EXHIBIT 10.17
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WARRANT AGREEMENT
Between
ASSOCIATED HOLDINGS, INC.
and
BOISE CASCADE CORPORATION
Dated as of January 31, 1992
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TABLE OF CONTENTS
Page
SECTION 1. Definitions; Accounting Terms and
Determinations............................................ 1
1.01 Definitions................................................ 1
1.02 Accounting Terms and Determinations........................ 10
SECTION 2. Issuance of Investor Warrants............................. 11
2.01 Authorization.............................................. 11
2.02 The Purchase of Investor Warrants.......................... 11
2.03 Purchase for the Investor's Account........................ 12
2.04 Securities Act Compliance.................................. 12
SECTION 3. Representations and Warranties............................ 12
3.01 Existence; Qualification................................... 12
3.02 No Breach.................................................. 12
3.03 Corporate Action........................................... 13
3.04 Approvals.................................................. 14
3.05 Investment Company Act..................................... 14
3.06 Public Utility Holding Company Act......................... 14
3.07 Capitalization............................................. 14
3.08 Private Offering........................................... 15
3.09 No Litigation.............................................. 16
3.10 Brokers.................................................... 16
SECTION 4. Restrictions on Transferability........................... 16
4.01 Transfers Generally........................................ 16
4.02 Transfers of Restricted Securities Pursuant to
Registration Statements, Rule 144 and Rule 144A............ 17
4.03 Notice of Certain Private Transfers........................ 17
4.04 Restrictive Legends........................................ 17
4.05 Termination of Restrictions................................ 17
SECTION 5. Certain Dispositions of Securities........................ 18
5.01 Certain Dispositions of Securities......................... 18
SECTION 6. Call Rights............................................... 19
6.01 Call Rights................................................ 19
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SECTION 7. Right to Join in Sale..................................... 20
7.01 Tag-Along Rights........................................... 20
7.02 Procedures................................................. 20
7.03 Issuer's Covenants......................................... 21
SECTION 8. Obligation to Join in Sale................................ 22
8.01 Go-Along Obligations....................................... 22
8.02 Procedures................................................. 23
8.03 Issuer's Covenants......................................... 23
8.04 Definition of Go-Along Sale................................ 23
SECTION 9. Holder's Rights........................................... 25
9.01 Delivery Expenses.......................................... 25
9.02 Taxes...................................................... 25
9.03 Replacement of Instruments................................. 25
9.04 Certain Restrictions....................................... 26
9.05 Transactions with Affiliates............................... 26
9.06 Certain Covenants.......................................... 27
9.07 Indemnification............................................ 28
9.08 Preemptive Rights.......................................... 29
9.09 Board Observers............................................ 30
9.10 Financial Statements, Etc. ................................ 31
9.11 Holders' Rights in Case of Other Securities................ 32
SECTION 10. Miscellaneous............................................. 33
10.01 Waiver..................................................... 33
10.02 Notices.................................................... 33
10.03 Expenses, Etc. ............................................ 34
10.04 Amendments, Etc. .......................................... 35
10.05 Successors and Assigns..................................... 35
10.06 Survival................................................... 35
10.07 Specific Performance....................................... 35
10.08 Captions................................................... 36
10.09 Counterparts............................................... 36
10.10 Governing Law.............................................. 36
10.11 Severability............................................... 36
10.12 Adjustment of Common Stock................................. 36
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SCHEDULE I - CAPITAL STOCK AND WARRANTS
SCHEDULE II - GENERAL PARTNERS OF WINGATE
ANNEX 1 - FORM OF WARRANT
ANNEX 2 - REGISTRATION RIGHTS AGREEMENT
ANNEX 3 - LEGAL OPINION
ANNEX 4 - CERTIFICATE OF INCORPORATION
ANNEX 5 - FORM OF JOINDER AGREEMENT
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WARRANT AGREEMENT
WARRANT AGREEMENT dated as of January 31, 1992, between ASSOCIATED
HOLDINGS, INC., a Delaware corporation ("Issuer"), and Boise Cascade
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Corporation, a Delaware corporation ("Boise Cascade" or the Investor").
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In connection with the organization of the Issuer and in
consideration of the actions taken by the Investor, Issuer has agreed to issue
Warrants (as hereinafter defined) to the Investor providing for the purchase of
shares of Class A 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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"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, any member 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"
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(including, with its correlative meanings, "controlled by" and "under common
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control with") shall mean possession, directly or indirectly, of the power to
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direct or cause the direction of management or policies of a Person (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise). Notwithstanding the foregoing, (a) no individual shall
be deemed to be an Affiliated 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)
BCOP and Boise Cascade shall be Affiliates of Issuer and each Subsidiary.
"Annual Management Fees" shall have the meaning assigned to such
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term in Section 9.05(e).
"Board" shall mean the Board of Directors of Issuer.
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"BCOP" shall mean Boise Cascade Office Products Corporation, a
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Delaware corporation.
"Business Day" shall mean any day on which commercial banks are not
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authorized or required to close in Chicago, Illinois.
"Call Notice" shall have the meaning assigned to such term in
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Section 6.01(a).
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"Call Notice Date" shall meant the date on which a Call Notice shall
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be received by the Holders.
"Call Price" shall mean the price payable for a redemption of the
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Investors Warrants under Section 6.01.
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"Call Right" shall mean the right of Issuer to purchase Warrants
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pursuant to, and in accordance with, Section 6.01.
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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, directly
or indirectly, general partners of Wingate Management Company, L.P. or Wingate
Management Company, L.P. shall have ceased to be, directly or indirectly, the
general partners of Wingate Partners, L.P.
"Chase" shall mean Chase Manhattan Investment Holdings, Inc., a
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Delaware corporation and its successors and assigns.
"Chase Registration Rights Agreement" shall mean the Registration
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Rights Agreement dated as of January 31, 1992 between Issuer and Chase.
"Chase Warrants" shall mean the Warrants issued to Chase covering
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150,340 shares of Class B Common Stock pursuant to the Chase Warrant Agreement.
"Chase Warrant Agreement" shall mean the Warrant Agreement dated as
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of January 31, 1992 between Issuer and Chase and for certain purposes, the
Operation Company.
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"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
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any other similar or successor agency of the Federal government administering
the Securities Act and/or the Exchange Act.
"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
Investor 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 shares 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
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Stock deemed to be 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 Permitted Financing" shall have the meaning assigned to such
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term in Section 1.01 of the Credit Agreement.
"Convertible Securities" shall mean evidences of Indebtedness,
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shares 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 mean the Credit Agreement dated as of
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January 31, 1992 among Operation Company, Issuer, the Lenders named therein and
The Chase Manhattan Bank (National Association) as agent.
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"Cumberland" shall mean Cumberland Capital Corporation, a Delaware
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corporation, and, so long as Cumberland is a general partner, ASI Partners,
L.P., a Delaware limited partnership.
"EBITD" shall have the meaning assigned to such term in Section 1.01
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of the Credit Agreement.
"Election Notice" shall have the meaning assigned to such term in
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Section 9.08.
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"Employee Shares" shall mean 56,935 shares of Class A Common Stock
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owned by Wingate and 21,725 shares of Class A Common Stock owned by Cumberland
on the date hereof which in their discretion any be sold to certain yet to be
identified management executives of the Operating Company.
"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 issuable upon redemption of the
Class A Preferred Stock, the Class B Preferred Stock and the Class C Preferred
Stock, respectively, authorized in the issuer's Certificate of Incorporation.
"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 as of 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 Price" shall have the meaning assigned to such term in
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Section 8.04.
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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.
