back Event with
the covenants set forth in Section 12. If the Issuer would have been in default
----------
of any such covenants in such a way as to adversely affect the rights of the
Look Back Holders then, in each such case, the computations and adjustments
provided for in this Section 8.02(c) shall be made as nearly as possible in the
---------------
manner so provided except that any additional adjustments required to protect
the Holders against such adverse effects in accordance with the intent and
principles of this Agreement shall be made.
(b) As used herein, the following terms shall have the following
respective meanings:
(i) "Look Back Event" shall mean the occurrence (whether in one
---------------
transaction or in a series of related transactions) of any Subsequent Asset
Sale or Subsequent Stock Sale.
(ii) "Subsequent Asset Sale" shall mean: (A) any merger, consolidation
---------------------
or share exchange of Issuer with any other Person (whether or not Issuer is
the surviving entity), and any reclassification or material change in
Issuer's capitalization, in which any Stockholder receives any distribution
in respect of his, her or its Common Stock; (B) any sale, lease or other
disposition of all or a majority of the assets of Issuer (including by or
through the issuance, sale, lease or other disposition of the capital stock
or assets of, or a merger or consolidation involving, any Subsidiary of
Issuer but excluding a sale/leaseback approved in good faith by the Board
so long as there is no distribution to the Stockholders of the proceeds
thereof) or any liquidation.
(iii) "Subsequent Share Value" shall mean, with respect to each share
----------------------
of Common Stock on any Subsequent Asset Sale Date, an amount equal to the
result obtained by dividing (A) the sum of (1) the aggregate fair market
value of all consideration received by Issuer and the Subsidiaries and
Stockholders in connection with the related Subsequent Asset Sale and all
other consideration received by Wingate, Cumberland, their respective
Affiliates or any limited
Warrant Agreement
-----------------
-41-
partners of Cumberland in connection with such Subsequent Asset Sale which
is properly attributable to their ownership interests in Issuer, net of
ordinary and customary transaction expenses (including taxes) for a
transaction of such size and nature (the "Net Consideration"), plus (2) the
----------------- ----
greater of Fair Market Value or Equity Value as at such Subsequent Asset
Sale Date (after giving effect to the related Subsequent Asset Sale and
excluding the Net Consideration) by (B) the total number of shares
(determined on a fully diluted basis) of all Common Stock outstanding on
such Subsequent Asset Sale Date (after giving effect to the related
Subsequent Asset Sale).
(iv) "Subsequent Stock Sale" shall mean: (A) any repurchase,
---------------------
redemption or other direct or indirect acquisition by Issuer of any Common
Stock or Options or Convertible Securities exercisable for or convertible
or exchangeable into Common Stock which equals or exceeds 25% of the Common
Stock (on a fully diluted basis), (B) any sale, disposition or other
transfer of any equity securities of Issuer or any Subsidiary of any class
through a public offering involving the Issuer, (C) any sale, disposition
or other transfer of any outstanding Common Stock or Options or Convertible
Securities exercisable for or convertible or exchangeable into Common Stock
which equals or exceeds 25% of the Common Stock (on a fully diluted basis).
(c) Promptly following its execution (or the execution by one of its
Affiliates or a Subsidiary) of an agreement pursuant to which, if the
transaction contemplated thereby is consummated, a Look Back Event would occur,
and, if different, the date of occurrence of a Look Back Event, Issuer shall
deliver a notice to the Look Back Holders of the execution of such agreement
(describing in reasonable detail the contents thereof and the contemplated
schedule for its consummation) and of the occurrence of such Look Back Event.
(d) The calculations of Subsequent Share Value under this Section 8.02
------------
shall be subject to the reasonable approval of the Majority Warrant
Stockholders.
Warrant Agreement
-----------------
-42-
SECTION 9. Right to Join in Sale.
---------------------
9.01 Tag-Along Rights.
----------------
(a) Notwithstanding anything herein to the contrary, but subject to
the provisions of Section 9.01(b), if Wingate, Cumberland, Boise Cascade, Good
---------------
Capital or any controlling stockholder of Issuer who purchases shares directly
from Issuer or any of their respective transferees (other than pursuant to an
underwritten public offering or in an ordinary brokerage transaction under
Rule 144) proposes, in a single transaction or a series of related transactions,
to sell, dispose of or otherwise transfer, directly or indirectly, any shares of
Common Stock then outstanding in any manner, other than (i) the Employee Shares,
(ii) pursuant to a registration statement filed pursuant to the Securities Act
in which the Holders may participate pursuant to the terms of the Registration
Rights Agreement, or (iii) in an ordinary brokerage transaction pursuant to
Rule 144 (each, a "Tag-Along Sale"), then Issuer shall cause such Stockholder
--------------
(the "Selling Stockholder") to refrain from effecting such transaction unless,
-------------------
prior to the consummation thereof, the Holders shall have been afforded the
opportunity to join in such transfer as provided in Section 9.02 (it being
------------
understood that such Holders shall pay their own expenses in connection
therewith).
(b) The provisions of Section 9.01(a) shall not apply in connection
---------------
with any sale, disposition or other transfer of (i) up to 25% of the shares of
Common Stock beneficially owned by Cumberland as of the date hereof to Wingate
and its majority-owned subsidiaries, (ii) any shares of Common Stock
beneficially owned (on a fully diluted basis) by Boise Cascade to Wingate and
its majority-owned subsidiaries, (iii) any shares of Common Stock beneficially
owned (on a fully diluted basis) by Good Capital to Wingate and its majority-
owned subsidiaries and (iv) any shares of Common Stock beneficially owned (on a
fully diluted basis) by Wingate to any of the Persons listed on Schedule II;
-----------
provided, however, that any further sale, disposition or transfer by such
- -------- -------
transferee shall be subject to the provisions of this Section 9.
---------
(c) On the date hereof, Issuer shall deliver to Investor a Joinder
Agreement in the form of Annex 5, executed by Wingate, Boise Cascade, Good
-------
Capital, Cumberland and Issuer.
(d) As a condition to the validity of any sale, disposition or other
transfer of any Common Stock (i) by any of the Persons who have executed and
delivered Joinder Agreements pursuant to Section 9.01(c) or this Section 9.01(d)
--------------- ---------------
to any other
Warrant Agreement
-----------------
-43-
Person, or (ii) by Issuer to any Person in a transaction in which such Person
would become a controlling stockholder of Issuer, other than pursuant to an
underwritten public offering or in an ordinary brokerage transaction under
Rule 144, the transferee thereof shall execute and deliver to Issuer and each
Holder a Joinder Agreement.
9.02 Procedures. Prior to the consummation of any transaction
----------
subject to Section 9.01, the Person or group of Persons that proposes to acquire
------------
shares of Common Stock in a Tag-Along Sale (the "Proposed Purchaser") shall make
------------------
a written offer to the Holders (the "Tag-Along Purchase Offer") which offer
------------------------
shall describe in reasonable detail the Common Stock and Warrants proposed to be
purchased, the price to be paid and all other terms of the Tag-Along Sale. The
Holders shall have 15 days after the making of the Tag-Along Purchase Offer in
which to accept the Tag-Along Purchase Offer. If any Holder accepts the Tag
Along Purchase Offer ("Participating Holder"), such Participating Holder shall
--------------------
be entitled to sell in the Tag-Along Sale a number of shares of Warrant Stock
(including Warrant Stock issuable upon the exercise of Warrants) equal to the
product of (i) the quotient determined by dividing (x) the number of shares of
Warrant Stock owned by such Participating Holder (including Warrant Stock
issuable upon the exercise of Warrants) by (y) the aggregate number of shares of
Common Stock (on a fully diluted basis) owned by the Selling Stockholder and all
Participating Holders, and (ii) the aggregate number of shares of Common Stock
and Warrants proposed to be purchased by the Proposed Purchaser in the Tag-Along
Sale; provided, however, that if the Tag-Along Sale would cause a Change of
-------- -------
Control or would cause any controlling stockholder and their respective
Affiliates other than Wingate to own less than a majority of the outstanding
Common Stock or less than a majority of the Voting Capital Stock of Issuer, then
the Participating Holders shall be entitled to sell 100% of their respective
Warrants and Warrant Stock (but not exceeding the aggregate amount of shares of
Common Stock proposed to be acquired in the Tag-Along Sale). The Tag-Along
Purchase Offer shall be at the same price and on the same terms and conditions
as the offer by the Proposed Purchaser to the Selling Stockholder, except that
no Participating Holders shall be required to make representations and
warranties to or agreements with the Proposed Purchaser other than
representations, warranties and agreements regarding such Participating Holder
and its ownership of the Warrants and/or Warrant Stock to be sold in the
Tag-Along Sale.
9.03 Issuer's Covenants. Issuer will not, on or after the date
------------------
hereof, either (a) deliver to the persons specified in
Warrant Agreement
-----------------
-44-
Section 9.01(a) a certificate evidencing any shares of Common Stock being sold
- ---------------
in a transaction requiring that a Tag-Along Purchase Offer be made unless the
Proposed Purchaser shall have in fact made a Tag-Along Purchase Offer in
accordance with the provisions of Section 9.02, or (b) deliver to the persons
------------
specified in Section 9.01(a) a certificate evidencing any shares of Common Stock
in connection with any other transaction without including on the reverse side
of such certificate a legend in substantially the following form:
THE SALE, DISPOSITION OR OTHER TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE
PROVISIONS OF SECTIONS 9 AND 10 OF THAT CERTAIN WARRANT
AGREEMENT DATED AS OF JANUARY 31, 1992, BETWEEN ASSOCIATED
HOLDINGS, INC., A DELAWARE CORPORATION ("ISSUER"), AND
------
CHASE MANHATTAN INVESTMENT HOLDINGS, INC., A DELAWARE
CORPORATION, AS SUCH WARRANT AGREEMENT MAY BE MODIFIED AND
SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME. A COPY OF
THE FORM OF SUCH WARRANT AGREEMENT IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF ISSUER. THE
HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF
SECTIONS 9 AND 10 OF SUCH WARRANT AGREEMENT.
SECTION 10. Obligation to Join in Sale.
--------------------------
10.01 Go-Along Obligations. In the event of a Go-Along Sale prior to
--------------------
the earliest of a Change in Control, a Qualified Public Offering and the
Expiration Date, each Holder shall be obligated to, and shall, if so requested
by Wingate, (a) sell, transfer and deliver, or cause to be sold, transferred and
delivered to the Third Party Purchaser, all (but not less than all) Warrants and
Warrant Stock owned by it at the same price per share and on the same terms and
conditions (except as expressly permitted below) as are applicable to Wingate
except that no Holders shall be required to make representations and warranties
to or agreements with the Third Party Purchaser other than representations,
warranties and agreements regarding such Holder and its ownership of the
Warrants and/or Warrant Stock to be sold in the Go-Along Sale; and (b) if
stockholder approval of the transaction is required, vote its shares of Warrant
Stock entitled to vote thereon in favor thereof (or abstain from voting, unless
such abstention would defeat the approval of such transaction) at any meeting of
Issuer's stockholders called for the purpose of voting on such transaction (it
being understood that such Holders shall not be obligated to pay their pro rata
--- ----
Warrant Agreement
-----------------
-45-
portion of the transaction costs associated with the sale, transfer or
delivery), provided, that if the Majority Warrant Stockholders so request, such
--------
Go-Along Sale shall be at a Fair Price.
10.02 Procedures.
----------
(a) Wingate shall deliver a written notice ("Go-Along Notice") to
---------------
each of the Holders setting forth the consideration per share to be paid by the
Third Party Purchaser and the other terms and conditions of the Go-Along Sale.
Not later than the later of 20 days following the Go-Along Notice Date or five
days following the determination of Fair Price and the cash equivalent of
non-cash consideration, if any, each of the Holders shall deliver to Wingate
Warrant certificates and certificates representing Warrant Stock, accompanied by
duly executed stock powers. At the closing for the Go-Along Sale, Wingate shall
remit to each of the Holders the consideration to which they are entitled.
(b) If any Holder should fail to deliver its Warrants or certificates
representing Warrant Stock, Issuer shall cause the books and records of Issuer
to show that such Warrants and/or Warrant Stock are bound by the provisions of
this Section 10 and that such Warrants and/or Warrant Stock shall be transferred
----------
only to the Third Party Purchaser upon surrender for transfer by the Holder
thereof.
(c) If, within 120 days after Wingate delivers a Go-Along Notice, the
Go-Along Sale is not completed, Wingate shall return to each Holder all Warrants
and certificates representing Warrant Stock that such Holder delivered for sale
pursuant hereto.
10.03 Issuer's Covenants. Issuer will not, on or after the date
------------------
hereof, deliver a certificate evidencing any shares of Common Stock in
connection with any other transaction (other than shares of Common Stock which
are being sold, or which have previously been sold, in a Tag-Along Sale,
Go-Along Sale, a registered public offering or a sale to the public pursuant to
Rule 144) without including on the reverse side of such certificate a legend in
substantially the form set forth in Section 9.03.
------------
10.04 Definition of Go-Along Sale. As used herein the following terms
---------------------------
shall have the following respective meanings:
"Go-Along Sale" shall mean (i) the sale for cash by Wingate and its
-------------
Affiliates of 100% of the equity interests in Issuer beneficially owned by them
in a private offering, (ii) the
Warrant Agreement
-----------------
-46-
sale for cash of all or substantially all of the assets of Issuer followed
immediately by the distribution to the holders of the Common Stock of the net
proceeds available for distribution, or (iii) a merger or consolidation
involving Issuer, wherein the holders of the Common Stock will receive cash for
their Common Stock, in each case in a bona fide arm's length transaction to or
with a Third Party (the "Third Party Purchaser"). Notwithstanding the foregoing,
---------------------
"Go-Along Sale" shall also include transactions of the type described above
where the consideration is other than cash, provided, that each Holder shall
--------
have the option to receive such consideration in an amount of cash equal to the
Fair Price of their respective interests in Issuer, but in any event not less
than the cash equivalent of the greatest amount of consideration paid to Wingate
or any Affiliate in respect of its shares in Issuer, as determined by the
Investment Banking Firms in the manner set forth below.
"Fair Price" shall mean that the consideration or net proceeds to be
----------
received by Issuer, if applicable, and by the holders of the Common Stock in or
immediately following a Go-Along Sale, is fair from a financial point of view,
and shall be determined as follows:
Within five days after the Go-Along Notice Date, Issuer and the
Majority Warrant Stockholders shall each designate a representative and such
representatives will meet and use their best efforts to reach an agreement on a
Fair Price. If the representatives designated by Issuer and the Majority Warrant
Stockholders are unable to reach such agreement within 15 days after the date on
which the later of the two representatives are designated, then (A) the Majority
Stockholders shall immediately designate one Investment Banking Firm; (B)
Issuer shall immediately designate one Investment Banking Firm; (C) the two
Investment Banking Firms so selected shall, within 20 days after the date on
which the later of the two Investment Banking Firms are appointed, determine
independently a Fair Price; (D) if the lesser of the two prices exceeds or is
equal to 90% of the other price, then the Fair Price will be the average of the
two, which average amount shall be conclusive and binding upon all the
applicable parties; (E) if the lesser of the two prices is less than 90% of the
other price, then the two Investment Banking Firms shall, within 20 days of the
date of determination of the later of the two prices appoint a third Investment
Banking Firm; and (F) the third Investment Banking Firm so selected shall,
within 15 days of its appointment, determine independently a Fair Price, which
Warrant Agreement
-----------------
-47-
determination shall be conclusive and binding upon all the applicable
parties.
Issuer will provide each Investment Banking Firm with all information
about Issuer and the Subsidiaries which such Investment Banking Firm
reasonably deems necessary for determining a Fair Price. The fees and
expenses of the determination of Fair Price and the cash equivalent of
non-cash consideration as provided herein (including those of the
Investment Banking Firms) will be paid by Issuer. Issuer may require that
the Investment Banking Firms keep confidential any non-public information
received as a result of this paragraph pursuant to reasonable
confidentiality arrangements.
In the event that the consideration to be paid by the Third Party Purchaser
consists of anything other than cash, the cash equivalent of such non-cash
consideration shall be determined by the Investment Banking Firm pursuant to the
same procedure and at the same time as a Fair Price is determined.
"Third Party" shall mean a Person or entity not otherwise an
-----------
Affiliate of Issuer or a Subsidiary or any of Issuer's stockholders.
SECTION 11. Earn Back.
---------
11.01 Calculation of Earn Back. Following the Calculation DAte for a
------------------------
Subject Holder, such Subject Holder shall surrender or pay to Issuer at the
option of the Subject Holder (i) Tranche B Warrants to purchase a number of
Stock Units equal to the product of the Applicable Earn Back Percentage and P,
(ii) outstanding Stock Units equal to the product of the Applicable Earn Back
Percentage and P, or (iii) an amount in cash equal to the product of the
Applicable Earn Back Percentage and the Warrant Income (an "Earn Back").
---------
Notwithstanding the foregoing, Issuer will not be entitled to any Earn Back in
the event that a Company Permitted Financing has occurred.
11.02 Payment of Earn Back. If an Earn Back payment is due on the
--------------------
Calculation Date, not later than 30 days following such Calculation Date, the
Subject Holder shall deliver such Earn Back to Issuer in Warrants, certificates
representing outstanding Warrant Stock, or cash, as the case may be, accompanied
by a certificate setting forth the calculation of the Earn Back in reasonable
detail, including calculation of the Applicable Earn Back Percentage, IRR,
Warrant Income and Y. If necessary in connection therewith, Issuer shall
simultaneously execute and
Warrant Agreement
-----------------
-48-
deliver to such Subject Holder a new Warrant and/or certificate evidencing
outstanding Warrant Stock covering the number of shares owed by or issuable to
(as the case may be) such Subject Holder immediately after payment of such Earn
Back.
11.03 Applicability of Earn Back Provision. (a) To the extent that
------------------------------------
the provisions of this Section 11 are applied to any transferee of Tranche B
----------
Warrants and/or Tranche B Warrant Stock, Warrant Income with respect to such
transferee and the transferred securities will be computed taking into account
all Warrant Income received by prior Holders in respect of such transferred
securities plus proceeds received on such Calculation Date, and IRR with respect
to such transferee will be computed as if such transferee had made a Tranche B
Loan at Closing in an amount proportional to the ratio of such Holder's Warrants
and Warrant Stock to all such Warrants and Warrant Stock originally issued.
(b) This Section 11 shall become inapplicable to Warrants and/or
----------
Warrant Stock immediately after the purchase of such Warrants and/or Warrant
Stock by any Person pursuant to a registered public offering, a sale pursuant to
Rule 144 or a Go-Along Sale. The purchaser of any Warrant or Warrant Stock
purchased from a Holder in the manner indicated in the preceding sentence shall
not be deemed a Subject Holder with respect thereto.
11.04 Special Definitions. For purposes of this Section 11:
------------------- ----------
"Calculation Date," with respect to each Subject Holder means the
----------------
first day on or before the seventh anniversary of the Closing Date which is the
date on which any of such Holder's Warrants or Warrant Stock are purchased by
Issuer pursuant to Sections 7 or 8, or sold pursuant to Sections 9 or 10,
---------- - ---------- --
in another sale of the entire equity interest in the Company or in an IPO in
which any of such Holder's Warrant Stock is sold or could have been sold,
provided such first day is after the repayment in full of each Tranche B Loan.
"Subject Holder" means a Holder of Tranche B Warrants and/or Tranche
--------------
B Warrant Stock which receives Warrant Income.
"Applicable Earn Back Percentage" as of any Calculation Date is the
-------------------------------
lower of the Earn Back Percentages in the table below corresponding to the
applicable IRR and Warrant Income achieved by the Subject Holder as of such
Calculation Date. If application of an Earn Back Percentage would reduce the
Subject Holder's IRR or Warrant Income to a level below the minimum for the Earn
Warrant Agreement
-----------------
-49-
Back Percentage being applied, the next lower Earn Back Percentage will be
applied unless it too would result in reduction below the minimum for such lower
Earn Back Percentage, in which case the next lower Earn Back Percentage shall be
applied, and so forth. If the application of an Earn Back Percentage would
result in an IRR or Warrant Income below the lowest number in the table, the
Earn Back Percentage shall be zero.
EARN BACK TABLE
---------------
Earn Back
IRR Warrant Income Percentage
--- -------------- ----------
25% Y x $5,000,000 10%
30% Y x $6,000,000 20%
35% Y x $7,000,000 30%
40% Y x $9,000,000 40%
"Y" = P/Q
in which
"P" = the number of Stock Units the Subject Holder and its Affiliates are
entitled to purchase.
"Q" = equals the total number of Stock Units which all Holders were entitled
to purchase on the Date of Issuance.
"Warrant Income" means all cash and Marketable Securities received by
the Subject Holder and its Affiliates in respect of the Tranche B Warrants and
Tranche B Warrant Stock or any securities or Property received in exchange
therefor, including but not limited to dividends, distributions, interest or
principal (but not interest or principal on the Loans or proceeds from sale or
transfer thereof). To the extent any Subject Holder chooses to include fewer
shares of Warrant Stock in an IPO or Tag-Along Sale than could be accommodated
therein (assuming participation in such event by all Holders) without diminution
in price, such Subject Holder shall be deemed to have received Warrant Income
equal to the amount it would have received had it included the greatest number
of shares possible. The value of Marketable Securities shall be computed as the
average market price per unit during the 20-day period beginning 10 days before
and ending 10 days after the applicable Calculation Date.
Warrant Agreement
-----------------
-50-
"IRR" means internal rate of return with respect to the Tranche B
---
Term Loans for the Subject Holder and its Affiliates, with investment deemed to
be pro rata for deemed portion of Tranche B Loans and taking into account
--------
Warrant Income, principal and interest on the Tranche B Loans received by the
Subject Holder and its Affiliates, computed in accordance with accepted
financial practice.
SECTION 12. Holders' Rights.
---------------
12.01 Delivery Expenses. If any Holder surrenders any certificate for
-----------------
Warrants or Warrant Stock to Issuer or a transfer agent of Issuer for exchange
for instruments of other denominations or registered in another name or names,
Issuer shall cause such new instruments to be issued and shall pay the cost of
delivering to or from the office of such Holder from or to Issuer or its
transfer agent, duly insured, the surrendered instrument and any new
instruments issued in substitution or replacement for the surrendered
instrument.
12.02 Taxes. Issuer shall pay all taxes (other than Federal, state or
-----
local income taxes) which may be payable in connection with the execution and
delivery of this Agreement or the Registration Rights Agreement or the issuance
of the Warrants and Warrant Stock hereunder or in connection with any
modification of this Agreement, the Registration Rights Agreement or the
Warrants and shall hold each Holder harmless without limitation as to time
against any and all liabilities with respect to all such taxes. The obligations
of Issuer under this Section 12.02 shall survive any redemption, repurchase or
-------------
acquisition of Warrants or Warrant Stock by Issuer, any termination of this
Agreement or the Registration Rights Agreement, and any cancellation or
termination of the Warrants.
12.03 Replacement of Instruments. Upon receipt by Issuer of evidence
--------------------------
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate or instrument evidencing any
Warrants or Warrant Stock, and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that, if the owner of the same is
--------
the Investor or an institutional lender or investor, its own agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender or cancellation
thereof,
Warrant Agreement
----------------
-51-
Issuer, at its expense, shall execute, register and deliver, in lieu thereof, a
new certificate or instrument for (or covering the purchase of) an equal number
of Warrants or Warrant Stock.
12.04 Certain Restrictions. Issuer shall not at any time enter into
--------------------
an agreement or other instrument limiting in any manner its ability to perform
its obligations under this Agreement, the Registration Rights Agreement or the
Warrants, or making such performance or the issuance of shares of Common Stock
upon the exercise of any Warrant a default under any such agreement or
instrument other than the Credit Agreement.
12.05 Transactions with Affiliates. Except as expressly permitted
----------------------------
by this Agreement, Issuer shall not, nor shall it permit any of its Subsidiaries
to, directly or indirectly: (a) make any Investment in an Affiliate; (b)
transfer, sell, lease, assign or otherwise dispose of any assets to an
Affiliate; (c) merge into or consolidate with or purchase or acquire Property
from an Affiliate; (d) enter into any other transaction directly or indirectly
with or for the benefit of an Affiliate (including guarantees and assumptions of
obligations of an Affiliate); provided, however, that (i) any Affiliate who is
-----------------
an individual may serve as an officer or employee of Issuer or its Subsidiaries
and receive reasonable compensation for his or her services in such capacity,
and (ii) Issuer and its Subsidiaries may enter into transactions providing for
the leasing of Property, the rendering or receipt of services or the purchase or
sale of inventory and other assets in the ordinary course of business if the
monetary or business consideration arising therefrom would be substantially as
advantageous to Issuer and its Subsidiaries as the monetary or business
consideration which would obtain in a comparable transaction with a Third Party;
or (e) at any time before February 1, 1999, pay to Wingate, Cumberland or any of
their respective Affiliates any management, consultant, financial advisor,
director or similar fees ("Sponsor Management Fees"), except (i) Sponsor
-----------------------
Management Fees of not more than $25,000 in any month (the "Monthly Management
------------------
Fees") plus (ii) up to an additional $200,000 of Sponsor Management Fees for any
- ----
fiscal year (the "Annual Management Fees") if, giving effect to the payment of
all Monthly Management Fees and to the payment of such Annual Management Fee
(solely for which purpose such Annual Management Fee shall be deemed to have
been paid in such fiscal year), EBITDA for such fiscal year is not less than the
EBITDA set forth opposite such fiscal year in Schedule V of the Credit
Agreement; provided that no Annual Management Fees for any fiscal year shall be
--------
paid until each Holder has received the financial statements of Issuer for such
fiscal year required to
Warrant Agreement
-----------------
-52-
be delivered to such Holder pursuant to Section 12.10(b) hereof; and provided,
---------------- --------
further, that, in any event, no Annual Management Fee shall be paid if, at the
- -------
time of such payment and after giving effect thereto, any Default (as such term
is defined in the Credit Agreement) or similar event under other agreements
relating to indebtedness shall have occurred and be continuing; and provided,
further, that any Annual Management Fees that shall not be paid because of the
occurrence and continuance of any Default (as such term is defined in the Credit
Agreement) shall continue to accrue.
