EXHIBIT 10.24
-------------
January 31, 1992
Mr. Daniel J. Schleppe
20 The Landing
Atlanta, Georgia 30350
Re: Grant of Non-Qualified Stock Option
-----------------------------------
Dear Mr. Schleppe:
On January 31, 1992, the Board of Directors of Associated Holdings, Inc.
(the "Company") adopted, and the stockholders of the Company approved, the
Company's 1992 Management Stock Option Plan (the "Plan") for certain directors,
officers and employees of the Company and any parent corporation or subsidiary
corporation of the Company. A copy of the Plan is annexed to this Option
Agreement as Exhibit A hereto and shall be deemed a part of this Option
---------
Agreement as if fully set forth herein. Unless the context otherwise requires,
all terms defined in the Plan shall have the same meaning when used herein.
1. The Grant
---------
The Company hereby grants to you, effective as of January 31, 1992 (the
"Grant Date"), as a matter of separate inducement and not in lieu of any salary
or other compensation for your services, the right and option to purchase (the
"Option"), in accordance with the terms and conditions set forth in the Plan and
this agreement, an aggregate of 5,681 shares of Class A Common Stock ("common
stock") of the Company, par value $0.01 per share (the "Option Shares"), at a
price of $10.00 per share (the "Exercise Price") subject to the limitations set
forth herein and in the Plan. The Option is not intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. Vesting and Exercise
--------------------
Subject to the provisions and limitations of Section 6 of the Plan and
other relevant provisions thereof and this Option Agreement you may exercise the
Option to purchase some or all of the Option Shares which are Vested Shares (as
hereinafter defined) as follows:
(a) For purposes of this agreement, the Option Shares shall be deemed
"Nonvested Shares" unless they have become
January 31, 1992
Page 2
"Vested Shares" pursuant to the following provisions. The Option Shares shall
become Vested Shares as follows:
(i) On January 31, 1993, one-fourth of the Option Shares
reserved for issuance under the Option shall become Vested Shares without
further action by the Board of Directors.
(ii) On January 31, 1994, an additional one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(iii) On January 31, 1995, an additional one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(iv) On January 31, 1996, the remaining one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(b) In addition, the Board of Directors may, in its sole discretion,
accelerate the vesting schedule set forth in paragraph (a) above.
(c) Subject to the relevant provisions and limitations contained
herein, you may exercise the Option to purchase some or all of the Vested Shares
at any time after the vesting thereof. In no event shall you be entitled to
exercise the Option for Nonvested Shares or for a fraction of a Vested Share.
(d) The unexercised portion of the Option, if any, will automatically
and without notice terminate and become null and void at 5:00 p.m., Central Time
on the date three years after the full vesting of all Option Shares reserved for
issuance under the Option (the "Option Term"). If, however, your employment
with the Company or any subsidiary or parent corporation of the Company
terminates before such termination date, this Option will terminate on the
applicable date as described in paragraph 3 below.
(e) Any exercise by you of the Option shall be in writing addressed to
the Corporate Secretary of the Company at its principal place of business and
shall be accompanied by the full amount of the Exercise Price of the shares so
purchased. Upon proper exercise and payment of the full Exercise Price therefor
(either in cash or, at your option, in shares of common stock pursuant to and in
the manner provided in Section 5a of the
January 31, 1992
Page 3
Plan), a certificate evidencing the number of shares of common stock purchased
by you pursuant to such exercise shall be delivered by the Company to you, which
certificate shall be registered in your name. Notwithstanding the foregoing, to
the extent any voting trust agreement is then in effect pursuant to which such
shares are required to be deposited in trust, then the Company may, at its
option, deliver to the applicable voting trustee or trustees thereunder such
certificate for deposit in such voting trust and you shall receive such voting
trust certificate or certificates as are contemplated under the terms and
provisions of such voting trust agreement.
(f) Upon the occurrence of a Major Transaction (as hereinafter
defined) all outstanding Option Shares, whether such Option Shares are Vested
Shares or Unvested Shares, shall be treated solely for the purposes of this
paragraph (f) as if they had been exercised in full immediately prior to such
Major Transaction. Accordingly, you shall receive your pro rata share of any
distribution of cash or property distributed to the holders of common stock. As
used herein the term "Major Transaction" shall be deemed to have occurred if:
(i) the Company shall consummate any recapitalization or
refinancing that results in a distribution of cash or property to
the holders of common stock of the Company;
(ii) the Company shall consummate any sale or exchange in a
transaction or series of transactions by the Company of all or
substantially all of its assets; or
(iii) the Company shall consummate a merger,
consolidation or like business combination or reorganization,
which results in an occurrence or has the effect of any event
described in clause (i) or clause (ii) above.
3. Termination of Employment
-------------------------
Upon the termination of your employment with the Company and any
parent corporation or subsidiary corporation of the Company, the Option shall,
to the extent not previously exercised, automatically terminate and become null
and void, provided that:
(1) if you shall die while in the employ of the Company or any
parent corporation or subsidiary corporation of the Company, your estate may,
until the earlier of (x) six (6) months after the date of death or (y) the
expiration of the
January 31, 1992
Page 4
Option Term, exercise the Option with respect to all or any part of the Option
Shares which you were entitled to purchase immediately prior to the time of your
death;
(2) in the case of termination of your employment due to
Disability, you may, until the earlier of (x) six (6) months after the date your
employment terminates or (y) the expiration of the Option Term, exercise the
Option with respect to all or any part of the Option Shares which you were
entitled to purchase immediately prior to the time of such termination; and
(3) in the case of termination for any reason other than those
specified in (1) or (2) above, you may, until the earlier of (x) thirty (30)
days after the date of such termination or (y) the expiration of the Option
Term, exercise your Option with respect to all or any part of the Option Shares
which you were entitled to purchase immediately prior to such termination,
except that, if you are terminated for good cause (as defined in the Plan and as
determined by the Committee) or if you voluntarily terminate your employment
with the Company or any parent corporation or subsidiary corporation of the
Company without the consent of the Company or any such parent corporation or
subsidiary corporation of the Company, then you shall forfeit your rights under
the Option except as to those Option Shares already purchased.
4. Transferability
---------------
The Option is not transferable by you otherwise than by will or the
laws of descent and distribution and is exercisable, during your lifetime, only
by you. The Option may not be assigned, transferred (except by will or the laws
of descent and distribution), pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar proceeding. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Option contrary to the provisions
hereof or of the Plan, and the levy of any attachment or similar proceeding upon
the Option, shall be null and void and without effect.
By your acceptance of this Option Agreement, you agree that you will
not sell or otherwise dispose of the Option, any common stock acquired pursuant
to the Option or any other "derivative security" (as defined by Rule 16a-1(c)
under the Securities Exchange Act of 1934, as amended) during the period ending
six months from the date hereof, and you further agree that any such common
stock or any other derivative security shall be subject to the restrictions and
limitations on transfer contained in any stockholders agreement or similar
agreement to
January 31, 1992
Page 5
which you may be a party at the time you acquire such common stock or such
derivative security pursuant to the exercise of the Option.