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"Go-Along Sale" shall have the meaning assigned to such term in
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Section 8.04.
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"Good" shall mean Good Capital Co., Inc., a Delaware corporation.
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"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 Investor Warrants or
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Warrant Stock pursuant to the provisions of this Agreement, including any
transferees of Investor Warrants or Warrant Stock; provided, however, that a
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holder of Warrant Stock 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".
"Indebtedness" shall have the meaning assigned to such term in
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Section 1.01 of the Credit Agreement.
"Interest Expense" shall have the meaning assigned to such term in
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Section 1.01 of the Credit Agreement.
"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 mean Boise Cascade Corporation, a Delaware
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corporation.
"Investor Registration Rights Agreement" shall mean the Registration
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Rights Agreement dated as of January 31, 1992 between Issuer and Investor and
other security holders executing said agreement, which shall be in the form
attached as Annex 2 hereto, as said Registration Rights Agreement shall be
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modified and supplemented and in effect from time to time.
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"Investor Warrants" shall mean the Warrants being issued hereunder to
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Investor covering 23,129 shares of Class A Common Stock.
"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
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 for the purchase of an
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aggregate of up to 21,684 shares of Class A Common Stock granted to the Key
Executives pursuant to the Issuer's 1992 Management Stock Option Plan.
"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.
"Management Options" shall mean the Options which may be issued to
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certain managers of the Operating Company pursuant to the Issuer's 1992
Management Stock Option Plan. The total number of shares issuable under said
plan, including the Key Executives Options, other options which may be granted
to Key Executives or options which may be granted to the managers amounts to
86,735 shares of Class A Common Stock.
"Monthly Management Fees" shall have the meaning assigned to such term
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in Section 9.05(e).
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"NASDAQ" shall mean the National Association of Securities Dealers
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automated quotation system.
"New Securities" shall mean any capital stock of Issuer (including any
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Common Stock or Preferred Stock), all Convertible Securities or Options that are
(or may become) exchangeable for, or exercisable or convertible into, such
capital stock, any voting security, and any Participating Security; provided,
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however, that New Securities shall not include the Warrants, the Warrant Stock
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and the Other Equity Securities.
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"Observer" shall have the meaning assigned to such term in
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Section 9.09.
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"Offeree" shall have the meaning assigned to such term in
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Section 9.08.
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"Offer Notice" shall have the meaning assigned to such term in
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Section 9.08.
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"Offer Period" shall have the meaning assigned to such term in
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Section 9.08.
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"Operating Company" shall mean Associated Stationers, Inc. a Delaware
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Corporation.
"Option" shall mean any warrant, option or other right to subscribe
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for or purchase a specified security of Issuer.
"Other Equity Documents" shall mean the Investor Registration Rights
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Agreement, Chase Warrant Agreement, Chase Warrants, Chase Registration Rights
Agreement, the Voting Trust Agreement, the Stockholders' Agreement, the Issuers'
1992 Management Stock Option Plan, the Executive Stock Purchase Agreements, the
Class A Common Stock and Class A Preferred Stock Purchase Agreement, the Class B
Preferred Stock Purchase Agreement and the Transition Services Agreement.
"Other Equity Securities" shall mean the Key Executive Options, the
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Management Options, the Investor Warrants, the Chase Warrants and the shares of
Common Stock purchased or purchasable by the holders of such Other Equity
Securities upon the exercise thereof.
"Other Securities" shall mean any stock (other than Warrant Stock) and
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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.
"Out of the Money" shall mean (a) in the case of an Option, that the
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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
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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
exercisable, 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
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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 respect of
interest or dividends, and to a fixed sum or percentage of principal amount or
liquidation preference in any distribution of assets.
"Person" shall mean a corporation, an association, a partnership, a
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joint venture, an organization, a business, an individual or a Governmental
Authority.
"Preferred Stock" shall mean, as to any Person, any capital stock of
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such Person which is preferred as to dividends or assets over any other class of
any other stock of such Person.
"Proposed Purchaser" shall have the meaning assigned to such term in
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Section 7.02.
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"Proposed Sale" shall have the meaning assigned to such term in
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Section 9.08.
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"Purchasing Offeree" shall have the meaning assigned to such term in
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Section 9.08.
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"Qualified Public Offering" shall mean an offering or offerings of
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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 of at least $25,000,000 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.
"Restricted Certificate" shall mean a certificate for shares of
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Warrant Stock or Warrants bearing or required to bear the restrictive legend set
forth in Section 4.04.
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"Restricted Securities" shall mean Restricted Stock and Restricted
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Warrants.
"Restricted Stock" shall mean Warrant Stock evidenced by a Restricted
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Certificate.
"Restricted Warrants" shall mean Warrants evidenced by a Restricted
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Certificate.
"Rule 144" shall mean Rule 144 promulgated by the Commission under the
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Securities Act (or any successor or similar rule then in force).
"Rule 144A" shall mean Rule 144A promulgated by the Commission under
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the Securities Act (or any successor or similar rule then in force).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
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any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Stockholder" shall have the meaning assigned to such term in
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Section 7.01.
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"Sponsor Management Fees" shall have the meaning assigned to such term
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in Section 9.05(e).
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"Stockholder" shall mean any Person who directly or indirectly owns
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any shares of Common Stock (including any shares of Warrant Stock).
"Stockholders Agreement" shall mean the Stockholders Agreement dated
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as of January 31, 1992 among Issuer, Wingate, Cumberland, Good, Boise Cascade
and the other Persons named therein.
"Subsidiary" shall mean any Person in which Issuer, directly or
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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
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definition of the "Subsidiary" in Section 1.01 of the Credit Agreement.
"Tag-Along Purchase Offer" shall have the meaning assigned to such
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term in Section 7.02.
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"Tag-Along Sale" shall have the meaning assigned to such term in
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Section 7.01(a).
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"Third Party" shall have the meaning assigned to such term in Section
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8.04.
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"Third Party Purchaser" shall have the meaning assigned to such term
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in Section 8.04.
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"Voting Capital Stock" with respect to any corporation shall mean its
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common stock and Preferred Stock entitled to vote generally for the election of
directors.
"Voting Trust Agreement" shall mean that certain Voting Trust
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Agreement dated as of January 31, 1992 among Issuer, the Beneficiaries named
therein and Gary G. Miller, Daniel J. Good, Thomas W. Sturgess, Frederick B.
Hegi, Jr. and either of James A. Johnson or James T. Callier, Jr. as Voting
Trustees.
"Warrant Stock" shall mean (i) the shares of Common Stock purchased or
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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
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or similar offering made in respect of the Common Stock referred to in clause
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(i) above. Any Warrant Stock purchased by Issuer shall, upon such purchase,
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cease to be Warrant Stock, cease to be outstanding and Issuer, upon such
purchase, shall not be deemed a Holder. Such Warrant Stock shall be either
"Investor Warrant Stock" or "Chase Warrant Stock," depending upon whether the
Warrant pursuant to which the Warrant Stock was issued was a Chase Warrant or an
Investor Warrant.
"Warrants" shall mean the Investor Warrants and the Chase Warrants.
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"Wingate" shall mean Wingate Partners, L.P., a Delaware limited
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partnership, 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 other wise may be
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expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements
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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. Issuance of Investor Warrants.
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2.01 Authorization. Issuer has authorized: (a) the issuance of warrant
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certificates covering the purchase of shares of Common Stock in the form of
Annex 1 to this Agreement (such certificates, together with the rights to
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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 "Investor Warrants") for issuance to the
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Investor pursuant to this Agreement; and (b) the issuance of such number of
shares of Class A Common Stock as shall be necessary to permit Issuer to comply
with its obligations to issue Class A Common Stock pursuant to the Warrants.