12.06 Certain Covenants.
-----------------
(a) Issuer shall, at all times prior to the Expiration Date, retain a
nationally recognized independent accounting firm as its auditors.
(b) Except as otherwise specifically provided herein, Issuer shall
not effect any repurchase, recapitalization, reorganization, reclassification,
merger, consolidation, share exchange, liquidation, spin-off, stock split,
dividend, distribution or stock consolidation, subdivision or combination that
would not afford to each Stockholder and Holder the same type and amount of
consideration.
(c) At any time prior to a Qualified Public Offering, Issuer shall
afford, and shall cause its Subsidiaries to afford, any Holder of Warrants
and/or Warrant Stock or its authorized agents or any prospective purchasers of
Warrants and/or Warrant Stock, access, at reasonable times, upon reasonable
prior notice, (i) to inspect the books and records of Issuer and its
Subsidiaries, (ii) to discuss with management of Issuer and its Subsidiaries the
business and affairs of Issuer and its Subsidiaries, and (iii) to inspect the
properties of Issuer and its Subsidiaries.
(d) So long as any Warrants or Warrant Stock shall remain
outstanding, neither Issuer nor any of its Subsidiaries shall (i) issue any
Participating Security, Options for or Convertible Securities convertible into a
Participating Security, (ii) issue any class of equity other than Common Stock
as presently constituted and Preferred Stock outstanding on the date hereof,
(iii) make or agree to make payments to any Person, such as any "phantom" stock
payments, where the amount thereof is calculated with reference to fair market
or equity value of Issuer or any of the Subsidiaries, or (iv) issue any Common
Stock for less than the Exercise Price.
Warrant Agreement
-----------------
-53-
(e) [Intentionally omitted].
(f) Issuer shall afford each Holder and its authorized agents the
right to attend all meetings of shareholders of Issuer and the Subsidiaries.
(g) Issuer will, and will cause each of the Subsidiaries to take such
action as will be necessary from time to time to ensure that Issuer or a
Subsidiary owns at least 80% of each class of capital stock of each Subsidiary.
(h) Issuer shall hold an annual meeting of shareholders in Texas,
Illinois or New York.
(i) To enable the ready and consistent determination of the Put Per
Share and compliance with the covenants set forth herein, neither Issuer nor any
of its Subsidiaries will change the last day of its fiscal year from December 31
of each year, or the last days of the first three fiscal quarters in each of its
fiscal years from March 31, June 30 and September 30 of each year, respectively.
(j) Except as otherwise specifically provided herein, Issuer shall
not effect any repurchase or redemption of Common Stock and shall cause its
Subsidiaries not to effect any repurchase or redemption of Common Stock from
any stockholder, other than (a) on a pro rata basis from all stockholders and
--------
Warrant Holders participating in such repurchase or redemption at the same type
and amount of consideration, or (b) from former employees of the Operating
Company for an aggregate purchase price of no more than $200,000 in any 12-month
period. Any repurchase or redemption of Common Stock shall include Warrant
Stock.
(k) Issuer shall provide each Holder with notice of the occurrence of
the Triggering Event as soon as possible, but in no event later than the third
Business Day following such Triggering Event, together with a brief description
of the event.
(l) Issuer shall not amend or consent to any modification, supplement
or waiver of any provision of any Other Equity Documents in any manner which
would have an adverse effect on the Warrant Stockholders without the prior
written consent of the Majority Warrant Stockholders. Without limiting the
generality of the foregoing, Issuer shall not amend, or consent to any
modification, supplement or waiver of any provision of any Other Equity
Documents in a way which would materially increase the benefits of the parties
thereto, increase the number of securi-
Warrant Agreement
-----------------
-54-
ties which may be issued or sold thereunder, or materially modify the
requirements as to eligibility for participation therein.
12.07 Indemnification. Issuer shall indemnify and hold harmless each
---------------
of the Investor and the Holders and each of their respective directors,
officers, employees, stockholders, Affiliates and agents (each, an "indemnified
-----------
person") on demand from and against any and all losses, claims, damages,
- ------
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) and expenses that arise out of, result from, or in any way relate to,
this Agreement, the Warrants or the Registration Rights Agreement, or in
connection with the other transactions contemplated hereby and thereby (other
than the mere diminution of the Investment by Holders in the Warrants
unaccompanied by any other violation of this Agreement), and to reimburse each
indemnified person, upon its demand, for any legal or other expenses incurred in
connection with investigating, defending or participating in the defense of any
such loss, claim, damage, liability, action or other proceeding (whether or not
such indemnified person is a party to any action or proceeding out of which any
such expenses arise), other than any of the foregoing claimed by any indemnified
person to the extent incurred by reason of the gross negligence or willful
misconduct of such indemnified person. No indemnified person shall be
responsible or liable to either Issuer or any other Person for any damages which
may be alleged as a result of or relating to this Agreement, the Warrants or the
Registration Rights Agreement, or in connection with the other transactions
contemplated hereby and thereby.
12.08 Preemptive Rights. If, at any time on or after the date hereof
-----------------
and prior to a Qualified Public Offering, Issuer shall propose to sell or issue
any New Securities to any Person (other than in connection with business
combinations and certain employee stock and stock option plans which in each
case have been approved by the Majority Warrant Stockholders) (a "Proposed
--------
Sale"), then Issuer shall, at least 30 days prior to the Proposed Sale, give
- ----
each Holder (an "Offeree") a notice (the "Offer Notice") of the Proposed Sale
------- ------------
(it being understood that the Offer Notice also shall contain full particulars
of the Proposed Sale, including the identity of the proposed beneficial and
record owners of the New Securities and the purchase price per unit of the New
Security).
In the Offer Notice, Issuer shall offer to each Offeree, subject to
consummation of the Proposed Sale, for 20 Business Days (the "Offer Period")
------------
commencing on the date of receipt by such Offeree of the Offer Notice, the
opportunity to
Warrant Agreement
-----------------
-55-
purchase from Issuer: (a) up to that number of units of the New Securities, at
the same purchase price per unit (and on the same terms and conditions as
offered to the proposed purchaser, under the Proposed Sale), equal to the
product of (i) the quotient determined by dividing (A) the number of shares of
Warrant Stock held by such Offeree (assuming the exercise by such Offeree of all
Warrants held by it) by (B) the number of shares of Common Stock outstanding on
a fully diluted basis, and (ii) the number of New Securities to be sold or
issued in the Proposed Sale; provided, that if the New Securities shall consist
--------
of voting Common Stock, each Offeree shall have the option to purchase, in lieu
of such voting Common Stock, up to an equal number of shares of non-voting
Common Stock otherwise identical to and convertible at Offerees option into such
voting Common Stock. In the event that an Offeree does not purchase New
Securities from Issuer in accordance with this paragraph, each Offeree which has
elected to purchase New Securities hereunder (a "Purchasing Offeree") shall be
------------------
entitled to purchase out of such unpurchased New Securities the same proportion
of the unpurchased units of such New Securities as the total number of shares of
Warrant Stock owned by such Purchasing Offeree bears to the total number of
shares of Warrant Stock owned by all Purchasing Offerees.
An Offeree may elect to accept the offer to purchase any New
Securities pursuant to this Section 12.08 by delivering a notice to Issuer (an
-------------
"Election Notice") within the Offer Period indicating the number of the New
---------------
Securities which such Offeree elects to purchase. On the date of the Proposed
Sale, each Offeree which has delivered an Election Notice shall deliver the
purchase price for its New Securities to Issuer in immediately available funds.
If (a) the number of New Securities proposed to be sold or issued in
the Proposed Sale is increased, (b) or any of the price, terms or conditions is
changed in a manner more favorable to the proposed purchaser under the Proposed
Sale after each Offeree has received the Offer Notice, or (c) the Proposed Sale
has not been consummated within 120 days of the giving of the Offer Notice,
then, whether or not such Offeree previously has accepted the offer to purchase
contained in the Offer Notice, Issuer shall notify such Offeree of any such
change. Such Offeree thereupon shall have until the later of (1) 10 Business
Days after receipt of such notice of change and (2) 20 Business Days after
receipt of the original Offer Notice within which to accept the initial offer as
so changed.
12.09 Board Observers. Issuer shall afford the Holders the opportunity
---------------
to have two representatives (each, an
Warrant Agreement
-----------------
-56-
"Observer") attend as an observer at (but not participate in or vote at) each
--------
meeting of the Board and each meeting of the board of directors of each
Subsidiary of Issuer. Issuer shall give each Observer notice of all such
meetings at the same time and in the same manner as notice is given to members
of the Board and of the board of directors of each Subsidiary of Issuer. Each
Observer shall be entitled to receive all written materials and other
information given to the directors of Issuer and the directors of each
Subsidiary of Issuer in connection with such meetings at the same time and in
the same manner and form such materials and information are given to the
directors, and copies of all minutes and all resolutions adopted by the Board
and by the board of directors of each Subsidiary of Issuer (whether at meetings,
by written consent or otherwise) promptly after such adoption and (if
applicable) approval thereof (it being understood that such copies shall be
certified by the Secretary or Assistant Secretary of Issuer or the relevant
Subsidiary of Issuer, as the case may be). The Observers shall be appointed by
the affirmative vote of the Majority Warrant Stockholders. Issuer shall
reimburse each Holder for the reasonable out-of-pocket expenses incurred by such
Holder in connection with the exercise of their rights under this Section 12.09.
-------------
12.10 Financial Statements, Etc. Issuer shall deliver the information
--------------------------
specified below to each Holder of a Warrant or Warrant Stock:
(a) as soon as available and in any event within 45 days after the
end of each quarterly fiscal period of each fiscal year of Issuer, consolidated
and consolidating statements of income, retained earnings and cash flows of
Issuer and the Subsidiaries for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and the
related consolidated and consolidating balance sheets as at the end of each such
period, setting forth in each case in comparative form the corresponding
consolidated and consolidating figures for the corresponding period in the
preceding fiscal year (if any), accompanied by a certificate of a senior
financial officer of Issuer, which certificate shall state that such financial
statements fairly present the financial condition and results of operations of
Issuer and the Subsidiaries, and said consolidating financial statements fairly
present the respective individual unconsolidated financial condition and results
of operations of Issuer and of the Subsidiaries, respectively, in each case in
accordance with GAAP, as at the end of, and for, such period (subject to normal
year-end audit adjustments);
Warrant Agreement
-----------------
-57-
(b) as soon as available and in any event within 90 days after the end
of each fiscal year of Issuer, consolidated and consolidating statements
of income, retained earnings and cash flow of Issuer and the Subsidiaries,
for such fiscal year and the related consolidated and consolidating balance
sheets as at the end of such fiscal year, setting forth in each case in
comparative form the corresponding consolidated and consolidating figures
for the preceding fiscal year, and accompanied (i) in the case of said
consolidated statements and balance sheet, by an opinion thereon of
independent certified public accountants of recognized national standing,
which opinion shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of
operations of Issuer and the Subsidiaries as at the end of, and for, such
fiscal year in accordance with GAAP, and a certificate of such accountants
stating that, in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any default under
any credit agreement to which Issuer and/or any of the Subsidiaries is a
party, and (ii) in the case of said consolidating statements and balance
sheets, by a certificate of a senior financial officer of Issuer, which
certificate shall state that said consolidating financial statements
fairly present the respective individual unconsolidated financial condition
and results of operations of Issuer and of each of the Subsidiaries, in
each case in accordance with GAAP, as at the end of, and for, such fiscal
year;
(c) as soon as available, and in any event within 30 days after the
end of each monthly accounting period in each fiscal year of Issuer, a
statement of EBITD for the 12 months ended at the end of such monthly
accounting period;
(d) promptly upon their becoming available, copies of all registration
statements and regular periodic reports, if any, which Issuer or any of the
Subsidiaries shall have filed with the Commission (or any Governmental
Authority substituted therefor) or any national securities exchange; and
(e) promptly upon the mailing thereof to the shareholders of Issuer or
any holder of Indebtedness of Issuer and/or the Subsidiaries generally,
copies of all financial statements, reports and proxy statements so mailed.
Warrant Agreement
-----------------
-58-
12.11 Holders' Rights in Case of Other Securities. If the Holders at
-------------------------------------------
any time shall have received or shall be entitled to receive Other Securities,
appropriate provision shall be made so that the Holders receive with respect to
such Other Securities as nearly as possible the intended benefits of this
Agreement with respect thereto.
SECTION 13. Miscellaneous.
-------------
13.01 Home Office Payment. Notwithstanding anything to the contrary in
-------------------
this Agreement or the Warrants, so long as the Investor or any nominee
designated by the Investor shall be a Holder, Issuer shall punctually pay all
amounts which become due and payable with respect to any Warrant or Warrant
Stock to the Investor at the address registered on the books of Issuer
maintained for such purpose, or at such other place and in such manner as the
Investor may designate by notice to Issuer, without presentation or surrender of
such Warrant or the making of any notation thereon. The Investor agrees that
prior to the sale, transfer or other disposition of a part of any Warrant, it
will make notation thereon of the number of Stock Units covered by the part of
the Warrant sold, transferred or disposed, or surrender the same in exchange for
a Warrant covering the number of Stock Units remaining on the Warrant so
surrendered. Issuer agrees that the provisions of this section shall inure to
the benefit of any other Holder registered on the books of Issuer.
13.02 Waiver. No failure on the part of the Investor to exercise and
------
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under this Agreement, the Warrants or the Registration Rights
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement, the Warrant or
the Registration Rights Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.
13.03 Notices.
-------
(a) All notices, requests and other communications provided for herein
and the Warrants (including any waivers or consents under, this Agreement and
the Warrants) shall be given or made in writing,
Warrant Agreement
-----------------
-59-
(i) if to Issuer:
Associated Holdings, Inc.
1075 Hawthorne Drive
Itasca, Illinois 60143
Attention: President and Chief
Executive Officer
with a copy to:
Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
Attention: Thomas W. Sturgess and
Frederick B. Hegi, Jr.
Cumberland Capital Corporation
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Attention: Gary G. Miller
(ii) if to the Investor:
Chase Manhattan Investment Holdings, Inc.
c/o The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Attn: Elliott H. Jones
Vice President
with a copy to:
Chase Manhattan Investment Holdings, Inc.
c/o The Chase Manhattan Bank
(National Association)
802 Delaware Avenue
P.O. Box 15371
Wilmington, Delaware 19850-5371
Attn: Warren Leonard
(iii) if to any other Person who is the registered Holder of any
Warrants or Warrant Stock, to the address for such Holder as it appears in
the stock or warrant ledger of Issuer;
Warrant Agreement
-----------------
-60-
or, in the case of any Holder, at such other address as shall be designated by
such party in a notice to Issuer; or, in the case of Issuer, at such other
address as Issuer may designate in a notice to the Investor and all other
Holders.
(b) All such notices, requests and other communications shall be:
(i) personally delivered, sent by courier guaranteeing overnight delivery or
sent by registered or certified mail, return receipt requested, postage prepaid,
in each case given or addressed as aforesaid; and (ii) effective upon receipt.
13.04 Expenses, Etc. Issuer agrees to pay or reimburse the Investor
--------------
and the Holders for: (a) all reasonable out-of-pocket costs and expenses of the
Investor and the Holders (including the reasonable fees and expenses of Milbank,
Tweed, Hadley & McCloy, special New York counsel to the Investor and other
reasonable legal fees and expenses), in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement and the Registration
Rights Agreement and the issuance of Warrants hereunder, and (ii) any amendment,
modification or waiver of (or consents in respect of) any of the terms of this
Agreement, the Registration Rights Agreement or the Warrants; and (b) all
reasonable costs and expenses of the Investor and the Holders (including
reasonable legal fees and expenses) in connection with (i) any default by Issuer
hereunder or under the Warrants or the Registration Rights Agreement or any
enforcement proceedings resulting therefrom, and (ii) the enforcement of this
Section 13.04.
- -------------
13.05 Amendments, Etc. Except as otherwise expressly provided in this
---------------
Agreement, any provision of this Agreement may be amended or modified only by an
instrument in writing signed by (a) Issuer and (b) the holders of 51% of the
shares of Warrant Stock as a class; provided, however, that (i) the consent of
-------- -------
the holders of any such class of shares or Warrants shall not be required with
respect to any amendment or waiver which does not affect the rights or benefits
of such class under this Agreement, and (ii) no such amendment or waiver shall,
without the written consent of all holders of such shares and Warrants at the
time outstanding, amend this Section 13.05.
-------------
13.06 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
Warrant Agreement
-----------------
-61-
13.07 Survival.
--------
(a) All representations and warranties made by Issuer herein or in
any certificate or other instrument delivered by it or on its behalf under this
Agreement or the Registration Rights Agreement shall be considered to have been
relied upon by the Investor and shall survive the issuance of the Warrants or
the Warrant Stock regardless of any investigation made by or on behalf of the
Investor. All statements in any such certificate or other instrument so
delivered shall constitute representations and warranties by Issuer hereunder.
(b) All representations and warranties made by the Investor herein
shall be considered to have been relied upon by Issuer and shall survive the
issuance to the Investor of the Warrants or the Warrant Stock regardless of any
investigation made by Issuer or on its behalf.
13.08 Specific Performance. Damages in the event of breach of this
--------------------
Agreement by a Holder or Issuer would be difficult, if not impossible, to
ascertain, and it is therefore agreed that each Holder and Issuer, in addition
to and without limiting any other remedy or right it may have, will have the
right to an injunction or other equitable relief in any court of competent
jurisdiction, enjoining any such breach, and enforcing specifically the terms
and provisions hereof, and each Holder and Issuer hereby waives any and all
defenses it may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief. The existence of
this right will not preclude the Holders or Issuer from pursuing any other
rights and remedies at law or in equity which the Holders or Issuer may have.
13.09 Captions. The captions and section headings appearing herein
--------
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
13.10 Counterparts. This Agreement may be executed on counterpart
------------
signature pages or in any number of counterparts, all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Agreement by signing any such counterpart signature page or
counterpart.
13.11 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the law of the State of New York without giving
effect to the conflicts of law principles thereof, except to the extent that New
York conflicts of laws
Warrant Agreement
-----------------
-62-
principles would apply the General Corporation Law of the State of Delaware to
matters relating to corporations incorporated thereunder.
13.12 Severability. If any one or more of the provisions contained
------------
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
13.13 Adjustment Of Common Stock. All references to Common Stock
--------------------------
herein shall be subject to appropriate adjustment by reason of any stock
dividend, split, reverse split, combination, recapitalization or any similar
corporate transaction.
13.14 Covenant of Wingate and Cumberland. None of Wingate, Cumberland
----------------------------------
or any transferee of the Employee Shares shall transfer or sell the Employee
Shares to any Person other than a management employee of the Operating Company.
Warrant Agreement
-----------------
-63-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Warrant Agreement as of the date first above written.
ASSOCIATED HOLDINGS, INC.,
By /s/
------------------------
Name: Thomas W. Sturgess
Title: Chairman and Chief
Executive Officer
CHASE MANHATTAN INVESTMENT
HOLDINGS, INC.,
By /s/
------------------------
Name: Elliott H. Jones
Title: Vice President
For Purposes of Section 7 Only:
---------
ASSOCIATED STATIONERS, INC.
By /s/
- ------------------------
Name: Thomas W. Sturgess
Title: Chairman and Chief
Executive Officer
Warrant Agreement
-----------------
Schedule I Capital Stock and Equity Securities
SCHEDULE I
HOLDER CLASS NO. OF
SHARES
- ------ ----- ------
WINGATE PARTNERS, L.P. CLASS A 592,175
COMMON
CLASS A 3,483
PREFERRED
ASI PARTNERS, L.P. CLASS A 226,345
COMMON
A PFRD. 1,332
CUMBERLAND CAPITAL CLASS A 23,129
CORPORATION COMMON
GOOD CAPITAL CO., INC. CLASS A 54,609
COMMON
CLASS A 185
PREFERRED
BOISE CASCADE CORPORATION CLASS B 5,000
PREFERRED
AFFILIATED COMPUTER SERVICES, CLASS C 7,500
INC. PREFERRED
Schedule II Certain Transferees
James T. Callier, Jr.
Frederick B. Hegi, Jr.
Thomas W. Sturgess
James A. Johnson
Dennis Johnson
Sue Goddard
Wallace R. Hawley
Lee Walton
Jay I. Applebaum
Estate of Howard Beasley
Callier Buy-Out Partners, as defined in the Agreement of Limited Partnership
of Wingate Partners, L.P.
Peter J. Wodtke
Pension Plans for Benefit of the Above
Annex 1 - Form of Warrant
Annex 1
to
Warrant Agreement
[Form of Warrant]
WARRANT
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE CONDITIONS SPECIFIED IN THAT CERTAIN WARRANT AGREEMENT DATED AS OF
JANUARY 31, 1992 (THE "WARRANT AGREEMENT"), BETWEEN ASSOCIATED HOLDINGS, INC., A
-----------------
DELAWARE CORPORATION ("ISSUER"), AND CHASE MANHATTAN INVESTMENT HOLDINGS, INC.,
------
AS THE WARRANT AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM
TIME TO TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF
THE FORM OF THE WARRANT AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE
PRINCIPAL EXECUTIVE OFFICE OF ISSUER. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF THE
WARRANT AGREEMENT.
No. of Stock Units: Warrant No.
-------------------- ------------
WARRANT
to Purchase Common Stock of
ASSOCIATED HOLDINGS, INC.
Expiring 10 years from the date hereof
THIS IS TO CERTIFY THAT [ ], or it registered assigns, is
entitled to purchase in whole or in part from time to time from Associated
Holdings, Inc., a Delaware corporation ("Issuer"), at any time on and after the
------
date hereof, but not later than 5:00 p.m., New York time, on the date which is
10 years from the date hereof (as it may be extended pursuant to Section 6.03,
the "Expiration Date"), [ ] Stock Units (as hereinafter defined and
---------------
subject to adjustment as provided herein) at a purchase price of $.01 per Stock
Unit provided, that such purchase price shall not be less than the aggregate par
--------
value of the capital stock contained in a Stock Unit, (the "Exercise Price"),
--------------
subject to the terms and conditions hereinbelow provided. Each exercise made
hereunder must be of a minimum of the lesser of 100 Stock Units and all of the
remaining Stock Units covered by this Warrant.
Warrant
-------
-2-
This Warrant is one of the [Underwriting/Tranche B] Warrants
originally issued pursuant to the Warrant Agreement dated as of January 31,
1992, between Issuer and Chase Manhattan Investment Holdings, Inc.
SECTION 1. Certain Definitions. (a) Each capitalized term used
-------------------
herein without definition shall have the meaning ascribed thereto (or
incorporated by reference) in the Warrant Agreement (as hereinafter defined).
(b) As used in this Warrant, unless the context otherwise requires:
"Additional Shares of Common Stock" shall mean all shares (including
---------------------------------
treasury shares) of Common Stock issued or sold by Issuer on or after the date
hereof, other than (i) the Warrant Stock and Common Stock issuable pursuant to
any warrants in an amount equal to the Tranche B Warrants and Tranche B Warrant
Stock repurchased by Issuer pursuant to Section 6 of the Warrant Agreement, (ii)
the shares of Common Stock which may be issued pursuant to the Other Equity
Securities (whether issuable immediately or upon the arrival of a specified date
or the occurrence of a specified event) on the date hereof, (iii) shares
purchased by Holder pursuant to the exercise of preemptive rights pursuant to
Section 12.08 of the Warrant Agreement, and (iv) the shares of Common Stock
described as being issued and outstanding in Section 3.07 of the Warrant
Agreement.
"Convertible Security Value" shall mean the value of a Convertible
--------------------------
Security as computed in accordance with accepted financial practice, taking into
account both its fixed income value (determined by discounting future payments
at an appropriate rate) and the value of the embedded option (determined using
an appropriate option valuation model).
"Current Market Price", per share of Common Stock, for the purposes
--------------------
of any provision of this Warrant at the date herein specified, shall be deemed
to be the fair market value per share of Common Stock, as reasonably determined
by the Board, or if there shall be a public market for the Common Stock, the
average of the daily market prices for each day during the 30 consecutive
trading days commencing 45 Business Days before such date as of which such a
price can be established in the manner set forth below. The market price for
each such Business Day shall be the last sale price on such day as reported in
the Consolidated Last Sale Reporting System or as quoted in the National
Association of Securities Dealers Automated Quotation System, or if such last
sale price is not available, the average of the closing bid and asked prices as
reported in either such system, or in any other case the higher bid price quoted
for such day as reported by The Wall Street Journal and the National Quotation
Bureau pink sheets.
Warrant
-------
-3-
"Current Warrant Price", for the purpose of any provision of this
---------------------
Warrant at the date herein specified, shall mean the amount per share of Common
Stock equal to the quotient resulting from dividing the Exercise Price per Stock
Unit in effect on such date by the number of shares (including any fractional
share) of Common Stock comprising a Stock Unit on such date.
"Exercise Notice" shall have the meaning set forth in Section 2.
--------------- ---------
"Exercise Price" shall have the meaning set forth at the head of this
--------------
Warrant.
"Expiration Date" shall have the meaning set forth at the head of this
---------------
Warrant as extended under Section 6.03.
------------
"Holder" shall mean the registered holder of this Warrant.
------
"include" and "including" shall be construed as if followed by the
------- ---------
phrase ", without being limited to,".
"Issuer" shall have the meaning set forth at the head of this Warrant.
------
"Stock Unit" shall mean one share of Common Stock, as such Common
----------
Stock is constituted on the date hereof, and thereafter shall mean such number
of shares (including any fractional shares) of Common Stock and other
securities, cash or other property as shall result from the adjustments
specified in Section 4 and Section 5. At the election of Holder, the Common
--------- ---------
Stock constituting a Stock Unit may be either Class A Common Stock or Class B
Common Stock or any combination thereof.
"Warrant Agreement" shall mean the Warrant Agreement dated as of
-----------------
January 31, 1992, between Issuer and Chase Manhattan Investment Holdings, Inc.,
as such Warrant Agreement shall be modified and supplemented and in effect from
time to time.
"Warrant Holder" shall mean any Person who acquires Warrants or
--------------
Warrant Stock pursuant to the provisions of the Warrant Agreement, including any
transferees of Warrants or Warrant Stock.