5. Reduction in Option Shares Based on IRR Achieved
------------------------------------------------
(a) The number of Option Shares purchasable or purchased by you upon
the exercise of the Option granted hereunder shall be reduced automatically to
the extent that the IRR (as defined below) achieved by the Sponsor Holders (as
defined below) is less than 60%. Such reduction in Option Shares shall be based
on the table set forth on Exhibit B hereto. No reduction in the number of such
---------
Option Shares shall occur if the IRR so achieved by the Sponsor Holders is 60%
or greater. If the IRR so achieved is less than 35%, the Option granted
hereunder shall terminate and any and all Option Shares previously purchased
pursuant to any exercise of the Option shall automatically be cancelled and the
certificates representing such Option Shares returned to the Company. You
hereby grant to the Company your power of attorney to effect any and all
reductions and cancellations permitted hereunder and to execute, acknowledge,
and deliver any and all documents and instruments on your behalf deemed
necessary by the Company to effect such reductions and cancellations. In the
event of a reduction of the number of Option Shares, the reduction will be
applied first to any Unvested Shares, second to any unexercised portion of
Vested Shares subject to the Option in the inverse order of exerciseability
until the unissued Option Shares are exhausted, and then to any issued Option
Shares.
(b) Upon each date Liquid Proceeds (as defined below) are received or
first held by the Sponsor Holders, the IRR to that date shall be determined by
the Board of Directors of the Company taking account of the dates and amounts
used in prior calculations and the properties that have become Liquid Proceeds
on such date. The reduction, if any, under this Section 5 shall be computed by
using the highest IRR computed on any such date or the final calculation date
under paragraph (d) below.
(c) If Option Shares have been purchased under the Option and are
thereafter cancelled, the Company shall return the amount of the Exercise Price
paid with respect thereto, together with interest from the date of exercise to
the date of return at the applicable federal long-term rate plus 100 basis
points.
(d) As used herein, the term "IRR" shall mean the annual rate of
return to the Sponsor Holders on their Common Stock Investment (as defined
below), compounded annually, from January 31, 1992 to the date of calculation.
A final calculation shall be made on the earliest of (i) January 31, 2000; (ii)
the
January 31, 1992
Page 6
date the Sponsor Holders collectively have disposed of all of their shares of
common stock and hold no other property received with respect to such shares of
common stock that is not Liquid Proceeds; and (iii) the first date that the
Sponsor Holders own only Liquid Proceeds with respect to their shares of common
stock. For purposes of computing IRR at any time (i) only Liquid Proceeds
received or held by the Sponsor Holders in respect of their Common Stock
Investment shall be included as a payment or distribution in respect thereof and
(ii) all fee income and warrants or other rights to acquire common stock or
other capital stock of the Company shall be disregarded.
(e) As used herein, the term "Sponsor Holders" shall mean, collectively,
Wingate Partners, L.P. and its affiliates.
(f) As used herein, the term "Common Stock Investment" shall mean the
purchase price for the shares of common stock, par value $0.01 per share, of the
Company purchased by the Sponsor Holders at the closing of the acquisition of
the wholesale division of Boise Cascade Office Products Corporation by
Associated Stationers, Inc., a wholly-owned subsidiary of the Company, but
excluding any shares of common stock sold or otherwise transferred by any
Sponsor Holder to any officer, director or employee of the Company or any of its
subsidiaries.
(g) As used herein, the term "Liquid Proceeds" shall mean (i) shares
of stock or other securities that (A) are registered under the Securities Act of
1933, as amended (the "Securities Act"), (B) are traded on the New York Stock
Exchange, the American Stock Exchange or one approved for quotation on the
NASDAQ National Market System at the time of calculation of the IRR, and (C) can
be sold on such market by the holder without incurring a significant discount
from the average of the bid and asked prices for such shares of stock or other
securities at such time; (ii) currency of the United States of America; (iii)
negotiable instruments drawn on a bank with at least $10 billion in assets and
payable in currency of the United States of America; (iv) obligations issued or
assumed by the United States of America or any agency or instrumentality
thereof; and (v) on January 31, 2000 any shares of common stock of the Company
or any other property received upon or with respect to shares of common stock of
the Company then held by the Sponsor Holders, which was not previously treated
as Liquid Proceeds shall be deemed to have been sold for an amount of cash equal
to its then fair market value as determined in good faith by the Board of
Directors of the Company and treated as Liquid Proceeds.
(h) any certificate or certificates (including without limitation,
any voting trust certificates) representing any Option Shares purchased by you
hereunder shall bear such legends
January 31, 1992
Page 7
as the Company deems reasonably necessary to protect the parties hereto
including, without limitation, a legend evidencing the reduction and
cancellation rights of the Company pursuant to this Section 5.
6. Registration
------------
Unless there is in effect a registration statement under the
Securities Act with respect to the issuance of the Option Shares (and, if
required, there is available for delivery a prospectus meeting the requirements
of Section 10(a)(3) of the Securities Act), you will, upon the exercise of the
Option (i) represent and warrant in writing to the Corporate Secretary of the
Company that the Option Shares then being purchased by you pursuant to the
Option are being acquired for investment only and not with a view to the resale
or distribution thereof, (ii) acknowledge and confirm that the Option Shares
purchased may not be sold unless registered for sale under the Securities Act or
pursuant to an exemption from such registration and (iii) agree that the
certificates evidencing such Option Shares shall bear a legend to the effect of
the foregoing.
7. Withholding Taxes
-----------------
By your acceptance hereof, and in accordance with Section 8(c) of the
Plan, you agree that (i) in the case of issuance of common stock or other
securities hereunder, the Company, as a condition of such issuance may require
the payment (through withholding from any payment otherwise due you from the
Company or any parent corporation or subsidiary corporation of the Company or,
at your option, a reduction in the number of shares of common stock of the
Company to be received, determined by the fair market value of such shares) of
any federal, state, local or foreign taxes required by law to be withheld with
respect to such issuance, and (ii) the Company shall have the right to establish
such other procedures as it may determine in its sole discretion with respect to
such issuances.
8. Miscellaneous
-------------
(a) This Option Agreement is subject to all the terms, conditions,
limitations and restrictions contained in the Plan. In the event of any
conflict or inconsistency between the terms hereof and the terms of the Plan,
the terms of the Plan shall be controlling.
(b) This Option Agreement is not a contract of employment and the
terms of your employment shall not be affected hereby or by any agreement
referred to herein except to the extent specifically so provided herein or
therein. Nothing
January 31, 1992
Page 8
herein shall be construed to impose any obligation on the Company or on any
parent corporation or subsidiary corporation of the Company to continue your
employment, and it shall not impose any obligation on your part to remain in the
employ of the Company or of any parent corporation or subsidiary corporation of
the Company.
Please indicate your acceptance of all the terms and conditions of the
Option and the Plan by signing and returning a copy of this Option Agreement.
Very truly yours,
ASSOCIATED HOLDINGS, INC.
By:
----------------------------
Thomas W. Sturgess,
Chairman of the Board and
Chief Executive Officer
ACCEPTED
_______________________________
DANIEL J. SCHLEPPE
Date: January 31, 1992
January 31, 1992
Page 9
EXHIBIT A
---------
1992 Management Stock Option Plan
January 31, 1992
Page 10
EXHIBIT B
---------
Percentage of Option Shares IRR
to be Retained by the Optionee Achieved %
- ------------------------------ ----------
100.000% 60 or more
98.333 59
96.667 58
95.000 57
93.333 56
91.667 55
90.000 54
88.333 53
86.667 52
85.000 51
83.333 50
81.667 49
80.000 48
78.333 47
76.667 46
75.000 45
73.333 44
71.667 43
70.000 42
68.333 41
66.667 40
60.000 39
53.333 38
46.667 37
40.000 36
33.333 35
0 less than 35
January 31, 1992
Michael D. Rowsey
2370 Sonnington Drive
Dublin, OH 43017
Re: Grant of Non-Qualified Stock Option
-----------------------------------
Dear Mr. Rowsey:
On January 31, 1992, the Board of Directors of Associated Holdings,
Inc. (the "Company") adopted, and the stockholders of the Company approved, the
Company's 1992 Management Stock Option Plan (the "Plan") for certain directors,
officers and employees of the Company and any parent corporation or subsidiary
corporation of the Company. A copy of the Plan is annexed to this Option
Agreement as Exhibit A hereto and shall be deemed a part of this Option
---------
Agreement as if fully set forth herein. Unless the context otherwise requires,
all terms defined in the Plan shall have the same meaning when used herein.