2.02 The Purchase of Investor Warrants.
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(a) On the date hereof:
(i) Issuer shall issue to the Investor Investor Warrants covering
23,129 shares of Class A Common Stock, representing 2% of the
outstanding shares of Common Stock on a fully diluted basis;
(ii) The Investor shall pay the Issuer $2 for the Investor
Warrants received by the Investor;
(iii) Issuer shall deliver to Investor a single certificate for
the Investor 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
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(iv) Issuer shall deliver to the Investor a legal opinion from
counsel to Issuer in the form attached as Annex 3 hereto.
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(b) On or before the date hereof, Issuer shall have adopted a
certificate of incorporation substantially in the form of Annex 4.
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2.03 Purchase for the Investor's Account. The Investor represents and
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warrants to Issuer as follows:
(a) The Investor is acquiring and shall acquire the Investor 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 Investor Registration Rights Agreement, lawfully to sell
or otherwise to dispose of all or any part of the Investors' 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.
2.04 Securities Act Compliance. The Investor understands that Issuer
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has not registered the Investor 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.
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SECTION 3. Representations and Warranties. Issuer represents and
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warrants as follows:
3.01 Existence; Qualification. Each of Issuer and the Operating
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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 its business, financial
condition, operations or assets of Issuer and the Operating Company taken as a
whole and has all requisite corporate power and authority to transact its
business in all such jurisdictions.
3.02 No Breach. The execution, delivery and performance of this
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Agreement, the Warrants and the Registration Rights Agreement by Issuer and the
consummation by it of the
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transactions contemplated hereby and thereby, 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 Investor Warrants and the Registration
Rights Agreement, or (iv) the rights and remedies of the Holders under any of
this Agreement, the Warrant, and the Investor Registration Rights Agreement, (c)
violate any judgement, 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. The Issuer has all necessary corporate power
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and authority to execute, deliver and perform its obligations under this
Agreement, the Investor Warrants and the Investor Registration Rights Agreement;
the execution, delivery and performance by Issuer of this Agreement, the
Investor Warrants and the Investor Registration Rights Agreement have been duly
authorized by all necessary corporate action (including all stockholder action)
on the part of Issuer; this Agreement, the Investor Warrants and the Investor
Registration Rights Agreement have been duly executed and delivered by Issuer
and constitute, the legal, valid and binding obligations of Issuer, enforceable
against Issuer in accordance with their respective 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 and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); the 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 and by general equitable principles
Warrant Agreement
-----------------
-14-
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); the shares of Class A Common Stock constituting the Warrant
Stock initially covered by the Investor Warrants have been duly and validly
authorized and reserved for issuance and shall, when paid for, issued and
delivered in accordance with the Investor Warrants, 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 Investor Registration Rights Agreement and for the
filing of Form D with the Commission in connection with the issuance of the
Investor 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 the execution,
delivery or performance by Issuer of this Agreement, the Investor Warrants or
the Investor Registration Rights Agreement or the validity or enforceability
thereof. Any such action required to be taken as a condition to the execution
and delivery of this Agreement and the Investor Registration Rights Agreement,
or the execution, issuance and delivery of the Investor 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.
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
Warrant Agreement
-----------------
-15-
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 Warrants owned of record and the
names of the owners of record on the date hereof. Upon the issuance of the
Warrants under this Agreement, Issuer shall not (except for the Warrants) 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 of obligations or
the type specified in Section 9.06(d)(iii) other than (A) the Investor Warrants
------------
to be issued pursuant to this Agreement, (B) the Chase Warrants, (C) the Key
Employee Options, (D) the Management Options, and (E) other securities which may
be issued pursuant to this Agreement or the Equity Documents.
(b) Except for 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.
(c) On the date hereof, none of the Subsidiaries has any equity security,
Participating Security or obligation of the type referred to in Section
-------
9.06(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 bear the legend set forth the in Section 7.03
------------
on the reverse side of such certificates.
3.08 Private Offering.
----------------
(a) Assuming the truth and accuracy of the Investor's representations and
warranties contained in Section 2.03, the issuance and sale of the Investor
------------
Warrants to the Investor hereunder are exempt from the registration and
prospectus delivery requirements of the Securities Act.
Warrant Agreement
-----------------
-16-
(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 any 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 Investor Warrants or the Investor
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.
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.
3.11 Joinder Agreement. Upon execution of this Agreement, Issuer shall
-----------------
cause each Stockholder to execute and deliver the Joinder Agreement.
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
---------
Warrant Agreement
-----------------
-17-
and in the Investors 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 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 Investor 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''), BETWEEN
ASSOCIATED HOLDINGS, INC., A DELAWARE CORPORATION (``ISSUER''), AND BOISE
CASCADE 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 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
Warrant Agreement
- 18 -
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.
----------------------------------
5.01 Certain Dispositions of Securities.
----------------------------------
Notwithstanding anything in this Agreement or the Warrants to the
contrary, but subject to compliance with the Securities Act, applicable state
securities laws, the requirement as to placement of a legend on certificates for
Restricted Securities specified in Section 4.04, and the delivery of an opinion
------------
of counsel satisfactory to Issuer, 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 (directly or indirectly) at least a majority of the Voting Capital
Stock of such Holder;
(iii) to another Holder; or
(iv) To any Person subject to Investor's prior consent, which it shall not
unreasonably withhold, and subject to a right of first refusal by Issuer and
other Stockholders, following the same procedures as would apply to a
transfer of Class A Common Stock under the Stockholders Agreement.
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
Warrant Agreement
-----------------
- 19 -
continues to own any of the Restricted Securities so transferred to such
transferee.
SECTION 6. Call Rights.
-----------
6.01 Call Rights.
-----------
(a) The Issuer shall have the right (a "Call Right") to purchase or
redeem all or part of the Investor Warrants at any time or from time to time
after or concurrently with the purchase or redemption by Issuer of all of the
outstanding shares of Class B Preferred Stock of Issuer, and any Class B
Exchange Notes issued in exchange for shares of such Class B Preferred Stock,
and the payment of all accrued dividends or interest thereon, but prior to the
issuance of stock upon exercise of the Investor Warrants. The exercise of "Call
Right" as all or part of the Investor Warrants shall be at the following price,
and upon the following terms and conditions:
(i) The price (the "Call Price") payable for the purchase and
----------
redemption of the Warrants shall be in an amount which provides the holder
of the Class B Preferred Stock with a yield equal to 15% per annum on the
aggregate amount of its investment in the Class B Preferred Stock, taking
into account any dividends received on the Class B Preferred Stock and any
interest received on any Class B Exchange Notes.
(ii) Issuer may exercise the Call Right by delivering a written
notice to the Holders of the Investor Warrants stating that Issuer has
elected to purchase the Investor Warrants specified in such notice (a
"Call Notice").
-----------
(iii) The purchase and sale of the Warrants pursuant to exercise of 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 later than the date 20 days after the date the Call Notice
is given .
(iv) Issuer shall pay the Call Price of the Warrants redeemed
hereunder, to the account designated by Investor by wire transfer in
immediately available funds.
(v) In connection with an exercise of a Call Right, if Issuer elects
to purchase less than all of the Investor Warrants then outstanding,
Issuer shall purchase such Warrants from the Holders of a pro rata basis,
--- ----
based on the
Warrant Agreement
-----------------
- 20 -
ratio of the number of shares of Warrant Stock purchasable upon the
exercise of Warrants owned by each such Holder to the number of shares of
Warrant Stock purchasable upon the exercise of the Investor Warrants
owned by all of the Holders.