"Warrants" shall mean the Warrants originally issued by Issuer
--------
pursuant to the Warrant Agreement, evidencing rights to purchase up to an
aggregate of 150,340 Stock Units, and all Warrants issued upon transfer,
division or combination of, or in substitution for, any thereof. All Warrants
shall at all times be identical as to terms and conditions, except as to the
number of Stock Units for which they may be exercised. The Underwriting
Warrant
-------
-4-
Warrants and the Tranche B Warrants shall at all times be dated as of their
respective dates of original issuance.
SECTION 2. Exercise of Warrant. On and after the date hereof and until
-------------------
5:00 p.m., New York time, on the Expiration Date, Holder may exercise this
Warrant, on one or more occasions, on any Business Day, in whole or in part, by
delivering to Issuer, at its office maintained for such purpose pursuant to
Section 11.01, (a) a written notice of Holder's election to exercise this
- -------------
Warrant, which notice shall specify the number of Stock Units to be purchased
(the "Exercise Notice"), (b) a certified or bank check or checks payable to
---------------
Issuer in an aggregate amount equal to the aggregate Exercise Price for the
number of Stock Units as to which this Warrant is being exercised, and (c) this
Warrant. Such Exercise Notice may be substantially in the form of Annex A
hereto. Upon receipt thereof, Issuer shall, as promptly as practicable and in
any event within five Business Days thereafter, execute or cause to be executed
and deliver or cause to be delivered to Holder a stock certificate or
certificates representing the aggregate number of shares of Warrant Stock and
other securities issuable upon such exercise and any other property to which
such Holder is entitled. The Warrant Stock may be issued as Class A Common Stock
or Class B Common Stock, or any combination thereof, at the option of Holder.
The stock certificate or certificates for Warrant Stock so delivered
shall be in such denominations as may be specified in the Exercise Notice and
shall be registered in the name of Holder or such other name or names as shall
be designated in such Exercise Notice. Such stock certificate or certificates
shall be deemed to have been issued and Holder or any other Person so designated
to be named therein shall be deemed to have become a holder of record of such
shares, including, to the extent permitted by law, the right to vote such shares
or to consent or to receive notice as a Stockholder, as of the date on which the
last of the Exercise Notice, payment of the Exercise Price and this Warrant is
received by Issuer as aforesaid, and all taxes required to be paid by Holder, if
any, pursuant to Section 9 hereof, prior to the issuance of such shares have
---------
been paid. If this Warrant shall have been exercised only in part, Issuer shall,
at the time of delivery of the certificate or certificates representing Warrant
Stock and other securities, execute and deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased Stock Units called
for by this Warrant, which new Warrant shall in all other respects be identical
with this Warrant, or, at the request of Holder, appropriate notation may be
made on this Warrant and the same returned to Holder.
All shares of Common Stock issuable upon the exercise of this Warrant
shall, upon payment therefor in accordance here-
Warrant
-------
-5-
with, be duly and validly issued, fully paid and nonassessable and free and
clear of any Liens.
Issuer shall not be required to issue a fractional share of Common
Stock upon exercise of this Warrant. As to any fraction of a share which Holder
would otherwise be entitled to purchase upon such exercise, Issuer shall pay a
cash adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price per share of Common Stock on the date of
exercise.
SECTION 3. Transfer, Division and Combination. Subject to Section
---------------------------------- -------
11.03, transfer of this Warrant and all rights hereunder, in whole or in part,
- -----
shall be registered on the books of Issuer to be maintained for such purpose,
upon surrender of this Warrant at the office of Issuer maintained for such
purpose pursuant to Section 11.01, together with a written assignment of this
-------------
Warrant, substantially in the form of Annex B hereto, duly executed by Holder or
its agent or attorney and payment of funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if required,
such payment, Issuer shall, subject to Section 11.03 and the immediately
-------------
following sentence, (a) execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denominations specified in such
instrument of assignment, (b) issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned and (c) promptly cancel this Warrant. If
and when this Warrant is assigned in blank (in case the restrictions on
transferability referred to in Section 11.03 shall have been terminated), Issuer
-------------
may (but shall not be obliged to) treat the bearer hereof as the absolute owner
of this Warrant for all purposes and Issuer shall not be affected by any notice
to the contrary. This Warrant, if properly assigned in compliance with this
Section 3 and Section 11.03, may be exercised by an assignee for the purchase of
- --------- -------------
shares of Common Stock without having a new Warrant or Warrants issued.
Notwithstanding any provision herein to the contrary, Issuer shall not be
required to register the transfer of Warrants or Warrant Stock in the name of
any Person who acquired this Warrant (or part hereof) or any Warrant Stock
otherwise than in accordance with this Warrant and the Warrant Agreement.
Issuer shall maintain at its aforesaid office books for the
registration and transfer of the Warrants.
SECTION 4. Adjustment of Stock Unit. The number of shares of Common
------------------------
Stock comprising a Stock Unit shall be subject to adjustment from time to time
as set forth in this Section 4. Issuer shall not take any action with respect to
---------
its Common Stock of any class requiring an adjustment pursuant to any of
Sections 4.01, 4.07 or 5 without at the same time taking like action with
- ------------- ---- -
respect to its Common Stock of each other class, and Issuer shall not create any
class of Common Stock which carries any rights to
Warrant
-------
-6-
dividends or assets differing in any respect from the rights of the Common Stock
on the date hereof.
4.01 Stock Dividends, Subdivisions and Combinations. If at any time
----------------------------------------------
Issuer shall:
(a) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend payable in, or other distribution
of, Additional Shares of Common Stock, or
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then the number of shares of Common Stock comprising a Stock Unit immediately
after the occurrence of any such event shall be adjusted to equal the number of
shares of Common Stock which a record holder of the number of shares of Common
Stock comprising a Stock Unit immediately prior to the happening of such event
would own or be entitled to receive after the happening of such event.
4.02 Issuance of Additional Shares of Common Stock. If at any time
---------------------------------------------
Issuer shall (except as hereinafter provided) issue or sell any Additional
Shares of Common Stock in exchange for consideration in an amount per Additional
Share of Common Stock less than the Current Market Price at the time the
Additional Shares of Common Stock are issued, then the number of shares of
Common Stock thereafter comprising a Stock Unit shall be adjusted to that number
determined by multiplying the number of shares of Common Stock comprising a
Stock Unit immediately prior to such adjustment by a fraction (a) the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such Additional Shares of Common Stock plus the number
of such Additional Shares of Common Stock so issued, and (b) the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such Additional Shares of Common Stock plus the number
----
of shares of Common Stock which the aggregate consideration for the total number
of such Additional Shares of Common Stock so issued would purchase at the
Current Market Price. For purposes of this Section 4.02, the date as of which
------------
the Current Market Price shall be computed shall be the earlier of (i) the date
on which Issuer shall enter into a firm contract for the issuance of such
Additional Shares of Common Stock and (ii) the date of actual issuance of such
Additional Shares of Common Stock. Subject to Section 4.05, no further
------------
adjustment of the number of shares of Common Stock comprising a Stock Unit shall
be made under this Section 4.02 upon the issuance of any Additional Shares of
------------
Common Stock:
Warrant
-------
(a) for which an adjustment is provided under Section 4.01;
------------
(b) which are issued pursuant to the exercise of any Options or the
conversion, exchange or exercise of any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such
Options or Convertible Securities (or upon the issuance of any Option
therefor) pursuant to Section 4.03 or 4.04; or
------------ ----
(c) as a distribution or a dividend which is distributed or declared
and paid in accordance with Section 5.02.
------------
Notwithstanding the foregoing, if any shares are issued pursuant to the
Transition Services Agreement, the number of shares of Common Stock comprising a
Stock Unit shall be increased by a number which is equal to the quotient
resulting from dividing (i) the product of the number of shares of Common Stock
issued pursuant to the Transition Services Agreement and .149, by (ii) 150,340.
4.03 Issuance of Options. If at any time Issuer shall issue or sell,
-------------------
or shall fix a record date for the determination of holders of any class of
securities entitled to receive, any Options for any Additional Shares of Common
Stock or any Convertible Securities, whether or not the rights to purchase
thereunder are immediately exercisable, then the number of shares of Common
Stock thereafter comprising a Stock Unit shall be adjusted as provided in
Section 4.02 on the basis that (a) the maximum number of Additional Shares of
- ------------
Common Stock issuable pursuant to all such Options or necessary to effect the
conversion or exchange of all such Convertible Securities shall be deemed to
have been issued as of (and, accordingly, the date as of which the Current
Market Price shall be computed shall be) the computation date specified in the
penultimate sentence of this Section 4.03, and (b) the aggregate consideration
------------
for such maximum number of Additional Shares of Common Stock shall be zero. For
purposes of this Section 4.03, the computation date for clause (a) above shall
------------ ----------
be the earlier of (i) the date on which Issuer shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive any
such Options and (ii) the date on which Issuer shall enter into a firm contract
for the issuance of such Options. No further adjustment of the number of shares
of Common Stock comprising a Stock Unit shall be made under this Section 4.03
------------
upon the issuance of any Options to subscribe for or purchase any Additional
Shares of Common Stock or any Convertible Securities as a distribution or a
dividend which is distributed or declared and paid in accordance with Section
-------
5.02. Notwithstanding the foregoing, any issuance of an Option which is issued
- ----
together with a debt security of Issuer, as a Unit, shall be treated for the
purpose of this Section 4 as the issuance of a Convertible Security.
---------
Warrant
-------
-8-
4.04 Issuance of Convertible Securities. If at any time Issuer shall
----------------------------------
issue or sell any Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and the cash received by
Issuer in payment for such Convertible Securities shall be less than the
Convertible Security Value thereof, then the number of shares of Common Stock
thereafter comprising a Stock Unit shall be increased to a number of shares of
Common Stock having a value immediately following the computation date (as
established below) equal to the value of the number of shares comprising such
Stock Unit immediately before such increase. For this purpose, the value before
the increase will be the Fair Market Value of the Common Stock as reasonably
determined by the Board on the basis set forth in the first paragraph of the
definition thereof (without reference to the appraisal procedure referred to
therein) divided by the number of shares of Common Stock outstanding on a fully
diluted basis as determined under the Warrant Agreement, and the value
immediately following the computation date shall be the foregoing value, except
that the numerator shall be the Fair Market Value plus the cash amount paid to
the Company for such Convertible Securities less the Convertible Security Value
of such Convertible Securities on issuance and the denominator shall be
increased by the number of Additional Shares of Common Stock issuable on
exercise of such Convertible Securities. For purposes of this Section 4.04, the
------------
computation date for clause (a) above shall be the earliest of (i) the date on
----------
which Issuer shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive any such Convertible Securities, (ii) the
date on which Issuer shall enter into a firm contract for the issuance of such
Convertible Securties,and (iii) the date of actual issuance of such Convertable
Securities. No further adjustment of the number of shares of Common Stock
comprising a Stock Unit shall be made under this Section 4.04 upon of any
------------
Convertible Securities:
(a) which are issued pursuant to the exercise of any Option
therefor, if any such adjustment shall previously have been made upon the
issuance of such Option pursuant to Section 4.03; or
------------
(b) as a distribution or a dividend which is distributed or declared
and paid in accordance with Section 5.02.
------------
4.05 Superseding Adjustment of Stock Unit. If, at any time after any
------------------------------------
adjustment of the number of shares of Common Stock comprising a Stock Unit shall
have been made pursuant to Section 4.03 or 4.04 as a result of the issuance of
------------ ----
Options or Convertible Securities, or after any new adjustment of the number of
shares of Common Stock comprising a Stock Unit shall have been made pursuant to
this Section 4.05, (a) such Options or the right of conversion, exchange or
------------
exercise of such Convertible Securities shall expire, and all or a portion of
such Options or the
Warrant
-------
-9-
right of conversion, exchange or exercise with respect to all or a portion of
such Convertible Securities, as the case may be, shall not have been exercised
or treated as having been exercised or otherwise canceled or acquired by the
Company in connection with any settlement including, without limitation, any
cash settlement, of such Options or the rights of conversion, or exchange or
exercise of such Convertible Securities, or (b) there has been any change in the
number of shares issuable upon exercise, conversion or exchange of such Options
or Convertible Securities (including as a result of the operation of anti-
dilution provisions applicable thereto), or a (c) the consideration per share,
for which Additional Shares of Common Stock are issuable pursuant to such
Options or the terms of any Convertible Securities, or the maturity of any such
Convertible Security, shall be changed, then such previous adjustment shall be
rescinded and annulled and the Additional Shares of Common Stock which were
deemed to have been issued by virtue of the computation made in connection with
the adjustment so rescinded and annulled shall no longer be deemed to have been
issued by virtue of such computation. Thereupon, a recomputation shall be made
of the effect of such Options or Convertible Securities on the basis of
(i) treating the number of Additional Shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the previous exercise
of such Options or such right of conversion or exchange, as having been
issued on the date or dates of such issuance as determined for purposes of
such previous adjustment and for the consideration actually received and
receivable therefor,
(ii) treating the maximum number of Additional Shares of Common Stock
(A) issuable pursuant to all Options which then remain outstanding and (B)
necessary to effect the conversion or exchange of all Convertible
Securities which then remain outstanding, as having been issued, and
(iii) making the computations called for in Section 4.04 on the basis
------------
of the revised terms of such Convertible Securities as if newly issued at
the time of such revision,
and, if and to the extent called for by the foregoing provisions of this
Section 4 on the basis aforesaid, a new adjustment of the number of shares of
- ---------
Common Stock comprising a Stock Unit shall be made, such new adjustment shall
supersede the previous adjustment so rescinded and annulled.
4.06 Other Provisions Applicable to Adjustments Under this Section 4.
---------------------------------------------------------------
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock comprising a Stock Unit hereinbefore provided
for in this Section 4:
---------
Warrant
-------
-10-
(a) Computation of Consideration. To the extent that any Additional
----------------------------
Shares of Common Stock or any Convertible Securities shall be issued for a
cash consideration, the consideration received by Issuer therefor shall be
deemed to be the amount of cash received by Issuer therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered by
Issuer for subscription, the subscription price, or, if such Additional
Shares of Common Stock or Convertible Securities are sold to underwriters
or dealers for public offering without a subscription offering, the initial
public offering price, in any such case excluding any amounts paid or
receivable for accrued interest or accrued dividends and without deduction
of any reasonable compensation, discounts or expenses paid or incurred by
Issuer for and in the underwriting of, or otherwise in connection with, the
issue thereof. To the extent that such issuance shall be for a
consideration other than cash, then, except as herein otherwise expressly
provided, the amount of such consideration shall be deemed to be the fair
market value of such consideration at the time of such issuance, as
reasonably determined by the Board. The consideration for any Additional
Shares of Common Stock issuable pursuant to any Options to subscribe for or
purchase the same shall be zero. The consideration for any Additional
Shares of Common Stock issuable pursuant to the terms of any Convertible
Securities shall be the cash consideration paid or payable to Issuer in
respect of the subscription for or purchase of such Convertible Securities.
In case of the issuance at any time of any Additional Shares of Common
Stock in payment or satisfaction of any dividend upon any class of stock
other than Common Stock, Issuer shall be deemed to have received for such
Additional Shares of Common Stock a consideration equal to the amount of
such dividend so paid or satisfied.
(b) When Adjustments to be Made. The adjustments required by this
---------------------------
Section 4 shall be made whenever and as often as any specified event
---------
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock comprising a Stock Unit that would
otherwise be required may be postponed (except in the case of a subdivision
or combination of shares of the Common Stock, as provided for in
Section
-------
4.01) up to but not beyond the date of exercise if such adjustment either
----
by itself or with other adjustments not previously made adds or subtracts
less than both (i) 1/20th of a share to or from the number of shares of
Common Stock comprising a Stock Unit immediately prior to the making of
such adjustment and (ii) 5% of the number of shares of Common Stock
comprising a Stock Unit. Any adjustment representing a change of less than
such minimum amount (except as aforesaid) shall be carried forward and made
as soon as such adjustment, together with other adjustments required by
this Section 4 and not previously made, would result in a minimum
---------
adjustment on the date of exercise. For
Warrant
-------
-11-
the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
--------------------
Section 4, fractional interests in Common Stock shall be taken into
---------
account to the nearest one-thousandth of a share.
(d) When Adjustment Not Required. If Issuer shall take a record of
----------------------------
the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and
shall, thereafter and before the distribution thereof to stockholders,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
4.07 Other Dilutive Events. In case any event shall occur, affecting
---------------------
Issuer, the Subsidiaries or any Person in which Issuer or any Subsidiary has a
direct or indirect Investment, as to which the provisions of Section 4 or
---------
Section 5 are not strictly applicable but the failure to make any adjustment
- ---------
would not fairly protect the purchase rights represented by this Warrant in
accordance with the essential intent and principles of such sections then, in
each such case, Issuer shall appoint a firm of independent public accountants of
recognized national standing (which may be the regular auditors of Issuer),
which shall give their opinion upon the adjustment, if any, on a basis
consistent with the essential intent and principles established in Section 4 and
---------
5, necessary to preserve, without dilution, the purchase rights represented by
- -
this Warrant. Without limiting the generality of the foregoing, Issuer
acknowledges that issuance of any equity security by any Subsidiary or Person in
which Issuer has a direct or indirect Investment to any Person other than
Issuer or a Wholly-Owned Subsidiary or sale of existing equity securities of
Subsidiaries or investees by Issuer or any Subsidiary for a price less than the
fair value thereof, and acquisition of less than 100% of the equity interest in
a Person for a price greater than the fair market value thereof, would be such
events. Upon receipt of such opinion, Issuer will promptly mail a copy thereof
to Holder and shall make the adjustments described therein.
SECTION 5. Consolidation, Merger, Share Exchange, ect.; Distributions.
----------------------------------------------------------
5.01 Consolidation, Merger, Share Exchange, ect. In case a
------------------------------------------
consolidation, merger or share exchange of Issuer shall be effected with another
Person on or after the date hereof, or the sale, lease or transfer of all or a
majority of its assets to
Warrant
-------
- 12 -
another Person shall be effected on or after the date hereof, then, as a
condition of such consolidation, merger, share exchange, sale, lease or
transfer, lawful and adequate provision shall be made whereby Holder shall
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions specified herein and in lieu of each Stock Unit immediately
theretofore purchasable and receivable upon the exercise of each of the
Warrants, such shares of stock, securities, cash or other property receivable
upon such consolidation, merger, share exchange, sale, lease or transfer by the
holder of the number of shares of Common Stock comprising a Stock Unit
immediately prior to such event. In any such case, appropriate and equitable
provision also shall be made with respect to the rights and interests of Holder
to the end that the provisions hereof (including Section 4) and of the Warrant
---------
Agreement and the Registration Rights Agreement shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock, securities, cash or
other property thereafter deliverable upon the exercise of any Warrants. Issuer
shall not effect any such consolidation, merger, share exchange, sale, lease or
transfer unless prior to or simultaneously with the consummation thereof the
successor Person (if other than Issuer) resulting from such consolidation,
merger or share exchange or the Person purchasing, leasing or otherwise
acquiring such assets shall assume, by written instrument mailed to Holder at
its last address appearing on the books of Issuer, the obligation to deliver to
Holder such shares of stock, securities, cash or other property as, in
accordance with the foregoing provisions, Holder may be entitled to purchase.
The above provisions of this Section 5.01 shall similarly apply to successive
------------
consolidations, mergers, share exchanges, sales, leases or transfers.
5.02 Distributions upon Declaration of Dividend or Other
---------------------------------------------------
Distribution. So long as any Warrants remain outstanding, Issuer shall pay,
- ------------
upon the declaration and payment of any dividend or distribution (whether such
dividend or distribution is in form of cash, debt securities, equity securities
or other property) on any class of Common Stock, to Holder the dividend or
distribution that such Holder would be otherwise entitled to receive had Holder
exercised this Warrant in full immediately prior to the taking of record of
those holders of Common Stock entitled to any such dividend or distribution. If
such dividend or distribution is in the form of a voting equity security, Holder
will be entitled to receive, at its option, in its stead non-voting equity
securities otherwise identical to and convertible at Holder's option into the
equity securities to which Holder is otherwise entitled thereunder and
continuing benefiting from antidilution provisions similar to those herein. This
provision shall not apply to stock dividends of Additional Shares of Common
stock, provided, that Issuer adjusts the number of shares of Common Stock
--------
comprising a Stock Unit pursuant to Section 4.01.
------------
Warrant
-------
-13-
A reclassification or recapitalization of the Common Stock shall be
deemed a distribution by Issuer to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 5.02 and,
------------
if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section 4.01.
------------
5.03 Dilution in Case of Other Securities. In case any other
------------------------------------
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of Issuer (or any
issuer of Other Securities or any other Person referred to in Section 5.01) or
------------
to subscription, purchase or other acquisition pursuant to any rights, options,
warrants to subscribe for, purchase or otherwise acquire either Additional
Shares of Common Stock or securities directly or indirectly convertible into or
exchangeable for Additional Shares of Common Stock, issued or granted by the
Company (or any such other issuer or Person) for a consideration such as to
dilute, on a basis consistent with the standards established in the other
provisions of Section 4, the purchase rights granted by this Warrant, then, and
---------
in each such case, the computations, adjustments and readjustments provided for
in Section 4 with respect to the Stock Units shall be made as nearly as possible
---------
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of the Warrants, so as
to protect the Warrant Holders against the effect of such dilution.
SECTION 6. Notice to Warrant Holders.
-------------------------
6.01 Notice of Adjustment of Stock Unit or Exercise Price. Whenever
----------------------------------------------------
the number of shares of Common Stock comprising a Stock Unit shall be adjusted
pursuant to Section 4, Issuer shall forthwith obtain a certificate signed by the
---------
chief financial officer of Issuer and reasonably acceptable to the Holders of a
majority of the Warrants, setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment was calculated
(including a description of the basis on which the Board determined the fair
market value of Additional Shares of Common Stock issued or sold and, if the
consideration therefor was other than cash, a description of how such
consideration was valued), specifying the number of shares of Common Stock
comprising a Stock Unit and (if such adjustment was made pursuant to
Section 4.07 or Section 5) describing the number and kind of any other
- ------------ ---------
securities comprising a Stock Unit, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. Issuer shall
promptly, and in any case within 10 days after the making of such adjustment,
cause a signed copy of such certificate to be delivered to each Warrant Holder
in accordance with Section
-------
Warrant
-------
-14-
11.02. Issuer shall keep at its office or agency, maintained for the purpose
- -----
pursuant to Section 11.01, copies of all such certificates and cause the same to
-------------
be available for inspection at said office during normal business hours by any
Warrant Holder or any prospective permitted purchaser or a Warrant designated by
a holder thereof. All adjustments set forth in such certificates shall be
subject to the reasonable approval of the Majority Warrant Stockholders.
6.02 Notice of Certain Corporate Action. In case Issuer shall propose
----------------------------------
(a) to pay any dividend to the holders of its Common Stock or to make any other
distribution to the holders of its Common Stock, or (b) to offer to the holders
of its Common Stock rights to subscribe for or to purchase any Additional Shares
of Common Stock or shares of stock of any class or any other securities, rights
or options, or (c) to effect any reclassification of its Common Stock (other
than a reclassification involving only the subdivision, or combination, of
outstanding shares of Common Stock), or (d) to effect any capital
reorganization, or (e) to effect any consolidation, merger, share exchange or
sale, lease, transfer or other disposition of all or a majority of its
property, assets or business (other than the creation of a Lien pursuant to a
Company Permitted Financing), or (f) to effect the liquidation, dissolution or
winding up of Issuer, then, in each such case, Issuer shall give to each
Warrant Holder, in accordance with Section 11.02, a notice of such proposed
-------------
action, which shall specify the date on which a record is to be taken for the
purposes of such stock dividend, distribution or rights, or the date on which
such reclassification, reorganization, consolidation, merger, share exchange,
sale, lease, transfer, disposition, liquidation, dissolution or winding up is to
take place and the date of participation therein by the holders of Common Stock,
if any such date is to be fixed, and shall also set forth such facts with
respect thereto as shall be reasonably necessary to indicate the effect of such
action on the Common Stock, if any, and the number and kind of any other shares
of stock which will comprise a Stock Unit, and the purchase price or prices
thereof, after giving effect to any adjustment, if any, which will be required
as a result of such action. Such notice shall be so given in the case of any
action covered by clause (a) or (b) above at least 20 days prior to the record
--------- ---
date for determining holders of the Common Stock for purposes of such action,
and in the case of any other such action, at least 20 days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of Common Stock, whichever shall be the earlier.
6.03 Notice of Expiration Date. Issuer shall give to each Warrant
-------------------------
Holder notice of the Expiration Date. Such notice may be given by Issuer not
less than 30 days but not more than 60 days prior to the Expiration Date;
provided, however, that if Issuer fails to give timely notice, the Expiration
- -------- -------
Date will be
Warrant
-------
-15-
extended to the date which is 30 days after the day on which such notice is
given.
SECTION 7. Reservation and Authorization of Common Stock. Issuer
---------------------------------------------
shall at all times reserve and keep available for issue upon the exercise or
conversion of Warrants such number of its authorized but unissued shares of
Common Stock of both classes as will be sufficient to permit the exercise in
full of all outstanding Warrants. Issuer shall not amend its certificate of
incorporation in any respect relating to the Common Stock other than to increase
or decrease the number of shares of authorized capital stock (subject to the
provisions of the preceding sentence) or to decrease the par value of any shares
of Common Stock. All shares of Common Stock which shall be so issuable, when
issued upon exercise of any Warrant and payment of the applicable Exercise Price
therefor in accordance with the terms of this Warrant, shall be duly and validly
issued, fully paid and nonassessable and free and clear of any Liens.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock comprising a Stock Unit or which would cause an
adjustment reducing the Current Warrant Price per share of Common Stock below
the then par value, if any, of the shares of Common Stock issuable upon exercise
of the Warrants, Issuer shall take any corporate action which is necessary in
order that Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock free and clear of any Liens upon the exercise of all the
Warrants immediately after the taking of such action.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock comprising a Stock Unit or in the Current
Warrant Price per share of Common Stock, Issuer shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
Issuer will list on each national securities exchange on which any
Common Stock may at any time be listed, subject to official notice of issuance
upon exercise of the Warrants, and will maintain such listing of, all shares of
Common Stock from time to time issuable upon the exercise of the Warrants.