1. The Grant
---------
The Company hereby grants to you, effective as of January 31, 1992 (the
"Grant Date"), as a matter of separate inducement and not in lieu of any salary
or other compensation for your services, the right and option to purchase (the
"Option"), in accordance with the terms and conditions set forth in the Plan and
this agreement, an aggregate of 6,679 shares of Class A Common Stock ("common
stock") of the Company, par value $0.01 per share (the "Option Shares"), at a
price of $10.00 per share (the "Exercise Price") subject to the limitations set
forth herein and in the Plan. The Option is not intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. Vesting and Exercise
--------------------
Subject to the provisions and limitations of Section 6 of the Plan and
other relevant provisions thereof and this Option Agreement you may exercise the
Option to purchase some or all of the Option Shares which are Vested Shares (as
hereinafter defined) as follows:
(a) For purposes of this agreement, the Option Shares shall be deemed
"Nonvested Shares" unless they have become
January 31, 1992
Page 2
"Vested Shares" pursuant to the following provisions. The Option Shares shall
become Vested Shares as follows:
(i) On January 31, 1993, one-fourth of the Option Shares reserved
for issuance under the Option shall become Vested Shares without further
action by the Board of Directors.
(ii) On January 31, 1994, an additional one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(iii) On January 31, 1995, an additional one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(iv) On January 31, 1996, the remaining one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(b) In addition, the Board of Directors may, in its sole discretion,
accelerate the vesting schedule set forth in paragraph (a) above.
(c) Subject to the relevant provisions and limitations contained
herein, you may exercise the Option to purchase some or all of the Vested Shares
at any time after the vesting thereof. In no event shall you be entitled to
exercise the Option for Nonvested Shares or for a fraction of a Vested Share.
(d) The unexercised portion of the Option, if any, will automatically
and without notice terminate and become null and void at 5:00 p.m., Central Time
on the date three years after the full vesting of all Option Shares reserved for
issuance under the Option (the "Option Term"). If, however, your employment
with the Company or any subsidiary or parent corporation of the Company
terminates before such termination date, this Option will terminate on the
applicable date as described in paragraph 3 below.
(e) Any exercise by you of the Option shall be in writing addressed
to the Corporate Secretary of the Company at its principal place of business and
shall be accompanied by the full amount of the Exercise Price of the shares so
purchased. Upon proper exercise and payment of the full Exercise Price therefor
(either in cash or, at your option, in shares of common stock pursuant to and in
the manner provided in Section 5a of the
January 31, 1992
Page 3
Plan), a certificate evidencing the number of shares of common stock purchased
by you pursuant to such exercise shall be delivered by the Company to you, which
certificate shall be registered in your name. Notwithstanding the foregoing, to
the extent any voting trust agreement is then in effect pursuant to which such
shares are required to be deposited in trust, then the Company may, at its
option, deliver to the applicable voting trustee or trustees thereunder such
certificate for deposit in such voting trust and you shall receive such voting
trust certificate or certificates as are contemplated under the terms and
provisions of such voting trust agreement.
(f) Upon the occurrence of a Major Transaction (as hereinafter
defined) all outstanding Option Shares, whether such Option Shares are Vested
Shares or Unvested Shares, shall be treated solely for the purposes of this
paragraph (f) as if they had been exercised in full immediately prior to such
Major Transaction. Accordingly, you shall receive your pro rata share of any
distribution of cash or property distributed to the holders of common stock. As
used herein the term "Major Transaction" shall be deemed to have occurred if:
(i) the Company shall consummate any recapitalization or
refinancing that results in a distribution of cash or property to
the holders of common stock of the Company;
(ii) the Company shall consummate any sale or exchange in
a transaction or series of transactions by the Company of all or
substantially all of its assets; or
(iii) the Company shall consummate a merger, consolidation
or like business combination or reorganization, which results in
an occurrence or has the effect of any event described in clause
(i) or clause (ii) above.
3. Termination of Employment
-------------------------
Upon the termination of your employment with the Company and any
parent corporation or subsidiary corporation of the Company, the Option shall,
to the extent not previously exercised, automatically terminate and become null
and void, provided that:
(1) if you shall die while in the employ of the Company or any
parent corporation or subsidiary corporation of the Company, your estate may,
until the earlier of (x) six (6) months after the date of death or (y) the
expiration of the
January 31, 1992
Page 4
Option Term, exercise the Option with respect to all or any part of the Option
Shares which you were entitled to purchase immediately prior to the time of your
death;
(2) in the case of termination of your employment due to
Disability, you may, until the earlier of (x) six (6) months after the date your
employment terminates or (y) the expiration of the Option Term, exercise the
Option with respect to all or any part of the Option Shares which you were
entitled to purchase immediately prior to the time of such termination; and
(3) in the case of termination for any reason other than those
specified in (1) or (2) above, you may, until the earlier of (x) thirty (30)
days after the date of such termination or (y) the expiration of the Option
Term, exercise your Option with respect to all or any part of the Option Shares
which you were entitled to purchase immediately prior to such termination,
except that, if you are terminated for good cause (as defined in the Plan and as
determined by the Committee) or if you voluntarily terminate your employment
with the Company or any parent corporation or subsidiary corporation of the
Company without the consent of the Company or any such parent corporation or
subsidiary corporation of the Company, then you shall forfeit your rights under
the Option except as to those Option Shares already purchased.
4. Transferability
---------------
The Option is not transferable by you otherwise than by will or the
laws of descent and distribution and is exercisable, during your lifetime, only
by you. The Option may not be assigned, transferred (except by will or the laws
of descent and distribution), pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar proceeding. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Option contrary to the provisions
hereof or of the Plan, and the levy of any attachment or similar proceeding upon
the Option, shall be null and void and without effect.
By your acceptance of this Option Agreement, you agree that you will
not sell or otherwise dispose of the Option, any common stock acquired pursuant
to the Option or any other "derivative security" (as defined by Rule 16a-1(c)
under the Securities Exchange Act of 1934, as amended) during the period ending
six months from the date hereof, and you further agree that any such common
stock or any other derivative security shall be subject to the restrictions and
limitations on transfer contained in any stockholders agreement or similar
agreement to
January 31, 1992
Page 5
which you may be a party at the time you acquire such common stock or such
derivative security pursuant to the exercise of the Option.