SECTION 7. Right to Join in Sale.
---------------------
7.01 Tag-Along Rights.
----------------
(a) Notwithstanding anything herein to the contrary, but subject to
the provisions of Section 7.01(b), if Wingate, Cumberland, Good, or any
---------------
controlling stockholder of Issuer who purchases shares directly from Issuer or
any of their respective Affiliates or transferees (other than pursuant to an
underwritten public offering or in an ordinary broker's 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 Holder shall have
been afforded the opportunity to join in such transfer as provided in Section
-------
7.02 (it being understood that such Holder shall pay their own expenses in
- ----
connection therewith.
(b) The provisions of Section 7.01(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 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 7.
---------
7.02. Procedures. Prior to the consummation of any transaction subject to
----------
Section 7.01, the Person or group of
- ------------
Warrant Agreement
-----------------
-21-
Persons that proposes to acquire shares of Common Stock in a Tag-Along Sale (the
"Proposed Purchaser") shall make a written offer to the Holder (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 Holder 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 dilute 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.
7.03 Issuer's Covenants. Issuer will not, on or after the date hereof,
------------------
either (a) deliver to the Persons specified in Section 7.01(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 7.02, or (b) deliver to the Persons specified in Section 7.01(a) 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
Warrant Agreement
-----------------
-22-
registered public offering or a sale in an ordinary brokerage transaction
pursuant to Rule 144) 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 7 AND 8 OF THAT CERTAIN WARRANT AGREEMENT DATED
AS OF JANUARY 31, 1992, BETWEEN ASSOCIATED HOLDINGS, INC., A
DELAWARE CORPORATION ("ISSUER"), AND BOISE CASCADE CORPORATION,
------
AS SUCH WARRANT AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED
AND IN EFFECT FROM TIME TO TIME. A COPY 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 7 AND 8 OF SUCH WARRANT AGREEMENT.
SECTION 8. Obligation to Join in Sale.
--------------------------
8.01 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
--------
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.
Warrant Agreement
-----------------
-23-
8.02 Procedures.
----------
(a) Wingate shall deliver a written notice ("Go-Along Notice") to the
---------------
Holder 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 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 considerations,
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 8 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.
8.03 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 7.03.
------------
8.04 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 interest in Issuer beneficially owned by
them in a private offering, (ii) the 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
Warrant Agreement
-----------------
-24-
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 Holder shall have the option to receive such
--------
consideration in an amount of cash equal to the Fair Price of its respective
interests in Issuer, but in any even 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 Holder
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 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 Holders shall immediately
designate one Investment Banking Firms; (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 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 determination shall be conclusive and binding upon all the 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
Warrant Agreement
-----------------
-25-
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 or 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 9. Holders' Rights.
---------------
9.01 Delivery Expenses. If the 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 the 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.
9.02 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 9.02 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.
9.03 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
Warrant Agreement
-----------------
-26-
Certificate or instrument evidencing any Investor 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,
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 Investor Warrants or Warrant Stock.
9.04 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 Investor Registration Rights Agreement or
the Investor Warrants, or making such performance or the issuance of shares of
Common Stock upon the exercise of an Investor Warrant a default under any such
agreement or instrument other than the Credit Agreement.
9.05 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, Good or
any of their respective Affiliates any
Warrant Agreement
-----------------
-27-
management, consultant, financial advisor, director or similar fees ("Sponsor
-------
Management Fees"), except (1) Sponsor Management Fees of not more than $25,000
- ---------------
in any month (the "Monthly Management Fees") plus (2) 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), the
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 the Holder has received
the financial statements of Issuer for such fiscal year required to be delivered
to such Holder pursuant to Section 9.10(b) hereof; and provided, further, that,
--------------- -------- -------
in any event, no Sponsor 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 is such term is defined in the Credit Agreement)
shall continue to accrue.
9.06 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, the 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.
Warrant Agreement
-----------------
- 28 -
(d) Issuer shall afford the Holder and its authorized agents the
right to attend all meetings of shareholders of Issuer and the Subsidiaries.
(e) 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.
(f) Issuer shall hold an annual meeting of shareholders each year in
Texas, Illinois or New York.
(g) To enable the ready and consistent determination of the Call
Price 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 31 of
each year, respectively.
(h) 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.
(i) 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 Holder. 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 securities which may be issued or sold thereunder, or materially
modify the requirements as to eligibility for participation therein.
9.07 Indemnification. Issuer shall indemnify and hold harmless the
---------------
Investor and the Holder 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
Warrant Agreement
-----------------
-29-
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 Investor
Warrants or the Investor Registrations 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 Investor
Warrants or the Investor Registration Rights Agreement, or in connection with
the other transactions contemplated hereby and thereby.
9.08 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 Holder) (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 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
Warrant Agreement
-----------------
-30-
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 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 9.08 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 or any such
change. Such Offeree thereupon shall have until the later or (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.
9.09 Board Observers. Issuer shall afford the Investor the opportunity
---------------
to appoint by notice to Issuer a representative (an "Observer") to attend as an
--------
observer (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 such 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. The Observer shall be entitled to receive all
written materials and other information given to the
Warrant Agreement
-----------------
-31-
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).
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 9.09.
------------
9.10 Financial Statements, Etc. Issuer shall deliver the information
-------------------------
specified below to each Holder of an Investor 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 presenting the respective
individual, unconsolidated financial condition and results of operations of
Issuer of Subsidiaries, respectively, in each case in accordance with GAAP,
as at the end of, and for such present the unconsolidated financial
conditions and results of operations of Issuer and of each of its
Subsidiaries, in accordance with GAAP, as at the end of, and for, such
period (subject to normal year-end audit adjustments).
(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 its Subsidiaries for
such fiscal year and the related
Warrant Agreement
-----------------
-32-
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 its 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 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 its
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 its Subsidiaries generally,
copies of all financial statements, reports and proxy statements so mailed.
9.11 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
Warrant Agreement
-----------------
-33-
as nearly as possible the intended benefits of this Agreement with respect
thereto.
SECTION 10. Miscellaneous.
-------------
10.01 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.
10.02 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,
(i) if to Issuer:
Associated Holdings, Inc.
1075 Hawthorne Drive
Itasca, Illinois 60143
Attn: President and Chief Executive Officer
Fax: (708) 773-6491
with copies to:
Wingate Partners, L.P.
750 North St. Paul, Suite 1200
Dallas, Texas 75201
Attn: Thomas W. Sturgess
Fax: (214) 871-8799
Cumberland Capital Corporation
5949 Sherry Lane, Suite 1550
Dallas, TX 75225
Attn: Gary G. Miller
Fax: (214) 696-5957
Warrant Agreement
-----------------
-34-
D'Ancona & Pflaum
30 N. LaSalle Street, Suite 2900
Chicago, Illinois 60602
Attn: Edwin H. Goldberger and
Suzanne L. Saxman
Fax: (708) 580-0923
(ii) if to the Investor:
Boise Cascade Corporation
One Jefferson Square
Boise, ID 83702
Attn: Treasurer
Fax: (208) 384-4934
and with a copy to:
Attn: General Counsel
Fax: (208) 384-7945
(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;
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.
10.03 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 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 Investor Registration Rights
Agreement or the Investor 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
Warrant Agreement
-----------------
-35-
default by Issuer hereunder or under the Investor Warrants or the Investor
Registration Rights Agreement or any enforcement proceedings resulting
therefrom, and (ii) the enforcement of this Section 10.03.
-------------
10.04 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 Issuer and the Holder.