Issuer will also so list on each national securities exchange, and will maintain
such listing of, any Other Securities if at the time any securities of the same
class shall be listed on such national securities exchange by Issuer.
SECTION 8. Taking of Record; Stock and Warrant Transfer Books. (a)
--------------------------------------------------
In the case of all dividends or other distributions by Issuer to the holders of
its Common Stock with respect to which any provision of Section 4 and Section
--------- -------
5.02 refers to the taking of a record of such holders, Issuer shall in each such
- ----
Warrant
-------
-16-
case take such a record as of the close of business on a Business Day.
(b) Issuer shall not at any time, except upon complete dissolution,
liquidation or winding up, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise, conversion or
transfer of any Warrant, unless otherwise required by any applicable federal,
state or local law.
SECTION 9. Expenses, Transfer Taxes and Other Charges. Issuer shall
------------------------------------------
pay any and all expenses, transfer taxes and other charges, including all costs
associated with the preparation, issue and delivery of stock or warrant
certificates, that are incurred in respect of the issuance or delivery of shares
of Common Stock upon exercise or conversion of this Warrant pursuant to Section
-------
2, or in connection with any transfer, division or combination of Warrants
- -
pursuant to Section 3. Issuer shall not, however, be required to pay any tax
---------
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which this
Warrant is registered, and no such issue or delivery shall be made unless and
until the Person requesting such issue has paid to Issuer the amount of any such
tax, or has established, to the satisfaction of Issuer, that such tax has been
paid.
SECTION 10. No Voting Rights. This Warrant shall not entitle Holder
----------------
to any voting or other rights as a stockholder of Issuer.
SECTION 11. Miscellaneous.
-------------
11.01 Office of Issuer. So long as any of the Warrants remains
----------------
outstanding, Issuer shall maintain an office in the continental United States of
America where the Warrants may be presented for exercise, transfer, division or
combination as in this Warrant provided. Such office shall be at Associated
Holdings, Inc., 1075 Hawthorne Drive, Itasca, IL 60143, unless and until Issuer
shall designate and maintain some other office for such purposes and give notice
thereof to all Warrant Holders.
11.02 Notices Generally. Any notices and other communications
-----------------
pursuant to the provisions hereof shall be sent in accordance with Section 13.03
of the Warrant Agreement.
11.03 Restrictions on Transferability. The Warrants and the Warrant
-------------------------------
Stock shall be transferable only upon compliance with the conditions specified
in Section 4 of the Warrant Agreement and the Registration Rights Agreement
therein referred to, which conditions are intended to ensure compliance with the
provisions of the Securities Act in respect of the transfer of any Warrant or
any Warrant Stock, and any Holder shall be bound
Warrant
-------
-17-
by the provisions of (and entitled to the benefits of) said Section 4 and said
Registration Rights Agreement.
11.04 Governing Law. This Warrant shall be governed by, and
-------------
construed in accordance with, the law of the State of New York without giving
effect to conflicts of law principles thereof, except to the extent that New
York conflicts of laws principles would apply the General Corporation Law of the
State of Delaware to matters relating to corporations incorporated thereunder.
11.05 Limitation of Liability. No provision hereof, in the absence
-----------------------
of affirmative action by Holder to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of Holder, shall give rise to any
liability of Holder for the Exercise Price or as a stockholder of Issuer,
whether such liability is asserted by Issuer, by any creditor of Issuer or any
other Person.
11.06 Fair Market Value Determinations by the Board, Etc. Whenever
--------------------------------------------------
the Board determines fair market value, Convertible Security Value or the Fair
Market Value of the Common Stock pursuant to this Warrant, or a firm of
independent public accountants opines as to an adjustment pursuant to Section
-------
4.07, any such determination or opinion shall be subject to the reasonable
- ----
approval of the Majority Warrant Stockholders.
SECTION 12. Conversion of Warrants. On and after the date hereof
----------------------
and prior to the Expiration Date, this Warrant may be converted, in whole or in
part, at the option of Holder, into the number of shares of Common Stock, for
each Stock Unit evidenced by this Warrant which is being so converted, equal to
the product of (a) the number of shares of Common Stock comprising a Stock Unit
at the time of such conversion, and (b) the Current Market Price per share of
Common Stock at the time of such conversion minus the Exercise Price of the
Warrant at the time of such conversion, divided by (c) the Current Market Price
----------
per share of Common Stock at the time of such conversion.
SECTION 13. Certain Legal Requirements. If Holder is subject to the
--------------------------
provisions of Regulation Y, Holder shall not, and shall not permit any of its
Bank Holding Company Affiliates to, permit any of its Bank Holding Company
Affiliates to convert this Warrant into shares of Common Stock pursuant to
Section 12, or exercise this Warrant, if after giving effect to such conversion
- ----------
or exercise, (i) Holder and its Bank Holding Company Affiliates would own more
than 5% of the total issued and outstanding shares of Common Stock or (ii)
Holder would Control Issuer (and for purposes of this clause (ii), a reasoned
opinion of counsel to Holder (which is based on facts and circumstances deemed
appropriate by such counsel) to the effect that Holder does not control Issuer
shall be conclusive).
Warrant
-------
-18-
IN WITNESS WHEREOF, Issuer has duly executed this Warrant.
Dated: January 31, 1992
ASSOCIATED HOLDINGS, INC.,
By
----------------------------
Name: Thomas W. Sturgess
Title: Chairman and Chief
Executive Officer
Warrant
-------
FORM OF EXERCISE
----------------
(To be executed by the registered holder hereof)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of ___________ Stock Units of Associated Holdings,
Inc., a Delaware corporation, and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant, and requests
that (i) certificates and/or other instruments covering such Stock Units be
issued in accordance with the instructions given below and (ii) if such Stock
Units shall not include all of the Stock Units to which Holder is entitled under
this Warrant, that a new Warrant of like tenor and date for the unpurchased
balance of the Stock Units issuable hereunder be delivered to the undersigned.
Dated: ___________________
___________________________________
(Signature of Registered Holder)
Instructions for issuance and
registration of Stock Units:
_________________________________
Name of Registered Holder
(please print)
Social Security or Other Identifying
Number:__________________________
Please deliver certificate to
the following address:
____________________________________
Street
____________________________________
City, State and Zip Code
Warrant
-------
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder hereof)
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all the rights
of the undersigned under this Warrant with respect to the number of Stock Units
covered thereby set forth hereinbelow unto:
Number of
Name of Assignee Address Stock Units
- ---------------- ------- -----------
Dated:
---------------
------------------------------
Signature of Registered Holder
------------------------------
Name of Registered Holder
(Please Print)
Witness:
- ------------------------------
Warrant
-------
Annex 2-Registration Rights Agreement
Annex 2
to
Warrant Agreement
ASSOCIATED HOLDINGS, INC.
REGISTRATION RIGHTS AGREEMENT
Dated as of January 31, 1992
TABLE OF CONTENTS
-----------------
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience only.
Page
No.
----
1. Requested Registrations.............................................. 1
(a) Registration Request........................................... 1
(b) Limitations on Requested Registrations......................... 2
(c) Registration Statement Form.................................... 3
(d) Registration Expenses.......................................... 3
(e) Priority in Cutback Registrations.............................. 3
2. Piggyback Registrations.............................................. 4
(a) Right to Include Registrable Securities........................ 4
(b) Registration Expenses.......................................... 4
(c) Priority in Cutback Registrations.............................. 4
3. Registration Procedures.............................................. 5
4. Underwritten Offerings............................................... 10
(a) Underwritten Requested Offerings............................... 10
(b) Underwritten Piggyback Offerings............................... 11
5. Holdback Agreements By Issuer and Other Securityholders.............. 11
6. Indemnification...................................................... 12
(a) Indemnification by Issuer...................................... 12
(b) Indemnification by Sellers..................................... 13
(c) Notices of Claims, etc......................................... 14
(d) Contribution................................................... 15
(e) Other Indemnification.......................................... 15
(f) Indemnification Payments....................................... 16
7. Covenants Relating to Rules 144 and 144A............................. 16
8. Other Registration Rights............................................ 17
(a) No Existing Agreements......................................... 17
(b) Future Agreements.............................................. 17
9. Definitions.......................................................... 17
10. Miscellaneous........................................................ 22
(a) Notices........................................................ 22
(b) Entire Agreement............................................... 23
(c) Amendment...................................................... 23
(d) Waiver......................................................... 23
(e) Consents and Waivers by Holders of Registrable Securities...... 24
(f) No Third Party Beneficiary..................................... 24
(g) Successors and Assigns......................................... 24
(h) Headings....................................................... 24
(i) Invalid Provisions............................................. 24
(j) Remedies....................................................... 24
(k) Governing Law.................................................. 25
(l) Counterparts................................................... 25
i
ASSOCIATED HOLDINGS, INC.
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT dated as of January 31, 1992 is
made and entered into by and between CHASE MANHATTAN INVESTMENT HOLDINGS, INC.,
a Delaware corporation (the "Investor"), and ASSOCIATED HOLDINGS, INC., a
--------
Delaware corporation (the "Issuer"). Capitalized terms not otherwise defined
------
herein have the meanings set forth in Section 9.
---------
WHEREAS, Issuer and the Investor are parties to a Warrant Agreement of
even date herewith (as modified and supplemented and in effect from time to
time, the "Warrant Agreement"), providing for the issuance by Issuer of
-----------------
Underwriting Warrants and Tranche B Warrants (each as defined in the Warrant
Agreement) which entitle the Investor to purchase, from and after the dates of
their respective issuance, from Issuer at any time on or prior to the date that
is ten years from the date of their respective issuance, Stock Units (as therein
defined) representing, initially, an aggregate amount equal to 13% of the issued
and outstanding shares of Common Stock of Issuer (on a fully diluted basis); and
WHEREAS, in order to induce the Investor to purchase the Warrants, and
as a condition precedent to such purchase, the Investor requires that Issuer
enter into this Agreement simultaneously with the Investor's execution of the
Warrant Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Requested Registrations. (a) Registration Requests. At any time
----------------------- ---------------------
after the earlier of (i) the date upon which Issuer shall have effected a Public
Offering and (ii) in the event that a Put Postponement occurs, the date on which
the corresponding Put Response Notice is delivered (the "Trigger Date"), upon
------------
the written request of the holders of a majority of the Registrable Securities
requesting that Issuer effect the registration under the Securities Act of all
or part of such holders' Registrable Securities and specifying the number of
Registrable Securities to be registered and the intended method of disposition
thereof (a "Registration Request"), Issuer will promptly, and in no event more
--------------------
than ten (10) Business Days after receipt of such Registration Request, give
written notice (a "Notice of Requested Registration") of such request to all
--------------------------------
other holders of Registrable Securities, and thereupon will use its best efforts
to effect the registration under the Securities Act of
Registration Rights Agreement
-----------------------------
-2-
(A) the Registrable Securities which Issuer has been so requested to
register by such Majority Warrant Stockholders, and
(B) all other Registrable Securities the holders of which have made
written requests to Issuer for registration thereof within twenty (20) days
after the giving of the Notice of Requested Registration (which requests
shall specify the intended method of distribution thereof),
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof) of the Registrable Securities so to be registered. If
requested by the holders of a majority of the Registrable Securities requested
to be included in any Requested Registration, the method of disposition of all
Registrable Securities included in such registration shall be an underwritten
offering effected in accordance with Section 4 (a). Notwithstanding the
-------------
foregoing, Issuer may postpone taking action with respect to a Requested
Registration for a reasonable period of time after receipt of the original
request (not exceeding one hundred twenty (120) days) if, in the reasonable
opinion of Issuer's Board of Directors, effecting the registration would
adversely affect a material financing, acquisition, disposition of assets or
stock, merger or other comparable transaction or would require Issuer to make
public disclosure of information the public disclosure of which would have a
material adverse effect upon Issuer, provided that Issuer shall not delay such
--------
action pursuant to this sentence more than once in any twelve (12) month period.
Subject to paragraph (e), Issuer may include in such registration other
-------------
securities for sale for its own account or for the account of any other Person.
If any securityholders of Issuer (other than the holders of Registrable
Securities in such capacity) register securities of Issuer in a Requested
Registration in accordance with this Section, such holders shall pay the fees
and expenses of their counsel and their pro rata share, on the basis of the
--- ----
respective amounts of the securities included in such registration on behalf of
each such holder, of the Registration Expenses if the Registration Expenses for
such registration are not paid by Issuer for any reason.
(b) Limitations on Requested Registrations.
--------------------------------------
Notwithstanding anything herein to the contrary, Issuer shall not be required to
honor a request for a Requested Registration if:
(i) the Trigger Date shall not yet have occurred;
(ii) in the case of a Long-Form Registration, (A) Issuer has previously
effected two (2) Effective Long-Form Registrations, or (B) in the event
that there has been a Put Postponement and the corresponding Put
Reactivation Date has not occurred, Issuer has previously effected
three (3) Effective Long-Form Registrations;
Registration Rights Agreement
-----------------------------
-3-
(iii) in the case of a Short-Form Registration, Issuer has previously
effected three (3) Effective Short-Form Registrations;
(iv) such request is received by Issuer less than three hundred (300)
days following the effective date of any previous registration statement
filed in connection with a Requested Registration, regardless of whether
any holder of Registrable Securities exercised its rights under this
Agreement with respect to such registration, unless such previous
registration constituted a Cutback Registration.
(c) Registration Statement Form. Requested Registrations shall be on
---------------------------
such appropriate registration form promulgated by the Commission as shall be
selected by Issuer, and shall be reasonably acceptable to the holders of a
majority of the Registrable Securities to which such registration relates, and
shall permit the disposition of such Registrable Securities in accordance with
the intended method or methods specified in their request for such registration,
provided, that such registration form is available under the terms of this
- --------
Agreement. Notwithstanding the forgoing, if Issuer selects a Form S-3 and the
use of such form is available under the terms of this Agreement and is permitted
by law, the holders of a majority of the Registrable Securities to which such
registration relates may notify Issuer in writing that, in the judgment of such
holders (or, if applicable, the Managing Underwriter), the inclusion of some or
all of the information required in a more detailed form specified in such notice
is of material importance to the success of the Public Offering of such
Registrable Securities, in which case Issuer shall supplement or amend the Form
S-3 to include such information.
(d) Registration Expenses. Issuer will pay all Registration Expenses
---------------------
incurred in connection with any Requested Registration.
(e) Priority in Cutback Registrations. If a Requested Registration
---------------------------------
becomes a Cutback Registration, Issuer will include in any such registration to
the extent of the number which the Managing Underwriter advises Issuer can be
sold in such offering (i) first, Registrable Securities requested to be included
-----
in such registration by the Requesting Holders, pro rata on the basis of the
--- ----
number of Registrable Securities requested to be included by such holders and
(ii) second, other securities of Issuer proposed to be included in such
------
registration, allocated among the holders thereof in accordance with the
priorities then existing among Issuer and the holders of such other securities;
and any securities so excluded shall be withdrawn from and shall not be included
in such Requested Registration.
Registration Rights Agreement
-----------------------------
-4-
2. Piggyback Registrations. (a) Right to Include Registrable
----------------------- ----------------------------
Securities. Notwithstanding any limitation contained in Section 1, if Issuer at
- ---------- ---------
any time proposes after the date hereof to effect a Piggyback Registration, it
will each such time give prompt written notice (a "Notice of Piggyback
-------------------
Registration") to all holders of Registrable Securities of its intention to do
- ------------
so and of such holders' rights under this Section 2, which Notice of Piggyback
---------
Registration shall include a description of the intended method of disposition
of such securities. Upon the written request of any such holder made within
fifteen (15) days after receipt of a Notice of Piggyback Registration (which
request shall specify the Registrable Securities intended to be disposed of by
such holder and the intended method of disposition thereof), Issuer will use its
best efforts to include in the registration statement relating to such Piggyback
Registration all Registrable Securities which Issuer has been so requested to
register. Notwithstanding the foregoing, if, at any time after giving a Notice
of Piggyback Registration and prior to the effective date of the registration
statement filed in connection with such registration, Issuer shall determine for
any reason not to register or to delay registration of such securities, Issuer
may, at its election, give written notice of such determination to each holder
of Registrable Securities and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay the Registration Expenses in connection therewith), without prejudice,
however, to the rights of any Requesting Holder entitled to do so to request
that such registration be effected as a Requested Registration under Section 1,
---------
and (ii) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities for the same period as the delay
in registering such other securities. No registration effected under this
Section 2 shall relieve Issuer of its obligations to effect a Requested
- ---------
Registration under Section 1.
---------
(b) Registration Expenses. Issuer will pay all Registration Expenses
---------------------
incurred in connection with each Piggyback Registration.
(c) Priority in Cutback Registrations. If a Piggyback Registration
---------------------------------
becomes a Cutback Registration, Issuer will include in such registration to the
extent of the amount of the securities which the Managing Underwriter advises
Issuer can be sold in such offering:
(i) if such registration involves a primary offering of Issuer's
securities, (x) first, the securities proposed by Issuer to be sold for its own
-----
account, and (y) second, other securities of Issuer proposed to be included in
------
such registration by any Person who is a party to a registration rights
agreement (including this Agreement) referred to in
Registration Rights Agreement
-----------------------------
-5-
Section 8(a), allocated among the holders thereof, pro rata on the basis of
------------ --- ----
the number of units of such securities requested to be included by such
holders; and
(ii) if such registration does not involve a primary offering, all
securities requested to be included in such registration by any Person who
is a party to a registration rights agreement (including this Agreement)
referred to in Section 8(a), pro rata on the basis of the number of
------------ --- ----
securities requested to be included by such holders;
(iii) if there has been a Put Postponement and the corresponding Put
Reactivation Date has not occurred, and the Majority Warrant Stockholders
have requested that their respective Registrable Securities be included in
a Piggyback Registration, the priority of the Registrable Securities
requested to be included in such Piggyback Registration in the event that
it becomes a Cutback Registration shall be as set forth in Section 1(e);
------------
and
and any securities so excluded shall be withdrawn from and shall not be included
in such Piggyback Registration.
3. Registration Procedures. If and whenever Issuer is required to use
-----------------------
its best efforts to effect the registration of any Registrable Securities under
the Securities Act pursuant to Section 1 or Section 2, Issuer will use its best
--------- ---------
efforts to effect the registration and sale of such Registrable Securities in
accordance with the intended methods of disposition thereof specified by the
Requesting Holders. Without limiting the foregoing, Issuer in each such case
will, as expeditiously as possible:
(a) prepare and file with the Commission the requisite registration
statement to effect such registration and use its best efforts to cause
such registration statement to become effective as soon as practicable,
provided that as far in advance as practical before filing such
--------
registration statement or any amendment or supplement thereto, Issuer will
furnish to the Requesting Holders copies of reasonably complete drafts of
all such documents proposed to be filed (including exhibits), and any such
holder shall have the opportunity to object to any information pertaining
solely to such holder and its plan of distribution that is contained
therein and Issuer will make the corrections reasonably requested by such
holder with respect to such information prior to filing any such
registration statement or amendment;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and any prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration statement and to comply with the provisions of the
Securities Act with
Registration Rights Agreement
-----------------------------
-6-
respect to the disposition of all Registrable Securities covered by such
registration statement, in accordance with the intended methods of disposition
thereof, until the earlier of (i) such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement and (ii) two hundred
and seventy (270) days after such registration statement becomes effective;
(c) promptly notify each Requesting Holder and the underwriter or
underwriters, if any:
(i) when such registration statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such registration statement or any post-
effective amendment thereto, when the same has become effective;
(ii) of any written request by the Commission for amendments or
supplements to such registration statement or prospectus;
(iii) of the notification to Issuer by the Commission of its initiation
of any proceeding with respect to the issuance by the Commission of, or of
the issuance by the Commission of, any stop order suspending the
effectiveness of such registration statement (and Issuer shall promptly
attempt to have such order withdrawn);
(iv) of the receipt by Issuer of any notification with respect to the
suspension of the qualification of any Registrable Securities for sale
under the applicable securities or blue sky laws of any jurisdiction;
(d) furnish to each seller of Registrable Securities covered by such
registration statement such number of conformed copies of such registration
statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 promulgated under the Securities Act relating to such
holder's Registrable Securities, and such other documents, as such seller may
reasonably request to facilitate the disposition of its Registrable Securities;
(e) use its best efforts to register or qualify all Registrable Securities
covered by such registration statement under such other securities or blue sky
laws of such
Registration Rights Agreement
-----------------------------
-7-
jurisdictions as each holder thereof shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by
such holder, except that Issuer shall not for any such purpose be required
(i) to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this
paragraph (e) be obligated to be so qualified, (ii) to subject itself to
------------
taxation in any such jurisdiction or (iii) to consent to general service of
process in any jurisdiction;
(f) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
each holder thereof to consummate the disposition of such Registrable
Securities;
(g) upon the request of (a) the Managing Underwriter, or (b) those
Requesting Holders who hold at least a majority of the Registrable
Securities to be included in a Requested Registration, effect a stock split
in respect of the Common Stock by means of a stock dividend on the Common
Stock or a subdivision of the Common Stock, or a combination of the Common
Stock, such stock split or combination to be in form, scope and substance
satisfactory to the Managing Underwriter or such Requesting Holders, as the
case may be.
(h) furnish to each Requesting Holder a signed counterpart, addressed
to such holder (and the underwriters, if any), of
(i) an opinion of counsel for Issuer, dated the effective date
of such registration statement (or, if such registration includes an
underwritten Public Offering, dated the date of any closing under the
underwriting agreement), reasonably satisfactory in form and substance
to such holder, and
(ii) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten Public Offering, dated the date of any closing under the
underwriting agreement), signed by the independent public accountants
who have certified Issuer's financial statements included in such
registration statement,
in each case covering substantially the same matters with respect to such
registration statement (and the prospectus
Registration Rights Agreement
-----------------------------
-8-
included therein) and, in the case of the accountants' letter, with respect
to events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to the underwriters in the underwritten Public Offerings
of securities and, in the case of the accountants' letter, such other
financial matters, as such holder (or the underwriters, if any) may
reasonably request;
(i) notify each holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which any prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and at the request of any such
holder promptly prepare and furnish to such holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months, but not more than
eighteen (18) months, beginning with the first full calendar month after
the effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder;
(k) make available for inspection by any Requesting Holder, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter (collectively, the "Inspectors"), all financial and
----------
other records, pertinent corporate documents and properties of Issuer
(collectively, the "Records") as shall be reasonably necessary to enable
-------
them to exercise any due diligence responsibility, and cause Issuer's
officers, directors and employees to supply all information reasonably
requested by any such Inspector in connection with such registration
statement, and permit the Inspectors to
Registration Rights Agreement
-----------------------------
-9-
participate in the preparation of such registration statement and any
prospectus contained therein and any amendment or supplement thereto.
(l) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement; and
(m) use its best efforts to cause all Registrable Securities covered
by such registration statement to be listed, upon official notice of
issuance, on any securities exchange on which any of the securities of the
same class as the Registrable Securities are then listed.
Issuer may require each holder of Registrable Securities as to which
any registration is being effected to, and each such holder, as a condition to
including Registrable Securities in such registration, shall, furnish Issuer
with such information regarding such holder and the distribution of such
securities as Issuer may from time to time reasonably request in writing in
connection with such registration; provided, however, that Issuer will not file
-------- -------
any registration statement under the Securities Act which refers to any holder
of any Registrable Securities by name or otherwise as the holder of any
securities of Issuer, unless it shall first have given to such holder the right
to require (a) the insertion therein of language, in form and substance
-
satisfactory to such holder, to the effect that the holding by such holder of
such securities does not make such holder a "controlling person" of Issuer
within the meaning of the Securities Act and is not to be construed as a
recommendation by such holder of the investment quality of the Issuer's debt or
equity securities covered thereby and that such holding does not imply that such
holder will assist in meeting any future financial requirements of Issuer, or
(b) in the event that such reference to such holder by name or otherwise is not
-
required by the Securities Act or any rules and regulations promulgated
thereunder, the deletion of the reference to such holder.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from Issuer of the
happening of any event of the kind described in paragraph (i), such holder will
-------------
forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (i) and, if so directed by Issuer, will
-------------
deliver to Issuer (at Issuer's expense) all copies, other than permanent file
copies, then in such holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice. In the
event Issuer shall give any such notice, the period referred to in
Registration Rights Agreement
-----------------------------
-10-
paragraph (b) shall be extended by a number of days equal to the number of days
- ------------
during the period from and including the giving of notice pursuant to
paragraph (i) and to and including the date when each holder of any Registrable
- ------------
Securities covered by such registration statement shall receive the copies of
the supplemented or amended prospectus contemplated by paragraph (i).
------------
4. Underwritten Offerings.
----------------------
(a) Underwritten Requested Offerings. In the case of any underwritten
--------------------------------
Public Offering being effected pursuant to a Requested Registration, the
Managing Underwriter and any other underwriter or underwriters with respect to
such offering shall be selected, after consultation with Issuer, by the holders
of a majority of the Registrable Securities to be included in such underwritten
offering with the consent of Issuer, which consent shall not be unreasonably
withheld. Issuer shall enter into an underwriting agreement in customary form
with such underwriter or underwriters, which shall include, among other
provisions, indemnities to the effect and to the extent provided in Section 6
---------
and shall take all such other actions as are reasonably requested by the
Managing Underwriter in order to expedite or facilitate the registration and
disposition of the Registrable Securities. The holders of Registrable Securities
to be distributed by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
Issuer to and for the benefit of such underwriters also be made to and for their
benefit and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement also be conditions precedent
to their obligations. No holder of Registrable Securities shall be required to
make any representations or warranties to or agreements with Issuer or the
underwriters other than representations, warranties or agreements regarding such
holder and its ownership of the securities being registered on its behalf and
such holder's intended method of distribution and any other representation
required by law. No Requesting Holder may participate in such underwritten
offering unless such holder agrees to sell its Registrable Securities on the
basis provided in such underwriting agreement and completes and executes all
questionnaires, powers of attorney, indemnities and other documents reasonably
required under the terms of such underwriting agreement. If any Requesting
Holder disapproves of the terms of an underwriting, such holder may elect to
withdraw therefrom and from such registration by notice to Issuer and the
Managing Underwriter, and each of the remaining Requesting Holders shall be
entitled to increase the number of Registrable Securities being registered to
the extent of the Registrable Securities so withdrawn in the proportion which
the number of Registrable Securities being registered by such remaining
Requesting Holder bears to the total number of
Registration Rights Agreement
-----------------------------
-11-
Registrable Securities being registered by all such remaining Requesting
Holders.