5. Reduction in Option Shares Based on IRR Achieved
------------------------------------------------
(a) The number of Option Shares purchasable or purchased by you upon
the exercise of the Option granted hereunder shall be reduced automatically to
the extent that the IRR (as defined below) achieved by the Sponsor Holders (as
defined below) is less than 60%. Such reduction in Option Shares shall be based
on the table set forth on Exhibit B hereto. No reduction in the number of such
---------
Option Shares shall occur if the IRR so achieved by the Sponsor Holders is 60%
or greater. If the IRR so achieved is less than 35%, the Option granted
hereunder shall terminate and any and all Option Shares previously purchased
pursuant to any exercise of the Option shall automatically be cancelled and the
certificates representing such Option Shares returned to the Company. You
hereby grant to the Company your power of attorney to effect any and all
reductions and cancellations permitted hereunder and to execute, acknowledge,
and deliver any and all documents and instruments on your behalf deemed
necessary by the Company to effect such reductions and cancellations. In the
event of a reduction of the number of Option Shares, the reduction will be
applied first to any Unvested Shares, second to any unexercised portion of
Vested Shares subject to the Option in the inverse order of exerciseability
until the unissued Option Shares are exhausted, and then to any issued Option
Shares.
(b) Upon each date Liquid Proceeds (as defined below) are received or
first held by the Sponsor Holders, the IRR to that date shall be determined by
the Board of Directors of the Company taking account of the dates and amounts
used in prior calculations and the properties that have become Liquid Proceeds
on such date. The reduction, if any, under this Section 5 shall be computed by
using the highest IRR computed on any such date or the final calculation date
under paragraph (d) below.
(c) If Option Shares have been purchased under the Option and are
thereafter cancelled, the Company shall return the amount of the Exercise Price
paid with respect thereto, together with interest from the date of exercise to
the date of return at the applicable federal long-term rate plus 100 basis
points.
(d) As used herein, the term "IRR" shall mean the annual rate of
return to the Sponsor Holders on their Common Stock Investment (as defined
below), compounded annually, from January 31, 1992 to the date of calculation.
A final calculation shall be made on the earliest of (i) January 31, 2000; (ii)
the
January 31, 1992
Page 6
date the Sponsor Holders collectively have disposed of all of their shares of
common stock and hold no other property received with respect to such shares of
common stock that is not Liquid Proceeds; and (iii) the first date that the
Sponsor Holders own only Liquid Proceeds with respect to their shares of common
stock. For purposes of computing IRR at any time (i) only Liquid Proceeds
received or held by the Sponsor Holders in respect of their Common Stock
Investment shall be included as a payment or distribution in respect thereof and
(ii) all fee income and warrants or other rights to acquire common stock or
other capital stock of the Company shall be disregarded.
(e) As used herein, the term "Sponsor Holders" shall mean,
collectively, Wingate Partners, L.P. and its affiliates.
(f) As used herein, the term "Common Stock Investment" shall mean the
purchase price for the shares of common stock, par value $0.01 per share, of the
Company purchased by the Sponsor Holders at the closing of the acquisition of
the wholesale division of Boise Cascade Office Products Corporation by
Associated Stationers, Inc., a wholly-owned subsidiary of the Company, but
excluding any shares of common stock sold or otherwise transferred by any
Sponsor Holder to any officer, director or employee of the Company or any of its
subsidiaries.
(g) As used herein, the term "Liquid Proceeds" shall mean (i) shares
of stock or other securities that (A) are registered under the Securities Act of
1933, as amended (the "Securities Act"), (B) are traded on the New York Stock
Exchange, the American Stock Exchange or one approved for quotation on the
NASDAQ National Market System at the time of calculation of the IRR, and (C) can
be sold on such market by the holder without incurring a significant discount
from the average of the bid and asked prices for such shares of stock or other
securities at such time; (ii) currency of the United States of America; (iii)
negotiable instruments drawn on a bank with at least $10 billion in assets and
payable in currency of the United States of America; (iv) obligations issued or
assumed by the United States of America or any agency or instrumentality
thereof; and (v) on January 31, 2000 any shares of common stock of the Company
or any other property received upon or with respect to shares of common stock of
the Company then held by the Sponsor Holders, which was not previously treated
as Liquid Proceeds shall be deemed to have been sold for an amount of cash equal
to its then fair market value as determined in good faith by the Board of
Directors of the Company and treated as Liquid Proceeds.
(h) any certificate or certificates (including without limitation,
any voting trust certificates) representing any Option Shares purchased by you
hereunder shall bear such legends
January 31, 1992
Page 7
as the Company deems reasonably necessary to protect the parties hereto
including, without limitation, a legend evidencing the reduction and
cancellation rights of the Company pursuant to this Section 5.
6. Registration
------------
Unless there is in effect a registration statement under the
Securities Act with respect to the issuance of the Option Shares (and, if
required, there is available for delivery a prospectus meeting the requirements
of Section 10(a)(3) of the Securities Act), you will, upon the exercise of the
Option (i) represent and warrant in writing to the Corporate Secretary of the
Company that the Option Shares then being purchased by you pursuant to the
Option are being acquired for investment only and not with a view to the resale
or distribution thereof, (ii) acknowledge and confirm that the Option Shares
purchased may not be sold unless registered for sale under the Securities Act or
pursuant to an exemption from such registration and (iii) agree that the
certificates evidencing such Option Shares shall bear a legend to the effect of
the foregoing.
7. Withholding Taxes
-----------------
By your acceptance hereof, and in accordance with Section 8(c) of the
Plan, you agree that (i) in the case of issuance of common stock or other
securities hereunder, the Company, as a condition of such issuance may require
the payment (through withholding from any payment otherwise due you from the
Company or any parent corporation or subsidiary corporation of the Company or,
at your option, a reduction in the number of shares of common stock of the
Company to be received, determined by the fair market value of such shares) of
any federal, state, local or foreign taxes required by law to be withheld with
respect to such issuance, and (ii) the Company shall have the right to establish
such other procedures as it may determine in its sole discretion with respect to
such issuances.
8. Miscellaneous
-------------
(a) This Option Agreement is subject to all the terms, conditions,
limitations and restrictions contained in the Plan. In the event of any
conflict or inconsistency between the terms hereof and the terms of the Plan,
the terms of the Plan shall be controlling.
(b) This Option Agreement is not a contract of employment and the
terms of your employment shall not be affected hereby or by any agreement
referred to herein except to the extent specifically so provided herein or
therein. Nothing
January 31, 1992
Page 8
herein shall be construed to impose any obligation on the Company or on any
parent corporation or subsidiary corporation of the Company to continue your
employment, and it shall not impose any obligation on your part to remain in the
employ of the Company or of any parent corporation or subsidiary corporation of
the Company.
Please indicate your acceptance of all the terms and conditions of the
Option and the Plan by signing and returning a copy of this Option Agreement.
Very truly yours,
ASSOCIATED HOLDINGS, INC.
By:
-----------------------------
Thomas W. Sturgess,
Chairman of the Board and
Chief Executive Officer
ACCEPTED
- -------------------------------
MICHAEL D. ROWSEY
Date: January 31, 1992
January 31, 1992
Page 9
EXHIBIT A
---------
1992 Management Stock Option Plan
January 31, 1992
Page 10
EXHIBIT B
---------
Percentage of Option Shares IRR
to be Retained by the Optionee Achieved %
------------------------------ ----------
100.000% 60 or more
98.333 59
96.667 58
95.000 57
93.333 56
91.667 55
90.000 54
88.333 53
86.667 52
85.000 51
83.333 50
81.667 49
80.000 48
78.333 47
76.667 46
75.000 45
73.333 44
71.667 43
70.000 42
68.333 41
66.667 40
60.000 39
53.333 38
46.667 37
40.000 36
33.333 35
0 less than 35
January 31, 1992
Mr. Lawrence E. Miller
415 Sterling Road
Kenilworth, IL 60043
Re: Grant of Non-Qualified Stock Option
-----------------------------------
Dear Mr. Miller:
On January 31, 1992, the Board of Directors of Associated Holdings,
Inc. (the "Company") adopted, and the stockholders of the Company approved, the
Company's 1992 Management Stock Option Plan (the "Plan") for certain directors,
officers and employees of the Company and any parent corporation or subsidiary
corporation of the Company. A copy of the Plan is annexed to this Option
Agreement as Exhibit A hereto and shall be deemed a part of this Option
---------
Agreement as if fully set forth herein. Unless the context otherwise requires,
all terms defined in the Plan shall have the same meaning when used herein.