10.05 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.
10.06 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 Investor Registration Rights Agreement shall be considered to
have been relied upon by the Investor and shall survive the issuance of the
Investor 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.
10.07 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.
Warrant Agreement
-----------------
-36-
10.08 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.
10.09 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.
10.10 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the law of the State of Illinois without giving
effect to the conflicts of law principles thereof, except to the extent that
Illinios conflicts of laws principles would apply the General Corporation Law of
the State of Delaware to matters relating to corporations incorporated
thereunder.
10.11 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.
10.12 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.
Warrant Agreement
-----------------
-37-
IN WITNESS WHEREOF, the parties hereto have duly executed this Warrant
Agreement as of the date first above written.
ASSOCIATED HOLDINGS, INC.,
By /s/ Suzanne L. Sarman
--------------------------
Name: Suzanne L. Sarman
Title: Assistant Secretary
BOISE CASCADE CORPORATION
By /s/ Carol Moerdyn
--------------------------
Name: Carol B Moerdyn
Title: Vice President
Warrant Agreement
-----------------
Schedule I Capital Stock and Warrants
SCHEDULE I
CAPITAL STOCK AND WARRANTS
Warrants
to Purchase
Common Stock Preferred Stock Common Stock
----------------- -------------------------- -----------------
Name Class A Class B Class A Class B Class C Class A Class B
- ---- ------- ------- ------- ------- ------- ------- -------
Wingate Partners, L.P. 592,175 3,483
Cumberland Capital
Corporation
& ASI Partners L.P. 249,474 1,332
Good Capital
Co., Inc. 54,609 135
Boise Cascade
Corporation 5,000 23,129
Affiliated Computer
Systems, Inc. 7,500
Chase Manhattan
Investment Holdings,
Inc. 150,340
------- ------- ------- ------- ------- ------- -------
896,258 0 5,000 5,000 7,500 23,129 150,340
======= ======= ======= ======= ======= ======= =======
Schedule II General Partners of Wingate
James T. Callier, Jr.
Frederick B. Hegi, Jr.
Thomas W. Sturgess
James Johnson
Dennis 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
Pension Plans for Benefit of the Above
Annex 1 - Form of Investor Warrant
Annex 2 - Investor Registration Rights Agreement
Annex 3 - Legal Opinion
Annex 4 - Certificate of Incorporation of Issuer
ANNEX 1
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 BOISE CASCADE 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 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.
For the Purchase of 23,129 shares
of Class A Common Stock. Warrant No. 3
--------------------
WARRANT
to Purchase Class A Common Stock of
ASSOCIATED HOLDINGS, INC.
Expiring 10 years from the date hereof
THIS IS TO CERTIFY THAT BOISE CASCADE CORPORATION, or its 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 January 31, 1992, but not later than 5:00 p.m., Chicago time, on January
31, 2002 (or such later date to which this Warrant may be extended pursuant to
Section 6.03, the "Expiration Date"), 23,129 shares of Class A Common Stock
---------------
(subject to adjustment as provided herein) at a purchase price of $1.00 per
share of Common Stock, provided that such price shall not be less than the
aggregate par value of the Class A Common Stock and other shares purchased or
being purchased (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 shares of Class A Common Stock and all of the remaining Stock
covered by this Warrant.
This Warrant is one of the Warrants originally issued pursuant to the
Warrant Agreement dated as of January 31, 1992, between Issuer and Boise Cascade
Corporation.
Warrant
-------
-2-
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 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), (iii) shares purchased
by Holder pursuant to the exercise of preemptive rights pursuant to Section 9.08
of the Warrant Agreement, (iv) shares purchased by Holder upon the exercise of
preemptive rights pursuant to Section 9.08 of the Warrant Agreement, and (v) the
shares of Common stock described as being issued and outstanding in Section 3.07
of the Warrant Agreement.
"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 trading 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 trading 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.
"Current Warrant Price", for the purpose of any provision of this
---------------------
Warrant, shall mean the amount payable per share of Common Stock equal to the
quotient resulting from dividing the total Exercise Price in effect on such date
required to be paid upon exercise of the Warrant in full by the total number of
shares (including any fractional share) of Common Stock on such date.
Warrant
-------
-3-
"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.
------
"Warrant Agreement" shall mean the Warrant Agreement dated as of
------- ---------
January 31, 1992, between Issuer and Boise Cascade Corporation, as such Warrant
Agreement shall be modified and supplemented and in effect from time to time.
"Warrants" shall mean the Warrants originally issued by Issuer
--------
pursuant to the Warrant Agreement, evidencing rights to purchase up to an
aggregate of 23,129 shares of Class A Common Stock, 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 shares of Common Stock for which they may be exercised. The
Warrants shall at all times be dated as of their respective dates of original
issuance.
"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.
SECTION 2. Exercise of Warrant. On and after January 31, 1993, and
-------------------
until 5:00 p.m., Chicago 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 shares of Common Stock to be
purchased (the "Exercise Notice"), (b) this Warrant, and (c) a certified or bank
---------------
check or checks payable to Issuer in an aggregate amount equal to the aggregate
Exercise Price for the number of shares of Common Stock as to which this Warrant
is being
Warrant
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-4-
exercised (or a wire transfer of funds in that amount into a bank account
designated by Issuer). 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 10 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. Notwithstanding the foregoing, an exercise of this
Warrant may be deferred for such period of time as may be needed to effect a
redemption by Issuer of any outstanding Class B Preferred Stock of Issuer and a
redemption of said Warrant in accordance with Section 6 of this Warrant. To
---------
defer a Warrant exercise, Issuer shall notify Holder in writing, within 10
Business Days after receipt of the Exercise Notice, of the Issuer's election to
effect said redemption of outstanding Class B Preferred Stock and the redemption
of said Warrant shall be completed within 20 days after receipt of said Exercise
Notice.
The stock certificate or certificates for Warrant Stock delivered upon
exercise of this Warrant 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 to occur of the delivery of the
Exercise Notice, payment of the Exercise Price and surrender of this Warrant 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; providing that the Warrant
is not redeemed as provided for in this Section 2. 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 Common Stock 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 exercises of this Warrant
shall, upon payment therefore in accordance herewith, be duly and validly
issued, fully paid and nonassessable and free and clear of any Liens.
Warrant
-------
-5-
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. The number of shares of Common Stock
-------------------
which may be purchased upon exercise of this Warrant 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
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-------
-6-
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 dividends
or assets differing in any respect from the rights of the Common Stock on the
date hereof. Any adjustment required hereunder shall be made simultaneously with
adjustments required under the Chase Warrant. The total price payable for the
purchase of the increased or decreased number of shares purchasable shall remain
the same, and the per share price shall be proportionately decreased or
increased.
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 shares of Common Stock purchasable hereunder 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
purchasable hereunder immediately prior to the happening of such even 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 shall be adjusted to that number determined by
multiplying the number of shares of Common Stock 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
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-------
-7-
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 purchasable hereunder shall be made under this Section 4.02 upon the
------------
issuance of any Additional Shares of Common Stock:
(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.
------------
(d) pursuant to the Transition Services Agreement dated as of January
31, 1992 among Boise Cascade Corporation ("Boise Cascade"), Boise Cascade Office
Products Corporation ("BCOP"), Associated Stationers, Inc. ("Stationers") and
Issuer, providing among other things for the possible issuance of Common Stock
of Issuer to Boise Cascade in consideration of the deferment of liabilities and
making of cash flow support payments to Stationers under the Transition Services
Agreement; or
(e) which are deemed to be issued as the result of an anti-dilution
adjustment with respect to any Option or Convertible Security or the adjustment
made to the Chase Warrants pursuant to the last sentence of Section 4.02 of the
Chase Warrant.