(b) Underwritten Piggyback Offerings. If Issuer at any time proposes
--------------------------------
to register any of its securities in a Piggyback Registration and such
securities are to be distributed by or through one or more underwriters, Issuer
will, subject to the provisions of Section 2(c), use its best efforts to arrange
------------
for such underwriters to include the Registrable Securities to be offered and
sold by Requesting Holders among the securities to be distributed by such
underwriters, and such holders shall be obligated to sell their Registrable
Securities in such Piggyback Registration through such underwriters on the same
terms and conditions as apply to the other Issuer securities to be sold by such
underwriters in connection with such Piggyback Registration. The holders of
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between Issuer and such underwriter or
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
Issuer to and for the benefit of such underwriters also be made to and for their
benefit and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement also be conditions precedent
to their obligations. No holder of Registrable Securities shall be required to
make any representations or warranties to or agreements with Issuer or the
underwriters other than representations, warranties or agreements regarding such
holder and its ownership of the securities being registered on its behalf and
such holder's intended method of distribution and any other representation
required by law. No Requesting Holder may participate in such underwritten
offering unless such holder agrees to sell its Registrable Securities on the
basis provided in such underwriting agreement and completes and executes all
questionnaires, powers of attorney, indemnities and other documents reasonably
required under the terms of such underwriting agreement. If any Requesting
Holder disapproves of the terms of an underwriting, such holder may elect to
withdraw therefrom and from such registration by notice to Issuer and the
Managing Underwriter, and each of the remaining Requesting Holders shall be
entitled to increase the number of Registrable Securities being registered to
the extent of the Registrable Securities so withdrawn in the proportion which
the number of Registrable Securities being registered by such remaining
Requesting Holder bears to the total number of Registrable Securities being
registered by all such remaining Requesting Holders.
5. Holdback Agreements By Issuer and Other Securityholders. Unless
-------------------------------------------------------
the Managing Underwriter otherwise agrees, Issuer and each holder of Registrable
Securities agrees not to effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the fourteen (14) days prior to and the
Registration Rights Agreement
-----------------------------
-12-
one hundred and eighty (180) days after the effective date of the registration
statement filed in connection with an underwritten offering made pursuant to a
Requested Registration (or for such shorter period of time as is sufficient and
appropriate, in the opinion of the Managing Underwriter, in order to complete
the sale and distribution of the securities included in such registration),
except as part of such underwritten registration and except pursuant to
registrations on Form S-4 or Form S-8 promulgated by the Commission or any
successor or similar forms thereto. Issuer also agrees, unless the Managing
Underwriter otherwise agrees, to cause each holder of its equity securities
which is a party to a registration rights agreement with Issuer entered into on
or after the date hereof, and each holder of its equity securities, or of any
securities convertible into or exchangeable or exercisable for such securities,
in each case purchased from Issuer, and Wingate, Cumberland or their respective
Affiliates, at any time after the date of this Agreement (other than in a Public
Offering), to agree, to the extent permitted by law, not to effect any such
public sale or distribution of such securities (including a sale under Rule
144), during such period, except as part of such underwritten registration.
6. Indemnification. (a) Indemnification by Issuer. Issuer shall, to
--------------- -------------------------
the full extent permitted by law, indemnify and hold harmless each seller of
Registrable Securities included in any registration statement filed in
connection with a Requested Registration or a Piggyback Registration, its
directors and officers, and each other Person, if any, who controls any such
seller within the meaning of the Securities Act, against any losses, claims,
damages expenses or liabilities, joint or several (together, "Losses"), to which
------
such seller or any such director or officer or controlling Person may become
subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, and
Issuer will reimburse such seller and each such director, officer and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such Loss (or action or
proceeding in respect thereof); provided that Issuer shall not be liable in any
--------
such case to the extent that any such Loss (or action or proceeding in respect
thereof) arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
Registration Rights Agreement
-----------------------------
-13-
amendment or supplement in reliance upon and in conformity with written
information furnished to Issuer through an instrument duly executed by such
seller specifically stating that it is for use in the preparation thereof. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller or any such director, officer or controlling
Person, and shall survive the transfer of such securities by such seller. Issuer
shall also indemnify each other Person who participates (including as an
underwriter) in the offering or sale of Registrable Securities, their officers
and directors and each other Person, if any, who controls any such participating
Person within the meaning of the Securities Act to the same extent as provided
above with respect to sellers of Registrable Securities.
(b) Indemnification by the Sellers. Each holder of Registrable
------------------------------
Securities which are included or are to be included in any registration
statement filed in connection with a Requested Registration or a Piggyback
Registration, as a condition to including Registrable Securities in such
registration statement, shall, to the full extent permitted by law, indemnify
and hold harmless Issuer, its directors and officers, and each other Person, if
any, who controls Issuer within the meaning of the Securities Act, against any
Losses to which Issuer or any such director or officer or controlling Person may
become subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, if such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
Issuer through an instrument duly executed by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the obligation to provide indemnification
-----------------
pursuant to this Section 6(b) shall be several, and not joint and several,
-----------
among such Indemnifying Parties and the aggregate amount which may be recovered
from any holder of Registrable Securities pursuant to the indemnification
provided for in this Section 6(b) in connection with any registration and sale
-----------
of Registrable Securities shall be limited to the total proceeds
received by such holder from the sale of such Registrable Securities. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of Issuer or any such director, officer or controlling
Person and shall survive the transfer of such securities by such seller. Such
holders shall also indemnify each
Registration Rights Agreement
-----------------------------
-14-
other Person who participates (including as an underwriter) in the offering or
sale of Registrable Securities, their officers and directors and each other
Person, if any, who controls any such participating Person within the meaning of
the Securities Act to the same extent as provided above with respect to Issuer.
(c) Notices of Claims, etc. Promptly after receipt by an Indemnified
-----------------------
Party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraph (a) or (b) of this Section 6, such
-------------------- ---------
Indemnified Party will, if a claim in respect thereof is to be made against an
Indemnifying Party pursuant to such paragraphs, give written notice to latter of
the commencement of such action, provided that the failure of any Indemnified
--------
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under the preceding paragraphs of this Section 6, except to
---------
the extent that the Indemnifying Party is actually prejudiced by such failure to
give notice. In case any such action is brought against an Indemnified Party,
the Indemnifying Party shall be entitled to participate in and, unless, in the
reasonable judgment of any Indemnified Party, a conflict of interest between
such Indemnified Party and any Indemnifying Party exists or such Indemnified
Party has additional defenses available to it with respect to such claim, to
assume the defense thereof, jointly with any other Indemnifying Party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such Indemnified Party, and after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party shall not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation; provided that the
--------
Indemnified Party may participate in such defense at the Indemnified Party's
expense; and provided further that the Indemnified Party or Indemnified Parties
-------- -------
shall have the right to employ one counsel to represent it or them if, in the
reasonable judgment of the Indemnified Party or Indemnified Parties, it is
advisable for it or them to be represented by separate counsel by reason of
having legal defenses which are different from or in addition to those available
to the Indemnifying Party, and in that event the reasonable fees and expenses of
such one counsel shall be paid by the Indemnifying Party. If the Indemnifing
Party is not entitled to, or elects not to, assume the defense of a claim, it
will not be obligated to pay the fees and expenses of more than one counsel
(plus appropriate local counsel) for the Indemnified Parties with respect to
such claim, unless in the reasonable judgment of any Indemnified Party a
conflict of interest may exist between such Indemnified Party and any other
Indemnified Parties with respect to such claim, in which event the Indemnifying
Party shall be obligated to pay the fees and expenses of such additional counsel
for the Indemnified Parties or counsels. No Indemnifying Party shall consent to
entry of any judgment or enter into any
Registration Rights Agreement
-----------------------------
-15-
settlement without the consent of the Indemnified Party which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party shall be subject to any liability for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
(d) Contribution. If the indemnity and reimbursement obligation
------------
provided for in any paragraph of this Section 6 is unavailable or insufficient
---------
to hold harmless an Indemnified Party in respect of any Losses (or actions or
proceedings in respect thereof) referred to therein, then the Indemnifying Party
shall contribute to the amount paid or payable by the Indemnified Party as a
result of such Losses (or actions or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and the Indemnified Party on the other hand in connection
with statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Party or the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this paragraph were to be determined by pro rata allocation or by any other
--- ----
method of allocation which does not take account of the equitable considerations
referred to in the first sentence of this paragraph. The amount paid by an
Indemnified Party as a result of the Losses referred to in the first sentence of
this paragraph shall be deemed to include any legal and other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any Loss which is the subject of this paragraph.
No Indemnified Party guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from the Indemnifying Party if the Indemnifying Party was not
guilty of such fraudulent misrepresentation.
(e) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 6 (with appropriate modifications)
---------
shall be given by Issuer and each seller of Registrable Securities with respect
to any required registration or other qualification of securities under any
federal or state law or regulation of any governmental authority other than the
Securities Act. The provisions of this Section 6 shall be in addition to any
---------
other rights to indemnification or
Registration Rights Agreement
-----------------------------
-16-
contribution which an Indemnified Party may have pursuant to law, equity,
contract or otherwise.
(f) Indemnification Payments. The indemnification required by this
------------------------
Section 6 shall be made by periodic payments of the amount thereof during the
- ---------
course of the investigation or defense, as and when bills are received or Losses
are incurred.
7. Covenants Relating to Rules 144 and 144A. If at any time Issuer is
----------------------------------------
required to file reports in compliance with either Section 13 or Section 15(d)
of the Exchange Act, Issuer will file reports in compliance with the Exchange
Act, will comply with all rules and regulations of the Commission applicable in
connection with the use of Rule 144 and take such other actions and furnish such
holder with such other information as such holder may request in order to avail
itself of such rule or any other rule or regulation of the Commission allowing
such holder to sell any Registrable Securities without registration, and will,
at its expense, forthwith upon the request of any holder io Registrable
Securities, deliver to such holder a certificate, signed by Issuer's principal
financial officer, stating (a) Issuer's name, address and telephone number
(including area code), (b) Issuer's Internal Revenue Service identification
number, (c) Issuer's Commission file number, (d) the number of shares of each
class of Stock outstanding as shown by the most recent report or statement
published by Issuer, and (e) whether Issuer has filed the reports required to be
filed under the Exchange Act for a period of at least ninety (90) days prior to
the date of such certificate and in addition has filed the most recent annual
report required to be filed thereunder. If at any time Issuer is not required to
file reports in compliance with either Section 13 or Section 15(d) of the
Exchange Act, Issuer at its expense will, forthwith upon the written request of
the holder of any Registrable Securities, make available adequate current public
information with respect to Issuer within the meaning of paragraph (c)(2) of
Rule 144.
With a view to making available to each holder of Registrable
Securities the benefits of certain rules and regulations of the Commission which
may permit the sale of the Registrable Securities to the public without
registration. Issuer agrees that so long as a holder owns any Registrable
Securities, each holder of Registrable Securities and each prospective holder
of Registrable Securities who may consider acquiring Registrable Securities in
reliance upon Rule 144A shall have the right to request from Issuer, and Issuer
will provide upon request, such information regarding Issuer and its business,
assets and properties, if any, as is at the time required to be made available
by Issuer under Rule 144A so as to enable such holder to transfer Registrable
Securities to such prospective holder in reliance upon Rule 144A.
Registration Rights Agreement
-----------------------------
-17-
Each holder of Registrable Securities agrees (on behalf of itself and
each of its affiliates, directors, officers, employees and representatives) to
use reasonable precautions to keep confidential, in accordance with their
customary procedures for handling confidential information of this nature and in
accordance with safe and sound practices, any non-public information supplied
to it by Issuer pursuant to this Agreement which is identified by Issuer as
being confidential at the time the same is delivered to such holder of
Registrable Securities, provided, that nothing herein shall limit the disclosure
--------
of any such information (i) to the extent required by statute, rule, regulation
or judicial process, (ii) to counsel for any of the holders of Registrable
Securities, (iii) to regulatory personnel, auditors or accountants, (iv) in
connection with any litigation to which any one or more of the holders of
Registrable Securities is a party, (v) to a Subsidiary or Affiliate of such
holder of Registrable Securities as provided in clause (a) above or (vi) to any
prospective holder of Registrable Securities so long as such prospective holder
of Registrable Securities first executes and delivers to the respective holder
of Registrable Securities a Confidentiality Agreement substantially in the form
of Annex 1.
-------
8. Other Registration Rights.
-------------------------
(a) No Existing Agreements. Issuer represents and warrants to the
----------------------
Investor that there is not in effect on the date hereof any agreement by Issuer
(other than this Agreement) pursuant to which any holders of securities of
Issuer have a right to cause Issuer to register or qualify such securities under
the Securities Act or any securities or blue sky laws of any jurisdiction other
than the Stockholders Registration Rights Agreement.
(b) Future Agreements. Issuer shall not hereafter agree with or
-----------------
amend an existing agreement with the holders of any securities issued or to be
issued by Issuer to register or qualify such securities under the Securities Act
or any securities or blue sky laws of any jurisdiction unless such agreement
specifically provides that (i) such holder of such securities may not
participate in any Requested Registration except as provided in Section 1; (ii)
---------
the holder of such securities may not participate in any Piggyback Registration
except as provided in Section 2; and (iii) such securities may not be publicly
---------
offered or sold for the period specified in Section 5 under the circumstances
---------
described in such Section.
9. Definitions.
-----------
(a) Except as otherwise specifically indicated, the following terms
will have the following meanings for all purposes of this Agreement:
Registration Rights Agreement
-----------------------------
-18-
"Agreement" means this Registration Rights Agreement, as the same
---------
shall be amended from time to time.
"Business Day" has the meaning ascribed to it in the Warrant
------------
Agreement.
"Common Stock" has the meaning ascribed to it in the Warrant
------------
Agreement.
"Commission" has the meaning ascribed to it in the Warrant Agreement.
----------
"Cutback Registration" means any Requested Registration or Piggyback
--------------------
Registration to be effected as an underwritten Public Offering in which the
Managing Underwriter with respect thereto advises Issuer and the Requesting
Holders in writing that, in its opinion, the number of securities requested to
be included in such registration (including securities of Issuer which are not
Registrable Securities) exceed the number which can be sold in such offering.
"Effective Long-Form Registration" means a Long-Form Registration that
--------------------------------
results in an Effective Registration.
"Effective Registration" means a Requested Registration which (a) has
----------------------
been declared or ordered effective in accordance with the rules of the
Commission, (b) has been kept effective for the period of time contemplated by
Section 3(b) and (c) has resulted in the Registrable Securities requested to be
- ------------
included in such registration actually being sold (except by reason of some act
or omission on the part of the Requesting Holders); provided that a Cutback
--------
Registration shall not be an Effective Registration for purposes of this
Agreement; and provided, further, that a Requested Registration in which Issuer
-------- -------
includes securities for sale for the account of Issuer shall not be an Effective
Registration for purposes of this Agreement. Notwithstanding the foregoing, a
registration that does not become effective after it has been filed with the
Commission solely by reason of the refusal to proceed of the Requesting Holders
shall be deemed to be an Effective Registration for purposes of this Agreement.
"Effective Short-Form Registration" means a Short-Form Registration
---------------------------------
that results in an Effective Registration.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated thereunder.
"Form S-1" means Form S-1 promulgated by the Commission under the
--------
Securities Act, or any successor or similar long-form registration statement.
Registration Rights Agreement
-----------------------------
-19-
"Form S-2" means Form S-2 promulgated by the Commission under the
--------
Securities Act, or any successor or similar short-form registration statement.
"Form S-3" means Form S-3 promulgated by the Commission under the
--------
Securities Act, or any successor or similar short-form registration statement.
"Indemnified Party" means a party entitled to indemnity in accordance
-----------------
with Section 6.
---------
"Indemnifying Party" means a party obligated to provide indemnity in
------------------
accordance with Section 6.
---------
"Inspectors" has the meaning ascribed to it in Section 3(k).
---------- ------------
"Investor" has the meaning ascribed to it in the preamble.
--------
"Issuer" has the meaning ascribed to it in the preamble.
------
"Long-Form Registration" means a Requested Registration effected by
----------------------
the filing of a registration statement on Form S-1 with the Commission.
"Losses" has the meaning ascribed to it in Section 6(a).
------ ------------
"Majority Warrant Stockholders" has the meaning ascribed to it in the
-----------------------------
Warrant Agreement.
"Managing Underwriter" means, with respect to any Public Offering, the
--------------------
underwriter or underwriters managing such Public Offering.
"NASD" means the National Association of Securities Dealers.
----
"Notice of Piggyback Registration" has the meaning ascribed to it in
--------------------------------
Section 2(a).
- ------------
"Notice of Requested Registration" has the meaning ascribed to it in
--------------------------------
Section 1(a).
- ------------
"Person" has the meaning ascribed to it in the Warrant Agreement.
------
"Piggyback Registration" means any registration of equity securities
----------------------
of Issuer under the Securities Act (other than a registration in respect of a
dividend reinvestment or similar plan for stockholders of Issuer or on Form S-4
or Form S-8 promulgated by the Commission, or any successor or similar forms
thereto),
Registration Rights Agreement
-----------------------------
-20-
whether for sale for the account of Issuer or for the account of any holder of
securities of Issuer (other than Registrable Securities).
"Public Offering" means any offering of Common Stock to the public,
---------------
either on behalf of Issuer or any of its securityholders, pursuant to an
effective registration statement under the Securities Act.
"Put Postponement" has the meaning ascribed to it in the Warrant
----------------
Agreement.
"Put Reactivation Date" has the meaning ascribed to it in the Warrant
---------------------
Agreement.
"Put Response Notice" has the meaning ascribed to it in the Warrant
-------------------
Agreement.
"Records" has the meaning ascribed to it in Section 3(k).
------- ------------
"Registrable Securities" means (i) shares of Common Stock or Other
----------------------
Securities issued or issuable upon exercise of the Warrants and (ii) any
securities issued or issuable with respect to any Common Stock or Other
Securities referred to in clause (i) by way of stock dividend, stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable Securities
when (x) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (y) they
shall have been distributed to the public pursuant to Rule 144, or (z) they
shall have ceased to be outstanding. Securities beneficially owned by Issuer or
any Affiliate (other than an institutional investor) shall not be deemed
Registrable Securities.
"Registration Expenses" means all expenses incident to Issuer's
---------------------
performance of or compliance with its obligations under this Agreement to effect
the registration of Registrable Securities in a Requested Registration or
Piggyback Registration, including, without limitation, all registration, filing,
securities exchange listing and NASD fees, all registration, filing,
qualification and other fees and expenses of complying with securities or blue
sky laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for Issuer and of its
independent public accountants, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance, the reasonable fees and disbursements of a single
Registration Rights Agreement
-----------------------------
-21-
counsel retained by the holders of a majority of the Registrable Securities
being registered, premiums and other costs of policies of insurance against
liabilities arising out of the Public Offering of the Registrable Securities
being registered and any fees and disbursements of underwriters customarily paid
by issuers of sellers of securities, but excluding underwriting discounts and
commissions and transfer taxes, if any, in respect of Registrable Securities,
which shall be payable by each holder thereof.
"Registration Request" has the meaning ascribed to it in Section 1(a).
-------------------- ------------
"Requesting Holders" means, with respect to any Requested Registration
------------------
or Piggyback Registration, the holders of Registrable Securities requesting to
have Registrable Securities included in such registration in accordance with
this Agreement.
"Requested Registration" means any registration of Registrable
----------------------
Securities under the Securities Act effected in accordance with Section 1.
---------
"Rule 144" means Rule 144 promulgated by the Commission under the
--------
Securities Act, and any successor provision thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Short-Form Registration" means a Requested Registration effected by
the filing of a registration statement on Form S-2 or Form S-3 with the
Commission.
"Trigger Date" has the meaning ascribed to it in Section 1(a).
------------ ------------
"Warrants" has the meaning ascribed to it in the Warrant Agreement.
--------
"Warrant Agreement" has the meaning ascribed to it in the preamble.
-----------------
"Warrant Stock" has the meaning ascribed to it in the Warrant
-------------
Agreement.
(b) Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer
to this entire Agreement; and (iv) the term "Section" refers to the specified
Section of this Agreement. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless Business Days are specified.
Registration Rights Agreement
-----------------------------
-22-
10. Miscellaneous.
-------------
(a) Notices. All notices, requests and other communications
-------
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Investor, to:
Chase Manhattan Investment Holdings, Inc,
c/o The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Facsimile No.: (212) 552-5529
Attn: Elliott H. Jones - Vice President
with a copy to:
Chase Manhattan Investment Holdings, Inc.
c/o The Chase Manhattan Bank
(National Association)
802 Delaware Avenue
P.O. Box 15371
Wilmington, Delaware 19850-5371
Facsimile No.: (302) 429-0456
Attn: Warren Leonard
If to Issuer, to:
Associated Holdings, Inc.
1075 Hawthorne Drive
Itasca, Illinois 60143
Facsimile No.: (708) 773-6491
Attn: President and Chief
Executive Officer
with a copy to:
Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
Facsimile No.: (214) 871-8799
Attn: Thomas W. Sturgess and
Frederick B. Hegi, Jr.
Registration Rights Agreement
-----------------------------
- 23 -
Cumberland Capital Corporation
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Facsimile No.: (817) 870-2685
Attn: Gary G. Miller
With respect to any other holder of Registrable securities, such notices,
requests and other communications shall be sent to the addresses set forth in
the stock or Warrant transfer records regularly maintained by Issuer. All such
notices, requests and other communications will (i) if delivered personally to
the address as provided in this Section, be deemed given upon delivery, (ii) if
delivered by facsimile transmission to the facsimile number as provided in this
Section, be deemed given upon receipt, and (iii) if delivered by mail in the
manner described above to the address as provided in this Section, be deemed
given upon receipt (in each case regardless of whether such notice, request or
other communication is received by any other Person to whom a copy of such
notice is to be delivered pursuant to this Section). Any party from time to
time may change its address, facsimile number or other information for the
purpose of notices to that party by giving notice specifying such change to the
other parties hereto.
(b) Entire Agreement. This Agreement supersedes all prior
----------------
discussions and agreements between the parties with respect to the subject
matter hereof, and together with the Warrant and the Warrant Agreement contains
the sole and entire agreement between the parties hereto with respect to the
subject matter hereof.
(c) Amendment. This Agreement may be amended, supplemented or
---------
modified only by a written instrument (which may be executed in any number of
counterparts) duly executed by or on behalf of each of Issuer and Persons owning
two-thirds or more of the Registrable Securities; provided, however, that any
-------- -------
amendment or modification of this Section 10 (c) shall be duly executed by or on
--------------
behalf of each of the Issuer and each holder of Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
holders of Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other holders of Registrable Securities may be given by holders of at
least a majority in aggregate principal amount of the Registrable Securities
being sold by such holders pursuant to such Registration Statement.
(d) Waiver. Subject to paragraph (e) of this Section, any term or
------ -------------
condition of this Agreement may be waived at any time by the party that is
entitled to the benefit thereof, but no such
Registration Rights Agreement
-----------------------------
-24-
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same term or condition of
this Agreement on any future occasion.
(e) Consents and Waivers by Holders of Registrable Securities. Any
---------------------------------------------------------
consent of the holders of Registrable Securities pursuant to this Agreement, and
any waiver by such holders of any provision of this Agreement, shall be in
writing (which may be executed in any number of counterparts) and may be given
or taken by Persons owning two-thirds or more of the Registrable Securities, and
any such consent or waiver so given or taken will be binding on all the holders
of Registrable Securities.
(f) No Third Party Beneficiary. The terms and provisions of this
--------------------------
Agreement are intended solely for the benefit of each party hereto, their
respective successors or permitted assigns and any other holder of Registrable
Securities, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person other than any Person entitled to
indemnity under Section 6.
---------
(g) Successors and Assigns. This Agreement is binding upon, inures
----------------------
to the benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
(h) Headings. The headings used in this Agreement have been inserted
--------
for convenience of reference only and do not define or limit the provisions
hereof.
(i) Invalid Provisions. If any provision of this Agreement is held
------------------
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
(j) Remedies. Except as otherwise expressly provided for herein, no
--------
remedy conferred by any of the specific provisions of this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in
Registration Rights Agreement
-----------------------------
-25-
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. The election of any one or more
remedies by any party hereto shall not constitute a waiver by any such party of
the right to pursue any other available remedies. As between the parties to
this Agreement, in any action or proceeding brought to enforce any provision of
this Agreement, or where any provision hereof is validly asserted as a defense,
the successful party shall be entitled to recover reasonable attorneys' fees in
addition to its costs and expenses and any other available remedy.
Damages in the event of breach of this Agreement by a party hereto or
any other holder of Registrable Securities would be difficult, if not
impossible, to ascertain, and it is therefore agreed that each such Person, in
addition to and without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach, and enforcing specifically
the terms and provisions hereof and Issuer and each holder of Registrable
Securities, by its acquisition of such Registrable Securities, hereby waives any
and all defenses it may have on the ground of lack of jurisdiction or competence
of the court to grant such an injunction or other equitable relief. The
existence of this right will not preclude any such Person from pursuing any
other rights and remedies at law or in equity which such Person may have.
(k) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
(l) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
Registration Rights Agreement
-----------------------------
-26-
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written
CHASE MANHATTAN INVESTMENT HOLDINGS, INC.
By:
--------------------------------
Name: Elliott H. Jones
Title: Vice President
ASSOCIATED HOLDINGS, INC.
By:
--------------------------------
Name: Thomas W. Sturgess
Title: Chairman and Chief
Executive Officer
Registration Rights Agreement
-----------------------------
Annex 1
-------
[Form of Confidentiality Agreement]
-----------------------------------
[Date]
CONFIDENTIALITY AGREEMENT
-------------------------
[Insert Name and
Address of Prospective
Holder of Registrable Securities]
Re: Registration Rights Agreement dated
as of January 31, 1992 between
Associated Holdings, Inc. and
Chase Manhattan Investment Holdings, Inc.