1. The Grant
---------
The Company hereby grants to you, effective as of January 31, 1992 (the
"Grant Date"), as a matter of separate inducement and not in lieu of any salary
or other compensation for your services, the right and option to purchase (the
"Option"), in accordance with the terms and conditions set forth in the Plan and
this agreement, an aggregate of 4,163 shares of Class A Common Stock ("common
stock") of the Company, par value $0.01 per share (the "Option Shares"), at a
price of $10.00 per share (the "Exercise Price") subject to the limitations set
forth herein and in the Plan. The Option is not intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. Vesting and Exercise
--------------------
Subject to the provisions and limitations of Section 6 of the Plan and
other relevant provisions thereof and this Option Agreement you may exercise the
Option to purchase some or all of the Option Shares which are Vested Shares (as
hereinafter defined) as follows:
(a) For purposes of this agreement, the Option Shares shall be deemed
"Nonvested Shares" unless they have become
January 31, 1992
Page 2
"Vested Shares" pursuant to the following provisions. The Option Shares shall
become Vested Shares as follows:
(i) On January 31, 1993, one-fourth of the Option Shares
reserved for issuance under the Option shall become Vested Shares without
further action by the Board of Directors.
(ii) On January 31, 1994, an additional one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(iii) On January 31, 1995, an additional one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(iv) On January 31, 1996, the remaining one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(b) In addition, the Board of Directors may, in its sole discretion,
accelerate the vesting schedule set forth in paragraph (a) above.
(c) Subject to the relevant provisions and limitations contained
herein, you may exercise the Option to purchase some or all of the Vested Shares
at any time after the vesting thereof. In no event shall you be entitled to
exercise the Option for Nonvested Shares or for a fraction of a Vested Share.
(d) The unexercised portion of the Option, if any, will automatically
and without notice terminate and become null and void at 5:00 p.m., Central Time
on the date three years after the full vesting of all Option Shares reserved for
issuance under the Option (the "Option Term"). If, however, your employment
with the Company or any subsidiary or parent corporation of the Company
terminates before such termination date, this Option will terminate on the
applicable date as described in paragraph 3 below.
(e) Any exercise by you of the Option shall be in writing addressed to
the Corporate Secretary of the Company at its principal place of business and
shall be accompanied by the full amount of the Exercise Price of the shares so
purchased. Upon proper exercise and payment of the full Exercise Price therefor
(either in cash or, at your option, in shares of common stock pursuant to and in
the manner provided in Section 5a of the
January 31, 1992
Page 3
Plan), a certificate evidencing the number of shares of common stock purchased
by you pursuant to such exercise shall be delivered by the Company to you, which
certificate shall be registered in your name. Notwithstanding the foregoing, to
the extent any voting trust agreement is then in effect pursuant to which such
shares are required to be deposited in trust, then the Company may, at its
option, deliver to the applicable voting trustee or trustees thereunder such
certificate for deposit in such voting trust and you shall receive such voting
trust certificate or certificates as are contemplated under the terms and
provisions of such voting trust agreement.
(f) Upon the occurrence of a Major Transaction (as hereinafter
defined) all outstanding Option Shares, whether such Option Shares are Vested
Shares or Unvested Shares, shall be treated solely for the purposes of this
paragraph (f) as if they had been exercised in full immediately prior to such
Major Transaction. Accordingly, you shall receive your pro rata share of any
distribution of cash or property distributed to the holders of common stock. As
used herein the term "Major Transaction" shall be deemed to have occurred if:
(i) the Company shall consummate any recapitalization or
refinancing that results in a distribution of cash or property to
the holders of common stock of the Company;
(ii) the Company shall consummate any sale or exchange in a
transaction or series of transactions by the Company of all or
substantially all of its assets; or
(iii) the Company shall consummate a merger,
consolidation or like business combination or reorganization,
which results in an occurrence or has the effect of any event
described in clause (i) or clause (ii) above.
3. Termination of Employment
-------------------------
Upon the termination of your employment with the Company and any
parent corporation or subsidiary corporation of the Company, the Option shall,
to the extent not previously exercised, automatically terminate and become null
and void, provided that:
(1) if you shall die while in the employ of the Company or any
parent corporation or subsidiary corporation of the Company, your estate may,
until the earlier of (x) six (6) months after the date of death or (y) the
expiration of the
January 31, 1992
Page 4
Option Term, exercise the Option with respect to all or any part of the Option
Shares which you were entitled to purchase immediately prior to the time of your
death;
(2) in the case of termination of your employment due to
Disability, you may, until the earlier of (x) six (6) months after the date your
employment terminates or (y) the expiration of the Option Term, exercise the
Option with respect to all or any part of the Option Shares which you were
entitled to purchase immediately prior to the time of such termination; and
(3) in the case of termination for any reason other than those
specified in (1) or (2) above, you may, until the earlier of (x) thirty (30)
days after the date of such termination or (y) the expiration of the Option
Term, exercise your Option with respect to all or any part of the Option Shares
which you were entitled to purchase immediately prior to such termination,
except that, if you are terminated for good cause (as defined in the Plan and as
determined by the Committee) or if you voluntarily terminate your employment
with the Company or any parent corporation or subsidiary corporation of the
Company without the consent of the Company or any such parent corporation or
subsidiary corporation of the Company, then you shall forfeit your rights under
the Option except as to those Option Shares already purchased.
4. Transferability
---------------
The Option is not transferable by you otherwise than by will or the
laws of descent and distribution and is exercisable, during your lifetime, only
by you. The Option may not be assigned, transferred (except by will or the laws
of descent and distribution), pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar proceeding. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Option contrary to the provisions
hereof or of the Plan, and the levy of any attachment or similar proceeding upon
the Option, shall be null and void and without effect.
By your acceptance of this Option Agreement, you agree that you will
not sell or otherwise dispose of the Option, any common stock acquired pursuant
to the Option or any other "derivative security" (as defined by Rule 16a-1(c)
under the Securities Exchange Act of 1934, as amended) during the period ending
six months from the date hereof, and you further agree that any such common
stock or any other derivative security shall be subject to the restrictions and
limitations on transfer contained in any stockholders agreement or similar
agreement to
January 31, 1992
Page 5
which you may be a party at the time you acquire such common stock or such
derivative security pursuant to the exercise of the Option.