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 purchasable hereunder shall be adjusted as provided in Section 4.01 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
Warrant
-------
-8-
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 of 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 share of Common Stock purchasable
hereunder 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.
- ---------
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 shares of Common Stock thereafter
purchasable hereunder 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 shares purchasable hereunder 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 Issuer for such Convertible
Securities, less the Convertible Security Value of such Convertible Securities
on issuance. 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
Securities, and (iii) the date of actual issuance of such Convertible
Securities. No further adjustment of the shares of Common stock purchasable
hereunder
Warrant
-------
-9-
shall be made under this Section 4.04 upon the issuance 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. If, at any time after any adjustment of
----------------------
the shares of Common Stock 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 shares of Common Stock purchasable hereunder 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 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 cancelled or acquired by the Issuer 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 the purposes
of such previous adjustment and for the consideration actually received and
receivable therefor,
Warrant
-------
-10-
(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 purchasable hereunder shall be made, and 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
Common Stock purchasable hereunder hereinbefore provided for in this Section 4:
---------
(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 for incurred by
Issuer for and in the underwriting of, or other-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 forma consideration other than
cash, then, except as herein otherwise expressly provided, the amount 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.
Warrant
-------
-11-
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
shares of Common Stock purchasable hereunder 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 shares of Common Stock
purchasable hereunder immediately prior to the making of such adjustment
and (ii) 5% of the number of shares of Common Stock. 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 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
---------------------
Section the Subsidiaries or any Person in which Issuer or any Subsidiary has a
direct or indirect Investment, as to which the
Warrant
-------
-12-
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
or 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, etc.; Distributions.
----------------------------------------------------------
5.01 Consolidation, Merger, Share Exchange, etc. 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 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 the shares of
Common Stock immediately theretofore purchasable and receivable upon the
exercise of each of the Warrants, such shares of stock, securities, cash or
other property 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 shares of
Common Stock purchasable hereunder 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
Warrant
-------
-13-
any Warrants. Issuer shall not effect any such consolidation, merger, shares
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, 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 the 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 an equity security, Holder will
be entitled to receive, at its option, in its stead non-voting equity securities
otherwise identical to the equity securities to which Holder is otherwise
entitled thereunder. 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 purchasable hereunder pursuant to Section 4.01.
------------
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,
Warrant
-------
-14-
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 purchasable hereunder 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 or Exercise Price. Whenever the
-----------------------------------------------
shares of Common Stock purchasable hereunder 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
thereafter purchasable hereunder and (if such adjustment was made pursuant to
Section 4.07 or Section 5) describing the number and kind of any other
- ------------ ---------
securities purchasable hereunder, 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 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 of 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 Holders.
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
Warrant
-------
-15-
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 major part 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
thereafter be purchasable hereunder, and the purchase price or prices thereof,
after giving effect to the 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 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
Warrant
-------
-16-
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
shares of Common Stock purchasable hereunder 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
shares of Common Stock purchasable hereunder 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 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
Warant
------
-17-
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 10.02 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 by the provisions of
Warrant
-------
-18-
(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 Illinois without giving effect to
conflicts of law principles thereof, except to the extent that Illinois
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. Whenever the Board
---------------------------------------------
determines fair market value or Convertible Security Value, or a firm of
independent public accounts 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 Holders.
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 the Hoder, into the number of shares of Common Stock
equal to the product of (a) the number of shares of Common Stock purchasable
hereunder at the time of such conversion, times (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.
IN WITNESS WHEREOF, Issuer has duly executed this Warrant.
Dated: January 31, 1992
ASSOCIATED HOLDINGS, INC.,
By
-----------------------------------------
Name:
Title:
Warrant
-------
-19-
FORM OF EXERSISE
----------------
(To be executed by the registered Holder hereof)
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ____ shares of Common Stock 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 be issued in accordance with the instructions given below and (ii) if
such stock shall not include all of the stock to which Holder is entitled under
this Warrant, that a new Warrant of like tenor and date for the unpurchased
balance of the stock issuable hereunder be delivered to the undersigned.
Dated: _______________
________________________________
(Signature of Registered Holder)
Instructions for issuance and
registration of Common Stock:
____________________________
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
-------
-20-
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 shares of
Common Stock covered thereby set forth hereinbelow unto:
Number of Shares
Name of Assignee Address of Common Stock
- ---------------- ------- ----------------
Dated: _________________
______________________________
Signature of Registered Holder
______________________________
Name of Registered Holder
(Please Print)
Witness:
__________________________
Warrant
-------
ASSOCIATED HOLDINGS
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
January 31, 1992 is made and entered into by and among ASSOCIATED HOLDINGS,
INC., a Delaware corporation (the "Issuer"), each party hereto whose name
appears on the signature pages hereto (each an "Initial Holder" and collectively
the "Initial Holders"), and each other person or entity who may execute this
Agreement in the future or who may execute a separate agreement to be bound by
the terms hereof (each Initial Holder and each such other person or entity a
"Holder", and collectively the "Holders"). Capitalized terms not otherwise
defined herein have the meanings set forth in Section 8.
---------
WHEREAS, this Agreement is being executed and delivered by the parties
hereto in connection with their purchase of Registrable Securities; and
WHEREAS, in order to induce each such party to purchase Registrable
Securities, and as a condition precedent to such purchase, Issuer has agreed
to provide the registration rights with respect thereto as set forth in this
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. From and after the date upon which Issuer
---------------------
shall have effected its initial Public Offering, upon the written request of a
Holder of at least 20% of the Registrable Securities requesting that Issuer
effect a registration under the Securities Act of all or part of such Holder's
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 all commercially reasonable efforts to effect
the registration under the Securities Act of:
(A) the Registrable Securities which Issuer has been so requested to
register by such Requesting Holder, 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 disposition 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). Subject to subsection (e)
------------
below, Issuer may include in such registration other securities for sale for its
own account or for the account of any other Person.
(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 consummation of an initial Qualified Public Offering by the
Issuer has not yet occurred;
(ii) in the case of a Long-Form Registration, Issuer has previously
effected two (2) Effective Long-Form Registrations;
(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 foregoing, 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
2
(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, the securities of Issuer proposed to be
-----
included in such registration in accordance with the priorities then existing
among Issuer and the holders of such securities pursuant to any agreement
between such holders and Issuer, including the Other Registration Rights
Agreement, (ii) second, any other securities of Issuer, including Registrable
------
Securities, proposed to be included in such registration pro rata among the
--- ----
holders thereof, including the Holders. Any securities excluded from such
registration shall be withdrawn from and shall not be included in such Requested
Registration.
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 all commercially
reasonable 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
3
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 any other securities of Issuer, including Registrable
------
Securities, proposed to be included in such registration pro rata among the
--- ----
holders thereof, including the Holders; and
(ii) if such registration does not involve a primary offering, (X)
first, any securities of Issuer proposed to be included in such registration in
- -----
accordance with the priorities then existing among Issuer and such holders
thereof pursuant to any agreement between such holders and Issuer, including
securities under the Other Registration Rights Agreement, and (y) second, any
------
other securities of Issuer to be included in such registration shall be
allocated among the holders thereof pro rata on the basis of the number of
--- ----
securities, including Registrable Securities, requested to be included by such
holders, including the Holders.
Any securities excluded from such registration shall be withdrawn from and shall
not be included in such Piggyback Registration.