Dear ______________:
As a party to the above-referenced Registration Rights Agreement (the
"Agreement"), we have agreed with Associated Holdings, Inc. (the "Company")
pursuant to Section 7 of the Agreement to use reasonable precautions to keep
confidential, except as otherwise provided therein, all non-public information
identified by the Company as being confidential at the time the same is
delivered to us pursuant to the Agreement.
As provided in said Section 7, we are permitted to provide you, as a
prospective holder of Registrable Securities (as defined in the Agreement), with
certain of such non-public information subject to the execution and delivery by
you, prior to receiving such non-public information, of a Confidentiality
Agreement in this form. Such information will not be made available to you
until your execution and return to us of this confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on behalf
of yourself and each of your affiliates, directors, officers, employees and
representatives) that (A) such information will not be used by you except in
connection with the proposed purchase mentioned above and (B) you shall use
reasonable precautions, in accordance with your customary procedures for
handling confidential information and in accordance with safe and sound
practices, to keep such information confidential, provided that nothing herein
shall limit the disclosure of any such information (i) to the extent required by
statute, rule,
Registration Rights Agreement
-----------------------------
-2-
regulation or judicial process, (ii) to your counsel or to counsel for any of
the holders of Registrable Securities, (iii) to regulatory personnel, auditors
or accountants, (iv) in connection with any litigation to which you or any one
or more of the holders of Registrable Securities is a party; and provided that
in no event shall you be obligated to return any materials furnished to you
pursuant to this Confidentiality Agreement.
Would you please indicate your agreement to the foregoing by signing,
at the place provided below, the enclosed copy of this Confidentiality
Agreement.
Very truly yours,
[Insert Name of Holder of
Registrable Securities]
By:
---------------------------------
The foregoing is agreed to
as of the date of this letter.
[Insert Name of Prospective
Holder of Registrable Securities]
By:
----------------------------------
Registration Rights Agreement
-----------------------------
Annex 3 - First Legal Opinion
January 31, 1992
Chase Manhattan Investment
Holdings, Inc.
1 Chase Manhattan Plaza
New York, NY 10081
Ladies and Gentlemen:
We have acted as counsel to Associated Holdings, Inc., a Delaware
corporation (the "Issuer"), in connection with the preparation, authorization,
------
execution and delivery of, and the consummation of the transactions contemplated
by, (i) the Warrant Agreement, dated as of January 31, 1992 (the "Warrant
-------
Agreement"), among the Issuer, Chase Manhattan Investment Holdings, Inc., a
- ---------
Delaware corporation (the "Investor") and, for certain purposes, Associated
--------
Stationers, Inc. (the "Operating Company"), (ii) the warrant certificate
-----------------
registered in the name of the Investor, dated as of January 31, 1992 (the
"Underwriting Warrant Certificate"), representing the Underwriting Warrants (as
--------------------------------
defined in the Warrant Agreement), (iii) the form of warrant certificate
representing the Tranche B Warrants (as defined in the Warrant Agreement), to be
issued within 12 months of the date hereof ("Tranche B Warrant Certificates";
------------------------------
the Tranche B Warrant Certificates and the Underwriting Warrant Certificates
herein being collectively referred to as the "Warrant Certificates") and (iv)
--------------------
the Registration Rights Agreement, dated as of January 31, 1992 (the
"Registration Rights Agreement"), between the Issuer and the Investor. We also
-----------------------------
have acted as counsel to the Operating Company in connection with preparation,
authorization, execution and delivery of the Warrant Agreement. This opinion is
being furnished to you pursuant to Section 2.02(a) of the Warrant Agreement for
purposes of Section 7 thereof. Terms defined in the Warrant Agreement, in the
Warrant Certificates or in the Registration Rights Agreement and not otherwise
defined herein are used herein with the meanings as so defined.
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 2
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Warrant Agreement, the Warrant
Certificates, the Registration Rights Agreement, the Joinder Agreement between
the Issuer and Wingate Partners, L.P. ("Wingate"), dated as of January 31, 1992
-------
the "Joinder Agreement") and such corporate records, agreements, documents and
-----------------
other instruments, and such certificates or comparable documents of public
officials and of officers and representatives of the Issuer and the Operating
Company, and have made such inquiries of such officers and representatives as we
have deemed relevant and necessary as a basis for the opinions hereinafter set
forth.
In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such latter
documents. As to all questions of fact material to this opinion that have not
been independently established, we have relied upon certificates or comparable
documents of officers and representatives of the Issuer and the Operating
Company and upon the representations and warranties of the Issuer contained in
the Warrant Agreement and in the Warrant Certificates.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
1. Each of the Issuer and the Operating Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
2. The Issuer has all requisite corporate power and authority to
execute and deliver the Warrant Agreement, the Warrant Certificates and the
Registration Rights Agreement and to perform its obligations thereunder. The
execution, delivery and performance of the Warrant Agreement, the Warrant
Certificates and the Registration Rights Agreement by the Issuer and the
consummation by the Issuer of the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of the Issuer.
Each of the Warrant Agreement, the Warrant Certificates and the Registration
Rights Agreement has been duly and validly executed and delivered by the Issuer
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 3
and (assuming the due authorization, execution and delivery thereof by the other
parties thereto and receipt of consideration for issuance of the Warrrants in
accordance with the terms of the Warrant Agreement) constitutes the legal, valid
and binding obligation of the Issuer, enforceable against the Issuer in
accordance with the terms thereof, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except to the extent that rights to
indemnification and contribution thereunder may be limited by federal or state
securities laws or public policy relating thereto.
3. The Operating Company has all requisite corporate power and
authority to execute and deliver the Warrant Agreement (for purposes of Section
7 thereof) and to perform its obligations thereunder. The execution, delivery
and performance of the Warrant Agreement (for purposes of Section 7 thereof) by
the Operating Company and the consummation by the Operating Company of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Operating Company. The Warrant Agreement
(for purposes of Section 7 thereof) has been duly and validly executed and
delivered by the Operating Company and (assuming the due authorization,
execution an delivery thereof by the other parties thereto and receipt of
consideration for issuance of the Warrants in accordance with the terms of the
Warrant Agreement) constitutes the legal, valid and binding obligation of the
Operating Company, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity) and except
to the extent that rights to indemnification and contribution thereunder may be
limited by federal or state securities laws or public policy relating thereto.
4. The execution and delivery of the Warrant Agreement (with respect
to the Issuer as to the whole Warrant
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 4
Agreement and with respect to the Operating Company for purposes of Section 7
thereof), the Warrant Certificates (with respect to the Issuer) and the
Registration Rights Agreement (with respect to the Issuer), the consummation of
the transactions contemplated thereby and compliance by each of the Issuer and
the Operating Company with any of the provisions thereof applicable to such
entity will not conflict with, constitute a default under or violate (i) any of
the terms, conditions or provisions of the certificate of incorporation or
by-laws of either the Issuer or the Operating Company, (ii) any of the terms,
conditions or provisions of any document, agreement or other instrument to which
the Issuer or the Operating Company is a party or by which either of them is
bound of which we are aware, (iii) any New York, Delaware corporate or federal
law or regulation (other than federal and state securities or blue sky laws, as
to which we express no opinion), or (iv) any judgment, writ, injunction, decree,
order or ruling of any court or governmental authority binding on the Issuer or
the Operating Company of which we are aware.
5. No consent, approval, waiver, license or authorization or other
action by or filing with any New York, Delaware corporate or federal
governmental authority is required in connection with the execution and delivery
by each of the Issuer and the Operating Company, as the case may be, of the
Warrant Agreement, the Warrant Certificates and the Registration Rights
Agreement or the consummation by the Issuer and the Operating Company of the
transactions contemplated thereby, except for filings and other actions required
pursuant to the Securities Act of 1933 and the rules and regulations thereunder
and federal and state securities or blue sky laws, as to which we express no
opinion, and those already obtained.
6. Except as set forth in Schedule IV to the Credit Agreement, to our
knowledge, there is no litigation, proceeding or governmental investigation
pending or overtly threatened against the Issuer or the Operating Company that
relates to any of the transactions contemplated by the Warrant Agreement, the
Warrant Certificates and the Registration Rights Agreement.
7. The authorized capital stock of the Issuer consists of 5,000,000
shares of Class A Common Stock, $0.01 par value per share, 5,000,000 of Class B
Common Stock, $0.01 par value per share, 15,000 shares of Class A Preferred
Stock, $0.01 par value per share, 15,000 shares of Class B Preferred Stock,
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 5
$0.01 par value per share, 15,000 shares of Class C Preferred
Stock, $0.01 par value per share, and 200,000 shares of
Additional Preferred Stock, $0.01 par value per share. As of the
date hereof, the Issuer has outstanding (i) 850,000 shares of
Common Stock, (ii) 5,000 shares of Class A Preferred Stock; (iii)
5,000 shares of Class B Preferred Stock; and (iv) 7,500 shares of
Class C Preferred Stock. All of such outstanding shares of
capital stock of the Issuer are duly authorized, validly issued,
and, other than with respect to 46,258 shares of Class A Common
Stock which at closing will be partly paid shares which are
assessable, under the General Corporation Law of the State of
Delaware, fully paid and nonassessable, and all shares of Warrant
Stock will be, when issued upon exercise of Warrants and upon
receipt of consideration therefor in accordance with the terms of
the Warrant Agreement, duly authorized, validly issued, fully
paid, and nonassessable. To our knowledge, there are no
outstanding securities of the Issuer convertible into or
evidencing the right to purchase or subscribe for any shares of
capital stock of the Issuer, there are no outstanding or
authorized options, warrants, calls, subscriptions, rights,
commitments or any other agreements of any character obligating
the Issuer to issue any shares of its capital stock or any
securities convertible into or evidencing the right to purchase
or subscribe for any shares of such capital stock other than (i)
in accordance with the certificate of incorporation of the
Issuer; (ii) management stock option arrangements pursuant to the
Issuer's 1992 Management Stock Option Plan; (iii) Warrants issued
pursuant to the Warrant Agreement; and (iv) warrants issued
pursuant to that certain warrant agreement, dated as of the date
hereof, between the Issuer and Boise Cascade Corporation.
Schedule I attached hereto sets forth a list derived from the
Issuer's stock records of record holders of Common Stock as of
the date hereof, together with the number of shares of Common
Stock each such holder is shown to hold on the Issuer's stock
records.
8. The Issuer is not an "investment company" or a
company "controlled by an investment company", within the meaning
of the Investment Company Act of 1940, as amended.
9. The Issuer is not a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of
a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 6
10. The Joinder Agreement has been duly executed and delivered by
Wingate and constitutes a valid and legally binding obligation of each of
Wingate and the Issuer, enforceable against each of them in accordance with its
terms, except to the extent that enforcement thereof may be limited by
applicable insolvency, reorganization, moratorium and similar laws affecting the
rights of creditors generally and by general principles of equity.
We have not acted as counsel to the Company or the Guarantor in
connection with the preparation, authorization, execution and delivery of, and
the consummation of the transactions contemplated by:
(i) the Purchase and Sale Agreement, dated as of September 17,
1991, among Boise Cascade Office Products Corporation, a Delaware corporation
("BCOP"), Boise Cascade Corporation, a Delaware corporation ("Boise"), and the
Company, as amended by the Extension to Purchase and Sale Agreement dated as of
December 17, 1991, among BCOP, Boise and the Company, and as further modified
and supplemented and in effect from time to time (the "Purchase Agreement"),
(ii) the Transition Services Agreement to be entered into among
Boise, BCOP and the Company (the "Transition Agreement"), and
(iii) the Agreement for Data Processing Services to be entered into
between the Company and Affiliated Computer Services, Inc. (the "Technology
Agreement")
and any other agreements, instruments, and other documents relating thereto or
executed and delivered in connection therewith. Accordingly, we express no
opinion as to the Purchase Agreement, the Transition Agreement, the Technology
Agreement or as to such other agreements, instruments or other documents, other
than the Warrant Agreement, the Warrant Certificates, the Registration Rights
Agreement and the Joinder Agreement.
The enforceability of provisions of the Warrant Agreement and the
Registration Rights Agreement of the effect that terms may not be waived or
modified except in writing may be limited under certain circumstances. We
express no opinion as to the enforceability of provisions contained in the
Warrant Agreement and the Registration Rights Agreement to the effect that the
parties thereto waive defenses based upon the grounds of
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 7
lack of jurisdiction or competence of a court to grant an injunction or other
equitable relief.
The opinions herein are limited to the laws of the State of New York,
the corporate laws of the State of Delaware, and the federal laws of the United
States, and we express no opinion on the effect on the matters covered by this
opinion of the laws of any other jurisdiction.
This opinion is rendered solely for your benefit in connection with
the transactions described above. This opinion may not be used or relied upon
by any other person and may not be disclosed, quoted, filed with a governmental
agency or otherwise referred to without our prior written consent.
Very truly yours,
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 8
SCHEDULE I
----------
Record Holders of Common Stock
of Associated Holdings, Inc.
as of January 31, 1992
Record Holders Shares of Common Stock Held
-------------- ---------------------------
Wingate Partners, L.P. 592,175
ASI Partners, L.P. 226,345
Good Capital Co., Inc. 54,609
Cumberland Capital Corporation 23,129
-------
Total Shares 896,258
Annex 4 - Certificate of Incorporation of Issuer
CERTIFICATE OF INCORPORATION
OF
ASSOCIATED HOLDINGS, INC.
THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify as following:
ARTICLE ONE
-----------
The name of the Corporation is Associated Holdings, Inc.
ARTICLE TWO
-----------
The registered office of the Corporation is to be located at 1209
Orange Street in the City of Wilmington in the County of New Castle, in the
State of Delaware. The name of its registered agent at that address is the
Corporation Trust Company.
ARTICLE THREE
-------------
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE FOUR
------------
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 10,245,000 shares, consisting of
(a) 15,000 shares of a class designated as Class A Preferred Stock, par value
$0.01 per share (the "Class A Preferred Stock"); (b) 15,000 shares of a class
designated as Class B Preferred Stock, par value $0.01 per share (the "Class B
Preferred Stock"); (c) 15,000 shares of a class designated as Class C Preferred
Stock, par value $0.01 per share (the "Class C Preferred Stock"); (d) 200,000
shares of a class of preferred stock, par value of $0.01 per share, as to which
the Board of Directors shall have the authority set forth in Article Five (the
"Additional Preferred Stock"); (e) 5,000,000 shares of a class designated as
Class A Common Stock, par value of $0.01 per share (the "Common Stock"); and
(f) 5,000,000 shares of a class designated as Class B Common Stock, par value
$0.01 per share (the "Nonvoting Common Stock").
The following is a statement of the designations and the powers,
preferences, and rights and the qualifications, limitations, and restrictions of
the Class A Preferred Stock, Class B Preferred Stock, Class C Preferred Stock,
Common Stock, and Nonvoting Common Stock:
I. Terms Applicable to the Class A Preferred Stock.
-----------------------------------------------
1.1 Dividends. (a) Subject to the provisions of Sections 1.1(b),
---------
1.2(f), and 1.2(h) the holders of Class A Preferred Stock shall be entitled to
receive, as and when declared by the Board of Directors of the Corporation out
of funds legally available for such purpose, dividends on the outstanding shares
of Class A Preferred Stock at the Class A Preferred Dividend Rate, payable on
each Preferred Dividend Payment Date to holders of record as they appear on the
stock transfer books of the Corporation on such record dates, not more than 60
days nor less than 10 days preceding the payment dates for such dividends, as
are fixed by the Board of Directors (or, to the extent permitted by applicable
law, a duly authorized committee thereof). Such dividends shall be cumulative
and shall accrue with respect to each share of Class A Preferred Stock, whether
or not declared, whether or not restricted by the terms of the Debt Agreements
or otherwise pursuant to the provisions hereof, and whether or not there are
funds legally available for the payment thereof until paid. The dividends on
the Class A Preferred Stock may be declared payable in cash or in additional
shares of Class A Preferred Stock valued at $1,000 per share, in the discretion
of the Board of Directors. No other dividends may be declared or paid to the
holders of Class A Preferred Stock. All dividends declared by the Board of
Directors upon shares of Class A Preferred Stock in accordance with this Section
1.1(a) shall be declared and paid pro rata with respect to all shares of Class A
Preferred Stock then outstanding.
(b) If at any time the Corporation shall have failed to pay any
accumulated dividends on any shares of Class A Preferred Stock on any Preferred
Dividend Payment Date as provided above, or if at time the Corporation shall
have failed to redeem shares of Class A Preferred Stock as required by Section
1.2(a) for any reason, the Corporation shall not
(i) declare or pay any dividend on any Junior Shares or make any
payment on account of, or set apart money for, a sinking or other analogous
fund for the purchase, redemption or other retirement of any Junior Shares
or make any distribution with respect thereto, either directly or
indirectly and whether in cash or property or in obligations or shares
(other than in Junior Shares) of the Corporation or any Subsidiary,
(ii) purchase any shares of Class A Preferred Stock (except for a
consideration payable in Junior Shares) or redeem fewer than all of the
shares of Class A Preferred Stock then outstanding, or
2
(iii) permit any Subsidiary to purchase any Junior Shares or permit
any Subsidiary to purchase fewer than all of the shares of Class A
Preferred Stock then outstanding,
unless, at the time of any such dividend, payment, distribution, purchase or
redemption, all accrued and unpaid dividends on shares of Class A Preferred
Stock are contemporaneously paid in full in cash or additional shares of Class A
Preferred Stock and all shares of Class A Preferred Stock which the Corporation
shall have so failed to redeem are contemporaneously redeemed.
1.2 Redemption.
----------
(a) Scheduled Redemption. Subject to any limitations contained
--------------------
elsewhere in this ARTICLE FOUR, the Corporation shall redeem all, but not less
than all, shares of Class A Preferred Stock on July 31, 1999, out of funds
legally available for such purpose, at a price per share equal to the Redemption
Price.
(b) Mandatory Redemption. Subject to any limitations contained
--------------------
elsewhere in this ARTICLE FOUR, in the event of the occurrence of a Cash-Out
Event, the Corporation agrees, at the election of any holder of then outstanding
shares of Class A Preferred Stock made as set forth in Section 1.2(i) below, to
redeem all, but not less than all, of such holder's shares of Class A Preferred
Stock then outstanding, out of funds legally available for such purpose, at a
price per share equal to the Redemption Price therefor. If pursuant to such
Cash-Out Event the holders of Common Stock of the Corporation receive cash,
Marketable Securities or a combination thereof, then, at the option of the
Corporation, the Corporation may, in lieu of the cash redemption contemplated in
the immediately preceding sentence, redeem such Class A Preferred Stock by
converting each such share into such cash, Marketable Securities or a
combination thereof, in the same proportions as the holders of Common Stock of
the Corporation so receive, the value of which shall equal the Redemption Price.
(c) Redemptions at Option of Corporation. At any time, and from time
------------------------------------
to time, the Corporation may, at its election, redeem, out of funds legally
available for such purpose, any portion or all of the Class A Preferred Stock
then outstanding at a price per share equal to the Redemption Price. Any
redemption of shares pursuant to this Section 1.2(c) will be made ratably (as
nearly as practicable) among the holders of the Class A Preferred Stock based
upon the number of shares held by each such holder.
(d) Optional Redemption through Note Exchange.
-----------------------------------------
(i) Subject to the provisions of subdivision (iv) of this Section
1.2(d), at the option of the Corporation, the
3
Corporation may, at any time out of funds legally available for such purpose,
redeem all, but not less than all, shares of the Class A Preferred Stock then
outstanding in exchange for, and through the issue by the Corporation in the
manner provided in this subdivision of, Class A Exchange Notes to be issued
under the Class A Indenture. Such exchange, if any, shall be a redemption of the
Class A Preferred Stock in exchange for the Class A Exchange Notes. The Class A
Exchange Notes issued to each holder shall be in an aggregate principal amount
equal to the Liquidation Value of the shares of Class A Preferred Stock redeemed
by the Corporation in exchange therefor.
(ii) Not more than 60 nor less than 30 days prior to the exchange
date, the Corporation shall mail irrevocable written notice, by registered mail,
postage prepaid and return or certified receipt requested, to each record holder
(and, to the extent such holder is a corporation, to the attention of its Chief
Executive Officer and its Corporate Secretary), specifying the exchange date and
the time and place where certificates representing shares of Class A Preferred
Stock are to be surrendered for Class A Exchange Notes. Upon mailing such
notice, the Corporation will be obliged to redeem all shares of Class A
Preferred Stock in exchange for the Class A Exchange Notes on the exchange date
specified in such notice. Upon surrender in accordance with such notice of the
certificates evidencing any shares of Class A Preferred Stock so exchanged
(properly endorsed or signed for transfer, if the Corporation shall require and
the notice shall so state), the Corporation will cause the Class A Exchange
Notes to be authenticated and issued in exchange for such shares of Class A
Preferred Stock and to be mailed to the holder of the shares of Class A
Preferred Stock at such holder's address of record or such other address as the
holder shall specify upon such surrender of such certificates.
(iii) On the exchange date, (A) the shares of Class A Preferred Stock
subject to such exchange and redemption shall cease to be entitled to any
dividends accruing after the exchange date, (B) all rights of the respective
holders of such shares, as stockholders of the Corporation by reason of the
ownership of such shares, except the right to receive the Class A Exchange
Notes upon surrender (and endorsement, if required by the Corporation) of the
respective certificates representing such shares, shall cease, (C) such shares
shall cease to be outstanding, and (D) the person or persons entitled to receive
the Class A Exchange Notes issuable upon such exchange shall be treated for all
purposes as the registered holder or holders of Class A Exchange Notes;
provided, however, that interest shall not begin to accrue on any such Class A
- -------- -------
Exchange Note issuable
4
to a holder of Class A Preferred Stock until such time as such holder
surrenders the certificate or certificates evidencing such shares of Class
A Preferred Stock.
(iv) The Corporation may redeem shares of Class A Preferred Stock in
exchange for Class A Exchange Notes only if, on the Exchange Date, (x) the
Corporation has paid all accrued dividends on all outstanding shares of
Class A Preferred Stock and (y) the Class A Indenture shall be executed and
delivered by the Corporation and the trustee thereunder.
(e) Redemption Price. For each share of Class A Preferred Stock which
----------------
is to be redeemed for cash the Corporation will be obligated on the Redemption
Date to pay to the holder thereof (upon surrender of the certificate
representing such share to the Corporation's stock transfer agent, or if none,
to the Corporation at its principal office) an amount in cash equal to the
Redemption Price. If the funds of the Corporation legally available for
redemption of shares of Class A Preferred Stock on any Redemption Date are
insufficient to redeem the total number of shares to be redeemed on such date,
those funds which are legally available shall be used to redeem the maximum
possible number of shares ratably (as nearly as practicable) among the holders
of the shares to be redeemed based upon the aggregate Redemption Price of such
shares held by each such holder. As and when additional funds of the Corporation
are legally available for the redemption of shares, such funds shall as soon as
practicable be used to redeem the balance of the shares which the Corporation
has become obligated to redeem on any Redemption Date.
(f) Dividends after Redemption Date. Subject to any limitations
-------------------------------
contained elsewhere in this ARTICLE FOUR, no share of Class A Preferred Stock is
entitled to any dividends accruing after the redemption of such share. Subject
to any limitations contained elsewhere in this ARTICLE FOUR, on the date of such
redemption dividends will cease to accrue, all rights of the holder of such
share as such holder will cease, and such shares will be deemed not to be
outstanding.
(g) Redeemed or Otherwise Acquired Shares. Any shares of Class A
-------------------------------------
Preferred Stock which are redeemed or otherwise acquired by the Corporation will
be retired and cancelled and may not be reissued.
(h) Restrictions on Dividends and Redemptions. Notwithstanding
-----------------------------------------
anything in this ARTICLE FOUR to the contrary, no dividend payment or other
distribution or redemption may be made with respect to Class A Preferred Stock
if such payment or other distribution or redemption will be in contravention of
the restrictions or limitations on such payments or other
5
distributions or redemptions contained in (i) this ARTICLE FOUR, (ii) the Debt
Agreements, (iii) the Subordinated Note, or (iv) any and all applicable state or
federal laws, rules, and regulations or in any and all orders of any state or
federal governmental authority.
(i) Redemption Methods.
------------------
(i) In order to effect a redemption under either Section 1.2(a) or
1.2(c) above, the Corporation shall deliver written notice, by registered
or certified mail, postage prepaid and return receipt requested, to the
holders of record (and, to the extent any such holder is a corporation, to
the attention of its Chief Executive Officer and its Corporate Secretary)
of the shares to be redeemed, addressed to such holders at their last
addresses as shown on the stock transfer books of the Corporation. Each
such notice of redemption shall specify the date fixed for redemption (to
be a date not less than 30 days from the date of such notice), the
Redemption Price, places of payment, that payment will be made upon
presentation and surrender of the certificates representing shares to be
redeemed and that on and after the date of such redemption (or such earlier
date as permitted hereunder) dividends will cease to accumulate on such
shares. Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given when mailed, and failure to give such
notice by mail, or any defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of the proceedings
for the redemption of any other shares to be redeemed on or after the date
fixed for redemption as stated in such notice. Each holder of the shares
called for redemption shall surrender its certificate or certificates
evidencing such shares to the Corporation at the place designated in such
notice and shall thereupon be entitled to receive payment of the Redemption
Price in cash, with respect to any redemption under Sections 1.2(a) or
1.2(c). If less than all shares evidenced by any such surrendered
certificate are redeemed, a new certificate shall be issued evidencing the
unredeemed shares.
(ii) In order to effect a redemption under Section 1.2(b) above,
within 30 days after the date of the occurrence of a Cash-Out Event the
Corporation shall deliver notice by registered or certified mail, postage
prepaid and return receipt requested, to the holders of record (and, to the
extent such holder is a corporation, to the attention of its Chief
Executive Officer and its Corporate Secretary) of the shares to be
redeemed, addressed to such holders at their last addresses as shown on the
stock transfer books of the Corporation. Each such notice of redemption
shall specify the date fixed for redemption (to be a date not less
6
than 30 days from the date of such notice), the Redemption
Price, places of payment, that payment will be made upon
presentation and surrender of the certificates representing
shares to be redeemed, a description in reasonable detail of
the applicable Cash-Out Event giving rise to the redemption,
and a description in reasonable detail of any Marketable
Securities to be included, and that on or after the date of
such redemption (or such earlier date as permitted
hereunder) dividends will cease to accumulate on such
shares. Any notice which is mailed as herein provided shall
be conclusively presumed to have been duly given when
mailed, and failure to give such notice by mail, or any
defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of
the proceedings for the redemption of any other shares to be
redeemed on or after the date fixed for redemption as stated
in such notice. Each holder of the shares called for
redemption who elects to exercise the right of redemption
under Section 1.2(b) above must surrender its certificate or
certificates evidencing all such shares to the Corporation
on or before the date set for redemption and at the place
designated in the Corporation's notice and shall thereupon
be entitled to receive payment of the Redemption Price in
cash, Marketable Securities or a combination thereof, as
applicable. Any failure on the part of any holder notified
as provided above to surrender such certificate or
certificates on or before the date set for redemption at the
place designated for redemption as provided above, shall be
conclusively deemed to have not elected to redeem such
holder's shares under and pursuant to Section 1.2(b) above
and shall not be entitled to receive the Redemption Price as
provided above.
(iii) Notwithstanding any other provision of this
ARTICLE FOUR, if on or after the date on which any notice of
redemption is first sent to the holders of shares to be
redeemed, funds necessary for the redemption shall be
available therefor and shall have been irrevocably deposited
or set aside, then, notwithstanding that the certificates
evidencing any shares so called for redemption shall not
have been surrendered, the dividends with respect to the
shares so called shall cease to accrue after the date fixed
for redemption, the shares shall no longer be deemed
outstanding, holders thereof shall cease to be stockholders,
and all rights whatsoever with respect to the shares so
called for redemption (except the right of the holders to
receive the Redemption Price without interest upon surrender
of their certificates therefor) shall terminate.
1.3 Voting Rights. Except as set forth below and as
-------------
otherwise required by law, holders of shares of Class A Preferred
Stock shall have no voting rights. In connection with any right
7
to vote, each holder of Class A Preferred Stock will have one vote for each
share held. Any shares of Class A Preferred Stock held by the Corporation or its
subsidiaries shall not have voting rights hereunder and shall not be counted in
determining the presence of a quorum. So long as the Class A Preferred Stock is
outstanding, the Corporation shall not, without the affirmative vote or written
consent of the holders of at least 51% of all outstanding Class A Preferred
Stock voting separately as a class:
(a) amend, alter, modify or repeal any provision of this Certificate
of Incorporation or the By-Laws of the Corporation in any manner which affects
materially and adversely the relative rights, preferences, qualifications,
powers, limitations or restrictions of the Class A Preferred Stock;
(b) increase the authorized number of shares of Preferred Stock of the
Corporation, authorize, issue or otherwise create securities convertible into
any shares of capital stock of the Corporation other than Junior Shares.
(c) voluntarily effect any reclassification of the Class A Preferred
Stock.
Whenever dividends on the Class A Preferred Stock shall be in
arrears in an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors of the
Corporation shall be increased by one, effective as of the election of such
directors as hereinafter provided and (ii) the holders of the Class A Preferred
Stock (voting separately as a class) will have the exclusive right to vote for
and elect such one additional director of the Corporation at any meeting of the
stockholders of the Corporation at which directors are to be elected held during
the period such dividends remain in arrears. The right of the holders of the
Class A Preferred Stock to vote for such one additional director shall terminate
when all accrued and unpaid dividends on the Class A Preferred Stock have been
declared and paid in cash or in additional shares of Class A Preferred Stock or
set apart for payment. The term of office of any director so elected shall
terminate immediately upon the termination of the right of the holders of the
Class A Preferred Stock to vote for such one additional director.
The foregoing right of the holders of the Class A Preferred Stock with
respect to the election of one director may be exercised at any annual meeting
of the stockholders of the Corporation or at any special meeting of the
stockholders of the Corporation held for such purpose. If the right to elect an
additional director shall have accrued to the holders of the Class A Preferred
Stock more than 90 days preceding the date established for the next annual
meeting of stockholders, the President of the Corporation shall, within 20 days
after the
8
delivery to the Corporation at its principal office of a written request for a
special meeting signed by the holders of at least 10% of the Class A Preferred
Stock then outstanding, call a special meeting of the holders of the Class A
Preferred Stock to be held within 60 days after the delivery of such request for
the purpose of electing such additional directors.
The holders of the Class A Preferred Stock voting as a class shall
have the right to remove without cause at any time and replace any director such
holders shall have elected pursuant to this Section.
1.4 Liquidation. (a) In the event of any voluntary or involuntary
-----------
liquidation, dissolution or winding-up of the Corporation, the holders of shares
of Class A Preferred Stock shall be entitled to receive the Class A Preferred
Liquidation Value of such shares held by them in preference to and in priority
over any distributions upon Junior Shares. Upon payment in full to the holders
of shares of Class A Preferred Stock of the Class A Preferred Liquidation Value
of such shares, the holders of shares of Class A Preferred Stock shall not be
entitled, as such holders, to any further participation in any distribution of
assets of the Corporation. If the assets of the Corporation are not sufficient
to pay in full the Class A Preferred Liquidation Value payable to the holders of
shares of Class A Preferred Stock, the holders of all such shares shall share
ratably (to the exclusion of any other holders of capital stock) in such
distribution of assets.
(b) Neither a consolidation or merger of the Corporation with or into
any other corporation, nor a sale or transfer of all or part of the
Corporation's assets for cash, securities or other property, nor a merger of any
other corporation with or into the Corporation shall be considered a
liquidation, dissolution or winding-up of the Corporation within the meaning of
this Section 1.4.
II. Terms Applicable to Class B and Class C Preferred Stock.
-------------------------------------------------------
2.1 Identical Rights. Except as otherwise provided in this ARTICLE
----------------
FOUR, all shares of Class B Preferred Stock and Class C Preferred Stock shall be
identical and shall entitle the holders thereof to the same rights and
privileges.
2.2 Dividends. (a) Subject to the provisions of Sections 2.2(b),
---------
2.3(f), and 2.3(h), the holders of Class B and Class C Preferred Stock shall be
entitled to receive, as and when declared by the Board of Directors of the
Corporation out of funds legally available for such purpose, dividends on the
outstanding shares of Class B and Class C Preferred Stock at the Class B and
Class C Preferred Dividend Rates, payable on each
9
Preferred Dividend Payment Date to holders of record as they appear on the stock
transfer books of the Corporation on such record dates, not more than 60 days
nor less than 10 days preceding the payment dates for such dividends, as are
fixed by the Board of Directors (or, to the extent permitted by applicable law,
a duly authorized committee thereof). Such dividends shall be cumulative and
shall accrue with respect to each share of Class B and Class C Preferred Stock,
Whether or not declared, whether or not restricted by the terms of the Debt
Agreements or otherwise pursuant to the provisions hereof, and whether or not
there are funds legally available for the payment thereof until paid. The
dividends on the Class B and Class C Preferred Stock may be declared payable in
cash or in additional shares of the same series of Preferred Stock, in the
discretion of the Board of Directors; provided that dividends on Class C
Preferred Stock may be payable in additional shares of Class C Preferred Stock
only for Dividend Payment Dates occurring on or prior to January 31, 1999. No
other dividends may be declared or paid to the holders of Class B or Class C
Preferred Stock. All dividends declared by the Board of Directors upon shares
of Class B or Class C Preferred Stock in accordance with this Section 2.2(a)
shall be declared and paid pro rata with respect to all shares of Class B and
Class C Preferred Stock then outstanding.
(b) If at any time the Corporation shall have failed to pay any
accumulated dividends on any shares of Class B and Class C Preferred Stock on
Preferred Dividend Payment Date as provided above, or if at any time the
Corporation shall have filed to redeem shares of Class B or Class C Preferred
Stock as required by Section 2.3(a) for any reason, the Corporation shall not:
(i) declare or pay any dividend on any Junior Shares or make any
payment on account of, or set apart money for, a sinking or other analogous
fund for the purchase, redemption or other retirement of any Junior Shares
or make any distribution with respect thereto, either directly or
indirectly and whether in cash or property or in obligations or shares
(other than in Junior Shares) of the Corporation or any Subsidiary,
(ii) purchase any shares of Class B or Class C Preferred Stock
(except for a consideration payable in Junior Shares) or redeem fewer than
all of the shares of Class B and Class C Preferred Stock then outstanding
(except in a manner consistent with the last sentence of Section 2.3(c)),
or
(iii) permit any Subsidiary to purchase any Junior Shares or permit
any Subsidiary to purchase fewer than all of the shares of Class B and
Class C Preferred Stock then outstanding,
10
unless, at the time of any such dividend payment, distribution, purchase or
redemption, all accrued and unpaid dividends on shares of Class B and Class C
Preferred Stock are contemporaneously paid in full in cash or additional shares
of Class B or Class C Preferred Stock, as applicable, and all shares of Class B
or Class C Preferred Stock which the Corporation shall have so failed to redeem
are contemporaneously redeemed.
(c) Notwithstanding any other provision in this ARTICLE FOUR, the
Corporation shall not, and shall not permit any of its Subsidiaries to, take any
of the actions specified in subsection 2.2(b)(i), (ii) or (iii) above in excess
of $1 million in the aggregate for all such actions, unless at the time such
action is taken:
(i) the Corporation has redeemed for cash all shares of Class B and
Class C Preferred Stock, if any, which have been issued to the holders of
Class B and Class C Preferred Stock, respectively, as in-kind dividends
on the Class B or Class C Preferred Stock, respectively, pursuant to
Section 2.2(a) above;
(ii) the Corporation and its wholly-owned Subsidiaries, on a
consolidated basis, have a common equity computed in accordance with
generally accepted accounting principles, after giving effect to any
purchases, redemptions, payments, distributions of disbursements under
subsection 2.2.(b)(i), (ii), or (iii) above, of at least $26 million;
(iii) if any such purchases, redemptions, payments, distributions or
disbursements specified in subsection 2.2(b)(i), (ii) or (iii) above are
to be made on or after July 31, 1999, then all shares of Class B Preferred
Stock shall have been redeemed or otherwise retired; and
(iv) if any such purchases, redemptions, payments, distributions or
disbursements specified in subsection 2.2(b)(i), (ii) or (iii) above are
to be made on or after the dates required for redemptions of shares of
Class C Preferred Stock pursuant to Section 2.3(c) below, then that
portion of such Class C Preferred Stock so required to be redeemed as of
such dates shall have been redeemed or otherwise retired;
provided, however, nothing in this subsection 2.2(c) shall limit or impair the
- -----------------
Corporation's obligation to make payments or disbursements for any amount it is
obligated to pay under or pursuant to the Warrant Agreement dated January 31,
1992 between the Corporation and Chase Manhattan Investment Holdings, Inc.; and
further provided, nothing in this subsection 2.2(c) shall limit the Corporation
- ----------------
or its Subsidiaries from re-purchasing
11
Common Stock or options to purchase Common Stock of the
Corporation held by any employee of the Corporation or its
Subsidiaries in connection with the termination of such
employee's employment.
2.3 Redemption.
----------
(a) Scheduled Redemption. Subject to any limitations
--------------------
contained elsewhere in this ARTICLE FOUR, the Corporation shall
redeem all shares of Class B Preferred Stock on July 31, 1999.
The Corporation shall redeem all shares of Class C Preferred
Stock by January 31, 2002, such redemption to be made in four
equal (as nearly as practicable) quarterly installments of
principal on April 30, 2001, July 31, 2001, October 31, 2001, and
January 31, 2002. Scheduled redemptions shall be made out of
funds legally available for such purpose, at a price per share
equal to the Redemption Price.
(b) Mandatory Redemption. Subject to any limitations
--------------------
contained elsewhere in this ARTICLE FOUR, in the event of the
occurrence of a Cash-Out Event, the Corporation agrees, at the
election of any holder of then outstanding shares of Class B or
Class C Preferred Stock, as applicable, made as set forth in
Section 2.3(i) below, to redeem all, but not less than all, of
such holder's shares of Class B or Class C Preferred Stock, as
applicable, then outstanding, out of funds legally available for
such purpose, at a price per share equal to the Redemption Price
therefor. If pursuant to such Cash-Out Event the holders of
Common Stock of the Corporation received cash, Marketable
Securities or a combination thereof, then, at the option of the
Corporation, the Corporation may, in lieu of the cash redemption
contemplated in the immediately preceding sentence, redeem such
Class B or Class C Preferred Stock, as applicable, by converting
each such share into such cash, Marketable Securities or a
combination thereof, in the same proportions received by the
holders of Common Stock of the Corporation, the value of which
shall equal the Redemption Price.
(c) Redemption at Option of Corporation. At any
-----------------------------------
time, and from time to time, the Corporation may, at its
election, redeem, out of funds legally available for such
purpose, any portion or all of the Class B and Class C Preferred
Stock then outstanding at a price per share equal to the
Redemption Price. Any redemption of shares pursuant to this
Section 2.3(c) will be made ratably (as nearly as practicable)
among the holders of the Class B and Class C Preferred Stock
based upon the number of shares held by each such holder without
distinction between classes.
12
(d) Optional Redemption through Note Exchange.
-----------------------------------------
(i) Subject to the provisions of subdivision (iv) of this Section
2.3(d), at the option of the Corporation, the Corporation may, at any time
out of funds legally available for such purpose, redeem all, but not less
than all shares of the Class B and Class C Preferred Stock then outstanding
in exchange for, and through the issue by the Corporation in the manner
provided in this subdivision of, Class B Exchange Notes (with respect to
exchanges of Class B Preferred Stock) and Class C Exchange Notes (with
respect to exchanges of Class C Preferred Stock). The Class B Exchange
Notes shall be issued under the Class B Indenture and the Class C Exchange
Notes shall be issued under the Class C Indenture. The Class B Exchange
Notes or Class C Exchange Notes issued to each holder shall be in an
aggregate principal amount equal to the Liquidation Value of the shares of
Class B and Class C Preferred Stock redeemed by the Corporation in exchange
thereof.
(ii) Not more than 60 nor less than 30 days prior to the exchange
date, the Corporation shall mail irrevocable written notice, by registered
or certified mail, postage prepaid and return receipt requested, to each
record holder (and, to the extent such holder is a corporation, to the
attention of its Chief Executive Officer and its Corporate Secretary),
specifying the exchange date and the time and place where certificates
representing shares of Class B and Class C Preferred Stock are to be
surrendered for Class B and Class C Exchange Notes. Upon mailing such
notice, the Corporation will be obliged to redeem all shares of Class B and
Class C Preferred Stock in exchange for the Exchange Notes on the exchange
date specified in such notice. Upon surrender in accordance with such
notice of the certificates evidencing the shares of Class B or Class C
Preferred Stock so exchanged (properly endorsed or signed for transfer, if
the Corporation shall require and the notice shall so state), the
Corporation will cause the Class B or Class C Exchange Notes, as
applicable, to be authenticated and issued in exchange for such shares of
Class B or Class C Preferred Stock and to be mailed to the holders of the
shares of Class B or Class C Preferred Stock at such holder's address of
record or such other address as the holder shall specify on such surrender
of such certificates.
(iii) On the exchange date, (A) the shares of Class B and Class C
Preferred Stock subject to such exchange and redemption shall cease to be
entitled to any dividends accruing after that date, (B) all rights of the
respective holders of such shares, as stockholders of the Corporation by
reason of the ownership of such shares, except the right to receive the
Class B and Class C Exchange Notes upon
13
surrender (and endorsement, if required by the Corporation) of the
respective certificates representing such shares, shall cease, (C) such
shares shall cease to be outstanding, and (D) the person or persons
entitled to receive the Class B or Class C Exchange Notes, as applicable,
issuable upon such exchange shall be treated for all purposes as the
registered holder or holders of Class B or Class C Exchange Notes, as
applicable; provided, however, that interest shall not begin to accrue on
-------- -------
any such Class B or Class C Exchange Notes issuable to a holder of Class B
or Class C Preferred Stock, as applicable, until such time as such holder
surrenders the certificate or certificates evidencing such shares of
Class B or Class C Preferred Stock, as applicable.
(iv) The Corporation may redeem shares of Class B and Class C
Preferred Stock in exchange for Class B and Class C Exchange Notes only
if, on the Exchange Date, (x) the Corporation has redeemed any outstanding
shares of Class A Preferred Stock and, if such redemption of Class A
Preferred Stock is effected by the issuance of a Class A Exchange Note,
such Class A Exchange Notes shall be senior to any Class B or Class C
Exchange Note issued in exchange for Class B or Class C Preferred Stock,
(y) the Corporation has paid all accrued dividends on all outstanding
shares of Class B or Class C Preferred stock, as applicable, and (z) the
Class B Indenture or the Class C Indenture, as applicable, shall be
executed and delivered by the Corporation and the applicable trustee
thereunder.
(e) Redemption Price. For each share of Class B and Class C
----------------
Preferred Stock which is to be redeemed for cash, the Corporation will be
obligated on the Redemption Date to pay to the holder thereof (upon surrender
of the certificate representing such share to the Corporation's stock transfer
agent, or if none, to the Corporation at its principal office) an amount in cash
equal to the Redemption Price. If the funds of the Corporation legally
available for redemption of shares of Class B and Class C Preferred Stock on
any Redemption Date are insufficient to redeem the total number of shares to be
redeemed on such date, those funds which are legally available shall be used to
redeem the maximum possible number of shares ratably (as nearly as practicable)
among the holders of the shares to be redeemed upon the aggregate Redemption
Price of such shares held by each such holder. As and when additional funds of
the Corporation are legally available for the redemption of shares, such funds
shall as soon as practicable be used to redeem the balance of the shares which
the Corporation has become obligated to redeem on any Redemption Date.
(f) Dividends after Redemption Date. Subject to any limitations
-------------------------------
contained elsewhere in this ARTICLE FOUR, no share of Class B or Class C
Preferred Stock is entitled to any dividends
14
accruing after the redemption of such share. On the date of such redemption
dividends will cease to accrue, all rights of the holder of such share as such
holder will cease, and such shares will not be deemed to be outstanding.
(g) Redeemed or Otherwise Acquired Shares. Any shares of Class B or
-------------------------------------
Class C Preferred Stock which are redeemed or otherwise acquired by the
Corporation will be retired and cancelled and may not be reissued.
(h) Restrictions on Dividends and Redemptions. Notwithstanding
-----------------------------------------
anything in this ARTICLE FOUR to the contrary, no dividend payment or other
distribution or redemption may be made with respect to Class B or Class C
Preferred Stock if such payment or other distribution or redemption will be in
contravention of the restrictions or limitations on such payments or other
distributions or redemption contained in (i) this ARTICLE FOUR, (ii) the Debt
Agreements, (iii) the Subordinated Note or (iv) any and all applicable state or
federal laws, rules, and regulations or in any and all orders of any state or
federal governmental authority.
(i) Redemption Methods. Any redemption of shares of Class B or
------------------
Class C Preferred Stock under and pursuant to Sections 2.3(a), 2.3(b), or 2.3(c)
shall be conducted in the same applicable manner as described with respect to
the Class A Preferred Stock in Section 1.2(i) above. Notwithstanding any other
provision of this ARTICLE FOUR, if on or after the date on which any notice of
redemption is first sent to the holders of shares to be redeemed, funds
necessary for the redemption shall be available therefor and shall have been
irrevocably deposited or set aside, then, notwithstanding that the certificates
evidencing the shares so called for redemption shall not have been surrendered,
the dividends with respect to the shares so called shall cease to accrue after
the date fixed for redemption, shares shall no longer be deemed outstanding,
owners thereof shall cease to be stockholders, and all rights whatsoever with
respect to the shares so called for redemption (except the right of the holders
to receive the Redemption Price without interest thereon upon surrender of their
certificates therefor) shall terminate.
2.4 Voting Rights. Except as otherwise set forth below and as
-------------
otherwise required by law, holders of shares of Class B or Class C Preferred
Stock shall have no voting rights. In connection with the right to vote, each
holder of Class B Preferred Stock will have one vote for each share held and
each holder of Class C Preferred Stock shall have one vote for each share held.
Any shares of Class B or Class C Preferred Stock held by the Corporation or its
subsidiary shall not have voting rights hereunder and shall not be counted in
determining the presence of a quorum. So long as the Class B Preferred Stock or
15
Class C Preferred Stock is outstanding, the Corporation shall not without the
affirmative vote or written consent of the holders of all outstanding Class B
and Class C Preferred Stock, each voting as a separate class:
(a) amend, alter, modify or repeal any provision of this Certificate
of Incorporation or the By-Laws of the Corporation in any manner which affects
adversely the relative rights, preferences, qualifications, powers, limitations
or restrictions of that series of Preferred Stock;
(b) increase the authorized number of shares of capital stock of the
Corporation, or authorize, issue or otherwise create securities convertible into
any shares of capital stock of the Corporation other than shares of Class A
(only for purposes of paying dividends in-kind on Class A Preferred Stock),
Class B or Class C Preferred Stock, Common Stock and/or Junior Shares; or
(c) voluntarily effect any reclassification of the Class B or Class
C Preferred Stock.
Whenever dividends on Class B Preferred Stock shall be in arrears in
an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors of the
Corporation shall be increased by one, effective as of the time of the election
of such directors as hereinafter provided and (ii) the holders of Class B
Preferred Stock (voting separately as a class) will have the exclusive right to
vote for and elect one additional director of the Corporation at any meeting of
the stockholders of the Corporation at which directors are to be elected held
during the period such dividends remain in arrears. The right of the holders of
Class B Preferred Stock to vote for such one additional director shall terminate
when all accrued and unpaid dividends on the Class B Preferred Stock have been
declared and paid in cash or in-kind or set apart for payment. The term of
office of any director so elected shall terminate immediately upon the
termination of the right of the holders of the Class B Preferred Stock to vote
for such one additional director.
Whenever dividends on Class C Preferred Stock shall be in arrears in
an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors of the
Corporation shall be increased by one, effective as of the time of the election
of such directors as hereinafter provided and (ii) the holders of Class C
Preferred Stock (voting separately as a class) will have the exclusive right to
vote for and elect one additional director of the Corporation at any meeting of
the stockholders of the Corporation at which directors are to be elected held
during the period such dividends remain in arrears. The right of the holders of
Class C
16
Preferred Stock to vote for such one additional director shall terminate when
all accrued and unpaid dividends on the Class B Preferred Stock have been
declared and paid in cash or in-kind or set apart for payment. The term of
office of any director so elected shall terminate immediately upon the
termination of the right of the holders of the Class C Preferred Stock to vote
for such one additional director.
The foregoing right of the holders of Class B and Class C Preferred
Stock with respect to the election of one director per class may be exercised at
any annual meeting of the stockholders of the Corporation or at any special
meeting of the stockholders of the Corporation held for such purpose. If the
right to elect an additional director shall have accrued to the holders of Class
B Preferred Stock or Class C Preferred Stock more than 90 days preceding the
date established for the next annual meeting of stockholders, the President of
the Corporation shall, within 20 days after the delivery to the Corporation at
its principal office of a written request for a special meeting signed by the
holders of at least 10% of the Class B Preferred Stock or Class C Preferred
Stock, as applicable, then outstanding, call a special meeting of the holders of
the Class B or Class C Preferred Stock, as applicable, to be held within 60 days
after the delivery of such request for the purpose of electing such additional
directors. The holders of the Class B Preferred Stock voting as a class shall
have the right to remove without cause at any time and replace any director such
holder shall have elected pursuant to this section. The holders of the Class C
Preferred Stock voting as a class shall have the right to remove without cause
at any time and replace any director such holder shall have elected pursuant to
this section.
2.5 Liquidation. (a) In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, the holders of shares
of Class B and Class C Preferred Stock shall be entitled to receive the Class B
or Class C Preferred Liquidation Value of such shares held by them in preference
to and in priority over any distributions upon Junior shares. Upon payment in
full to the holders of shares of Class B and Class C Preferred Stock of the
Class B and Class C Preferred Liquidation Values of such shares, the holders of
shares of Class B or Class C Preferred Stock shall not be entitled, as such
holders, to any further participation in any distribution of assets of the
Corporation. If the assets of the Corporation are not sufficient to pay in full
the Class B and Class C Preferred Liquidation Value payable to the holders of
shares of Class B or Class C Preferred Stock, the holders of all such shares
shall share ratably (the exclusion of any other holders of capital stock) in
such distribution of assets.
(b) Neither a consolidation or merger of the Corporation with or
into any other corporation, nor a sale or
17
transfer of all or part of the Corporation's assets for cash, securities or
other property, nor a merger of any other corporation with or into the
Corporation, shall be considered a liquidation, dissolution or winding-up of the
Corporation within the meaning of this Section 2.5.
III. Common stock and Nonvoting Common Stock
---------------------------------------
3.1 Identical Rights. Except as otherwise provided in this ARTICLE
----------------
FOUR, all shares of Common Stock and Nonvoting Common Stock shall be identical
and shall entitle the holder thereof to the same rights and privileges.
3.2 Dividends. From and after the date of issuance, the holders of
---------
outstanding shares of Common Stock and Nonvoting Common Stock shall be entitled
to receive dividends on the shares of Common Stock and Nonvoting Common Stock
when, as, and if declared by the Board of Directors, out of funds legally
available for such purpose. All holders of shares of Common Stock and Nonvoting
Common Stock shall share ratably, in accordance with the numbers of shares held
by each such holder, in all dividends or distributions on shares of Common Stock
payable in cash, in property or in securities of the Corporation (other than
shares of Common Stock). All dividends or distributions declared on shares of
Common Stock and Nonvoting Common Stock which are payable in shares of Common
Stock or Nonvoting Common Stock shall be declared on both classes of shares at
the same rate, provided that any such dividend or distribution shall be payable
in shares of the class of Common Stock or Nonvoting Common Stock held by the
stockholder to whom the dividend or distribution is payable.