5. Reduction in Option Shares Based on IRR Achieved
------------------------------------------------
(a) The number of Option Shares purchasable or purchased by you upon
the exercise of the Option granted hereunder shall be reduced automatically to
the extent that the IRR (as defined below) achieved by the Sponsor Holders (as
defined below) is less than 60%. Such reduction in Option Shares shall be based
on the table set forth on Exhibit B hereto. No reduction in the number of such
---------
Option Shares shall occur if the IRR so achieved by the Sponsor Holders is 60%
or greater. If the IRR so achieved is less than 35%, the Option granted
hereunder shall terminate and any and all Option Shares previously purchased
pursuant to any exercise of the Option shall automatically be cancelled and the
certificates representing such Option Shares returned to the Company. You
hereby grant to the Company your power of attorney to effect any and all
reductions and cancellations permitted hereunder and to execute, acknowledge,
and deliver any and all documents and instruments on your behalf deemed
necessary by the Company to effect such reductions and cancellations. In the
event of a reduction of the number of Option Shares, the reduction will be
applied first to any Unvested Shares, second to any unexercised portion of
Vested Shares subject to the Option in the inverse order of exerciseability
until the unissued Option Shares are exhausted, and then to any issued Option
Shares.
(b) Upon each date Liquid Proceeds (as defined below) are received or
first held by the Sponsor Holders, the IRR to that date shall be determined by
the Board of Directors of the Company taking account of the dates and amounts
used in prior calculations and the properties that have become Liquid Proceeds
on such date. The reduction, if any, under this Section 5 shall be computed by
using the highest IRR computed on any such date or the final calculation date
under paragraph (d) below.
(c) If Option Shares have been purchased under the Option and are
thereafter cancelled, the Company shall return the amount of the Exercise Price
paid with respect thereto, together with interest from the date of exercise to
the date of return at the applicable federal long-term rate plus 100 basis
points.
(d) As used herein, the term "IRR" shall mean the annual rate of
return to the Sponsor Holders on their Common Stock Investment (as defined
below), compounded annually, from January 31, 1992 to the date of calculation.
A final calculation shall be made on the earliest of (i) January 31, 2000; (ii)
the
January 31, 1992
Page 6
date the Sponsor Holders collectively have disposed of all of their shares of
common stock and hold no other property received with respect to such shares of
common stock that is not Liquid Proceeds; and (iii) the first date that the
Sponsor Holders own only Liquid Proceeds with respect to their shares of common
stock. For purposes of computing IRR at any time (i) only Liquid Proceeds
received or held by the Sponsor Holders in respect of their Common Stock
Investment shall be included as a payment or distribution in respect thereof and
(ii) all fee income and warrants or other rights to acquire common stock or
other capital stock of the Company shall be disregarded.
(e) As used herein, the term "Sponsor Holders" shall mean, collectively,
Wingate Partners, L.P. and its affiliates.
(f) As used herein, the term "Common Stock Investment" shall mean the
purchase price for the shares of common stock, par value $0.01 per share, of the
Company purchased by the Sponsor Holders at the closing of the acquisition of
the wholesale division of Boise Cascade Office Products Corporation by
Associated Stationers, Inc., a wholly-owned subsidiary of the Company, but
excluding any shares of common stock sold or otherwise transferred by any
Sponsor Holder to any officer, director or employee of the Company or any of its
subsidiaries.
(g) As used herein, the term "Liquid Proceeds" shall mean (i) shares
of stock or other securities that (A) are registered under the Securities Act of
1933, as amended (the "Securities Act"), (B) are traded on the New York Stock
Exchange, the American Stock Exchange or one approved for quotation on the
NASDAQ National Market System at the time of calculation of the IRR, and (C) can
be sold on such market by the holder without incurring a significant discount
from the average of the bid and asked prices for such shares of stock or other
securities at such time; (ii) currency of the United States of America; (iii)
negotiable instruments drawn on a bank with at least $10 billion in assets and
payable in currency of the United States of America; (iv) obligations issued or
assumed by the United States of America or any agency or instrumentality
thereof; and (v) on January 31, 2000 any shares of common stock of the Company
or any other property received upon or with respect to shares of common stock of
the Company then held by the Sponsor Holders, which was not previously treated
as Liquid Proceeds shall be deemed to have been sold for an amount of cash equal
to its then fair market value as determined in good faith by the Board of
Directors of the Company and treated as Liquid Proceeds.
(h) any certificate or certificates (including without limitation,
any voting trust certificates) representing any Option Shares purchased by you
hereunder shall bear such legends
January 31, 1992
Page 7
as the Company deems reasonably necessary to protect the parties hereto
including, without limitation, a legend evidencing the reduction and
cancellation rights of the Company pursuant to this Section 5.
6. Registration
------------
Unless there is in effect a registration statement under the
Securities Act with respect to the issuance of the Option Shares (and, if
required, there is available for delivery a prospectus meeting the requirements
of Section 10(a)(3) of the Securities Act), you will, upon the exercise of the
Option (i) represent and warrant in writing to the Corporate Secretary of the
Company that the Option Shares then being purchased by you pursuant to the
Option are being acquired for investment only and not with a view to the resale
or distribution thereof, (ii) acknowledge and confirm that the Option Shares
purchased may not be sold unless registered for sale under the Securities Act or
pursuant to an exemption from such registration and (iii) agree that the
certificates evidencing such Option Shares shall bear a legend to the effect of
the foregoing.
7. Withholding Taxes
-----------------
By your acceptance hereof, and in accordance with Section 8(c) of the
Plan, you agree that (i) in the case of issuance of common stock or other
securities hereunder, the Company, as a condition of such issuance may require
the payment (through withholding from any payment otherwise due you from the
Company or any parent corporation or subsidiary corporation of the Company or,
at your option, a reduction in the number of shares of common stock of the
Company to be received, determined by the fair market value of such shares) of
any federal, state, local or foreign taxes required by law to be withheld with
respect to such issuance, and (ii) the Company shall have the right to establish
such other procedures as it may determine in its sole discretion with respect to
such issuances.
8. Miscellaneous
-------------
(a) This Option Agreement is subject to all the terms, conditions,
limitations and restrictions contained in the Plan. In the event of any
conflict or inconsistency between the terms hereof and the terms of the Plan,
the terms of the Plan shall be controlling.
(b) This Option Agreement is not a contract of employment and the
terms of your employment shall not be affected hereby or by any agreement
referred to herein except to the extent specifically so provided herein or
therein. Nothing
January 31, 1992
Page 8
herein shall be construed to impose any obligation on the Company or on any
parent corporation or subsidiary corporation of the Company to continue your
employment, and it shall not impose any obligation on your part to remain in the
employ of the Company or of any parent corporation or subsidiary corporation of
the Company.
Please indicate your acceptance of all the terms and conditions of the
Option and the Plan by signing and returning a copy of this Option Agreement.
Very truly yours,
ASSOCIATED HOLDINGS, INC.
By:
----------------------------
Thomas W. Sturgess,
Chairman of the Board and
Chief Executive Officer
ACCEPTED
- -------------------------------
LAWRENCE E. MILLER
Date: January 31, 1992
January 31, 1992
Page 9
EXHIBIT A
---------
1992 Management Stock Option Plan
January 31, 1992
Page 10
EXHIBIT B
---------
Percentage of Option Shares IRR
to be Retained by the Optionee Achieved %
------------------------------ ----------
100.000% 60 or more
98.333 59
96.667 58
95.000 57
93.333 56
91.667 55
90.000 54
88.333 53
86.667 52
85.000 51
83.333 50
81.667 49
80.000 48
78.333 47
76.667 46
75.000 45
73.333 44
71.667 43
70.000 42
68.333 41
66.667 40
60.000 39
53.333 38
46.667 37
40.000 36
33.333 35
0 less than 35
January 31, 1992
Mr. Robert W. Eberspacher
6907 Huntfield Drive
Charlotte, North Carolina 28270
Re: Grant of Non-Qualified Stock Option
-----------------------------------
Dear Mr. Eberspacher:
On January 31, 1992, the Board of Directors of Associated Holdings,
Inc. (the "Company") adopted, and the stockholders of the Company approved, the
Company's 1992 Management Stock Option Plan (the "Plan") for certain directors,
officers and employees of the Company and any parent corporation or subsidiary
corporation of the Company. A copy of the Plan is annexed to this Option
Agreement as Exhibit A hereto and shall be deemed a part of this Option
---------
Agreement as if fully set forth herein. Unless the context otherwise requires,
all terms defined in the Plan shall have the same meaning when used herein.