3. Registration Procedures. If and whenever Issuer is required to use
-----------------------
all commercially reasonable efforts to effect the registration of any
Registrable Securities under the Securities Act pursuant to Section 1 or Section
-------- -------
2, Issuer will use all commercially reasonable 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
4
commercially reasonable 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);
(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 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
(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
5
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 all commercially reasonable efforts to register or qualify all
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such 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 all commercially reasonable 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) use all commercially reasonable efforts to obtain a comfort letter
or comfort letters from the Issuer's independent public accountants in customary
form and covering such maters of the type customarily covered by comfort letters
as the Requesting Holders who hold at least a majority of the Registrable
Securities to be included in a Requesting Registration or the Managing
Underwriter 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
6
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 or omit to state a 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:
(j) otherwise use all commercially reasonable 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
participate in the preparation of such registration statement and any prospectus
contained herein 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 all commercially reasonable 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 and affidavits 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
7
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; provided that such Holder shall furnish to Issuer an opinion of
counsel reasonably acceptable to Issuer to such effect.
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 (b), 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 (b) 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 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 (c) 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 (b).
-------------
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. The Holders of Registrable Securities to be distributed by such
- ---------
underwriters shall be parties to such underwriting agreement and may, at their
option (if permitted by the underwriters), 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
8
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.
(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 all commercially
------------
reasonable 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 (if permitted by the
underwriters), 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
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
9
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 and
-----------------------------------------------------------
Right to Defer Filing.
- ---------------------
(a) Holdbacks. 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 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.
(b) Deferral of Filing. The Issuer may defer the filing of a
------------------
registration statement required by Section 1 hereunder for a period of 180 days
if (i) at the time the Issuer receives a Registration Request, the Issuer or any
of its subsidiaries are engaged in confidential negotiations or other
confidential business activities, disclosure of which would be required in such
registration statement (but would not be required if such registration statement
were not filed), and the Board of Directors of the Issuer determines in good
faith that such disclosure would be materially detrimental to the Issuer and its
stockholders, or (ii) Issuer had received, prior to receiving the Registration
Request, a request to register securities of the Issuer from a different holder
thereof having priority as to registration over the Holders of Registrable
Securities (a "preferred request") and is proceeding with reasonable diligence
to comply with the preferred request, or (iii) prior to receiving the
Registration Request, the Board of Directors had determined to effect a
registered underwritten public offering of the Issuer's equity securities for
the Issuer's account and the Issuer had taken substantial steps (including,
without limitation, selecting and entering into a letter of intent with the
managing underwriter for such offering) and is proceeding with reasonable
diligence to effect such offering. A deferral of the filing of a registration
statement pursuant to this Section 5(b) shall be lifted, and the
10
requested registration statement shall be filed forthwith, if, in the case of a
deferral pursuant to clause (i) of the preceding sentence, the negotiations or
other activities are disclosed or terminated, or, in the case of a deferral
pursuant to clause (ii) of the preceding sentence, the preferred request is
withdrawn, or in the case of a deferral pursuant to clause (iii) of the
preceding sentence, the proposed registration for the Issuer's account is
abandoned. In order to defer the filing of a registration statement pursuant to
this Section 5(b), the Issuer shall promptly, upon determining to seek such
deferral, deliver to each Requesting Holder a certificate signed by the
President of the Issuer stating that the Issuer is deferring such filing
pursuant to this Section 5(b) and the basis therefor in reasonable detail.
Within 20 days after receiving such certificate the Holders of a majority of the
Registrable Securities held by the Requesting Holders and for which registration
was previously requested may withdraw such request by giving notice to the
Issuer. If withdrawn, the Registration Request shall be deemed not to have been
made for all purposes of this Agreement.
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, 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
11
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 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
12
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 the
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 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 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 Indemnifying 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 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 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.
13
(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 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 Rule 144 and 144A. If at any time Issuer
---------------------------------------
is required to file reports in compliance with either
14
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 of 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.
8. Definitions.
-----------
(a) In addition to other terms defined elsewhere in this Agreement,
except as otherwise specifically indicated, the following terms will have the
following meanings for all purposes of this Agreement:
"Agreement" means this Registration Rights Agreement, as the same
---------
shall be amended from time to time.
"Business Day" means a day other than a Saturday, Sunday or other day
------------
on which commercial banks in Chicago, Illinois are authorized and required by
law to close.
15
"Common Stock" means the Class A Common Stock of the Issuer, par value
------------
$0.01 per share, and any voting trust certificates representing shares of Class
A Common Stock issued pursuant to that certain Voting Trust Agreement of even
date herewith among the Issuer, and the voting trustees and beneficiaries named
therein, as amended, modified, or supplemented from time to time.
"Commission" means the Securities and Exchange Commission or any
----------
successor governmental agency.
"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
without a reduction in the selling price anticipated to be received for the
securities to be sold in such Public 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.
16
"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.
"Holder" has the meaning ascribed to it in the preamble.
------
"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.
---------
"Initial Holder" has the meaning ascribed to it in the preamble.
--------------
"Inspectors" has the meaning ascribed to it in Section 3(k).
---------- ------------
"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).
------ ------------
"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).
------------
"Other Registration Rights Agreement" means the Registration Rights
-----------------------------------
Agreement dated of even date herewith entered into between the Issuer, and Chase
Manhattan Investment Holdings, Inc., as the same may be amended from time to
time.
"Person" means an individual, partnership, limited partnership,
------
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture or other entity of whatever nature.
17
"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), 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.
"Records" has the meaning ascribed to it in Section (3)k.
------- ------------
"Registrable Securities" means Common Stock held by a Holder,
----------------------
including shares of Common Stock represented by voting trust certificates, and
any other securities of Issuer held by a Holder and issued or issuable with
respect to Common Stock by way of a stock dividend or stock split or in
connection with a combination of shares or recapitalization. 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.
"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 a
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 counsel and single
firm of accountants 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, but excluding underwriting fees, discounts and
commissions and transfer taxes, if any, in respect of Registrable Securities,
and fees and disbursements of counsel for any underwriter, which shall be
payable by each Holder thereof.
18
"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.
(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.
9. Miscellaneous.
-------------
(a) Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by facsimile or by reputable express
courier service (charge prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid, such notices,
demands and other communications will be sent to each party to this Agreement at
the address indicated on the signature pages hereto, or to such other address or
to the signature pages hereto, or to such other address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party.
(b) Entire Agreement. This Agreement supersedes all prior
----------------
discussions and agreements between the parties with respect to the subject
matter hereof, and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
19
(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 9(c) shall be duly executed by or on
------------
behalf of each of the Issuer and each holder of Registrable Securities; and
further provided that no such amendment, supplement or modification that
materially and adversely affects the rights of a party hereunder shall be
enforceable against such party until such party has consented in writing to
such amendment, supplement or modification (provided that any amendment,
supplement or modification made for the purpose of adding an additional party
hereto shall not be deemed to materially or adversely affect the rights of any
party hereto).
(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 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
20
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, and (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.
(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 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.
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 Illinois 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.