3.3 Stock Splits, Etc. The Corporation shall not in any manner
-----------------
subdivide (by stock split, stock dividend or otherwise), or combine (by reverse
stock split, or otherwise) the outstanding shares of Common Stock or Nonvoting
Common Stock unless the outstanding shares of the other class shall be
proportionately subdivided or combined. No reclassification or any other
adjustment or modification of the rights or preferences shall be effected
(including without limitation pursuant to a merger, consolidation or liquidation
involving the Corporation) with respect to either the Common Stock or the
Nonvoting Common Stock unless both the Common Stock and Nonvoting Common Stock
are reclassified or the rights or preferences are adjusted or modified in
exactly the same manner and at the same time. In this regard, and without
limiting the generality of the foregoing, in the case of any consolidation or
merger of the Corporation with or into any other entity (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in case of any sale or transfer of all
or substantially all the assets of the
18
Corporation, or the reclassification of the Common Stock into any other form of
capital stock of the Corporation, whether in whole or in part, the holder of
each share of Nonvoting Common Stock shall, after such consolidation, merger,
sale or transfer or reclassification, have the right to convert such share of
Nonvoting Common Stock into the kind and amount of shares of stock and other
securities and property which such holder would have been entitled to receive
upon such consolidation, merger, sale or transfer or reclassification if such
holder had held such Common Stock issuable upon the conversion of such share of
Nonvoting Common Stock immediately prior to such consolidation, merger, sale or
transfer or reclassification.
3.4 Liquidation. In the event of any voluntary or involuntary
-----------
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of shares of Common Stock and Nonvoting Common Stock shall be entitled
to share ratably, in accordance with the number of shares held by each such
holder, in all of the assets of the Corporation available for distribution to
the holders of shares of Common Stock.
3.5 Voting Rights. Except as otherwise provided herein or by law,
-------------
the entire voting power of the Corporation shall be vested in the holders of
shares of Common Stock and each holder of shares of Common Stock shall be
entitled to one vote for each share of Common Stock held of record by such
holder; provided that, without the consent of the holders of record of at
--------
least 51% of Nonvoting Common Stock at the time outstanding (assuming, for the
purpose of this provision, that the holders of rights to acquire shares of
Nonvoting Common Stock shall be deemed to be the holders of the shares of
Nonvoting Common Stock which are at the time issuable upon the full exercise
thereof whether or not such holders are then entitled to exercise such rights
pursuant to the terms thereof), given in writing or by the vote at any regular
or special meeting of stockholders of the Corporation, the Corporation shall
not:
(a) amend, alter, modify or repeal any provision of this Certificate
of Incorporation or the By-Laws of the Corporation in any manner which
adversely affects the relative rights, preferences, qualifications,
powers, limitations or restrictions of the Nonvoting Common Stock, or
amend, alter, modify or repeal this Section 3.5;
(b) increase or decrease the authorized number of shares of any class
of capital stock of the Corporation or authorize, issue or otherwise create
securities convertible into or exercisable for any shares of capital stock of
the Corporation other than the shares of Class A, Class B, and Class C Preferred
Stock and the Common Stock, and the Nonvoting Common Stock authorized hereunder;
19
(c) voluntarily effect an exchange or reclassification of shares of
Nonvoting Common Stock into shares of another class of capital stock of
the Corporation; or
(d) effect a merger or consolidation of the Corporation with another
corporation, unless the certificate or articles of incorporation of the
surviving corporation shall provide that the shares of the capital stock
of such surviving corporation into which the shares of Nonvoting Stock
hereunder shall be converted shall have the identical rights and
privileges as the shares of capital stock of such surviving corporation
into which the shares of Common Stock hereunder shall be converted, other
than the voting rights in this Section 3.5 and the conversion and other
rights in Section 3.6 below which shall not be adversely affected by such
merger or consolidation.
3.6 Conversion
----------
(a) Right to Conversion. Subject to and upon compliance with the
-------------------
provisions of this Section 6, any holder of shares of Nonvoting Common Stock
shall be entitled at any time and from time to time to convert each share of
Nonvoting Common Stock held by such holder into a share of Common Stock at the
conversion rate of one share of Common Stock for one share of Nonvoting Common
Stock.
(b) Procedure. The conversion of any shares of Nonvoting Common Stock
---------
into shares of Common Stock, shall be effected by the holder of the shares of
Nonvoting Common Stock to be converted surrendering the certificate therefor,
duly endorsed, at the office of the Corporation or of any transfer agent for the
shares of Common Stock or at such other place as the Corporation is willing to
accept such surrender accompanied by written notice to the Corporation at such
office or other place that it elects to so convert and stating the number of
shares of Nonvoting Common Stock being converted. Thereupon the Corporation
shall promptly issue and deliver at such office or other place to such holder a
certificate or certificates for the number of shares of Common Stock to which
such holder is entitled, registered in the name of such holder or a designee of
such holder as specified in such notice. Such conversion shall be deemed to have
been made at the close of business on the date of such surrender of the shares
to be converted in accordance with the procedure set forth in the first sentence
of this Section 3(b), and the Person entitled to receive the share issuable upon
such conversion shall be treated for all purposes as having become the record
holder of such shares at such time. In the event of the conversion of less than
all of the shares of Nonvoting Common Stock into shares of Common Stock
evidenced by the certificate so surrendered, the Corporation shall execute and
deliver to or upon the written order of such holder, without
20
charge to such holder, a new certificate evidencing the shares of Nonvoting
Common Stock not converted.
(c) Reservation. The Corporation shall at all times reserve and keep
-----------
available out of its authorized but unissued shares of Common Stock, or any
shares of Common Stock held in its treasury, solely for the purpose of issue
upon conversion of the share of Nonvoting Common Stock as provided herein, such
number of shares of Common Stock as shall then be issuable upon the conversion
of all outstanding shares of Nonvoting Common Stock. The shares of Common Stock
so issuable shall when so issued be duly and validly issued, fully paid and
nonassessable.
(d) Certain Legal Requirements. No person subject to the provisions
--------------------------
of Regulation Y shall, and no such Person shall permit any of its Bank Holding
Company Affiliates to, convert any shares of Nonvoting Common Stock held by it
into shares of Common Stock, if after giving effect to such conversion, (i)
such Person and its Bank Holding Company Affiliates would own more than 5% of
the total issued and outstanding shares of Common Stock or (ii) such Person
would Control the Corporation (and, for purposes of this clause (ii), a reasoned
opinion of counsel to such Person (which is based on facts and circumstances
deemed appropriate by such counsel) to the effect that such Person does not
control the Corporation shall be conclusive).
IV. Definitions.
-----------
As used in this ARTICLE FOUR, the terms indicated below shall have
the following respective meanings:
"Affiliate", with respect to any Person, means any other Person
---------
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such
corporation, by contract or otherwise. Additionally, with respect to Wingate
Partners,L.P. the term "Affiliate" for purposes of the definition of Change of
Control shall be deemed to include James T. Callier, Jr., Frederick B. Hegi,
Jr., Thomas W. Sturgess, James A.Johnson, Dennis J. Johnson, Sue Goddard,
Wallace R. Hawley, Lee Walton, Bud Applebaum, Estate of Howard Beasley, Callier
Buy-Out Partners, as defined in the Agreement of Limited Partnership of Wingate
Partners, L.P., Peter J. Wodtke, and pension plans for the benefit of such
individuals or entities.
"Associated" means Associated Stationers, Inc., a Delaware
----------
corporation.
"Bank Holding Company Affiliate" shall mean, with respect to any
------------------------------
Person subject to the provisions of Regulation Y,
21
(i) if such Person is a bank holding company, any company directly or indirectly
controlled by such bank holding company, and (ii) otherwise, the bank holding
company that controls such Person and any company (other than such Person)
directly or indirectly controlled by such bank holding company.
"Business Sale" means a transaction or a series of transactions,
-------------
whether effected by sale or exchange of securities or assets, merger or
consolidation, or otherwise, that results in the sale of the Corporation or its
business to an Independent Third Party or group of Independent Third Parties,
pursuant to which such Independent Third Party or group of Independent Third
Parties would acquire (a) capital stock of the Corporation possessing the voting
power under normal circumstances to elect a majority of the Board or (b) all or
substantially all of the Corporation's assets determined on a consolidated
basis.
"Cash-Out Event" means the occurrence of a Business Sale, a Change in
--------------
Control, a Qualified Public Offering or a Recapitalization. In the case of Class
C Preferred Stock, "Cash-Out Event" shall also include the expiration of the
--------------
agreement between Associated and Affiliated Computer Services, Inc. providing
for the furnishing of information systems services for Associated, or the early
termination of such agreement for any reason other than termination of such
agreement by Affiliated Computer Services, Inc.
"Change in Control" means an occurrence by which Wingate Partners and
----------------
its Affiliates and Cumberland Capital Corporation and its Affiliates shall have
collectively sold or otherwise disposed of and received the pecuniary benefit of
33-1/3% of the Common Stock legally or beneficially owned by them collectively
as of January 31, 1992, subject to appropriate adjustment in the event of a
stock split, reverse stock split or similar transaction and excluding any sales
or other dispositions made by any of them to employees of the Corporation or of
any of its Subsidiaries of up to 10% of such holdings.
"Class A Exchange Notes" means the Class A Subordinated Exchange
----------------------
Notes which may be issued by the Corporation to the holders of the Class A
Preferred Stock upon a redemption pursuant to Section 1.2(d). Such Class A
Exchange Notes shall have a maturity date of July 31, 1999 and shall bear
interest at the rate of 10% for interest paid in cash and 13% for interest paid
in-kind in additional Class A Exchange Notes. Such interest shall be payable
quarterly in arrears, either in cash or in-kind on the Preferred Dividend
Payment Dates. Such Class A Exchange Notes will permit a required prepayment to
the same amounts on the same dates as would have applied to an optional or
mandatory redemption of the Class A Preferred Stock (assuming that the exchange
pursuant to Section 1.2(d) had not occurred), shall not contain any financial
covenants by, or other restrictive
22
covenants (other than limitations imposed by senior debt and applicable law) on,
the Corporation, and shall provide for an event of default only upon the
Corporation's failure to make payments in accordance with its terms or upon a
bankruptcy filing by or against the Corporation which filing is not dismissed
within 60 days after filing. The payment of principal, interest, and premium (if
any) will be subordinated to senior debt (to be defined as any obligation of the
Corporation or its subsidiaries for borrowed money including the obligations
under the Subordinated Note).
"Class A Indenture" means an indenture for the Class A Exchange Notes
-----------------
that qualifies under and is in compliance with the Trust Indenture Act to be
entered into between the Corporation and a trustee acceptable to the Corporation
and a majority of the holders of Class A Exchange Notes and containing such
terms and provisions as are approved by the Board of Directors of the
Corporation.
"Class B and Class C Exchange Notes" means the Class B Subordinated
----------------------------------
Exchange Notes and the Class C Subordinated Exchange Notes which may be issued
by the Corporation to the holders of the Class B or Class C Preferred Stock, as
applicable, upon a redemption pursuant to Section 2.3(d). Class B Exchange Notes
shall have a maturity date of July 31, 1999. The Class C Exchange Notes shall
have a maturity date of January 31, 2002, with payments to be made thereon in
four equal (as nearly as practicable) installments of principal on April 30,
2001, July 31, 2001, October 31, 2001, and January 31, 2002. Both Class B and
Class C Exchange Notes shall bear interest at the rate of 11% for interest paid
in cash and 12% for interest paid in-kind in additional Class B or Class C
Exchange Notes, as applicable. Such interest shall be payable quarterly in
arrears, either in cash or in-kind as would have applied to the Class B and
Class C Preferred Stock Dividend on the Preferred Dividend Payment Dates. Such
Notes will permit or require prepayments in the same amounts and at the same
dates as would have applied to an optional or mandatory redemption of the Class
B and Class C Preferred Stock (assuming that the exchange pursuant to Section
2.3(d) had not occurred), shall not contain any financial covenants by, or other
restrictive covenants (other than limitations imposed by senior debt and
applicable law) on, the Corporation, and shall provide for an event of default
only upon the Corporation's failure to make payments in accordance with its
terms or upon a bankruptcy filing by or against the Corporation, which filing is
not dismissed within 60 days after filing. The payment of principal, interest,
and premium (if any) will be subordinated to senior debt (to be defined as any
obligation of the Corporation for borrowed money including the obligations under
the Subordinated Note) and payments in respect of Class A Exchange Notes.
23
"Class B Indenture" means an indenture for the Class B Exchange Notes
-----------------
that qualifies under and is in compliance with the Trust Indenture Act to be
entered into between the Corporation and a trustee acceptable to the Corporation
and a majority of the holders of Class B Exchange Notes and containing such
terms and provisions as are approved by the Board of Directors of the
Corporation.
"Class A Preferred Dividend Rate" means a rate of 10% per annum,
-------------------------------
computed on the basis of a 360-day year and twelve 30-day months, to be applied
to the Dividend Base for the Class A Preferred Stock as from time to time
adjusted; provided that in the event of and during continuance of a failure by
the Corporation to pay in cash a dividend on the Class A Preferred Stock on any
Preferred Dividend Payment Date or to make any redemption payment when due, the
dividend rate shall be increased to 13% per annum, and shall remain at said rate
until such failure is cured, such increase to be effective retroactive to the
first day of the accrual period for which the dividend was not paid.
"Class A, Class B, and Class C Preferred Liquidation Value" of any
---------------------------------------------------------
share of Class A, Class B or Class C Preferred Stock means as of any particular
date an amount equal to the sum of $1,000 plus the aggregate of accrued
and unpaid dividends on such share to such date, subject to appropriate
adjustment in the event of a stock split, reverse stock split or similar
transaction.
"Class B or Class C Preferred Dividend Rate" means a rate of 9% per
------------------------------------------
annum computed on the basis of a 360-day year and twelve 30-day months, to be
applied to the Dividend Base for the Class B or Class C Preferred Stock as from
time to time adjusted; provided that in the event of and during continuance of a
failure by the Corporation to pay in cash a dividend on the Class B or Class C
Preferred Stock on any Preferred Dividend Payment Date or to make any redemption
payment when due, the dividend rate shall be increased to 10% per annum, and
shall remain at said rate until such failure is cured, such increase to be
effective retroactive to the first day of the accrual period for which the
dividend was not paid.
"Class C Indenture" means an indenture for the Class C Exchange Notes
-----------------
that qualifies under and is in compliance with the Trust Indenture Act to be
entered into between the Corporation and a trustee acceptable to the Corporation
and a majority of the holders of Class C Exchange Notes and containing such
terms and provisions as are approved by the Board of Directors of the
Corporation.
"Control" (including, with its correlative meanings, "controlled by"
------- -------------
and "under common control with") shall mean, with
-------------------------
24
respect to any Person, the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
"Debt Agreements" means the Credit Agreement dated as of January 31,
---------------
1992 among Associated, the Corporation, The Chase Manhattan Bank (National
Association), as Agent, and the lenders which become parties thereto, and the
notes and other documents and instruments executed and delivered in
connection therewith, as said agreement and notes and other documents and
instruments may from time to time be amended or supplemented, and any agreements
evidencing any renewal, extension, refinancing, refunding or replacement
thereof.
"Dividend Base" of any share of Class A, Class B or Class C Preferred
-------------
Stock means $1,000, subject to appropriate adjustment in the event of a stock
split, reverse stock split or similar transaction.
"Independent Third Party" means any person who, immediately prior to
-----------------------
the contemplated transaction, does not own in excess of 5% of the Common Stock
on a fully diluted and converted basis (a "5% Owner"), who is not controlling,
--------
controlled by or under common control with the Corporation or any such 5% Owner
and who is not the spouse or descendant (by birth or adoption) of any such 5%
Owner or a trust for the benefit of such 5% Owner and/or such other persons.
"Junior Shares" means with respect to the priority of any class or
-------------
series of Preferred Stock, shares of Common Stock or shares of any other series
or class of Preferred Stock of the Corporation which are designated as junior to
such series in this Certificate of Incorporation or any amendment thereto, or in
the resolution designating the class or series of such Preferred Stock and any
warrants, options or other rights to acquire or purchase such securities. The
shares of Class B and Class C Preferred Stock are Junior Shares in relation to
the Class A Preferred Stock. Any shares of Additional Preferred Stock,
regardless of designation, shall be deemed Junior Shares in relation to the
Class A, Class B and Class C Preferred Stock.
"Liquidation Date" means as to any series of Preferred Stock, the
----------------
first date on which the assets of the Corporation are distributed to the
holders of such series of Preferred Stock in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation.
"Marketable Securities" shall mean Common Stock or common stock or
---------------------
other securities of any corporation that is the successor to substantially all
of the business or assets of the Corporation or the ultimate parent of such
successor which is (or
25
will, upon distribution thereof, be) listed in the New York Stock Exchange, the
American Stock Exchange or approved for quotation on the NASDAQ National Market
System.
"Person" means an individual, partnership, association, joint
------
venture, corporation, business, trust, estate, unincorporated organization or
government or any department, agency or subdivision thereof.
"Preferred Dividend Payment Date" shall mean each April 30, July 31,
-------------------------------
October 31 and January 31, or the next business day following each such date of
any year commencing with the initial payment date of April 30, 1992.
"Qualified Public Offering" means a sale in a public offering or
-------------------------
series of public offerings, registered under the Securities Act of Common
Stock; provided, however, that such offering or series of offerings shall not be
--------
deemed to be a Qualified Public Offering unless such offering or offerings shall
------
have resulted in (A)(i) public ownership of not less than 20% of the Common
Stock of the Corporation on a fully-diluted basis (which such shares of Common
Stock are listed upon the New York Stock Exchange, the American Stock Exchange
or are approved for quotation on the NASDAQ National Market System), and (ii)
such offering or offerings shall have resulted in receipt by the Corporation of
aggregate cash proceeds (after deduction of underwriter discounts and the costs
associated with such offering or offerings) of at least $37.5 million, or (B)
the holders of Common Stock of the Corporation receive, as a result of such
offering or offerings, cash, Marketable Securities or a combination thereof
valued at not less than $1 million.
"Recapitalization" means a recapitalization of the Corporation
----------------
pursuant to which the holders of Common Stock of the Corporation receive cash,
securities (other than shares junior to the Class B or Class C Preferred Stock),
property or other assets and such consideration is valued at not less than $1
million.
"Redemption Date" as to any share of Class A, Class B or Class C
---------------
Preferred Stock means the date specified in the notice of any redemption at
the Corporation's option or the applicable date specified herein in the case
of any other redemption; provided that no such date will be a Redemption Date
--------
unless the applicable Redemption Price is actually paid or has been set aside
for payment to such stockholder in full as of such date, and if not so paid
or set aside for payment to such stockholder in full, the Redemption Date will
be the date on which such Redemption Price is fully paid.
"Redemption Price" of any share of Class A, Class B or Class C
----------------
Preferred Stock means as of the Redemption Date an amount equal to the sum of
$1000 plus the aggregate of accrued and
26
unpaid dividends on such share to such date, subject to appropriate adjustment
in the event of a stock split, reverse stock split or similar transaction.
"Regulation Y" shall mean Regulation 7 promulgated by the Board of
------------
Governors of the Federal Reserve system (12 C.F.R. (S) 225) or any successor
regulation.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Subordinated Note" means, until January 31, 1994, the form of the
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Junior Subordinated Note attached as an Exhibit to the Transition Services
Agreement which may be issued to Boise Cascade Corporation by Associated
pursuant thereto, and thereafter such Junior Subordinated Note as and to the
extent so issued.
"Subsidiary" means any corporation, a majority (by number of votes) of
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the voting securities of which shall, at the time as of which any determination
is being made, be owned by the Corporation, directly or indirectly through one
or more Subsidiaries.
"Transition Services Agreement" means the Transition Services
-----------------------------
Agreement dated as of January 31, 1992, among the Corporation, Associated, Boise
Cascade Office Products Corporation, and Boise Cascade Corporation, as such
agreement may from time to time be amended.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended, the rules and regulations promulgated thereunder, and any successor
legislation thereto.
ARTICLE FIVE
------------
The Board of Directors of the Corporation is hereby expressly authorized to
the full extent now or hereafter permitted by the laws of the State of Delaware,
at any time and from time to time to provide for the issuance of some or all of
the Additional Preferred Stock in one or more classes or series of a class, with
such voting powers, full or limited, or without voting powers, and with such
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions providing for the issue
thereof adopted by the Board of Directors. Before the Corporation shall issue
any Additional Preferred Stock of any classes or series of a class, the Board of
Directors shall adopt
27
a resolution or resolutions fixing the voting powers, designations, preferences
and rights of such series, and the qualifications, limitations or restrictions
thereof, and the number of shares of Additional Preferred Stock of such series,
and appropriate documents shall be executed and filed as required by law.
ARTICLE SIX
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The name and address of the Incorporator are as follows:
Name Address
---- -------
Suzanne L. Saxman c/o D'Ancona & Pflaum
30 N. LaSalle Street
Suite 2900
Chicago, IL 60602
ARTICLE SEVEN
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The Corporation shall indemnify any person who was, is, or is threatened to
be made a party to a proceeding (as hereinafter defined) by reason of the fact
that he or she (i) is or was a director or officer of the Corporation or (ii)
while a director or officer of the Corporation, is or was serving at the request
of the Corporation as a director, officer , partner, venturer, proprietor,
trustee (including voting trustee), employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust (including voting trust), employee benefit plan, or other
enterprise, to the fullest extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. Such right
shall be a contract right and as such shall run to the benefit of any director
or officer who is elected and accepts the position of director or officer of the
Corporation or elects to continue to serve as a director or officer of the
Corporation while this ARTICLE SEVEN is in effect. Any repeal or amendment of
this ARTICLE SEVEN shall be prospective only and shall not limit the rights of
any such director or officer or the obligations of the Corporation with respect
to any claim arising from or related to the services of such director or officer
in any of the foregoing capacities prior to any such repeal or amendment to this
ARTICLE SEVEN. Such right shall include the right to be paid by the Corporation
expenses incurred in defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within 60 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
28
whole or in part, the claimant shall also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense are not permitted under the
Delaware General Corporation Law, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) to have made its determination prior to the commencement of such
action that indemnification of, or advancement of costs of defense to, the
claimant is permissible in the circumstances nor an actual determination by the
Corporation (including its board of directors or any committee thereof,
independent legal counsel, or stockholders) that such indemnification or
advancement is not permissible shall be a defense to the action or create a
presumption that such indemnification or advancement is not permissible. In the
event of the death of any person having a right of indemnification under the
foregoing provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights conferred
above shall not be exclusive of any other right which any person may have or
hereafter acquire under any stature, by-law, resolution of stockholders or
directors, agreement, or otherwise,
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit or proceeding.
ARTICLE EIGHT
-------------
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. Any repeal or amendment of this ARTICLE EIGHT by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation arising from an act of omission occurring prior to the time of such
repeal or amendment. In addition to the circumstances in which a director of the
Corporation is not
29
personally liable as set forth in the foregoing provisions of this ARTICLE
EIGHT, a director shall not be liable to the Corporation or its stockholders to
such further extent as permitted by any law applicable to the Corporation
hereafter enacted, including without limitation any subsequent amendment to the
Delaware General Corporation Law.
ARTICLE NINE
------------
The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders.
(1) The number of directors of the Corporation shall be such as from
time to time shall be fixed by, or in the manner provided in, the bylaws.
Election of directors need not be by ballot unless the bylaws so provide.
(2) The Board of Directors shall have power, subject to the other
provisions of this Certificate, without the assent or vote of the stockholders
to make, alter, amend, change, add to or repeal the bylaws of the Corporation;
to fix and vary the amount to be reserved for any proper purpose; to authorize
and cause to be executed mortgages and liens and all or any part of the property
of the Corporation; to determine the use and disposition of any surplus or net
profits; and to fix the times for the declaration and payment of dividends.
(3) No contract or transaction between the Corporation and one or
more of its directors, officers, or stockholders or between the Corporation and
any person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is
30
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved, or ratified by the board of directors, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this Certificate, and to any bylaws from time to time
made by the stockholders; provided, however, that no bylaws so made shall
invalidate any prior act of the directors which would have been valid if such
bylaw had not been made.
ARTICLE TEN
-----------
The Corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of Delaware.
ARTICLE ELEVEN
--------------
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 law, and all rights and powers conferred herein on
stockholders, directors and officers are subject to this reserved power.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of January,
1992.
-----------------------------
Suzanne L. Saxman
31
Annex 5 - Joinder Agreement
Annex 5
to
Warrant Agreement
JOINDER AGREEMENT
JOINDER AGREEMENT, dated the date set forth below, between ASSOCIATED
HOLDINGS, INC., a Delaware corporation ("Issuer") and the undersigned
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stockholders of Issuer.
A. Reference is made to that certain Warrant Agreement dated as of
January 31, 1992 (as modified and supplemented and in effect from time to time,
the "Warrant Agreement"), among Issuer and Chase Manhattan Investment Holdings,
-----------------
Inc. a Delaware corporation and, for certain purposes, Associated Stationers,
Inc. Each capitalized term used but not defined herein shall have the meaning
assigned to such term in the Warrant Agreement.
[B. Section 9.01(c) of the Warrant Agreement requires that Wingate
Partners, L.P., ASI Partners, L.P., Cumberland Capital Corporation, Good Capital
Co., Inc. and Boise Cascade Corporation execute and deliver to Issuer and each
Holder this Joinder Agreement.]
[B. Section 9.01(d) of the Warrant Agreement requires that certain
transferees of shares of Common Stock execute and deliver to Issuer and each
Holder this Joinder Agreement.]
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
undersigned hereby agrees that:
1. The undersigned [: (a) is delivering this Joinder Agreement
pursuant to Section 9.01(c) of the Warrant Agreement]; and (b) acknowledges
---------------
receipt of a copy of the Warrant Agreement.
2. The undersigned hereby agrees: (a) to be bound by the provisions of
Sections 9 and 10 of the Warrant Agreement and of Section 5 of Registration
Rights Agreement; (b) to be bound by the covenants in the Warrant Agreement
applicable to it; and (c) to be treated as a Stockholder for all purposes
thereof.
[3. In the case of the Persons delivering this Joinder Agreement
pursuant to Section 9.01(c): The undersigned hereby agree to be bound by the
provisions of Section 12.06 of the Warrant Agreement.]
Joinder Agreement
-----------------
2
IN WITNESS WHEREOF, the undersigned has signed this Joinder Agreement
on the date set forth below.
Date:
---------------------------- -----------------------------------
[Description of transferred
securities, name of
transferor,
and date of transfer:
-----------------------------------
-----------------------------------
-----------------------------------
----------------------------------]
Acknowledged and Agreed to
as of the date written
above:
ASSOCIATED HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
Joinder Agreement
-----------------