1. The Grant
---------
The Company hereby grants to you, effective as of January 31, 1992
(the "Grant Date"), as a matter of separate inducement and not in lieu of any
salary or other compensation for your services, the right and option to purchase
(the "Option"), in accordance with the terms and conditions set forth in the
Plan and this agreement, an aggregate of 5,161 shares of Class A Common Stock
("common stock") of the Company, par value $0.01 per share (the "Option
Shares"), at a price of $10.00 per share (the "Exercise Price") subject to the
limitations set forth herein and in the Plan. The Option is not intended to be
an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Vesting and Exercise
--------------------
Subject to the provisions and limitations of Section 6 of the Plan and
other relevant provisions thereof and this Option Agreement you may exercise the
Option to purchase some or all of the Option Shares which are Vested Shares (as
hereinafter defined) as follows:
(a) For purposes of this agreement, the Option Shares shall be deemed
"Nonvested Shares" unless they have become
January 31, 1992
Page 2
"Vested Shares" pursuant to the following provisions. The Option Shares shall
become Vested Shares as follows:
(i) On January 31, 1993, one-fourth of the Option Shares reserved
for issuance under the Option shall become Vested Shares without further
action by the Board of Directors.
(ii) On January 31, 1994, an additional one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(iii) On January 31, 1995, an additional one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(iv) On January 31, 1996, the remaining one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(b) In addition, the Board of Directors may, in its sole discretion,
accelerate the vesting schedule set forth in paragraph (a) above.
(c) Subject to the relevant provisions and limitations contained
herein, you may exercise the Option to purchase some or all of the Vested Shares
at any time after the vesting thereof. In no event shall you be entitled to
exercise the Option for Nonvested Shares or for a fraction of a Vested Share.
(d) The unexercised portion of the Option, if any, will automatically
and without notice terminate and become null and void at 5:00 p.m., Central Time
on the date three years after the full vesting of all Option Shares reserved for
issuance under the Option (the "Option Term"). If, however, your employment
with the Company or any subsidiary or parent corporation of the Company
terminates before such termination date, this Option will terminate on the
applicable date as described in paragraph 3 below.
(e) Any exercise by you of the Option shall be in writing addressed to
the Corporate Secretary of the Company at its principal place of business and
shall be accompanied by the full amount of the Exercise Price of the shares so
purchased. Upon proper exercise and payment of the full Exercise Price therefor
(either in cash or, at your option, in shares of common stock pursuant to and in
the manner provided in Section 5a of the
January 31, 1992
Page 3
Plan), a certificate evidencing the number of shares of common stock purchased
by you pursuant to such exercise shall be delivered by the Company to you, which
certificate shall be registered in your name. Notwithstanding the foregoing, to
the extent any voting trust agreement is then in effect pursuant to which such
shares are required to be deposited in trust, then the Company may, at its
option, deliver to the applicable voting trustee or trustees thereunder such
certificate for deposit in such voting trust and you shall receive such voting
trust certificate or certificates as are contemplated under the terms and
provisions of such voting trust agreement.
(f) Upon the occurrence of a Major Transaction (as hereinafter
defined) all outstanding Option Shares, whether such Option Shares are Vested
Shares or Unvested Shares, shall be treated solely for the purposes of this
paragraph (f) as if they had been exercised in full immediately prior to such
Major Transaction. Accordingly, you shall receive your pro rata share of any
distribution of cash or property distributed to the holders of common stock. As
used herein the term "Major Transaction" shall be deemed to have occurred if:
(i) the Company shall consummate any recapitalization or
refinancing that results in a distribution of cash or property to
the holders of common stock of the Company;
(ii) the Company shall consummate any sale or exchange in a
transaction or series of transactions by the Company of all or
substantially all of its assets; or
(iii) the Company shall consummate a merger, consolidation or
like business combination or reorganization, which results in an
occurrence or has the effect of any event described in clause (i)
or clause (ii) above.
3. Termination of Employment
-------------------------
Upon the termination of your employment with the Company and any
parent corporation or subsidiary corporation of the Company, the Option shall,
to the extent not previously exercised, automatically terminate and become null
and void, provided that:
(1) if you shall die while in the employ of the Company or any
parent corporation or subsidiary corporation of the Company, your estate may,
until the earlier of (x) six (6) months after the date of death or (y) the
expiration of the
January 31, 1992
Page 4
Option Term, exercise the Option with respect to all or any part of the Option
Shares which you were entitled to purchase immediately prior to the time of your
death;
(2) in the case of termination of your employment due to
Disability, you may, until the earlier of (x) six (6) months after the date your
employment terminates or (y) the expiration of the Option Term, exercise the
Option with respect to all or any part of the Option Shares which you were
entitled to purchase immediately prior to the time of such termination; and
(3) in the case of termination for any reason other than those
specified in (1) or (2) above, you may, until the earlier of (x) thirty (30)
days after the date of such termination or (y) the expiration of the Option
Term, exercise your Option with respect to all or any part of the Option Shares
which you were entitled to purchase immediately prior to such termination,
except that, if you are terminated for good cause (as defined in the Plan and as
determined by the Committee) or if you voluntarily terminate your employment
with the Company or any parent corporation or subsidiary corporation of the
Company without the consent of the Company or any such parent corporation or
subsidiary corporation of the Company, then you shall forfeit your rights under
the Option except as to those Option Shares already purchased.
4. Transferability
---------------
The Option is not transferable by you otherwise than by will or the
laws of descent and distribution and is exercisable, during your lifetime, only
by you. The Option may not be assigned, transferred (except by will or the laws
of descent and distribution), pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar proceeding. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Option contrary to the provisions
hereof or of the Plan, and the levy of any attachment or similar proceeding upon
the Option, shall be null and void and without effect.
By your acceptance of this Option Agreement, you agree that you will
not sell or otherwise dispose of the Option, any common stock acquired pursuant
to the Option or any other "derivative security" (as defined by Rule 16a-1(c)
under the Securities Exchange Act of 1934, as amended) during the period ending
six months from the date hereof, and you further agree that any such common
stock or any other derivative security shall be subject to the restrictions and
limitations on transfer contained in any stockholders agreement or similar
agreement to
January 31, 1992
Page 5
which you may be a party at the time you acquire such common stock or such
derivative security pursuant to the exercise of the Option.
5. Reduction in Option Shares Based on IRR Achieved
------------------------------------------------
(a) The number of Option Shares purchasable or purchased by you upon
the exercise of the Option granted hereunder shall be reduced automatically to
the extent that the IRR (as defined below) achieved by the Sponsor Holders (as
defined below) is less than 60%. Such reduction in Option Shares shall be based
on the table set forth on Exhibit B hereto. No reduction in the number of such
---------
Option Shares shall occur if the IRR so achieved by the Sponsor Holders is 60%
or greater. If the IRR so achieved is less than 35%, the Option granted
hereunder shall terminate and any and all Option Shares previously purchased
pursuant to any exercise of the Option shall automatically be cancelled and the
certificates representing such Option Shares returned to the Company. You
hereby grant to the Company your power of attorney to effect any and all
reductions and cancellations permitted hereunder and to execute, acknowledge,
and deliver any and all documents and instruments on your behalf deemed
necessary by the Company to effect such reductions and cancellations. In the
event of a reduction of the number of Option Shares, the reduction will be
applied first to any Unvested Shares, second to any unexercised portion of
Vested Shares subject to the Option in the inverse order of exerciseability
until the unissued Option Shares are exhausted, and then to any issued Option
Shares.
(b) Upon each date Liquid Proceeds (as defined below) are received or
first held by the Sponsor Holders, the IRR to that date shall be determined by
the Board of Directors of the Company taking account of the dates and amounts
used in prior calculations and the properties that have become Liquid Proceeds
on such date. The reduction, if any, under this Section 5 shall be computed by
using the highest IRR computed on any such date or the final calculation date
under paragraph (d) below.
(c) If Option Shares have been purchased under the Option and are
thereafter cancelled, the Company shall return the amount of the Exercise Price
paid with respect thereto, together with interest from the date of exercise to
the date of return at the applicable federal long-term rate plus 100 basis
points.
(d) As used herein, the term "IRR" shall mean the annual rate of
return to the Sponsor Holders on their Common Stock Investment (as defined
below), compounded annually, from January 31, 1992 to the date of calculation.
A final calculation shall be made on the earliest of (i) January 31, 2000; (ii)
the
January 31, 1992
Page 6
date the Sponsor Holders collectively have disposed of all of their shares of
common stock and hold no other property received with respect to such shares of
common stock that is not Liquid Proceeds; and (iii) the first date that the
Sponsor Holders own only Liquid Proceeds with respect to their shares of common
stock. For purposes of computing IRR at any time (i) only Liquid Proceeds
received or held by the Sponsor Holders in respect of their Common Stock
Investment shall be included as a payment or distribution in respect thereof and
(ii) all fee income and warrants or other rights to acquire common stock or
other capital stock of the Company shall be disregarded.
(e) As used herein, the term "Sponsor Holders" shall mean,
collectively, Wingate Partners, L.P. and its affiliates.
(f) As used herein, the term "Common Stock Investment" shall mean the
purchase price for the shares of common stock, par value $0.01 per share, of the
Company purchased by the Sponsor Holders at the closing of the acquisition of
the wholesale division of Boise Cascade Office Products Corporation by
Associated Stationers, Inc., a wholly-owned subsidiary of the Company, but
excluding any shares of common stock sold or otherwise transferred by any
Sponsor Holder to any officer, director or employee of the Company or any of its
subsidiaries.
(g) As used herein, the term "Liquid Proceeds" shall mean (i) shares
of stock or other securities that (A) are registered under the Securities Act of
1933, as amended (the "Securities Act"), (B) are traded on the New York Stock
Exchange, the American Stock Exchange or one approved for quotation on the
NASDAQ National Market System at the time of calculation of the IRR, and (C) can
be sold on such market by the holder without incurring a significant discount
from the average of the bid and asked prices for such shares of stock or other
securities at such time; (ii) currency of the United States of America; (iii)
negotiable instruments drawn on a bank with at least $10 billion in assets and
payable in currency of the United States of America; (iv) obligations issued or
assumed by the United States of America or any agency or instrumentality
thereof; and (v) on January 31, 2000 any shares of common stock of the Company
or any other property received upon or with respect to shares of common stock of
the Company then held by the Sponsor Holders, which was not previously treated
as Liquid Proceeds shall be deemed to have been sold for an amount of cash equal
to its then fair market value as determined in good faith by the Board of
Directors of the Company and treated as Liquid Proceeds.
(h) any certificate or certificates (including without limitation,
any voting trust certificates) representing any Option Shares purchased by you
hereunder shall bear such legends
January 31, 1992
Page 7
as the Company deems reasonably necessary to protect the parties hereto
including, without limitation, a legend evidencing the reduction and
cancellation rights of the Company pursuant to this Section 5.
6. Registration
------------
Unless there is in effect a registration statement under the
Securities Act with respect to the issuance of the Option Shares (and, if
required, there is available for delivery a prospectus meeting the requirements
of Section 10(a)(3) of the Securities Act), you will, upon the exercise of the
Option (i) represent and warrant in writing to the Corporate Secretary of the
Company that the Option Shares then being purchased by you pursuant to the
Option are being acquired for investment only and not with a view to the resale
or distribution thereof, (ii) acknowledge and confirm that the Option Shares
purchased may not be sold unless registered for sale under the Securities Act or
pursuant to an exemption from such registration and (iii) agree that the
certificates evidencing such Option Shares shall bear a legend to the effect of
the foregoing.
7. Withholding Taxes
-----------------
By your acceptance hereof, and in accordance with Section 8(c) of the
Plan, you agree that (i) in the case of issuance of common stock or other
securities hereunder, the Company, as a condition of such issuance may require
the payment (through withholding from any payment otherwise due you from the
Company or any parent corporation or subsidiary corporation of the Company or,
at your option, a reduction in the number of shares of common stock of the
Company to be received, determined by the fair market value of such shares) of
any federal, state, local or foreign taxes required by law to be withheld with
respect to such issuance, and (ii) the Company shall have the right to establish
such other procedures as it may determine in its sole discretion with respect to
such issuances.
8. Miscellaneous
-------------
(a) This Option Agreement is subject to all the terms, conditions,
limitations and restrictions contained in the Plan. In the event of any
conflict or inconsistency between the terms hereof and the terms of the Plan,
the terms of the Plan shall be controlling.
(b) This Option Agreement is not a contract of employment and the
terms of your employment shall not be affected hereby or by any agreement
referred to herein except to the extent specifically so provided herein or
therein. Nothing
January 31, 1992
Page 8
herein shall be construed to impose any obligation on the Company or on any
parent corporation or subsidiary corporation of the Company to continue your
employment, and it shall not impose any obligation on your part to remain in the
employ of the Company or of any parent corporation or subsidiary corporation of
the Company.
Please indicate your acceptance of all the terms and conditions of the
Option and the Plan by signing and returning a copy of this Option Agreement.
Very truly yours,
ASSOCIATED HOLDINGS, INC.
By:
----------------------------
Thomas W. Sturgess,
Chairman of the Board and
Chief Executive Officer
ACCEPTED
- -------------------------------
ROBERT W. EBERSPACHER
Date: January 31, 1992
January 31, 1992
Page 9
EXHIBIT A
---------
1992 Management Stock Option Plan
January 31, 1992
Page 10
EXHIBIT B
---------
Percentage of Option Shares IRR
to be Retained by the Optionee Achieved %
------------------------------ ----------
100.000% 60 or more
98.333 59
96.667 58
95.000 57
93.333 56
91.667 55
90.000 54
88.333 53
86.667 52
85.000 51
83.333 50
81.667 49
80.000 48
78.333 47
76.667 46
75.000 45
73.333 44
71.667 43
70.000 42
68.333 41
66.667 40
60.000 39
53.333 38
46.667 37
40.000 36
33.333 35
0 less than 35