21
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
ASSOCIATED HOLDINGS, INC., a
Delaware corporation
By:
--------------------------------------
Name: Thomas W. Sturgess
Title: Chairman of the Board and
Chief Executive Officer
Address:
1075 Hawthorne Drive
Itasca, IL 60143
Telecopy No.: 708-773-6491
with a copy to:
WINGATE PARTNERS, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
Telecopy No.: 214-871-8799
WINGATE PARTNERS, L.P., a Delaware
limited partnership
By: Wingate Management Company,
L.P., a Delaware limited
partnership, its general partner
By:
--------------------------------------
Thomas W. Sturgess,
General Partner
Address:
750 North St. Paul
Suite 1200
Dallas, TX 75201
Telecopy No.: 214-871-8799
22
CUMBERLAND CAPITAL CORPORATION,
a Delaware corporation
By:
--------------------------------------
Gary G. Miller,
President
Address:
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Telecopy No.: 817-870-2685
ASI Partners, L.P., a Delaware
limited partnership
By: CUMBERLAND CAPITAL CORPORATION,
a Delaware corporation,
its general partner
By:
--------------------------------------
Name: Gary G. Miller
Title: President
Address:
301 Commerce Street
Suite 3300
Fort Worth, TX 76102
Telecopy No.: 817-870-2685
GOOD CAPITAL CO., INC., a Delaware
corporation
By:
--------------------------------------
Name: Daniel J. Good
Title: President
Address:
1211 Lake Road
Lake Forest, IL 60045
Telecopy No.: 708-234-8663
23
BOISE CASCADE CORPORATION, a
Delaware corporation
By:
--------------------------------------
Carol Moerdyk,
Vice President
Address:
One Jefferson Square
Boise, Idaho 83702
ATTN: General Counsel
Telecopy No.: 208-384-7945
-----------------------------------------
Michael D. Rowsey
Address:
2370 Sonnington Drive
Dublin, OH 43017
Telecopy No.: 614-876-4922
-----------------------------------------
Daniel J. Schleppe
Address:
20 The Landing
Atlanta, GA 30350
Telecopy No.:
--------------
-----------------------------------------
Robert W. Eberspacher
Address:
6907 Huntfield Drive
Charlotte, NC 28270
Telecopy No.:
--------------
-----------------------------------------
Lawrence E. Miller
Address:
415 Sterling Road
Kenilworth, IL 60043
Telecopy No.:
--------------
24
ANNEX 3
January 31, 1992
The Parties to the Investor Warrant Agreement
dated as of January 31, 1992.
Gentlemen:
We have acted as counsel to Associated Holdings, Inc., a Delaware
corporation ("Holdings"), in connection with the authorization, execution and
delivery of the Investor Warrant Agreement dated as of January 31, 1992 (the
"Warrant Agreement") between Holdings and Boise Cascade Corporation ("Boise
Cascade") and the other parties named therein. All capitalized terms used but
not defined herein have the respective meanings given to such terms in the
Warrant Agreement.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Warrant 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
Holdings, and have made such inquiries of such officers and representatives as
we have deemed relevant and necessary as a basis for the opinion 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 Holdings, and upon the representations and
warranties of Holdings contained in the Agreement.
Based on the foregoing, and subject to the qualifications stated herein,
we are of the opinion that:
1. Holdings is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
2. Holdings has all requisite corporate power and authority to execute
2
January 31, 1992
and deliver the Warrant Agreement, the Investor Warrants for 23,129 shares of
Class A Common Stock of Holdings (the "Warrant") issued to Boise Cascade (the
"Warrants") and the Investor Registration Rights Agreement, dated as of January
31, 1992 between Holdings and Boise Cascade (the "Registration Agreement"), and
to perform its obligations thereunder. The execution, delivery and performance
by Holdings of the Warrant Agreement, the Warrants and the Registration
Agreement, and the consummation by Holdings of the transactions contemplated
thereby, have been duly authorized by all necessary corporate action on the part
of Holdings. The Warrant Agreement, the Warrants and the Registration Agreement
have been duly and validly executed and delivered by Holdings and (assuming the
due authorization, execution and delivery thereof by the other parties thereto)
constitute legal, valid, and binding obligations of Holding, enforceable against
it in accordance with their respective terms subject to (i) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws generally affecting creditors' rights and remedies; (ii) 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); (iii) the availability or efficacy of specific
performance, injunctive relief or any other equitable remedies; and (iv) except
to the extent that rights to indemnification thereunder may be limited by
federal or state securities laws or public policy relating thereto.
3. The authorized capital stock of Holdings consists of 5,000,000 share 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, $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, Holdings has outstanding (i) 896,258 shares of
Class A 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 such shares of capital stock of Holdings outstanding as of the
Closing are duly authorized, validly issued, fully paid and nonassessable,
provided that we do not express any opinion as to whether the 46,258 shares of
- --------
Common Stock issued to Good Capital Co., Inc. and Cumberland Capital
Corporation, collectively, pursuant to Investment Banking Fee and Management
Agreements with such parties are validly issued, fully paid and non-assessable.
Our opinions expressed above are limited to the laws of the State of
Illinois, the General Corporation Law of the State of Delaware and the Federal
laws of the United States of America. Partner of this Firm are members of the
Bar of the State of Illinois, and we do not hold ourselves out as being
conversant with, and do not express any opinion as to, laws of any jurisdiction
other than those of the United States of America, the State of Illinois and the
General Corporation Law of the State of Delaware. Our opinions are rendered only
with respect to the laws, and the rules, regulations and orders thereunder,
which currently are in effect.
3
January 31, 1992
This opinion is provided to you and rendered solely for your benefit in
connection with entering into the Agreement. This opinion may not be used or
relied upon by any other person or for any other purpose and may not be
disclosed, quoted, filed with a governmental agency or otherwise referred to
without our prior written consent.
Very truly yours,
D'ANCONA & PFLAUM
By:
---------------------------
Suzanne L. Saxman
cc: Associated Holdings, Inc.
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 (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 any 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
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 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 time of 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
any Preferred Dividend Payment Date as provided above, or if at any time the
Corporation shall have failed 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 common equity computed in accordance with
generally accepted accounting principles, after giving effect to any
purchases, redemptions, payments, distributions or 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) 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 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) or 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 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 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 purposes 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 shares 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 shares 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 the
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 form 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 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 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 on 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
$1,000 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 Y 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
-----------------
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
----------
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
-----------
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
-------------
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 statute, 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 or 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 to
Warrant Agreement
JOINDER AGREEMENT
JOINDER AGREEMENT, dated the date set forth below, between ASSOCIATED
HOLDINGS, INC., a Delaware corporation ("Issuer") and the undersigned
------
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 form time to time,
the "Investor Warrant Agreement"), between Issuer and Boise Cascade Corporation.
--------------------------
Each capitalized term used but not defined herein shall have the meaning
assigned to such term in the Investor Warrant Agreement.
B. Section 3.11 of the Investor Warrant Agreement requires that
Issuer cause each Stockholder to execute and deliver this Joinder Agreement.)
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned herby agrees that:
1. The undersigned acknowledges receipt of a copy of the Investor
Warrant Agreement.
2. The undersigned hereby agrees: (a) to be bound by the provisions
of Sections 7 and 8 of the Investor Warrant Agreement and Section 5 of the
Investor Registration Rights Agreement; (b) to be bound by the covenants in the
Investor Warrant Agreement applicable to it; and (c) to be treated as a
Stockholder for all purposes thereof.
IN WITNESS WHEREOF, the undersigned has executed this Joinder
Agreement on the date set forth below.
Date: January 31, 1992 WINGATE PARTNERS, L.P.
By: WINGATE MANAGEMENT COMPANY, L.P.
its general partner,
-------------------------------------
By:
Title:
CUMBERLAND CAPITAL CORPORATION
-------------------------------------
By:
Title:
ASI PARTNERS, L.P.
By: Cumberland Capital Corporation,
its general partner,
-------------------------------------
By: Gary G. Miller
Title:
GOOD CAPITAL CO., INC.
-------------------------------------
By:
Title:
Acknowledged and Agreed to
as of the date written
above:
ASSOCIATED HOLDINGS, INC.
By:
------------------------------
Name:
Title: