<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 12, 1996
-------------
CARVER CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Washington 0-14482 91-1043157
- ---------- ------- ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number Identification No.)
</TABLE>
20121 48th Avenue W., Lynnwood, Washington 98036
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(Address of principal executive offices)
Registrant's telephone number, including area code: (206) 775-1202
-----------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
Exhibit Index
Appears on Page 6
Page 1 of 74 Pages
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Item 5. Other Events.
On June 12, 1996, Carver Corporation (the "Company") entered into a Stock
Purchase Agreement with Renwick Capital Management, Inc. ("Renwick") and certain
Renwick affiliates (the "Purchase Agreement"). The Purchase Agreement provides
for the sale to affiliates of Renwick of up to 1,411,764 shares of Series A
Cumulative Convertible Preferred Stock (the "Preferred Stock") and the issuance
to Renwick of five year warrants (the "Warrants") to acquire up to 300,000
shares of the Company's common stock (the "Common Stock"). The financing is to
be made over a 90 day period in three tranches each consisting of 470,588 shares
of Preferred Stock and Warrants to purchase up to 100,000 shares of Common
Stock. The number of shares of Common Stock potentially issuable upon
conversion of the Preferred Stock and exercise of the Warrants (assuming no
antidilution adjustment becomes necessary) are 1,411,764 and 300,000,
respectively, for a potential cumulative total of 1,711,764. These represent
approximately 38.3%, 8.1% and 46.4%, respectively, of the 3,687,330 shares of
Common Stock outstanding at June 12, 1996. The number of shares of Common Stock
which might be issued in payment of the mandatory dividend cannot be determined
at this time as such number will vary with the market price of the Common Stock.
Concurrently with entering into the Purchase Agreement, the Company closed
on the first tranche of the financing (the "Initial Closing"). In connection
with the Initial Closing, Renwick Alpha Fund L.P., a special situations
investment fund and an affiliate of Renwick, purchased 470,588 shares of
Preferred Stock for an aggregate of $1 million, and Renwick received Warrants to
purchase 100,000 shares of Common Stock. The Preferred Stock and Warrants sold
in connection with the Initial Closing are convertible into, or exercisable for,
an aggregate of 570,588 shares of Common Stock, or approximately 15.5% of the
3,687,330 shares of Common Stock outstanding at June 12, 1996. The subsequent
tranches of the financing are expected to raise $2.0 million through the
issuance of additional shares of Preferred Stock and are expected to close
within 90 days.
The price of the Preferred Stock is $2.125 per share. The exercise price
of the Warrants is $1.50 per share of Common Stock, if exercised from the date
of the Initial Closing through the date two years from the date of the Initial
Closing, $1.75 for the next year, $2.00 for the next year, and $2.125 for the
final year, subject to certain potential antidilution adjustments.
Each share of Preferred Stock is convertible at any time at the option of
the holder into one share of Common Stock, subject to certain potential
antidilution adjustments to be triggered by the issuance of additional shares of
Common Stock at less than the lesser of the then current market price or $2.125.
The Preferred Stock is entitled to an 8% compounding annual dividend payable
quarterly. In the first year such dividend is to be paid with shares of Common
Stock. In years two and three (the Preferred Stock will automatically be
Page 2 of 74 Pages
<PAGE>
converted into Common Stock on the third anniversary of issuance, thereby
terminating the accruing dividend) the Company has the option of paying the
dividend either in cash or with shares of Common Stock. If paid with Common
Stock, the number of shares will be based on the greater of $2.125 per share or
the average of the closing bid prices for the Common Stock for the 30 days prior
to the dividend payment date.
The holders of Preferred Stock are entitled to one vote per share. Certain
actions by the Company, such as a merger or liquidation, the sale of
substantially all of its assets, payment of dividends, amendment of the
Company's articles of incorporation, the issuance of additional securities or
the incurrence of certain indebtedness, require the approval of the holders of
at least a majority (or in some cases, two-thirds) of the holders of the
Preferred Stock. Holders of the Preferred Stock and Warrants are also entitled
to rights to have the Company register shares of Common Stock issued upon
conversion of the Preferred Stock or exercise of the Warrants.
In addition, the holders of the Preferred Stock are entitled to elect two
representatives to the Company's Board of Directors. The Company's Board of
Directors has been increased to up to seven members, and Raj K. Bhatia and James
R. McCullough have been appointed to the Board of Directors to represent holders
of the Preferred Stock. Bhatia and McCullough are partners of Renwick. By
virtue of the number of votes to be controlled by Renwick and its affiliates,
their right to elect two of the Company's seven directors and the fact that
various actions may not be taken by the Company without the approval of the
holders of at least a majority of the Preferred Stock, such holders may be
deemed to have acquired control of the Company.
Renwick is a New York-based investment banking firm founded in 1994 which
specializes in the identification of undervalued growth companies exhibiting the
potential for an operational turn-around. Renwick actively supports its
principal investments through the involvement of industry and Wall Street
professionals familiar with turn-around situations.
The Company designs, develops, manufacturers and markets high-fidelity
consumer audio components and systems which are known for their superior sound
reproduction.
Safe Harbor statement under the Private Securities Litigation Reform Act of
1995: Statements in this Current Report on Form 8-K regarding the subsequent
closings under the Purchase Agreement are forward looking statements.
Subsequent closings under the Purchase Agreement are subject to, among other
things, the absence of any material adverse changes in the business or financial
condition of the Company. There can be no assurance that the Company will not
experience any such material adverse change or that such subsequent closings
will actually occur.
Page 3 of 74 Pages
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<TABLE>
<CAPTION>
Item 7. Financial Statements and Exhibits.
EXHIBIT DESCRIPTION
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<C> <S>
2.1 Series A Preferred Stock Purchase Agreement,
dated as of June 12, 1996, by and among the
Company and each of those persons and entities
whose names are set forth on Exhibit A thereto
(the "Investors")
4.1 Warrant Agreement, dated as of June 12, 1996,
by and among the Company and Renwick
Capital Management, Inc.
4.2 Registration Rights Agreement, dated as of
June 12, 1996, by and among the Company and
the Investors
4.3 Certificate of Designation, as filed with the
Secretary of State of the State of Washington
on June 12, 1996
4.4 Form of Series A Cumulative Convertible
Preferred Stock Certificate
4.5 Form of Warrant Certificate evidencing the
right to acquire shares of the Company's
Common Stock
</TABLE>
Page 4 of 74 Pages
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CARVER CORPORATION
By: /s/ John P. World
-----------------------------------------
Name: John P. World
Title: Executive Vice President, Secretary
and General Manager (Principal Accounting
Officer)
DATE: June 26, 1996
Page 5 of 74 Pages
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EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
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<C> <S> <C>
2.1 Series A Preferred Stock Purchase Agreement,
dated as of June 12, 1996, by and among the
Company and each of those persons and entities
whose names are set forth on Exhibit A thereto (the
"Investors") 7
4.1 Warrant Agreement, dated as of June 12, 1996, by
and among the Company and Renwick Capital
Management, Inc. 35
4.2 Registration Rights Agreement, dated as of June 12,
1996, by and among the Company and the Investors 50
4.3 Certificate of Designation, as filed with the
Secretary of State of the State of Washington on
June 12, 1996 59
4.4 Form of Series A Cumulative Convertible Preferred
Stock Certificate 70
4.5 Form of Warrant Certificate evidencing the right to
acquire shares of the Company's Common Stock 72
</TABLE>
Paes 6 of 74 Pages
<PAGE>
EXHIBIT 2.1
CARVER CORPORATION
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement, dated as of June 12,
1996, is among Carver Corporation, a Washington corporation (the
"Company"), the investors listed on Exhibit A (the "Investors") and Renwick
Capital Management, Inc. The parties agree as follows:
1. Definitions; Certain Rules of Construction. Certain capitalized
------------------------------------------
terms are used in this Agreement with the specific meanings defined below
in this Section 1. Except as otherwise explicitly specified to the
contrary or unless the context clearly requires otherwise, (a) the
capitalized term "Section" refers to sections of this Agreement, (c) the
capitalized term "Schedule" refers to schedules to this Agreement, (d)
references to a particular Section include all subsections thereof, (e) the
word "including" shall be construed as "including without limitation", (f)
references to a particular statute or regulation include all rules and
regulations thereunder and any successor statute, regulation or rules, in
each case as from time to time in effect, (g) words in the singular or
plural form include the plural and singular form, respectively, and (h)
references to a particular Person include such Person's successors and
assigns to the extent not prohibited by this Agreement.
1.1 "1933 Act" means the Securities Act of 1933, as amended.
--------
1.2 "1934 Act" means the Securities Exchange Act of 1934, as
--------
amended.
1.3 "Certificate of Designation" means the "Certificate of
--------------------------
Designation of Series A Cumulative Convertible Preferred Stock setting
forth the Powers, Preferences, Rights, Qualifications, Limitations and
Restrictions of Such Series of Preferred Stock of Carver Corporation,"
attached as Exhibit B hereto.
1.4 "Articles of Incorporation" means the Articles of
-------------------------
Incorporation of the Company, as amended and in effect from time to time.
1.5 "Closing" is defined in Section 2.4.
-------
1.6 "Common Stock" means the Company's Common Stock, $.01 par
------------
value per share.
1.7 "Company" is defined in the preamble to this Agreement.
-------
1.8 "Initial Closing" is defined in Section 2.4.1
---------------
1.9 "Investors" is defined in the preamble to this Agreement.
---------
Page 7 of 74 Pages
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1.10 "Material Adverse Effect" means a material adverse effect
-----------------------
on the Company's business as presently conducted and as proposed to be
conducted, financial condition, results of operations or ability to perform
its obligations under the Transaction Documents.
1.11 "Person" means any present or future natural person or any
------
corporation, association, partnership, limited liability company, limited
partnership, joint venture, joint stock or other company, business trust,
trust, organization, business or government or any governmental agency or
political subdivision thereof.
1.12 "Preferred Shares" means the shares of Common Stock
----------------
issuable upon conversion of the Series A Preferred.
1.13 "Preferred Stock" means the Company's Preferred Stock, $.01
---------------
par value per share.
1.14 "Registration Rights Agreement" means the Registration
-----------------------------
Rights Agreement dated as of June 12, 1996, as amended and in effect from
time to time, among the Company and the Investors attached as Exhibit C.
1.15 "Related Party" is defined in Section 3.19.
-------------
1.16 "Securities" shall mean the Series A Preferred, the
----------
Warrants, the Preferred Shares and the Warrant Shares.
1.17 "Series A Preferred" means the Company's Series A
------------------
Cumulative Convertible Preferred Stock, par value, $.01 per share.
1.18 "Shares" means each of the Preferred Shares and the Warrant
------
Shares.
1.19 "Subsequent Closing" is defined in Section 2.4.2.
------------------
1.20 "Transaction Documents" means each of (a) this Agreement,
---------------------
(b) the Registration Rights Agreement, (c) the Certificate of Designation,
(d) the Warrant Agreement, (e) the Investment Banking Agreement in the form
of Exhibit F hereto, (f) any other agreements, instruments, or documents
entered into by the Company or its Subsidiaries pursuant to this Agreement;
1.21 "Warrant Agreement" means the form of Common Stock Warrant
-----------------
Agreement, dated June 12, 1996 between the Company and Renwick Capital
Management, Inc. ("Warrants") to purchase up to 300,000 shares of Common
Stock at prices ranging from $1.50 per share to $2.125 per share.
1.22 "Warrant Shares" means the shares of Common Stock issuable
--------------
upon exercise of the Warrants.
Page 8 of 74 Pages
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2. Authorization, Sale and Purchase of Series A Preferred and
----------------------------------------------------------
Warrants
--------
2.1 Authorization of Series A Preferred and Warrants. The
------------------------------------------------
Company has authorized the issuance and sale of up to 1,411,764 shares of
Series A Preferred and the Warrants. The rights, privileges, and
preferences of the Series A Preferred are as set forth in the Certificate
of Designation, a copy of which is attached hereto as Exhibit B and the
Articles of Incorporation.
2.2 Sale and Purchase of Series A Preferred. Subject to the
---------------------------------------
terms and conditions of this Agreement and on the basis of the
representations and warranties set forth herein, the Company agrees to sell
to each Investor, and each Investor severally and not jointly agrees to
purchase from the Company, the number of shares of Series A Preferred to
purchase the number of shares of Common Stock set forth opposite such
Investor's name on Exhibit A for a purchase price of $2.125 per share of
Series A Preferred.
2.3 Issuance of Warrants. In consideration of the time and
---------------------
efforts expended by RCM in connection with the transaction contemplated by
this Agreement, the Company agrees to issue to RCM at each Closing,
Warrants to acquire one share of Common Stock for every $10 invested in
Series A Preferred by the Investors.
2.4 The Closings. The purchase and sale of the Series A
------------
Preferred and Warrants will take place at up to three closings (each a
"Closing") at the offices of Renwick Capital Management, Inc., 900 Third
--------
Avenue, New York, New York or at such other place as the parties shall
mutually agree. At each Closing, the Company will deliver to each Investor
a certificate or certificates, registered in each Investor's name,
representing the number of shares of Series A Preferred and Warrants to be
acquired by such Investor pursuant to this Agreement at such Closing,
against payment of the purchase price thereof in lawful money of the United
States of America by wire transfer or check payable to the Company.
2.4.1 Initial Closing. The Initial Closing (the "Initial
--------------- -------
Closing") shall take place at 12:00 noon (New York time) on June 12, 1996
-------
or at such other time or on such other date as the parties shall mutually
agree. Subject to the terms and conditions of this Agreement, and on the
basis of the representations and warranties set forth herein, at the
Initial Closing each Investor shall purchase the number of Series A
Preferred set forth opposite such Investor's name on Exhibit A.
2.4.2 Subsequent Closings. Each subsequent Closing (each a
-------------------
"Subsequent Closing") shall take place at such time and on such date as the
-------------------
Investors shall designate, but in any event not more than 90 days after the
Initial Closing.
3. Representations and Warranties of the Company. In order to induce
---------------------------------------------
the Investors to enter into this Agreement and to purchase the Series A
Preferred hereunder, the Company hereby represents and warrants to each
Investor that:
Pages 9 of 74 Pages
<PAGE>
3.1 Organization and Corporate Power. The Company and each
--------------------------------
subsidiary of the Company ("Subsidiaries") is a corporation (a) duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and (b) qualified to do business as a
foreign corporation in each jurisdiction in which such qualification is
required and in which the failure to so qualify would have a Material
Adverse Effect on such Person other than as set forth on Schedule 3.1. The
Company and each Subsidiary have all required corporate power and authority
(i) to own its property, (ii) to carry on its business as presently
conducted or proposed to be conducted and (iii) to carry out the
transactions contemplated hereby. The Company has furnished to the counsel
for the Investors correct and complete copies of the charter and by-laws of
the Company as amended and in effect on the date hereof.
3.2 Authorization. Each of the Transaction Documents has been
-------------
duly executed and delivered by the Company and is the legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms. The execution, delivery and performance of each
of the Transaction Documents have been duly authorized by all necessary
corporate action of the Company.
3.3 Capitalization. After the filing of the Certificate of
---------------
Designation with the Washington Secretary of State and immediately prior to
the Initial Closing, the entire authorized capital stock of the Company
will consist of (i) 2,000,000 shares of Preferred Stock, of which 1,411,767
shares will be designated Series A Preferred and of which no shares will be
issued and outstanding, and (ii) 20,000,000 shares of Common Stock, of
which 3,687,330 shares will be issued and outstanding. The Company holds
no shares of Series A Preferred and no shares of Common Stock in its
treasury. When issued in accordance with the terms of this Agreement, the
Series A Preferred will be duly authorized, validly issued and outstanding,
fully paid and nonassessable. When issued, the Warrants will be a valid
and binding obligation of the Company, enforceable in accordance with their
terms. When issued, upon the conversion of the Series A Preferred, or upon
the exercise of the Warrants, the Preferred Shares and the Warrant Shares,
respectively, will be duly issued, fully paid and non-assessable. Other
than as set forth on Schedule 3.3 and except for the securities, there are
no outstanding warrants, options or other rights to purchase or acquire
from the Company or exchangeable for or convertible into, any shares of
Preferred Stock or Common Stock. There are no preemptive rights with
respect to the issuance or sale by the Company of the Shares which have not
been waived. Except as provided in the Registration Rights Agreement or as
imposed by applicable securities laws, there are no restrictions on the
transfer or voting of any shares of Series A Preferred or Common Stock.
Other than as set forth in the Registration Rights Agreement, there are no
existing rights with respect to registration under the 1933 Act of any of
the Company's securities. The Company has not violated the 1933 Act or any
state blue sky or securities laws in connection with the issuance of any of
its securities.
3.4 Noncontravention. Neither the execution and the delivery of
----------------
the Transaction Documents, nor the consummation of the transactions
contemplated hereby, will (i) violate any statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which
Page 10 of 74 Pages
<PAGE>
the Company or any Subsidiary is subject or any provision of the charter or
bylaws of any of the Company or any Subsidiary nor (ii) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which the Company or
any Subsidiary is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any security interest
upon any of its assets), except where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation, failure to
give notice, or security interest would not have a Material Adverse Effect
on the ability of the parties to consummate the transactions contemplated
by the Transaction Documents. The Company need not give any notice to,
make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the parties to
consummate the transactions contemplated by the Transaction Documents,
which has not been given, made or obtained, except where the failure to
give notice, to file, or to obtain any authorization, consent, or approval
would not have a Material Adverse Effect on the ability of the parties to
consummate the transactions contemplated by this Agreement.
3.5 Financial Statements. Attached hereto as Exhibit G are the
--------------------
following financial statements (collectively the "Financial Statements"):
(i) audited consolidated balance sheets and statements of income, changes
in stockholders' equity, and cash flow as of and for the fiscal years ended
December 31, 1993, December 31, 1994 and December 31, 1995 for the Company;
and (ii) unaudited consolidated balance sheets and statements of income,
changes in stockholders' equity, and cash flow (the "Most Recent Financial
Statements") as of and for the three months ended March 31, 1996, (the
"Most Recent Fiscal Month End") for the Company and its Subsidiaries. The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby and present fairly the financial condition of the Company
and its Subsidiaries as of such dates and the results of operations of the
Company and its Subsidiaries for such periods; provided, however, that the
Most Recent Financial Statements are subject to normal year-end adjustments
and lack footnotes and other presentation items.
3.6 Absence of Certain Developments. Except as disclosed in
-------------------------------
Schedule 3.6, there has not been since the date of the Most Recent
Financial Statements, any (a) change in the condition, financial or
otherwise, of the Company or any Subsidiary or in the assets, liabilities,
properties, or business of the Company or any Subsidiary or in the
prospects of the Company or any Subsidiary, which has had or will have
Material Adverse Effect, (b) declaration, setting aside or payment of any
dividend or other distribution with respect to the capital stock of the
Company, (c) loss, destruction or damage to any property of the Company or
any Subsidiary whether or not insured, which loss will have a Material
Adverse Effect, (d) labor trouble involving, or any material change in, any
of their respective personnel or the terms and conditions of employment,
(e) waiver by the Company or any Subsidiary of any valuable right, (f) loan
or extension of credit by the Company or any Subsidiary to any of their
respective officers or employees or (g) acquisition or disposition of any
material assets (or any contract or
Page 11 of 74 Pages
<PAGE>
arrangement therefor) or any other material transaction by the Company or
any Subsidiary otherwise than for fair value in the ordinary course of
business.
3.7 Legal Compliance. Except as disclosed in Schedule 3.7, to
---------------- -----------
the Company's knowledge, each of the Company and the Subsidiaries has
complied with all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local and foreign governments (and all
agencies thereof), except where the failure to comply would not have a
Material Adverse Effect.
3.8 Title to Properties. Except as disclosed in Schedule 3.8,
------------------- ------------
other than (a) any lien in respect of current taxes not yet due and payable
and (b) possible minor liens and encumbrances which do not in any case
materially detract from the value of the property subject thereto or
materially impair the operations of the Company and which have arisen in
the ordinary course of business and shall be removed within a reasonable
period, the Company has good and marketable title to all properties and
assets necessary to its business as presently conducted and as proposed to
be conducted and to all of its properties and assets, free and clear of all
mortgages, security interests, liens, restrictions or encumbrances. All
machinery and equipment included in such properties which is necessary to
the business of each of the Company and its Subsidiaries is in good
condition and repair except for reasonable wear and tear, and all leases of
real or personal property to which each of the Company and its Subsidiaries
is a party are fully effective and afford the party thereto peaceful and
undisturbed possession of the subject matter of the lease. To the best
knowledge of the Company, neither it nor any Subsidiary is in material
violation of any zoning, building or safety ordinance, regulation or
requirement or other law or regulation applicable to the operation of owned
or leased properties that is likely to impede the normal operation of the
business of the Company or any Subsidiary and the Company has not received
any written notice of violation with which it has not complied.
3.9 Tax Matters. Except as set forth in Schedule 3.9, there are
-----------
no federal, state, county or local taxes due and payable by the Company or
any of its Subsidiaries, which have not been paid. There have been no
examinations or audits of any tax returns or reports by any applicable
federal, state or local governmental agency. The Company has duly filed
all federal, state, county and local tax returns required to have been
filed by it and there are in effect no waivers of applicable statutes of
limitations with respect to taxes for any year.
3.10 Contracts and Commitments. Except for the contracts
-------------------------
described in Schedule 3.10, copies of which have been made available to the
-------------
counsel for the Investors, neither the Company nor any Subsidiary is a
party to (a) any contract, obligation or commitment (other than the
negotiations and preparation of the Transaction Documents) which involves
by its terms a commitment in excess of $100,000 or (b) any agreements with
any officer, director or affiliate of the Company, including employment
contracts (including contracts with any common law employee, agent or
independent contractor), management agreements, stock redemption or
purchase agreements, financing agreements, distribution right agreements,
royalty agreements, licenses under which the
Page 12 of 74 Pages
<PAGE>
Company is licensee or licensor, leases of real property or pension,
profit-sharing, retirement or stock option plans.
3.11 No Defaults. Except as disclosed on Schedule 3.11 and
----------- -------------
except for those which will not have a Material Adverse Effect, the Company
is not in default (a) under its Articles of Incorporation or by-laws or any
note, indenture, mortgage, lease, agreement, contract, purchase order or
other instrument, document or agreement to which it is a party or by which
it or any of its property is bound or affected or (b) with respect to any
order, writ, injunction or decree of any court or any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign. To the best knowledge of
the Company, there does not exist any condition, event or act which after
notice, lapse or time, or both, could constitute a default by the Company
under any of the foregoing except for those which will not have a Material
Adverse Effect. To the best knowledge of the Company, no third party is in
default under any agreement, contract or other instrument, document or
agreement to which the Company is a party or by which any of them or any of
their property is affected, which default would have a Material Adverse
Effect.
3.12 The Company possesses sufficient right and authority to use
all know-how, proprietary information, copyrights, trademarks, patent
rights and other proprietary and intellectual properties necessary to the
conduct of its business as presently conducted and as proposed to be
conducted ("Intellectual Properties") without infringing the rights of
others. The Company has taken reasonable and appropriate steps and
precautions to protect and preserve the confidentiality of all trade
secrets and confidential information of the Company or others entrusted to
it including, without limitation, entering into appropriate confidentiality
and nondisclosure agreements with all those employees and other parties
with access to or knowledge of confidential or proprietary information
relating to or included in the Intellectual Properties. The Company's
operations do not infringe any copyright, trademark, service mark, trade
name, patent, patent right or any other right of any person, whether
registered or unregistered, nor do they involve the misappropriation of any
trade secret of any person, except for such infringements or
misappropriation as will not have a Material Adverse Effect. The Company
has not received notice from any person alleging that such infringement or
misappropriation has occurred or is continuing.
3.13 No Governmental Consent or Approval Required. Based in
--------------------------------------------
part on the representations made by the Investors in Section 4, other than
(a) federal or state securities law filings which have been made or which
will be made in a timely manner and (b) the filing of the Certificate of
Designation (which, as of the Initial Closing, will have been filed), no
authorization, consent, approval or other order of, declaration to, or
filing with, any governmental agency or body is required for or in
connection with the valid and lawful authorization, execution and delivery
by the Company of any of the Transaction Documents or the authorization,
issuance, sale and delivery of the Securities.
3.14 Litigation. Except as disclosed on Schedule 3.14, there is
----------
not any action, suit, proceeding or investigation pending or, to the best
knowledge of the Company, threatened against the Company or any of its
Subsidiaries which questions the
Page 13 of 74 Pages
<PAGE>
validity of any of the Transaction Documents or the right of the Company to
enter into them or to consummate the transactions contemplated hereby or
thereby, or which would have either individually or in the aggregate, a
Material Adverse Effect or any change in the current equity ownership of
the Company or any of its Subsidiaries, nor is the Company aware that there
is any basis for the foregoing. The foregoing includes, without
limitation, actions pending, or to the best knowledge of the Company and
its Subsidiaries, threatened, involving the prior employment of any of the
employees of the Company or any of its Subsidiaries, their use in
connection with the business of the Company or any of its Subsidiaries of
any information, creations or techniques allegedly proprietary to any of
their former employers or other Persons or entities, or their obligations
under any agreements with prior employers or other Persons or entities.
Neither the Company nor any of its Subsidiaries nor, to the best of the
Company's knowledge, any of their respective officers or directors is a
party to, or subject to the provisions of, any order, writ, injunction,
judgment or decree of any court or governmental agency or instrumentality
which would have a Material Adverse Effect. Except as disclosed on
Schedule 3.14, there is no action, suit or proceeding by the Company or any
of its Subsidiaries presently pending or which the Company or any of its
Subsidiaries presently intends to initiate.
3.15 Securities Laws. The Common Stock is registered under
---------------
Section 12(g) of the 1934 Act and the Company is currently in compliance
with, and, except as set forth in Schedule 3.15, at all times for the last
-------------
five (5) years has been, in compliance with the periodic reporting
requirements and the rules and regulations of the 1934 Act and The Nasdaq
National Market except for such failures to comply as will not have a
Material Adverse Effect.
3.16 Business. Each of the Company and its Subsidiaries has all
---------
franchises, permits, licenses and other rights and privileges necessary to
permit it to own its property and to conduct its present business. Neither
the Company nor any of its Subsidiaries is in violation of any law,
regulation, authorization or order of any public authority relevant to the
ownership of its properties or the carrying on of its present business
which in the aggregate would have a Material Adverse Effect.
3.17 Brokerage. There are no claims for brokerage commissions
---------
or finder's fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement made
by or on behalf of the Company or any of its Subsidiaries, and the Company
agrees to pay any such brokerage commissions, finder's fees or similar
compensation and to indemnify and hold the Investors harmless against any
damages incurred as a result of any such claim.
3.18 Books and Records. The minute books of each of the Company
-----------------
and its Subsidiaries contain complete and accurate records of all meetings
and other corporate actions of its stockholders, its Board of Directors and
all committees, if any, appointed by its Board of Directors. The stock
ledger of each of the Company and its Subsidiaries is complete and reflects
all issuances, transfers, repurchases and cancellations of shares of
capital stock of the Company or such Subsidiary, as the case may be. The
books of account, ledgers, order books, records and documents of each of
the Company
Page 14 of 74 Pages
<PAGE>
and its Subsidiaries accurately and completely reflect all material
information relating to its business, the nature, acquisition, maintenance,
location and collection of their respective assets and the nature of all
transactions giving rise to its obligations and accounts receivable.
3.19 Material Facts. This Agreement, the Exhibits, the
--------------
Schedules and each other agreement, document, certificate or written
statement furnished, or to be furnished, to the Investors through each
Subsequent Closing by or on behalf of the Company or any of its
Subsidiaries in connection with the transactions contemplated hereby
inclusive of the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 and the Company's Quarterly Report on Form 10-Q for the
three months ended March 31, 1996 do not, or will not, contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements contained herein or therein in light of the
circumstances in which they were made not misleading.
4. Representations, Warranties and Certain Other Agreements of the
---------------------------------------------------------------
Investors and RCM.
------------------
4.1 Representations and Warranties of the Investors. Each
-----------------------------------------------
Investor severally and not jointly hereby represents and warrants that:
4.1.1. Authorization. Such Investor has full power and
-------------
authority to execute, deliver and perform this Agreement and the
Registration Rights Agreement and to acquire the Series A Preferred and
Preferred Shares. Each of this Agreement and the Registration Rights
Agreement constitutes the legal, valid and binding obligation of such
Investor, enforceable against such Investor in accordance with its terms.
4.1.2. Purchase Entirely for Own Account. The Series A
---------------------------------
Preferred and Preferred Shares to be acquired by such Investor will be
acquired for investment for such Investor's own account, not as a nominee
or agent and not with a view to the distribution of any part thereof. Such
Investor has no present intention of selling, granting any participation
in, or otherwise distributing the Series A Preferred and Preferred Shares
acquired by such Investor. Such Investor does not have any contract,
undertaking, agreement or arrangement with any Person to sell or transfer,
or grant any participation to such Person or to any third Person, with
respect to any of the Series A Preferred and Preferred Shares to be
acquired by such Investor.
4.1.3. Restricted Securities. Such Investor understands
---------------------
that the Series A Preferred and Preferred Shares to be acquired by such
Investor have not been registered under the 1933 Act or the laws of any
state and may not be sold or transferred, or otherwise disposed of, without
registration under the 1933 Act and applicable state securities laws, or an
exemption therefrom, and that in the absence of an effective registration
statement covering the Series A Preferred and Preferred Shares to be
acquired by such Investor must be held indefinitely. In the absence of an
effective registration statement covering the Securities to be acquired by
such Investor, such Investor will sell or transfer, or otherwise dispose
of, the Securities to be acquired by
Page 15 of 74 Pages
<PAGE>
such Investor only in a manner consistent with its representations and
agreements set forth herein and the terms and conditions set forth in the
Registration Rights Agreement.
4.1.4 Formation. Such Investor represents that it was not
---------
organized for the purpose of making an investment in the Company.
4.1.5 Financial Condition. Such Investor's financial
-------------------
condition is such that it is able to bear the risk of holding the Series A
Preferred and Preferred Shares to be acquired by such Investor for an
indefinite period of time and can bear the loss of its entire investment in
the Securities to be acquired by such Investor. Investor has substantial
experience in evaluating and investing in private placement transactions of
securities and companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company. Renwick
Alpha Fund, L.P. is an "accredited investor", as that term is defined in
Rule 501 promulgated under the 1933 Act. Renwick Special Situations, L.P.
does not, and as of the date of each Closing in which it participates will
not, have more than 30 equity owners who are not "accredited investors."
4.1.6 Receipt of Information. Such Investor has been
----------------------
furnished access to the business records of the Company and its
Subsidiaries and such additional information and documents as such Investor
has requested and has been afforded an opportunity to ask questions of, and
receive answers from, representatives of the Company and its Subsidiaries
concerning the terms and conditions of this Agreement, the purchase of the
Securities, the business, operations, market potential, capitalization,
financial condition and prospects of the Company and its Subsidiaries, and
all other matters deemed relevant to such Investor. Such Investor confirms
that it has been furnished (i) the Company's Annual Report on Form 10-K
with respect to the Company's fiscal year ending December 31, 1995, (ii)
the Company's Quarterly Report on Form 10-Q with respect to the Company's
fiscal quarter ending March 31, 1996, (iii) the proxy statement with
respect to the Company's 1996 annual shareholders' meeting, (iv) a Current
Report of the Company on Form 8-K dated May 1, 1996, and (v) a description
of the Securities and the use of proceeds from the sale thereof.
4.1.7 Brokerage. There are no claims for brokerage
---------
commissions or finder's fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of such Investor, and such Investor agrees
to indemnify and hold the Company and its Subsidiaries and other Investors
harmless against any damages incurred as a result of any such claims.
4.2 Representations and Warranties of RCM. RCM represents and
-------------------------------------
warrants that:
4.2.1. Authorization. RCM has full power and authority to
-------------
execute, deliver and perform this Agreement, the Warrant Agreement and the
Registration Rights Agreement and to acquire Warrants and Warrant Shares.
Each of this Agreement, the Warrant and the Registration Rights Agreement
constitutes the legal,
Page 16 of 74 Pages
<PAGE>
valid and binding obligation of such Investor, enforceable against RCM in
accordance with its terms.
4.2.2. Purchase Entirely for Own Account. The Warrants and
---------------------------------
Warrant Shares to be acquired by RCM will be acquired for investment for
RCM's own account, not as a nominee or agent and not with a view to the
distribution of any part thereof. RCM has no present intention of selling,
granting any participation in, or otherwise distributing the Warrants and
Warrant Shares acquired by RCM other than to certain officers, employees or
consultants to RCM. RCM does not have any contract, undertaking, agreement
or arrangement with any Person to sell or transfer, or grant any
participation to such Person or to any third Person, with respect to any of
the Warrants and Warrant Shares to be acquired by RCM other than with
respect to such limited number of officers or consultants of RCM.
4.2.3. Restricted Securities. RCM understands that the
---------------------
Warrants and Warrant Shares to be acquired by RCM may not be sold or
transferred, or otherwise disposed of, without registration under the 1933
Act and applicable state securities laws, or an exemption therefrom, and
that in the absence of an effective registration statement covering the
Warrants and Warrant Shares to be acquired by RCM must be held
indefinitely. In the absence of an effective registration statement
covering the Warrants and Warrant Shares to be acquired by RCM, RCM will
sell or transfer, or otherwise dispose of, the Warrants and Warrant Shares
to be acquired by RCM only in a manner consistent with its representations
and agreements set forth herein and the terms and conditions set forth in
the Registration Rights Agreement.
4.2.4 Formation. RCM represents that it was not organized
---------
for the purpose of making an investment in the Company.
4.2.5 Financial Condition. RCM's financial condition is
-------------------
such that it is able to bear the risk of holding the Warrants and Warrant
Shares to be acquired by RCM for an indefinite period of time and can bear
the loss of its entire investment in the Warrants and Warrant Shares to be
acquired by RCM. RCM has substantial experience in evaluating and investing
in private placement transactions of securities and companies similar to
the Company so that it is capable of evaluating the merits and risks of its
investment in the Company. RCM is an "accredited investor", as that term is
defined in Rule 501 promulgated under the 1933 Act.
4.2.6 Receipt of Information. RCM has been furnished
----------------------
access to the business records of the Company and its Subsidiaries and such
additional information and documents as RCM has requested and has been
afforded an opportunity to ask questions of, and receive answers from,
representatives of the Company and its Subsidiaries concerning the terms
and conditions of this Agreement, the purchase of the Warrants and Warrant
Shares, the business, operations, market potential, capitalization,
financial condition and prospects of the Company and its Subsidiaries, and
all other matters deemed relevant to RCM.
Page 17 of 74 Pages
<PAGE>
4.2.7 Brokerage. There are no claims for brokerage
---------
commissions or finder's fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of RCM, and RCM agrees to indemnify and hold
the Company and its Subsidiaries and other Investors harmless against any
damages incurred as a result of any such claims.
4.3 Further Limitations on Disposition. Each Investor and RCM
----------------------------------
further agree not to make any disposition of all or any portion of the
Securities unless and until:
(a) there is in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement and all applicable state
securities laws; or
(b) (i) such Investor or RCM shall have notified the Company
of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition and
(ii) such Investor or RCM shall have furnished the Company with an opinion
of counsel reasonably satisfactory to the Company, that such disposition
will not require registration of such shares under the 1933 Act and that
all requisite action has been or will, on a timely basis, be taken under
any applicable state securities laws in connection with such disposition
notwithstanding the provisions of clauses (a) and (b) above, no such
registration statement or opinion of counsel shall be necessary for a
transfer by any Investor or RCM(i) pursuant to Rule 144(k) promulgated
under the 1933 Act, (ii) pursuant to Rule 144A promulgated under the 1933
Act or (iii) a transfer by an Investor or RCM to a partner, Subsidiary,
shareholder, officer, employee or affiliate of such Investor, if, in the
case of clauses (ii) and (iii) above, the transferee agrees in writing to
be subject to the terms hereof to the same extent as if such transferee
were an original Investor hereunder.
4.4 Legends. It is understood that the certificates evidencing
-------
the Securities may bear substantially the following legends:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES,
AND SUCH SECURITIES MAY NOT BE OFFERED FOR RESALE, SOLD, ASSIGNED OR
OTHERWISE HYPOTHECATED FOR VALUE (INCLUDING BY ANY PLEDGEE) UNLESS (A) THE
SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT AND THE SECURITIES LAWS
OF ALL APPLICABLE STATES OF THE UNITED STATES, OR (B) THE SECURITIES ARE
OFFERED AND SOLD IN COMPLIANCE WITH AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS AND, AT THE OPTION OF THE COMPANY, THE HOLDER PROVIDES AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO SUCH EFFECT.
Page 18 of 74 Pages
<PAGE>
(b) Any legend required by the Registration Rights Agreement
or the laws of any applicable jurisdiction.
5. Conditions to the Investors' Obligations at Each Closing. The
--------------------------------------------------------
obligations of the Investors under Section 2 to purchase the Series A
Preferred to be acquired by the Investors at any Closing are subject to the
fulfillment at or prior to such Closing of each of the following conditions
(unless waived by the Investors in accordance with Section 11.5):
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 3 shall be true and correct
on and as of the date of such Closing with the same effect as though such
representations and warranties had been made on and as of the date of such
Closing.
5.2 Performance. The Company shall have performed and complied
-----------
with all agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before such
Closing.
5.3 Compliance Certificate. The Company shall deliver to the
----------------------
Investors at such Closing a certificate signed by the chief executive
officer or general counsel of the Company certifying that the conditions
specified in Sections 5.1, 5.2, 5.5, 5.6 and 5.8 have been fulfilled.
5.4 Certificate of Designation. The Company shall have filed
--------------------------
with the Washington Secretary of State a certificate of designation to the
Articles of Incorporation of the Company in the form of Exhibit B.
---------
5.5 Qualifications. All authorizations, approvals, or permits,
--------------
if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful
issuance and sale of the Securities to the Investors pursuant to this
Agreement shall have been duly obtained and shall be effective on and as of
such Closing other than those which are not required to be obtained before
such Closing.
5.6 Proceedings and Documents. All corporate and other
-------------------------
proceedings in connection with the transaction contemplated at such Closing
and all documents incident thereto shall be reasonably satisfactory in form
and substance to the Investors and to the special counsel for the
Investors, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
5.7 Opinion of Company Counsel. The Investors shall have
--------------------------
received from Heller, Ehrman, White & McAuliffe, counsel for the Company,
an opinion dated as of the date of such Closing in substantially the form
of Exhibit H.
---------
5.8 Secretary's Certificate. The Company shall have delivered
-----------------------
to the Investors a certificate dated as of the date of such Closing and
signed by the secretary of
Page 19 of 74 Pages
<PAGE>
the Company certifying: (a) that attached thereto is a true and complete
copy of the by-laws of the Company as in effect on the date of such
certification; (b) that attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors of the Company authorizing
the execution, delivery and performance of each of the Transaction
Documents the issuance, sale and delivery of the Shares, and that all such
resolutions are in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated by the Transaction
Documents; (c) that attached thereto is a true and complete copy of the
Articles of Incorporation, as amended and in effect on the date of such
certification, and (d) as to the incumbency and specimen signature of
certain officers of the Company.
5.9 Registration Rights Agreement. The Company shall have
-----------------------------
executed and delivered to the Investors the Registration Rights Agreement.
5.10 Investment Banking Agreement. The Company shall have
----------------------------
executed and delivered an Investment Banking Agreement substantially in the
form as attached as Exhibit F.
---------
5.11 Warrant. The Company shall have issued a Warrant
-------
Certificate in the form included as Exhibit E hereto to purchase such
number of shares of Common Stock as shall equal one share of Common Stock
for every $10 invested by the Investors in Series A Preferred at the
Closing.
6. Conditions of the Company's Obligations at Each Closing. The
-------------------------------------------------------
obligations of the Company under Section 2 to sell Securities at any
Closing are subject only to the fulfillment at or prior to such Closing of
each of the following conditions (unless waived by the Company).
6.1 Representations and Warranties. The representations and
------------------------------
warranties of the Investors and RCM contained in Section 4 shall be true
and correct as of the date of such Closing with the same effect as though
such representations and warranties had been made on and as of the date of
such Closing.
6.2 Payment of Purchase Price. The Investors shall have
-------------------------
delivered payment of the aggregate purchase price of the Securities to be
acquired at such Closing as set forth in Section 2.2.
6.3 Qualifications. All authorizations, approvals, or permits,
--------------
if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful
issuance and sale of the Securities to the Investors pursuant to this
Agreement shall have been duly obtained and shall be effective on and as of
such Closing other than those which are not required to be obtained before
such Closing.
6.4 Proceedings and Documents. All corporate and other
-------------------------
proceedings in connection with the transactions contemplated at such
Closing and all documents incident thereto shall be reasonably satisfactory
in form and substance to the Company
Page 20 of 74 Pages
<PAGE>
and to counsel for the Company, and they shall have received all such
counterpart original and certified or other copies of such documents as
they may reasonably request.
6.5 Registration Rights Agreement. The Investors shall have
-----------------------------
executed and delivered to the Company the Registration Rights Agreement.
6.6 Investment Representations. The individual equity owners of
--------------------------
Renwick Special Situations, L.P. who elect to participate in the purchase
by that fund of Series A Preferred shall have provided written investment
representations to the Company consistent with those set forth in Section
4.1 and otherwise in form acceptable to the Company.
7. Affirmative Covenants of the Company and its Subsidiaries.
---------------------------------------------------------
7.1 Financial and Other Information.
-------------------------------
7.1.1. Annual Financial Statements. The Company will
---------------------------
deliver to each Investor holding at least 250,000 shares of Series A
Preferred or Preferred Shares:
(a) within 90 days after the end of each fiscal
year, a copy of the audited consolidated and consolidating balance sheets
of the Company and its Subsidiaries as at the end of such fiscal year and
the audited consolidated and consolidating statements or income and of cash
flows of the Company and its Subsidiaries for such fiscal year, all in
reasonable detail, prepared in accordance with generally accepted
accounting principles, consistently applied, and certified in an audit
report by independent public accountants of national standing selected by
the Board of Directors of the Company which may include Moss Adams; and
(b) copies of all financial statements and reports
which the Company or any of its Subsidiaries shall send to its stockholders
generally or file with the Securities and Exchange Commission or any stock
exchange on which any securities of the Company or any of its Subsidiaries
may be listed.
7.1.2. Quarterly Financial Statements. The Company will
------------------------------
deliver to each Investor, within 45 days after the end of each of the first
three quarters of each fiscal year, (a) a copy of the unaudited
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as at the end of such fiscal quarter and the unaudited
consolidated and consolidating statements of income and of cash flows of
the Company and its Subsidiaries for such fiscal quarter and for the
portion of the fiscal year ending on the last day of such fiscal quarter,
each of the foregoing balance sheets and statements (i) to set forth in the
comparative form the corresponding figures for the same period of the prior
fiscal year, (ii) to be in reasonable detail, (iii) to be prepared in
accordance with generally accepted accounting principles, consistently
applied, except that such financial statements may be subject to normal
year-end audit adjustments and may not contain all footnotes required under
generally accepted accounting principles, and (iv) to be certified, subject
to normal year-end audit adjustments, by the principal
Page 21 of 74 Pages
<PAGE>
financial officer of the Company as true and accurate in all material
respects as of the date thereof.
7.1.3. Other Information. The Company will also
-----------------
furnish to each Investor with reasonable promptness such other information
and data with respect to the Company or any of its Subsidiaries as such
Investor may from time to time reasonably request.
7.1.4 Directors and Officers Insurance. The Company
---------------------------------
shall maintain insurance reasonably acceptable in form to the Investors
covering liability of directors and officers of the Company which shall
include the nominees of the Investors as beneficiaries for as long as the
Investors have the right to nominate directors to the Board of the Company.
7.2 Confidentiality. Each Investor covenants and agrees that
---------------
such Investor and any Person controlled by such Investor receiving
information under Section 7.1 shall maintain the confidentiality of all
financial, confidential and proprietary information of the Company and any
of its Subsidiaries acquired by such Person in receiving such information
and exercising any rights. Notwithstanding the preceding sentence, each
Investor or Person controlled by such Investor may (a) disclose such
information when required by a subpoena or other process, provided that
such Investor or Person first gives the Company advance notice of such
disclosure as soon as practicable; (b) disclose such information to the
extent necessary to enforce this Agreement and the transactions
contemplated hereby; (c) disclose such information to its attorneys,
accountants, consultants and other professionals to the extent necessary to
obtain their services in connection with its investment in the Company,
provided that the requirements of this Section 7.2 shall in turn be binding
on any such attorney, accountant, consultant or other professional; and (d)
disclose such information as may be required by any prospective purchaser
of any Securities from such Investor. Each Investor may also disclose such
information to any Subsidiary, affiliate, partner or shareholder who shall
first agree in writing to be bound by the provisions of this Section 7.2.
7.3 Change in Nature of Business. Neither the Company nor any
----------------------------
of its Subsidiaries shall make any material change in the nature of its
business as carried on at the date hereof or as contemplated in written
materials delivered to the Investors prior to the date hereof.
7.4 Payment of Expenses. The Company shall pay at each Closing
-------------------
all reasonable expenses of the Investors (including all out-of-pocket
expenses and the reasonable fees and disbursements of special counsel for
the Investors) not to exceed an aggregate of $50,000, incurred through the
date of such Closing in connection with the discussion, evaluation,
negotiation and documentation of the transactions contemplated by the
Transaction Documents and all amendments, waivers, consents and other
operations thereunder.
Page 22 of 74 Pages
<PAGE>
7.5 Termination of Covenants. The covenants set forth in this
------------------------
Section 7 shall terminate and be of no further force or effect on the
earlier of (i) the fifth anniversary of the initial Closing hereunder or
(ii) such time as no Investor continues to own shares of Series A Preferred
Stock or Warrants convertible into or exercisable for an aggregate of
50,000 shares of Common Stock.
8. Notices. Any notice required to be given pursuant to this
-------
Agreement shall be given in writing. Any notice, consent, approval, demand
and other communication in connection with this Agreement shall be deemed
to be given if given in writing (including facsimile, telecopy or similar
transmission) addressed as provided below (or to the addressee at such
other address as the addressee shall have specified by notice actually
received by the addressor), and if either (a) actually delivered in fully
legible form to such address (evidenced in the case of a telecopy by
receipt of a telecopy transmission confirmation) or (b) in the case of a
letter, five days shall have elapsed after the same shall have been
deposited in the United States mails (i) with first-class postage prepaid
and registered or certified, with return receipt requested, or (ii) with
express delivery postage prepaid, with receipt required for delivery.
If to the Company, to it at 20121-48th Avenue West, Lynnwood,
Washington 98036.
If to any Investor, or RCM, to it at its address set forth on Exhibit
-------
A, with a copy to Crummy, Del Deo, Dolan, Griffinger & Vecchione, a
-
Professional Corporation, One Riverfront Plaza, Newark, New Jersey 07102-
5497, Telecopy: (201) 596-0545 to the attention of Jeffrey A. Baumel, Esq.
9. Survival of Covenants; Assignability of Rights. All covenants,
----------------------------------------------
agreements, representations and warranties of the Company made in this
Agreement (including the Exhibits and Schedules), the other Transaction
Documents and any other written information delivered or furnished to any
Investor in connection herewith or therewith:
(a) shall be deemed material and to have been relied upon by such
Investor; and
(b) except as provided otherwise in this Agreement:
(i) shall survive the delivery of the Shares;
(ii) shall bind each of the Company and its successors and
assigns (whether so expressed or not); and
(iii) shall inure to the benefit of each of the Investors
and their respective successors and assigns and each transferee of any
Shares (whether so expressed or not), but only if such transferee is (A) an
affiliate, partner or stockholder of such Investor or transferee or an
account managed or advised by the manager or advisor of such Investor or
transferee or (B) a transferee or assignee of at least 50,000 Shares, as
Page 23 of 74 Pages
<PAGE>
adjusted for any stock split, stock dividend or other recapitalization,
provided in any event that the Company is given written notice at the time
of or within a reasonable time after said transfer, stating the name and
address of said transferee or assignee and provided, further, that the
transferee or assignee agrees in writing to abide by and assume each and
every duty and obligation of an Investor pursuant to this Agreement.
10. Parties in Interest. All covenants, agreements, representations,
-------------------
warranties and undertakings in this Agreement made by and on behalf of any
of the parties hereto shall bind and inure to the benefit of the respective
successors and permitted assigns of the parties hereto (whether so
expressed or not).
11. Course of Dealing; Amendments, Waivers and Consents. No course
---------------------------------------------------
of dealing between any Investor, on one hand, and the Company, on the other
hand, shall operate as a waiver of any Investor's rights under this
Agreement or any other Transaction Document. The Company acknowledges that
if any Investor, without being required to do so by this Agreement or any
other Transaction Document, gives any notice of information to, or obtains
any consent from, the Company, the Investors shall not by implication have
amended, waived or modified any provision of this Agreement or any other
Transaction Document, or created any duty to give any such notice or
information or to obtain such consent on any future occasion. No delay or
omission on the part of any Investor in exercising any right under this
Agreement or any other Transaction Document shall operate as a waiver of
such right or any other right hereunder or thereunder. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion. No amendment, waiver or consent with
respect to this Agreement shall be binding unless it is in writing and
signed by each of the Company and the holders of a majority of the
aggregate shares of Series A Preferred and or the Shares into which such
Series A Preferred have been converted. Any amendment or waiver effected
in accordance with this Section 11 shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding
(including securities into which such securities are convertible or
exercisable), each future holder of any of such securities and the Company.
12. General. All Exhibits and Schedules are hereby incorporated by
-------
reference and made a part of this Agreement. If any provision of this
Agreement shall be found by any court of competent jurisdiction to be
invalid or unenforceable, the parties hereby waive such provision to the
extent that it is found to be invalid or unenforceable. Such provision
shall, to the maximum extent allowable by law, be modified by such court so
that it becomes enforceable, and, as modified, shall be enforced as any
other provision hereof, all the other provisions hereof continuing in full
force and effect. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation hereof. This Agreement and the other Transaction Documents
constitute the entire understanding of the parties with respect to the
subject matter hereof and supersede any and all prior understandings and
agreements, whether written or oral, with respect to such subject matter.
This Agreement may be executed in counterparts, which together shall
constitute one and the same instrument. This Agreement shall be governed
by and construed in accordance with the laws (other than the conflict of
laws rules) of the State of New York.
Page 24 of 74 Pages
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Stock
Purchase Agreement to be executed by a duly authorized officer as an
agreement under seal as of the date first above written.
COMPANY
CARVER CORPORATION
[Corporate Seal] By: /s/ Stephen M. Williams
------------------------
Title: President
Attest:
------------------------
Title:
INVESTORS
RENWICK SPECIAL SITUATIONS,
L.P.
By: /s/ Raj K. Bhatia
------------------
Title: General Partner
RENWICK ALPHA FUND, L.P.
By: /s/ Raj K. Bhatia
------------------
Title: General Partner
RCM
RENWICK CAPITAL MANAGEMENT,
INC.
By: /s/ Raj K. Bhatia
------------------
Title: Co-President
Page 25 of 74 Pages
<PAGE>
EXHIBITS/SCHEDULES
<TABLE>
<CAPTION>
Exhibits
--------
<C> <S>
A -Investors
B -Certificate of Designation
C -Registration Rights Agreement
D -Intentionally Omitted
E -Warrant Agreement
F -Investment Banking Agreement
G -Financial Statements
H -Opinion of Company Counsel
<CAPTION>
Schedules
---------
<C> <S>
3.1 -Organization and Corporate Power
3.3 -Capitalization
3.6 -Absence of Certain Developments
3.7 -Legal Compliance
3.8 -Properties
3.9 -Tax Matters
3.10 -Contracts
3.11 -Defaults
3.12 -Intellectual Property
3.14 -Litigation
3.15 -Securities Laws Compliance
</TABLE>
Page 26 of 74 Pages
<PAGE>
EXHIBIT A
Investor
Address
Purchase Price
No. of Shares
-------------
Closing I
Renwick Alpha Fund, L.P.
900 Third Avenue, 27th Floor
New York, NY 10022
$1,000,000
470,588
Closing II
Renwick Special Situations Fund, L.P.
900 Third Avenue, 27th Floor
New York, NY 10022
$1,000,000
470,588
Closing III
Renwick Special Situations Fund, L.P.
900 Third Avenue, 27th Floor
New York, NY 10022
$1,000,000
470,588
Page 27 of 74 Pages
<PAGE>
EXHIBIT B
Certificate of Designation
See Exhibit 4.3
to this
Current Report
on Form 8-K
Page 28 of 74 Pages
<PAGE>
EXHIBIT C
Registration Rights Agreement
See Exhibit 4.2
to this
Current Report
on Form 8-K
Page 29 of 74 Pages
<PAGE>
EXHIBIT E
Warrant Agreement
See Exhibit 4.1
to this
Current Report
on Form 8-K
Page 30 of 74 Pages
<PAGE>
EXHIBIT F
CONSULTING AGREEMENT
June 12, 1996
Carver Corporation
20121 48th Avenue West
Lynnwood, Washington 98036
Attention: Stephen Williams, President
Dear Mr. Williams:
This will confirm the arrangements, terms and conditions pursuant to
which Renwick Capital Management, Inc. (the "Consultant"), has been
retained to serve as a financial consultant and advisor to Carver
Corporation, a Washington corporation (the "Company"), on a non-exclusive
basis for a period of three (3) years commencing on June 12, 1996. The
undersigned hereby agrees to the following terms and conditions:
1. Duties of Consultant. Consultant shall, at the request of the
--------------------
Company, upon reasonable notice, render the following services to the
Company from time to time:
(a) Consulting Services. Consultant will provide such financial
-------------------
consulting services and advice pertaining to the Company's business affairs
as the Company may from time to time reasonably request. Without limiting
the generality of the foregoing, Consultant will assist the Company in
developing, studying and evaluating financing and merger and acquisition
proposals based upon documentary information provided to the Consultant by
the Company.
(b) Financing. Consultant will assist and represent the Company in
---------
obtaining both short and long-term financing. The Consultant will be
entitled to additional compensation under certain circumstances in
accordance with the terms set forth in Section 3 hereof.
(c) Wall Street Liaison. Consultant will, when appropriate, arrange
-------------------
meetings between representatives of the Company and individuals and
financial institutions in the investment community, such as security
analysts, portfolio managers and market makers.
(d) Consultant will provide counsel with respect to initiating or
conducting discussions and negotiations with potential acquirers and, if
requested by the Company, participate in such discussions and negotiations.
Consultant will also provide advice with respect to the pricing, structure
and form of any such transaction. If requested, for an additional
reasonable fee to be agreed upon by the Consultant and the Company,
Page 31 of 74 Pages
<PAGE>
Consultant will assist the Company in preparing a descriptive memorandum
which shall be made available or used in discussions with prospective
investors, lenders or acquirers.
(e) Fairness Opinion. If requested in connection with a transaction
-------------------
pursuant to which we are entitled to receive the completion fee provided
for in Section 3 below, we will render an opinion as to the fairness from a
financial point of view to the Company and its shareholders of the
consideration to be received by the Company and/or its shareholders in
connection with such transaction. If, for any reason, a transaction is not
consummated and the fee provided for below is not paid, the Company will
reimburse the Consultant for its services rendered on the basis of the
amount of time devoted to preparing the opinion or the draft thereof, at a
reasonable hourly rate to be agreed upon by the Consultant and the Company.
In addition to the foregoing services, Consultant will render such
additional services as may be requested by the Company and determined to be
reasonable by the Consultant. The services described in this Section 1
shall be rendered by Consultant at such time and place and in such manner
(whether by conference, telephone, letter or otherwise) as Consultant may
reasonably determine.
2. Compensation. As compensation for Consultant's services
------------
hereunder, the Company shall pay to Consultant a monthly fee of $4,167.
3. Additional Compensation in Certain Circumstances. In addition to
------------------------------------------------
the financial consulting services described in Section 1 above, Consultant
may introduce the Company to persons, whether individuals or entities, that
may be suitable candidates for providing the Company with debt or equity
financing or that may be suitable candidates to purchase substantially all
of the stock or assets of the Company, merge with the Company, or enter
into a joint venture or other transaction with the Company. If, at any
time up until the first anniversary of the date hereof, the Company enters
into an agreement with any such persons or their affiliates, pursuant to
which the Company obtains debt or equity financing or pursuant to which
substantially all of the Company's stock or assets is purchased or the
Company is merged with or into another entity the Company will pay to
Consultant, in accordance with the formula set forth below, additional
compensation based on the aggregate of all proceeds received by the Company
(the "Consideration") in such transaction (the "Transaction"), provided,
however, that no such compensation shall be payable in connection with
Transactions with any of the parties listed on Attachment A.
The additional compensation to be paid will be paid upon the closing
of the Transaction, by certified check, in the following amounts:
a) 2% of the first $8,000,000 of the consideration paid in the
Transaction;
b) 3% of the consideration in excess of $8,000,000 and up to
$11,000,000;
c) 3.25% of the consideration in excess of $11,000,000 and up to
12,000,000
Page 32 of 74 Pages
<PAGE>
d) 3.50% of the consideration in excess of 12,000,000 and up to
$13,000,000;
e) 4.00% of the consideration in excess of $13,000,000 and up
to $14,000,000; and
f) 5.00% of the consideration in excess of $14,000,000.
4. Available Time. Consultant shall make available such time as it,
--------------
in its sole discretion, shall deem appropriate for the performance of its
obligations under this agreement.
5. Relationship. Nothing herein shall constitute Consultant as an
------------
employee or agent of the Company, except to such extent as might
hereinafter be agreed upon for a particular purpose. Except as might
hereinafter be expressly agreed, Consultant shall not have the authority to
obligate or commit the Company in any manner whatsoever.
6. Confidentiality. Except in the course of the performance of its
---------------
duties hereunder, Consultant agrees that it shall not disclose any trade
secrets, know-how, or other proprietary information not in the public
domain learned as a result of this Agreement unless and until such
information becomes generally known.
7. Assignment. This Agreement shall not be assignable by any party
----------
except to successors to all or substantially all of the business of either
party for any reason whatsoever without the prior written consent of the
other party, which consent may be arbitrarily withheld by the party whose
consent is required.
8. Governing Law. This Agreement shall be deemed to be a contract
-------------
made under the laws of the State of New York and for all purposes shall be
construed in accordance with the laws of said State.
Very truly yours,
RENWICK CAPITAL MANAGEMENT, INC.
By: /s/ Raj K. Bhalia
------------------------------
Name: Raj K. Bhalia
Title: Co-President
AGREED AND ACCEPTED:
CARVER CORPORATION
By: /s/ Stephen M. Williams
--------------------------------
Name: Stephen M. Williams
Title: President
Page 33 of 74 Pages
<PAGE>
EXHIBIT G
FINANCIAL STATEMENTS
Financial statements attached as Exhibit G to the Stock Purchase Agreement
consist of (i) the Company's audited consolidated balance sheets and statements
of income, changes in stockholders' equity, and cash flow as of and for the
fiscal years ended December 31, 1993, December 31, 1994 and December 31, 1995
included in the Company's Annual Report on Form 10-K with respect to the
Company's fiscal year ending December 31, 1995 previously filed with the U.S.
Securities and Exchange Commission; and (ii) the Company's unaudited
consolidated balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the three months ended March 31, 1996
included in the Company's Quarterly Report on Form 10-Q with respect to the
Company's fiscal quarter ending March 31, 1996 previously filed with the U.S.
Securities and Exchange Commission.
Page 34 of 74 Pages
<PAGE>
EXHIBIT 4.1
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of June 12, 1996 (the "Closing Date")
between CARVER CORPORATION, a Washington corporation (the "Company"), and
RENWICK CAPITAL MANAGEMENT, INC. (hereinafter referred to as the "Holder").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company proposes to issue to the Holder, warrants (the
"Warrants") to purchase up to 100,000 shares (the "Shares") of Common Stock
of the Company, par value $.01 per share (the "Common Stock") at prices
ranging from $1.50 to $2.125 per share pursuant to and in connection with
the Series A Preferred Stock Purchase Agreement dated June 12, 1996 by and
among the Company, the investors on Schedule A thereof and Renwick Capital
Management, Inc.; and
NOW, THEREFORE, in consideration of the premises, the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Grant. The Holder is hereby granted the right to purchase, at
-----
any time from the Closing Date until 5:00 P.M., New York time, on the fifth
anniversary of the Closing Date (the "Warrant Exercise Term"), up to
100,000 fully-paid and non-assessable Shares at an initial exercise price
(subject to adjustment as provided in Article 6 hereof) ("Exercise Price")
as follows:
a. $1.50 per share if the Warrants are exercised at any time
between the Closing Date and 5:00 P.M., New York time, on the second
anniversary of the Closing Date;
b. $1.75 per share if the Warrants are exercised on or between
the day after the second anniversary of the Closing Date and 5:00 P.M., New
York time, on the third anniversary of the Closing Date;
c. $2.00 per share if the Warrants are exercised on or between
the day after the third anniversary of the Closing Date and 5:00 P.M., New
York time, on the fourth anniversary of the Closing Date; and
d. $2.125 per share if the Warrants are exercised on or between
the day after the fourth anniversary of the Closing Date and 5:00 P.M., New
York time, on the fifth anniversary of the Closing Date.
Page 35 of 74 Pages
<PAGE>
2. Warrant Certificates. The warrant certificates (the "Warrant
--------------------
Certificates") delivered pursuant to this Agreement shall be in the form
set forth in Exhibit A attached hereto and made a part hereof, with such
appropriate insertions, omissions, substitutions and other variations as
required or permitted by this Agreement.
3. Exercise of Warrant. The Warrants are exercisable at the prices
-------------------
set forth in Section 1 hereof, payable in cash by certified or official
bank check in New York Clearing House Funds payable to the order of the
Company, or by wire transfer of immediately available funds to an account
designated by the Company, subject to adjustment as provided in Article 7
hereof. Upon surrender of the Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of the Exercise
Price (as hereinafter defined) for the Shares purchased, at the Company's
principal offices (currently located at 20121 48th Avenue West, Lynnwood,
Washington 98036), the registered holder of a Warrant Certificate shall be
entitled to receive a certificate or certificates for the Shares so
purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder hereof, in whole or in part (but
not as to fractional Shares) in increments of at least 50,000 shares (or,
if the number of shares available for purchase is less than 50,000, such
lesser amount). In the case of the purchase of less than all the Shares
purchasable under any Warrant Certificate, the Company shall cancel said
Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the
Shares purchasable thereunder.
4. Issuance of Certificates.
------------------------
Upon the exercise of the Warrants, the issuance of certificates for
the Shares purchased shall be made forthwith (and in any event within three
business days thereafter) without charge to the Holder thereof including,
without limitation, any tax which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the provisions of Article
5 hereof) be issued in the name of, or in such names as may be directed by,
the Holder thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name
other than that of the Holder and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile
signature of the present or any future President or Vice President of the
Company attested to by the manual or facsimile signature of the present or
any future Secretary or Assistant Secretary of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer.
Upon exercise, in part or in whole, of the Warrants, certificates
representing the Shares shall bear a legend substantially similar to the
following:
Page 36 of 74 Pages
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND
SUCH SECURITIES MAY NOT BE OFFERED FOR RESALE, SOLD, ASSIGNED OR
OTHERWISE HYPOTHECATED FOR VALUE (INCLUDING BY ANY PLEDGEE) UNLESS (A)
THE SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT AND THE
SECURITIES LAWS OF ALL APPLICABLE STATES OF THE UNITED STATES, OR (B)
THE SECURITIES ARE OFFERED AND SOLD IN COMPLIANCE WITH AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS AND, AT THE OPTION OF THE COMPANY,
THE HOLDER PROVIDES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO
SUCH EFFECT.
5. Restriction on Transfer of Warrants.
-----------------------------------
By acceptance of a Warrant Certificate each Holder represents and
agrees that such Holder is acquiring the Warrants evidenced thereby, and
that upon exercise thereof it will acquire the Shares, not with a view to
any sale, distribution or transfer thereof in violation of the Securities
Act of 1933, as amended (the "Act") and acknowledges and agrees that the
Warrants and the Shares may not be sold, transferred or otherwise disposed
of without registration under the Act or any applicable exemption from the
registration requirements of the Act. Holder further acknowledges that the
Shares will not be issued pursuant to the exercise of a Warrant unless the
exercise of the Warrant and the issuance and delivery of such Shares shall
comply with all relevant provisions of law, including without limitation,
the Act, and other federal and state securities laws and regulations and
the requirements of any stock exchange on which the Shares may then be
listed, as established to the reasonable satisfaction of Company. The
shares are subject to a Registration Rights Agreement of even date herewith
between the Company and the Holder.
6. Price.
-----
6.1 Initial and Adjusted Exercise Price. The initial exercise
-----------------------------------
price of each Warrant shall be as set forth in Section 1 hereof. The
adjusted exercise price shall be the price which shall result from time to
time from any and all adjustments of the initial exercise price in
accordance with the provisions of Article 7 hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall mean
--------------
the initial exercise price or the adjusted exercise price, depending upon
the context.
7. Anti-Dilution Provisions. The Exercise Price in effect at any
------------------------
time and the number and kind of securities purchasable upon the exercise of
this Warrant shall be subject to adjustment from time to time upon the
happening of certain events as follows:
Page 37 of 74 Pages
<PAGE>
a. In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock
into a greater number of shares, or (iii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for such dividend
or distribution or of the effective date of such subdivision, combination
or reclassification shall be adjusted so that it shall equal the price
determined by multiplying the Exercise Price by a fraction, the denominator
of which shall be the number of shares of Common Stock outstanding after
giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such
action. Such adjustment shall be made successively whenever any event
listed above shall occur.
b. In case the Company shall fix a record date for the issuance
of rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities convertible
into Common Stock) at a price (the "Subscription Price") (or having a
conversion price per share) less than the lesser of the current market
price of the Common Stock (as defined in Subsection (h) below) on the
record date mentioned below, or the Exercise Price on such record date (the
lesser of such two being the "Adjustment Trigger Price") the Exercise Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Exercise Price in effect immediately prior to the date of
such issuance by a fraction, the numerator of which shall be the sum of the
number of shares of Common Stock outstanding on the record date mentioned
below and the number of additional shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock so
offered (or the aggregate conversion price of the convertible securities so
offered) would purchase at the Adjustment Trigger Price and the
denominator of which shall be the sum of the number of shares of Common
Stock outstanding on such record date and the number of additional shares
of Common Stock offered for subscription or purchase (or into which the
convertible securities so offered are convertible). Such adjustment shall
be made successively whenever such rights or warrants are issued and shall
become effective immediately after the record date for the determination of
shareholders entitled to receive such rights or warrants; and to the extent
that shares of Common Stock are not delivered or securities convertible
into Common Stock are not delivered) after the expiration of such rights or
warrants the Exercise Price shall be readjusted to the Exercise Price which
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made upon the basis of delivery of only the number
of shares of Common Stock (or securities convertible into Common Stock)
actually delivered.
c. In case the Company shall hereafter distribute to the
holders of its Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions and dividends or distributions
referred to in Subsection (b) above) or subscription rights or warrants
(excluding those referred to in Subsection (6) above), then in each such
case the Exercise Price in effect thereafter shall be determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the total number of shares of
Common Stock outstanding
Page 38 of 74 Pages
<PAGE>
multiplied by the current market price per share of Common Stock (as
defined in Subsection (h) below), less the fair market value (as determined
by the Company's Board of Directors) of said assets or evidences of
indebtedness so distributed or of such rights or warrants, and the
denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such current market price per share of Common
Stock. Such adjustment shall be made successively whenever such a record
date is fixed. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the
record date for the determination of shareholders entitled to receive such
distribution.
d. In case the Company shall issue shares of its Common Stock
[excluding shares issued (i) in any of the transactions described in
Subsection (a) above, (ii) any Permitted Issuance (as defined in Subsection
(m) below), (iii) to shareholders of any corporation which merges into the
Company in proportion to their stock holdings of such corporation
immediately prior to such merger, upon such merger, or issued in a bona
fide public offering pursuant to a firm commitment underwriting, but only
if no adjustment is required pursuant to any other specific subsection of
this Section (7) (without regard to Subsection (i) below) with respect to
the transaction giving rise to such rights] for a consideration per share
(the "Offering Price") less than the Adjustment Trigger Price the Exercise
Price shall be adjusted immediately thereafter so that it shall equal the
price determined by multiplying the Exercise Price in effect immediately
prior thereto by a fraction, the numerator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior to the
issuance of such additional shares and the number of shares of Common Stock
which the aggregate consideration received or to be received [determined as
provided in Subsection (g) below] for the issuance of such additional
shares would purchase at the Adjustment Trigger Price and the denominator
of which shall be the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares. Such adjustment
shall be made successively whenever such an issuance is made.
e. In case the Company shall issue any securities convertible
into or exchangeable for its Common Stock [excluding securities issued in
transactions described in Subsections (b) and (c) above] for a
consideration per share of Common Stock (the "Conversion Price") initially
deliverable upon conversion or exchange of such securities [determined as
provided in Subsection (g) below] less than the Adjustment Trigger Price,
the Exercise Price shall be adjusted immediately thereafter so that it
shall equal the price determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, the numerator of which
shall be the sum of the number of shares of Common Stock outstanding
immediately prior to the issuance of such securities and the number of
shares of Common Stock which the aggregate consideration received or to be
received [determined as provided in Subsection (g) below] for such
securities would purchase at the Adjustment Trigger Price and the
denominator of which shall be the sum of the number of shares of Common
Stock outstanding immediately prior to such issuance and the maximum number
of shares of Common Stock of the Company deliverable upon conversion of or
in exchange for such securities at the initial conversion or exchange price
or rate. Such adjustment shall be made successively whenever such an
issuance is made.
Page 39 of 74 Pages
<PAGE>
f. Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Subsections (a), (b), (c), (d) and (e)
above, the number of Shares purchasable upon exercise of this Warrant shall
simultaneously be adjusted by multiplying the number of Shares initially
issuable upon exercise of this Warrant by the Exercise Price in effect on
the date of such adjustment and dividing the product so obtained by the
Exercise Price, as adjusted, such quotient to be rounded up to the next
whole number.
g. For purposes of any computation respecting consideration
received pursuant to Subsections (b), (c), (d) and (e) above the following
shall apply:
(i) in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash, provided that
in no case shall any deduction be made for any commissions, discounts or
other expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith.
(ii) in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors of the Company
(irrespective of the accounting treatment thereof), whose determination
shall be conclusive; and
(iii) in the case of the issuance of securities convertible
into or exchangeable for shares of Common Stock, the aggregate
consideration received therefor shall be deemed to be the consideration
received by the Company for the issuance of such securities plus the
additional minimum consideration, if any, to be received by the Company
upon the conversion or exchange thereof [the consideration in each case to
be determined in the same manner as provided in clauses (i) and (ii) of
this Subsection (g)].
(h) For the purpose of any computation under Subsections (b),
(c), (d) and (e) above, the current market price per share of Common Stock
at any date shall be deemed to be the average of the daily closing prices
for 30 consecutive business days before such date The closing price for
each day shall be the last reported sale price regular way or, in case no
such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the Common Stock is admitted to
trading or listed, or if not listed or admitted to trading on any such
exchange, the average of the highest reported bid and lowest reported asked
prices as reported by NASDAQ, or other similar organization if NASDAQ is no
longer reporting such information, or if not so available, the fair market
price as determined by the Board of Directors, whose determination shall be
conclusive.
(i) No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least ten cents
($0.10) in such price; provided, however, that any adjustments which by
reason of this Subsection (i) are not required to be made shall be carried
forward and taken into account in any
Page 40 of 74 Pages
<PAGE>
subsequent adjustment required to be made hereunder. All calculations
under this Section 7 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. Anything in this Section 7
to the contrary notwithstanding, the Company shall be entitled, but shall
not be required, to make such changes in the Exercise Price, in addition to
those required by this Section 7, as it shall determine, in its sole
discretion, to be advisable in order that any dividend or distribution in
shares of Common Stock, or any subdivision, reclassification or combination
of Common Stock, hereafter made by the Company shall not result in any
Federal Income tax liability to the holders of Common Stock or securities
convertible into Common Stock (including Warrants).
(j) Whenever the Exercise Price is adjusted, as herein provided,
the Company shall promptly, but no later than 10 days after any request for
such an adjustment by the Holder, cause a notice setting forth the adjusted
Exercise Price and adjusted number of Shares issuable upon exercise of each
Warrant, and, if requested, information describing the transactions giving
rise to such adjustments, to be mailed to the Holders at their last
addresses appearing in the Warrant register, and shall cause a certified
copy thereof to be mailed to its transfer agent, if any. The Company may
retain a firm of independent certified public accountants selected by the
Board of Directors (who may be the regular accountants employed by the
Company) to make any computation required by this Section (7), and a
certificate signed by such firm shall be conclusive evidence of the
correctness of such adjustment.
(k) In the event that at any time, as a result of an adjustment
made pursuant to Subsection (a) above, the Holder of this Warrant
thereafter shall become entitled to receive any shares of the Company,
other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of this Warrant shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
Subsections (a) to (i), inclusive above.
(l) Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon exercise of this Warrant,
Warrants therefore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the similar Warrants
initially issuable pursuant to this Agreement.
(m) "Permitted Issuance" shall mean (i) shares issued in
connection with an underwritten public offering, (ii) shares issued
pursuant to the Company's employee benefit plans in existence on the
Closing Date or as subsequently adopted with the approval of the
shareholders of the Company in the manner required by any shareholders of
the Company in the manner required by any applicable law, (iii) shares of
Common Stock in an amount not greater than ten percent of the Company's
then outstanding shares of Common Stock issued to strategic partners, (iv)
Common Stock issued as a stock dividend to holders of Common Stock or
Series A Cumulative Convertible Preferred Stock or upon any subdivision or
combination of such shares, (v) shares issued upon conversion of Series A
Cumulative Convertible Preferred Stock or as payment of dividends thereon,
(vi) securities issued in connection with the merger or consolidation of
the Company or any subsidiary with any other operating entity, or the
Page 41 of 74 Pages
<PAGE>
exchange of securities for stock of another operating entity; (vii) the
issuance of securities in connection with the purchase of all or
substantially all of the assets of another operating business entity or a
division of another operating business entity; (viii) the offering or
issuance of securities in connection with the purchase of any tangible or
intangible assets for use in the Company's business, including, without
limitation, patents, trade secrets and leasehold interests, the lease of
equipment by the Company, the provision of lease financing to the Company
or the purchase of capital equipment by the Company; or (ix) shares of
Common Stock issued upon exercise of the Warrants.
8. Exchange and Replacement of Warrant Certificates.
------------------------------------------------
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office
of the Company, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of
securities in such denominations as shall be designated by the Holder
thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate,
and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation
of the Warrants, if mutilated, the Company will make and deliver a new
Warrant Certificate of like tenor, in lieu thereof.
9. Elimination of Fractional Interests.
-----------------------------------
The Company shall not be required to issue certificates representing
fractions of Shares upon the exercise of the Warrants, nor shall it be
required to issue scrip or pay cash in lieu of fractional interests, it
being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction up to the nearest whole number of
Shares.
10. Reservation and Listing of Securities.
-------------------------------------
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon
the exercise of the Warrants, such number of shares of Common Stock as
shall be issuable upon the exercise thereof. The Company covenants and
agrees that, upon exercise of the Warrants and payment of the Exercise
Price therefor, all Shares issuable upon such exercise shall be duly and
validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any shareholder. As long as the Warrants shall be
outstanding, the Company shall use its best efforts to cause all shares of
Common Stock issuable upon the exercise of the Warrants to be listed on or
quoted by NASDAQ.
11. Notices to Warrant Holders.
--------------------------
Page 42 of 74 Pages
<PAGE>
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive
notice as a shareholder in respect of any meetings of shareholders for the
election of directors or any other matter, or as having any rights
whatsoever as a shareholder of the Company. If, however, at any time prior
to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of its shares
of Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on
the books of the Company (other than under circumstances covered by
Subsection 7(a) above); or
(b) the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor (other than
under circumstances covered by Subsection 7(a) above); or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all
or substantially all of its property, assets and business as an entirety
shall be proposed; or
(d) reclassification or change of the outstanding shares of
Common Stock (other than a change in par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination),
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is
the surviving corporation and which does not result in any reclassification
or change of the outstanding shares of Common Stock, except a change as a
result of a subdivision or combination of such shares or a change in par
value, as aforesaid), or a sale or conveyance to another corporation of the
property of the Company as an entirety is proposed; or
(e) the Company or an affiliate of the Company shall propose to
issue any rights to subscribe for shares of Common Stock or any other
securities of the Company or of such affiliate to all the shareholders of
the Company; then, in any one or more of said events, the Company shall
give written notice to the Holder or Holders of such event at least fifteen
(15) days prior to the date fixed as a record date or the date of closing
the transfer books for the determination of the shareholders entitled to
such dividend, distribution, convertible or exchangeable securities or
subscription rights, options or warrants, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of closing the transfer books, as the
case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration
or payment of any such dividend or distribution, or the issuance of any
convertible or exchangeable
Page 43 of 74 Pages
<PAGE>
securities or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
12. Notices.
-------
Any notice required to be given pursuant to this Agreement shall be
given in writing. Any notice, consent, approval, demand and other
communication in connection with this Agreement shall be deemed to be given
if given in writing (including facsimile, telecopy or similar transmission)
addressed as provided below (or to the addressee at such other address as
the addressee shall have specified by notice actually received by the
addressor), and if either (a) actually delivered in fully legible form to
such address (evidenced in the case of a telecopy by receipt of a telecopy
transmission confirmation) or (b) in the case of a letter, five days shall
have elapsed after the same shall have been deposited in the United States
mails (i) with first-class postage prepaid and registered or certified,
with return receipt requested, or (ii) with express delivery postage
prepaid, with receipt required for delivery.
If to the Company, to it at 20121-48th Avenue West, Lynnwood,
Washington 98036.
If to any Investor, to it at 900 Third Avenue, 27th Floor, New York,
New York 10022, with a copy to Crummy, Del Deo, Dolan, Griffinger &
Vecchione, a Professional Corporation, One Riverfront Plaza, Newark, New
Jersey 07102-5497, Telecopy: (201) 596-0545 to the attention of Jeffrey A.
Baumel, Esq.
13. Course of Dealing; Amendments, Waivers and Consents.
----------------------------------------------------
No course of dealing between any Holder, on one hand, and the Company,
on the other hand, shall operate as a waiver of any Holder's rights under
this Agreement or any other Transaction Document. The Company acknowledges
that if any Holder, without being required to do so by this Agreement or
any other Transaction Document, gives any notice of information to, or
obtains any consent from, the Company, the Holder shall not by implication
have amended, waived or modified any provision of this Agreement or any
other Transaction Document, or created any duty to give any such notice or
information or to obtain such consent on any future occasion. No delay or
omission on the part of any Investor in exercising any right under this
Agreement or any other Transaction Document shall operate as a waiver of
such right or any other right hereunder or thereunder. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion. No amendment, waiver or consent with
respect to this Agreement shall be binding unless it is in writing and
signed by each of the Company and the Holder.. Any amendment or waiver
effected in accordance with this Section 11 shall be binding upon each
Holder of any securities
Page 44 of 74 Pages
<PAGE>
purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible or exercisable), each
future holder of any of such securities and the Company.
14. Survival of Covenants; Assignability of Rights.
----------------------------------------------
The Warrants may not be sold, assigned, or transferred except in
compliance with Section 5 above. All covenants, agreements,
representations and warranties of the Company made in this Agreement and
any other written information delivered or furnished to any Investor in
connection herewith or therewith:
(a) shall inure to the benefit of each of the Holder and its
respective successors and assigns and each permitted transferee of any
Warrants (whether so expressed or not), but only if such transferee is (A)
an affiliate, partner or stockholder of Holder or transferee or (B) a
transferee or assignee of Warrants to purchase at least 50,000 Shares, as
adjusted for any stock split, stock dividend or other recapitalization,
provided in any event that the Company is given written notice at the time
of or within a reasonable time after said transfer, stating the name and
address of said transferee or assignee and provided, further, that the
transferee or assignee agrees in writing to abide by and assume each and
every duty and obligation of an Investor pursuant to this Agreement.
15. Termination.
-----------
This Agreement shall terminate on the earlier of the fifth anniversary
of the Closing Date or the date on which all Warrants have been exercised
in full.
16. Governing Law.
-------------
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Washington and
for all purposes shall be construed in accordance with the laws of said
State without regard to the conflicts of laws provisions thereof.
17. Benefits of This Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Holder and any other permitted
registered holder or holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and the Holder
and any other permitted holder or holders of the Warrant Certificates.
Page 45 of 74 Pages
<PAGE>
18. Counterparts.
------------
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original,
and such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day and year first above written.
[SEAL] CARVER CORPORATION
By: /s/ Stephen M. Williams
--------------------------------
Name: Stephen M. Williams
Title: President
Attest:
-----------------------
RENWICK CAPITAL MANAGEMENT, INC.
By: /s/ Raj K. Bhatia
-----------------
Name: Raj K. Bhatia
Title: Co-President
Page 46 of 74 Pages
<PAGE>
EXHIBIT A
Warrant Certificate
See Exhibit 4.5
to this
Current Report
on
Form 8-K
Page 47 of 74 Pages
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _________ Shares of
Common Stock and herewith tenders in payment for such securities, cash,
certified or official bank check payable in New York Clearing House Funds
to the order of Carver Corporation, any combination of cash or certified or
official bank check in New York Clearing House funds, or by wire transfer
of immediately available funds in the amount of $ _________ , all in
accordance with the terms hereof. The undersigned requests that a
certificate for such securities be registered in the name of
____________________ , whose address is __________________, and that such
Certificate be delivered to,
______________, whose address is _____________.
Dated: Signature: ________________________
(Signature must conform in all respects to name of holder as specified on
the face of the Warrant Certificate.)
________________________________
________________________________
(Insert Social Security or Other
Identifying Number of Holder)
Page 48 of 74 Pages
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_______________, Attorney, to transfer the within Warrant Certificate on
the books of the within-named Company, with full power of substitution.
Dated: Signature:______________________
(Signature must conform in all respects to name of holder as specified on
the face of the Warrant Certificate)
_______________________________
_______________________________
(Insert Social Security or Other
Identifying Number of Assignee)
Page 49 of 74 Pages
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
-----------------------------
AGREEMENT, dated as of the 12th day of June, 1996, between each of the
Investors listed on Schedule A hereto (a "Holder" or the "Holders") and
Carver Corporation, a Washington corporation, having its principal place of
business at 20121 48th Avenue West, Lynnwood, Washington 98036 (the
"Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holders are purchasing from the Company an aggregate of up
to 1,411,764 shares of Series A Cumulative Convertible Preferred Stock of
the Company, $.01 par value ( the "Preferred Stock") or receiving warrants
(the "Warrants") to purchase up to 300,000 shares (the "Warrant Shares") of
common stock, $.01 par value, of the Company ("Common Stock") upon the
terms set forth in the Series A Preferred Stock Purchase Agreement by and
between the Company and the Holders dated June 12, 1996 (the "Purchase
Contract"); and
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein with respect to the shares of Common Stock to be
issued to the Holders upon the (i) conversion of the Preferred Stock and
(ii) issuance of the shares of Common Stock underlying the Warrants;
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. Registration Rights.
-------------------
(a) Registration Under the Securities Act of 1933. None of the
---------------------------------------------
Warrants, the Warrant Shares, the Preferred Stock or the Common Stock to be
issued upon conversion of the shares of Preferred Stock (the "Conversion
Shares") have been registered for purposes of public distribution under the
Securities Act of 1933, as amended (the "Act").
(b) Registrable Securities. As used herein, the term
----------------------
"Registrable Security" means the Warrant Shares, the Conversion Shares and
any shares of Common Stock issued upon any stock split or stock dividend in
respect of such Registrable Securities; provided, however, that with
respect to any particular Registrable Security, such security shall cease
to be a Registrable Security when, as of the date of determination, (i) it
has been effectively registered under the Act and disposed of pursuant
thereto, (ii) registration under the Act is no longer required for
subsequent public distribution of such security, (iii) it has ceased to be
outstanding or (iv) it is no longer beneficially owned by a Holder or a
permitted transferee of the rights of a Holder pursuant to Section 9 of
this Agreement. The term "Registrable Securities" means any and/or all of
the securities falling within the foregoing definition of a "Registrable
Security." In the event of any merger, reorganization, consolidation,
recapitalization or
Page 50 of 74 Pages
<PAGE>
other change in corporate structure affecting the Common Stock, such
adjustment shall be made in the definition of "Registrable Security" as is
appropriate in order to prevent any dilution or enlargement of the rights
granted pursuant to this Section 1.
(c) Piggyback Registration. (i) If, at any time during the ten
----------------------
years following the date of this Agreement, the Company proposes to prepare
and file one or more registration statements under the Act to register any
shares of Common Stock on a registration form that may be used for
registration of Registrable Shares (in any such case, other than in
connection with a merger, acquisition or pursuant to Form S-8 or successor
form) (for purposes of this Section 1, collectively, the "Registration
Statement"), it will give written notice of its intention to do so by
registered mail ("Notice"), at least twenty (20) days prior to the filing
of each such Registration Statement, to each Holder. Upon the written
request of any Holder (a "Requesting Holder"), made within twenty (20) days
after receipt of the Notice, that the Company include any of the Requesting
Holder's Registrable Securities in the proposed Registration Statement, the
Company shall use its reasonable best efforts to effect the registration
under the Act of the Registrable Securities which it has been so requested
to register ("Piggyback Registration"), at the Company's sole cost and
expense and at no cost or expense to the Requesting Holder provided,
however, that if, in the written opinion of the Company's managing
underwriter, if any, for such offering, the inclusion of all or a portion
of the Registrable Securities requested to be registered, when added to the
securities being registered by the Company or the selling shareholder(s),
will exceed the maximum amount of the Company's securities which can be
marketed (i) at a price reasonably related to their then current market
value, or (ii) without otherwise materially adversely affecting the entire
offering, then the Company may exclude from such offering all or a portion
of the Registrable Securities which it has been requested to register.
(ii) If securities are proposed to be offered for sale pursuant
to such Registration Statement by other security holders of the Company and
the total number of securities to be offered by the Requesting Holder and
such other selling security holders is required to be reduced pursuant to a
request from the managing underwriter (which request shall be made only for
the reasons and in the manner set forth above) the aggregate number of
Registrable Securities to be offered by the Requesting Holder pursuant to
such Registration Statement shall equal the number which bears the same
ratio to the maximum number of securities that the underwriter believes may
be included for all the selling security holders (including the Requesting
Holder) as the original number of Registrable Securities proposed to be
sold by the Requesting Holder bears to the total original number of
securities proposed to be offered by the Requesting Holder and the other
selling security holders.
(iv) Notwithstanding the provisions of this Section 1(c), the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 1(c) (irrespective of whether any written
request for inclusion of such securities shall have already been made) to
elect not to file any such proposed Registration Statement, or to withdraw
the same after the filing but prior to the effective date thereof.
Page 51 of 74 Pages
<PAGE>
(d) Demand Registration. At any time during a period of five
-------------------
years from the date of this Agreement, Holders owning more than 50% of the
aggregate Registrable Securities then outstanding shall have the right
(which right is in addition to the piggyback registration rights provided
for under Section 1(c) hereof), exercisable by written notice to the
Company (the "Demand Registration Request"), to have the Company prepare
and file with the Securities and Exchange Commission (the "Commission") no
more than on two occasions, according to the expense - sharing arrangements
described at Section 2(b) below, a Registration Statement and such other
documents, including a prospectus, as may be necessary (in the opinion of
both counsel for the Company and counsel for such Holders), in order to
comply with the provisions of the Act, so as to permit a public offering
and sale of the Registrable Securities by the Holder provided, however,
-------- -------
that the Company shall not be required to effect a Registration pursuant to
this Section 1(d) unless at least 500,000 shares of the Registrable
Securities are proposed to be sold in such registration (as adjusted for
any stock split, stock dividend or similar change in the Common Stock).
The Company shall not be required to maintain the effectiveness of any such
registration for greater than six months. The form on which such
registration shall be filed shall be determined by the Company from among
the forms then available to it under the Act for such registration.
(e) In addition to the rights set forth in Section 1(c) above,
at any time prior to the tenth anniversary of the date of this Agreement,
one or more Holders holding at least 50% of the Registrable Securities then
outstanding ("Initiating Holders") may make written demand for registration
of Registrable Shares under the Securities Act on Form S-3 (an "S-3 Demand
Notice") on an unlimited number of occasions, provided that the Registrable
Shares requested to be registered in any such Form S-3 registration
statement have an aggregate fair market value at the date of delivery to
the Company of the S-3 Demand Notice of at least $250,000 and provided,
further, that the Company is then eligible to use Form S-3 for registration
and public sale of the Registrable Securities.
(f) Notwithstanding the foregoing, the Company may delay filing
a registration statement and may withhold efforts to cause the registration
statement to become or remain effective, if the Company determines in good
faith that such registration might (i) interfere with or affect the
negotiation or completion of any transaction that is being contemplated by
the Company at the time the right to delay is exercised, or (ii) involve
initial or continuing disclosure obligations that might not be in the best
interest of the Company's shareholders. Notwithstanding the foregoing, the
Company shall not be entitled to exercise its right to defer filing or
effectiveness of or to update a registration pursuant to a Demand
Registration Request for more than one hundred eighty (180) consecutive
days.
2. Covenants of the Company With Respect to Registration. The
-----------------------------------------------------
Company covenants and agrees as follows:
(a) In connection with any registration under Section 1(d)
hereof, the Company shall use its best efforts to file the Registration
Statement as expeditiously as possible, but in any event no later than
forty-five (45) days following receipt of any demand therefor, shall use
its best efforts to have any such Registration Statement
Page 52 of 74 Pages
<PAGE>
declared effective at the earliest possible time, and shall furnish each
holder of Registrable Securities such number of prospectuses as shall
reasonably be requested.
(b) The Company shall pay all costs, fees and expenses in
connection with all Registration Statements filed pursuant to Sections
1(c), 1(d) and 1(e) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, and blue sky fees and
expenses; provided, however, that the expenses paid by the Company in
connection with the exercise of rights to registration pursuant to Section
1(e) above shall be limited to those usual and customary expenses
associated with a non-underwritten offering. However, each Holder shall be
solely responsible for the fees of any counsel retained by him or her in
connection with such registration and any transfer taxes or underwriting
discounts or commissions applicable to the Registrable Securities sold by
him or her pursuant to Section 1(c) hereof.
(c) The Company shall indemnify and hold harmless each Holder
and each underwriter, within the meaning of the Act, who may purchase from
or sell for the Holder, any Registrable Securities, from and against any
and all losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in the Registration Statement, any
other registration statement filed by the Company under the Act, any post-
effective amendment to such registration statements, or any prospectus
included therein required to be filed or furnished by reason of this
Agreement or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or alleged
untrue statement or omission or alleged omission based upon information
furnished or required to be furnished in writing to the Company by a Holder
or underwriter expressly for use therein; which indemnification shall
include each person, if any, who controls any such underwriter within the
meaning of the Act and each officer, director, employee and agent of such
underwriter. The Holder and any such underwriter and other person, shall be
obligated to indemnify the Company, its directors, each officer signing the
Registration Statement and each person, if any, who controls the Company
within the meaning of the Act, from and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, any
registration statement or any prospectus required to be filed or furnished
by reason of this Agreement or caused by any omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue
statement or omission based upon information furnished in writing to the
Company by the Holder or underwriter or other person expressly for use
therein.
(d) If for any reason the indemnification provided for in the
preceding subparagraph is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, claim,
damage, liability or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate
Page 53 of 74 Pages
<PAGE>
to reflect not only the relative benefits received by the indemnified party
and the indemnifying party, but also the relative fault of the indemnified
party and the indemnifying party, as well as any other relevant equitable
considerations.
(e) Nothing contained in this Agreement shall be construed as
requiring the Holder to exercise the Warrants or convert the Preferred
Stock prior to the initial filing of any registration statement or the
effectiveness thereof.
(f) If the Company shall fail to comply with the provisions of
this Agreement, the Company shall, in addition to any other equitable or
other relief available to the holders of Registrable Securities, be liable
for any or all incidental, special and consequential damages sustained by
the holders of Registrable Securities, requesting registration of their
Registrable Securities.
(g) Except as set forth in Section 2(j), the Company shall not
permit the inclusion of any securities other than the Registrable
Securities to be included in any Registration Statement filed pursuant to
Section 1(d) hereof, or permit any other registration statement to be or
remain effective during the effectiveness of a Registration Statement filed
pursuant to Section 1(d) hereof, without the prior written consent of the
Holders of a majority of the Registrable Securities held by Holders who
initiated the Demand Registration Request, which consent shall not be
unreasonably withheld.
(h) The Company shall deliver promptly to the Holder of
Registrable Securities participating in the offering in which the Holder's
shares are being registered pursuant to Section 1(c) or 1(d) hereof and
requesting the correspondence and memoranda described in this Section 2(i)
and to the managing underwriter, if any, copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with
respect to the Registration Statement and permit the Holder and
underwriters to do such investigation, upon reasonable advance notice, with
respect to information contained in or omitted from the Registration
Statement as it deems reasonably necessary to comply with applicable
securities laws or rules of the National Association of Securities Dealers,
Inc. Such investigation shall include access to books, records and
properties and opportunities to discuss the business of the Company with
its officers and independent auditors, all to such reasonable extent and at
such reasonable times and as often as the Holder of Registrable Securities
or underwriter shall reasonably request.
(i) Upon the written request therefor by the Holder, the Company
shall include in the Registration Statement covering any of the Registrable
Securities any other shares of Common Stock held by the Holder as of the
date of filing of such Registration Statement, provided that such Holder
pays the incremental costs associated with registration of such additional
shares.
3. Additional Terms. The following provisions shall be applicable
----------------
to any Registration Statement filed pursuant to Section 1 of this
Agreement:
Page 54 of 74 Pages
<PAGE>
(a) The Company will use its reasonable best efforts to cause
the Registration Statement to become effective as promptly as possible and,
if any stop order shall be issued by the Commission in connection
therewith, to use its reasonable efforts to obtain the removal of such
order. Following the effective date of the Registration Statement, the
Company shall, upon the request of the Holder, forthwith supply such
reasonable number of copies of the Registration Statement, preliminary
prospectus and prospectus meeting the requirements of the Act, and other
documents necessary or incidental to a public offering, as shall be
reasonably requested by the Holder to permit the Holder to make a public
distribution of his or her Registrable Securities. The Company will use its
reasonable efforts to qualify the Registrable Securities for sale in such
states as the Holder of Registrable Securities shall reasonably request,
provided that no such qualification will be required in any jurisdiction
where, solely as a result thereof, the Company would be subject to service
of general process or to taxation or qualification as a foreign corporation
doing business in such jurisdiction. The obligations of the Company
hereunder with respect to the Holder's Registrable Securities are expressly
conditioned on the Holder's furnishing to the Company such appropriate
information concerning the Holder, the Holder's Registrable Securities and
the terms of the Holder's offering of such Registrable Securities as the
Company may reasonably request.
(b) Neither the filing of a Registration Statement by the
Company pursuant to this Agreement nor the making of any request for
prospectuses by the Holder shall impose upon the Holder any obligation to
sell his or her Registrable Securities.
(c) The Holder, upon receipt of notice from the Company that an
event has occurred which requires a post-effective amendment to the
Registration Statement or a supplement to the prospectus included therein,
shall promptly discontinue the sale of his or her Registrable Securities
until the Holder receives a copy of a supplemented or amended prospectus
from the Company, which the Company shall provide as soon as practicable
after such notice.
(d) If the Company fails to keep the Registration Statement
continuously effective, for the time period required by Section 1(d)
hereof, then the Company shall, promptly upon the request of the Holders of
more than 50% of the then-unsold Registrable Securities, update the
Registration Statement or file a new registration statement covering the
Registrable Securities remaining unsold, subject to the terms and
provisions hereof.
4. Amendment or Waiver. The provisions of this Agreement may be
-------------------
amended at any time and from time to time, and particular provisions of
this Agreement may be waived, with an agreement or consent in writing,
executed in one or more counterparts, signed by the Company and by Holders
holding not less than a majority of the Registrable Securities outstanding
and held by Holders as of the date of such amendment or waiver. Any
amendment or waiver effected in accordance with this paragraph shall be
binding on the Company and all Holders.
5. Entire Agreement. This Agreement constitutes the entire
----------------
agreement of the parties hereto with respect to the subject matter hereof,
and supersedes all prior
Page 55 of 74 Pages
<PAGE>
agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
6. Execution in Counterparts. This Agreement may be executed in one
-------------------------
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
7. Notices. All notices, requests, demands or other communications
-------
required by or otherwise given with respect to this Agreement shall be in
writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), four days after
being mailed by United States first-class mail, postage prepaid and return
receipt requested, or when delivered by facsimile (if a confirming copy is
sent by mail as aforesaid), in each case to the applicable addresses set
forth below:
If to the Holder, to his or her address set forth on the signature
page of this Agreement.
If to the Company, to the address set forth on the first page of this
Agreement.
8. Binding Effect; Benefits. A Holder may assign his or her rights
------------------------
hereunder to a transferee or assignee of at least 50,000 Registrable
Securities, as adjusted by any stock split, stock dividend or similar
change in the Common Stock, provided in any event that the Company is given
written notice at the time of or within a reasonable time after said
transfer, stating the name and address of said transferee or assignee and
provided, further, that the transferee or assignee agrees in writing to
abide by and assume each and every duty and obligation of a Holder pursuant
to this Agreement. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns. Nothing herein
contained, express or implied, is intended to confer upon any person other
than the parties hereto and their respective heirs, legal representatives,
successors and such permitted assigns, any rights or remedies under or by
reason of this Agreement.
9. Headings. The headings contained herein are for the sole purpose
--------
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this
Agreement.
10. Severability. Any provision of this Agreement which is held by a
------------
court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
11. Governing Law. This Agreement shall be deemed to be a contract
-------------
made under the laws of the State of New York and for all purposes shall be
construed in accordance with the laws of said State.
Page 56 of 74 Pages
<PAGE>
IN WITNESS WHEREOF, this Registration Rights Agreement has been
executed and delivered by the parties hereto as of the date first above
written.
CARVER CORPORATION
By: /s/ Stephen M. Williams
-------------------------------
Name: Stephen M. Williams
Title: President
INVESTORS:
RENWICK SPECIAL SITUATIONS, L.P.
By: /s/ Raj K. Bhalia
-------------------------------
Name: Raj K. Bhalia
Title: General Partner
RENWICK ALPHA FUND, L.P.
By: /s/ Raj K. Bhalia
-------------------------------
Name: Raj K. Bhalia
Title: General Partner
RENWICK CAPITAL MANAGEMENT, INC.
By: /s/ Raj K. Bhalia
-------------------------------
Name: Raj K. Bhalia
Title: Co-President
Page 57 of 74 Pages
<PAGE>
SCHEDULE A
Renwick Special Situations, L.P.
900 Third Avenue - 27th Floor
New York, New York 10022
Renwick Alpha Fund, L.P.
900 Third Avenue - 27th Floor
New York, New York 10022
Renwick Capital Management, Inc.
900 Third Avenue - 27th Floor
New York, New York 10022
Page 58 of 74 Pages
<PAGE>
EXHIBIT 4.3
CARVER CORPORATION
_________________________
CERTIFICATE OF DESIGNATION
OF SERIES A CUMULATIVE CONVERTIBLE
PREFERRED STOCK SETTING FORTH THE POWERS,
PREFERENCES, RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF
SUCH SERIES OF PREFERRED STOCK
The undersigned, the President of Carver Corporation, a Washington
corporation (the "Corporation"), in accordance with the provisions of RCW
23B.06.020(4), does hereby certify that, pursuant to the authority
conferred upon the Board of Directors by the Restated Articles of
Incorporation of the Corporation, the following resolution creating a
series of Series A Cumulative Convertible Preferred Stock was duly adopted
by the Board of Directors on June 5, 1996;
RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Restated Articles of Incorporation and
the provisions of RCW 23B.06.020(4), the Board of Directors does hereby
provide for the designation of a series of preferred stock, Series A (the
"Series A Preferred Stock"), initially consisting of One Million Four
Hundred Eleven Thousand Seven Hundred Sixty-Four (1,411,764) shares, and to
the extent that the designation, powers, preferences and relative and other
special rights and the qualifications, limitations and restrictions of the
Series A Preferred Stock are not stated and expressed in the Restated
Articles of Incorporation, the Board of Directors does hereby fix and
herein state and express such designation, powers, preferences and relative
and other special rights and the qualifications, limitations and
restrictions as follows:
Section 1. Designation and Number. (a) The shares of such series
----------------------
shall be designated "Series A Cumulative Convertible Preferred Stock" (the
"Series A Preferred Stock"). The number of shares initially constituting
the Series A Preferred Stock shall be 1,411,764, which number may be
decreased (but not increased) by the Board of Directors without a vote of
shareholders; provided, however, that such number may not be decreased
--------- -------
below the number of then outstanding shares of Series A Preferred Stock.
(b) The Series A Preferred Stock shall, with respect to dividend
rights and rights on liquidation, dissolution or winding up, rank prior to
the Common Stock, par value $0.01 per share, of the Corporation (the
"Common Stock") and any other issue of Preferred Stock.
Page 59 of 74 Pages
<PAGE>
Section. 2. Dividends and Distributions.
---------------------------
(a) The holders of the outstanding shares of Series A Preferred
Stock shall be entitled to receive, out of any funds legally available
therefor, cumulative dividends at the annual rate of $0.17 per share of
Series A Preferred Stock held by such holder payable in such number of
shares of Common Stock of the Corporation as shall equal the amount of
dividend payable divided by a number equal to the greater of (a) the
average of the closing bid price for the Common Stock of the Corporation
for a period of 30 days prior to the dividend date, or (b) $2.125, to be
payable on or before the last day of August and November, 1996 and February
and May, 1997.
(b) After May 31, 1997, the holders of the outstanding shares of
Series A Preferred Stock shall be entitled to receive, out of any funds
legally available therefor, cumulative dividends at the annual rate of
$0.17 per share of Series A Preferred Stock payable in cash, in shares of
Common Stock, in accordance with the formula set forth above, or a
combination thereof, at the option of the Corporation on or before the last
day of August, November, February and May.
(c) In the event the Corporation does not pay a dividend when
due as provided in subparagraphs (a) and (b) herein, such dividend shall be
required to be paid prior to the Corporation paying the next scheduled
dividend.
(d) The holders of shares of Series A Preferred Stock shall not
be entitled to receive any dividends or other distributions except as
provided herein.
(e) All numbers relating to calculation of cumulative dividends
shall be subject to equitable adjustment in the event of any stock
dividend, stock split, combination, reorganization, recapitalization,
reclassification or other similar event involving a change in the capital
structure of the Series A Preferred Stock.
Section 3. Voting Rights.
-------------
(a) In addition to any other rights provided for herein or by
law, the holders of Series A Preferred Stock shall be entitled to vote,
together with the holders of Common Stock, as a class, on all matters as to
which holders of Common Stock are entitled to vote, in the same manner and
with the same effect as such holders of Common Stock. In any vote, the
holders of Series A Preferred Stock shall be entitled to one vote per share
of Series A Preferred Stock. Except as otherwise expressly provided in
this Section 3 or as otherwise required by law, the holders of shares of
Series A Preferred Stock and Common Stock shall vote together (or render
written consents in lieu of a vote) as a single class on all matters
submitted to the shareholders of the Corporation.
(b) Notwithstanding subparagraph (a), a vote at a duly convened
meeting or by written consent of the holders of at least two-thirds of the
then outstanding shares of Series A Preferred Stock as a separate class is
required to approve: (i) any voluntary plan of liquidation; (ii) any merger
or consolidation of the Corporation with or into another corporation unless
the Corporation shall be the surviving corporation, or the sale
Page 60 of 74 Pages
<PAGE>
of all or substantially all of the Corporation's capital stock or assets to
any other Person, or any other form of business combination or
reorganization in which Control of the Corporation is transferred (a
"Reorganization"); (iii) the payment by the Corporation of any dividend or
the distribution of any assets of the Corporation with respect to any class
of stock ranking junior to or on a parity with the Series A Preferred Stock
other than any dividend consisting solely of shares of any class of capital
stock paid to the holders of shares of such class of capital stock; or (iv)
the redemption or repurchase of capital stock by the Corporation.
"Control" shall be deemed to have been transferred in a transaction or
series of transactions in which any person, or group of related persons
(other than one or more holders of shares of Series A Preferred Stock),
shall have acquired beneficial ownership of more than 50% of the Common
Stock of the Corporation (assuming all outstanding and then exercisable or
convertible rights, options, warrants or convertible or exchangeable
securities entitling the holders thereof to subscribe for or purchase or
otherwise acquire shares of Common Stock ("Common Stock Equivalents") have
been fully exercised or converted).
(c) Notwithstanding subparagraph (a), a vote at a duly convened
meeting or by written consent of the holders of a majority of the then
outstanding shares of Series A Preferred Stock as a separate class is
required in order to: (i) amend the Articles of Incorporation of the
Corporation; (ii) change the number of directors on the Board of Directors
of the Corporation to a number greater than seven; (iii) approve the
Corporation's or any of its subsidiaries' involvement or participation in a
line of business other than the high fidelity audio business; (iv)
authorize the issuance of any additional equity securities by the
Corporation or any of its subsidiaries other than Permitted Issuances; (v)
approve the incurrence by the Corporation or any of its subsidiaries of
indebtedness for borrowed money in excess of the amount of indebtedness for
borrowed money outstanding or available for borrowing by the Corporation or
its subsidiaries on the Issue Date pursuant to existing credit agreements
that are in effect on the Issue Date and which may be renewed under
substantially the same terms.
(d) The holders of the Series A Preferred Stock, voting as a
separate class, shall be entitled to elect two directors (the "Series A
Directors"). At any annual or special meeting of the Corporation (or in a
written consent in lieu thereof) held for the purpose of electing
directors, the presence in person or by proxy of the holders of at least a
majority (or, in the case of written consent, all) of the then outstanding
shares of Series A Preferred Stock (voting as a separate class) shall
constitute a quorum for the election of the Series A Directors. The
holders of at least a majority of the shares of the then outstanding Series
A Preferred Stock (voting as a separate class) present in person or by
proxy at any meeting relating to the election of directors (calculated
after the determination of a quorum) shall then be entitled to elect the
Series A Directors.
A Series A Director may be removed during his or her term of office
without cause, by and only by, the affirmative vote or written consent of
the holders of at least a majority (or, in the case of written consent,
all) of the then outstanding shares of the Series A Preferred Stock (voting
as a separate class). A vacancy in a seat held by a Series A Director
shall be filled by vote of the holders of at least a majority of the then
outstanding shares of Series A Preferred Stock (voting as a separate class)
present in
Page 61 of 74 Pages
<PAGE>
person or represented by proxy at any meeting (calculated after the
determination of a quorum) or by written consent of all of the holders of
the then outstanding shares of Series A Preferred Stock (voting as a
separate class).
Section 4. Reacquired Shares. Any shares of Series A Preferred Stock
-----------------
converted, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares of Series A Preferred Stock shall upon their
cancellation, and upon the filing of an appropriate certificate with the
Secretary of State of the State of Washington, if required, become
authorized but unissued shares of Preferred Stock, par value $.01 per
share, of the Corporation and may be reissued as part of another series of
Preferred Stock, par value $.01 per share, of the Corporation, subject to
the conditions or restrictions on issuance set forth herein.
Section 5. Liquidation, Dissolution or Winding Up. (a) If the
--------------------------------------
Corporation shall commence a voluntary case under the Federal bankruptcy
laws or any other applicable Federal or state bankruptcy, insolvency or
similar law, or consent to the entry of an order for relief in an
involuntary case under such law or to the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Corporation or of any substantial part of its property, or
make an assignment for the benefit of its creditors, or admit in writing
its inability to pay its debts generally as they become due, or if a decree
or order for relief in respect of the Corporation shall be entered by a
court having jurisdiction in the premises in an involuntary case under the
Federal bankruptcy laws or any other applicable federal or state
bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Corporation or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and any such decree
or order shall be unstayed and in effect for a period of 150 consecutive
days and on account of any such event the Corporation shall liquidate,
dissolve or wind up, or if the Corporation shall otherwise liquidate,
dissolve or wind up, no distribution shall be made (i) to the holders of
shares of Junior Stock unless, prior thereto, the holders of shares of
Series A Preferred Stock, subject to Section 8, shall have received the
Face Value with respect to each share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) plus all declared or
accumulated but unpaid dividends on such shares.
(b) The consolidation, merger or other business combination of
the Corporation with or into any other Person or Persons pursuant to which
control of the Corporation is transferred to such Person or Persons, or the
sale of all or substantially all the assets of the Corporation, shall be
deemed to be a liquidation, dissolution or winding up of the Corporation
for purposes of this Section 5.
(c) Whenever the distribution provided for in this Section 5
shall be payable in property other than cash, the value of such
distribution shall be the fair market value of such property as determined
in good faith by the Board of Directors of the Corporation (irrespective of
the accounting treatment thereof). If after notice duly provided to the
holders of Series A Preferred Stock with respect to any such valuation
Page 62 of 74 Pages
<PAGE>
of property, the holder or holders of a majority in interest of the Series
A Preferred Stock disagree with such valuation, then the Company, at its
expense, shall retain an independent third party appraiser, acceptable to
the holders of a majority in interest of the Series A Preferred Stock,
which shall render an opinion as to the value of such distribution, which
determination shall be conclusive.
Section 6. Conversion. The holders of the Series A Preferred Stock
----------
shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock
----------------
shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share at the office of the Corporation
or any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined by applying the
Conversion Ratio. The number of shares of Common Stock to be issued and
delivered upon conversion of a share of Series A Preferred Stock, adjusted
as hereinafter provided is referred to herein as the "Conversion Ratio."
The Conversion Ratio shall initially be one, subject to adjustment from
time to time pursuant to Section 6(g).
(b) Mandatory Conversion. Each share of Series A Preferred
--------------------
Stock plus accrued and unpaid dividends shall be automatically converted
into such number of fully paid and nonassessable shares of Common Stock as
is determined by applying the Conversion Ratio upon the earlier to occur
of: (i) the closing of an underwritten public offering on a firm commitment
basis pursuant to an effective registration statement filed pursuant to the
Securities Act of 1933, as amended, covering the offer and sale of shares
of Common Stock ("Underwritten Public Offering"), or (ii) on or after the
third anniversary of the Issue Date, at the option of the Corporation. Upon
the occurrence of either of the foregoing events, the holders of the Series
A Preferred Stock shall, upon notice from the Corporation, surrender the
certificates representing such shares at the office of the Corporation or
of its transfer agent for the Common Stock. Thereupon, there shall be
issued and delivered to such holder a certificate or certificates for the
number of shares of Common Stock into which the shares of Series A
Preferred Stock so surrendered were convertible on the date on which such
conversion occurred.
(c) Mechanics of Conversion. Before any holder of Series A
-----------------------
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of this Corporation or of any
transfer agent for the Series A Preferred Stock, and shall give written
notice to this Corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued. The Corporation shall, as soon as practicable thereafter, issue
and deliver at such office to such holder of Series A Preferred Stock, or
to the nominee or nominees of such holder, a certificate or certificates
for the number of shares of Common Stock to which such holder shall be
entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of
the shares of Series A Preferred Stock to be converted, and the person or
persons entitled to receive the shares
Page 63 of 74 Pages
<PAGE>
of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock as
of such date. If the conversion is pursuant to Section 6 (b)(i) above,
the conversion may, at the option of any holder tendering Series A
Preferred Stock for conversion, be conditioned upon the closing with the
underwriters of the sale of securities pursuant to such offering, in which
event the person(s) entitled to receive the Common Stock upon conversion of
the Series A Preferred Stock shall not be deemed to have converted such
Series A Preferred Stock until immediately prior to the closing of such
sale of securities. The Corporation shall not be obligated to issue
certificates representing conversion shares unless certificates evidencing
the shares of Series A Preferred Stock being converted are either delivered
to the Corporation or its transfer agent, or the holder notifies the
Corporation that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection therewith.
(d) The Conversion Ratio shall be subject to adjustment from
time to time in certain instances as hereinafter provided. Upon
conversion, the holder of shares of Series A Preferred Stock shall be
entitled to receive any accrued and unpaid dividends on the shares of
Series A Preferred Stock surrendered for conversion calculated on a pro
rata basis through the date of such conversion payable in cash or shares of
Common Stock as provided in Section 2 above.
(e) In connection with the conversion of any shares of Series A
Preferred Stock, no fractions of shares of Common Stock shall be issued,
but in lieu thereof the Corporation shall pay a cash adjustment in respect
of such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the
trading day on which such shares of Series A Preferred Stock are deemed to
have been converted. If more than one share of Series A Preferred Stock
shall be surrendered for conversion by the same holder at the same time,
the number of full shares of Common Stock issuable on conversion thereof
shall be computed on the basis of the total number of shares of Series A
Preferred Stock so surrendered.
(f) The Corporation shall use its best efforts to obtain the
approval of its shareholders for the authorization of such number of its
authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the conversion of all outstanding shares of Series A
Preferred Stock, and shall take all action required to increase the
authorized number of shares of Common Stock necessary to permit the
conversion of all outstanding shares of Series A Preferred Stock, if
required.
(g) Adjustment of Conversion Ratio. The Conversion Ratio will
------------------------------
be subject to adjustment from time to time as follows:
1. In case the Corporation shall (i) declare a dividend or
make a distribution on its outstanding shares of Common Stock in shares of
Common Stock, (ii) subdivide or reclassify its outstanding shares of Common
Stock into a greater number of shares, or (iii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Ratio in effect at the time of the record date
Page 64 of 74 Pages
<PAGE>
for such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that it
shall equal the price determined by multiplying the Conversion Ratio by a
fraction, the numerator of which shall be the number of shares of Common
Stock outstanding after giving effect to such action, and the denominator
of which shall be the number of shares of Common Stock outstanding
immediately prior to such action. Such adjustment shall be made
successively whenever any event listed above shall occur.
2. In case the Corporation shall fix a record date for the
issuance of rights or warrants to all holders of its Common Stock entitling
them to subscribe for or purchase shares of Common Stock (or securities
convertible into Common Stock) at a price (the "Subscription Price") (or
having a conversion price per share) less than the lesser of the Current
Market Price of the Common Stock (as defined in Subsection (7) below) on
the record date mentioned below, or the Face Value on such record date (the
lesser of such two being the "Adjustment Trigger Price"), the Conversion
Ratio shall be adjusted so that the same shall equal the price determined
by multiplying the Conversion Ratio in effect immediately prior to the date
of such issuance by a fraction, the denominator of which shall be the sum
of the number of shares of Common Stock outstanding on the record date and
the number of additional whole shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock so offered (or
the aggregate issuance and conversion price of the convertible securities
so offered) would purchase at the Adjustment Trigger Price and the
numerator of which shall be the sum of the number of shares of Common Stock
outstanding on such record date and the number of additional shares of
Common Stock offered for subscription or purchase (or into which the
convertible securities so offered are convertible). Such adjustment shall
be made successively whenever such rights or warrants are issued and shall
become effective immediately after the record date for the determination of
shareholders entitled to receive such rights or warrants; and to the extent
that shares of Common Stock are not delivered (or securities convertible
into Common Stock are not delivered) after the expiration of such rights or
warrants the Conversion Ratio shall be readjusted to the Conversion Ratio
which would then be in effect had the adjustments made upon the issuance of
such rights or warrants been made upon the basis of delivery of only the
number of shares of Common Stock (or securities convertible into Common
Stock) actually delivered.
3. In case the Corporation shall hereafter distribute to
the holders of its Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions and dividends or distributions
referred to in Subsection (1) above) or subscription rights or warrants
(excluding those referred to in Subsection (2) above), then in each such
case the Conversion Ratio in effect thereafter shall be determined by
multiplying the Conversion Ratio in effect immediately prior thereto by a
fraction, the denominator of which shall be the total number of shares of
Common Stock outstanding multiplied by the Current Market Price per share
of Common Stock (as defined in Subsection (7) below), less the fair market
value (as determined by the Corporation's Board of Directors) of said
assets or evidences of indebtedness so distributed or of such rights or
warrants, and the numerator of which shall be the total number of shares of
Common Stock outstanding multiplied by such Current Market Price per share
of
Page 65 of 74 Pages
<PAGE>
Common Stock. Such adjustment shall be made successively whenever such a
record date is fixed. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the
record date for the determination of shareholders entitled to receive such
distribution.
4. In case the Corporation shall issue shares of its Common
Stock excluding shares issued (i) in any of the transactions described in
Subsection (1) above, (ii) any Permitted Issuance, and (iii) to
shareholders of any corporation which merges into the Corporation in
proportion to their stock holdings of such corporation immediately prior to
such merger, upon such merger [but only if no adjustment is required
pursuant to any other specific subsection of this Section (g) (without
regard to Subsection (8) below) with respect to the transaction giving rise
to such rights], for a consideration per share (the "Offering Price") less
than the Adjustment Trigger Price, the Conversion Ratio shall be adjusted
immediately thereafter so that it shall equal the amount determined by
multiplying the Conversion Ratio in effect immediately prior thereto by a
fraction, the denominator of which shall be the sum of the number of shares
of Common Stock outstanding immediately prior to the issuance of such
additional shares and the number of shares of Common Stock which the
aggregate consideration received or to be received [determined as provided
in Subsection (6) below] for the issuance of such additional shares would
purchase at the Adjustment Trigger Price and the numerator of which shall
be the number of shares of Common Stock outstanding immediately after the
issuance of such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.
5. In case the Corporation shall issue any securities
convertible into or exchangeable for its Common Stock [excluding securities
issued in transactions described in Subsections (1) and (3) above] for a
consideration per share of Common Stock (the "Conversion Price") initially
deliverable upon conversion or exchange of such securities [determined as
provided in Subsection (6) below] less than the Adjustment Trigger Price,
the Conversion Ratio shall be adjusted immediately thereafter so that it
shall equal the price determined by multiplying the Conversion Ratio in
effect immediately prior thereto by a fraction, the denominator of which
shall be the sum of the number of shares of Common Stock outstanding
immediately prior to the issuance of such securities and the number of
shares of Common Stock which the aggregate consideration received or to be
received [determined as provided in Subsection (6) below] for such
securities would purchase at the Adjustment Trigger Price and the numerator
of which shall be the sum of the number of shares of Common Stock
outstanding immediately prior to such issuance and the maximum number of
shares of Common Stock of the Corporation deliverable upon conversion of or
in exchange for such securities at the initial conversion or exchange price
or rate. Such adjustment shall be made successively whenever such an
issuance is made.
6. For purposes of any computation respecting consideration
received pursuant to Subsections (2) and (3) above, the following shall
apply:
(i) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such cash,
provided that in no case
Page 66 of 74 Pages
<PAGE>
shall any deduction be made for any commissions, discounts or other
expenses incurred by the Corporation for any underwriting of the issue or
otherwise in connection therewith;
(ii) in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market value
thereof as determined in good faith by the Board of Directors of the
Corporation (irrespective of the accounting treatment thereof), whose
determination shall be conclusive; and
(iii) in the case of the issuance of securities
convertible into or exchangeable for shares of Common Stock, the aggregate
consideration received therefor shall be deemed to be the consideration
received by the Corporation for the issuance of such securities plus the
additional minimum consideration, if any, to be received by the Corporation
upon the conversion or exchange thereof [the consideration in each case to
be determined in the same manner as provided in clauses (i) and (ii) of
this Subsection (6)].
7. For the purpose of any computation under Subsections (2),
(3) (4) and (5) above, the current market price per share of Common Stock
at any date (the "Current Market Price") shall be deemed to be the average
of the daily closing prices for 30 consecutive business days before such
date. The closing price for each day shall be the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either
case on the principal national securities exchange on which the Common
Stock is admitted to trading or listed, or if not listed or admitted to
trading on any such exchange, the average of the highest reported bid and
lowest reported asked prices as reported by NASDAQ, or other similar
organization if NASDAQ is no longer reporting such information, or if not
so available, the fair market price as determined by the Board of
Directors, whose determination shall be conclusive.
8. No adjustment in the Conversion Ratio shall be required
unless such adjustment would require an increase or decrease of at least
.10 in such ratio; provided, however, that any adjustments which by reason
of this Subsection (8) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment required to be made
hereunder. All calculations under this Section (g) shall be made to the
nearest one-hundredth of a percentage point, as the case may be. Anything
in this Section (g) to the contrary notwithstanding, the Corporation shall
be entitled, but shall not be required, to make such changes in the
Conversion Ratio, in addition to those required by this Section (g), as it
shall determine, in its sole discretion, to be advisable in order that any
dividend or distribution in shares of Common Stock, or any subdivision,
reclassification or combination of Common Stock, hereafter made by the
Corporation shall not result in any Federal Income tax liability to the
holders of Common Stock or securities convertible into Common Stock.
9. Whenever the Conversion Ratio is adjusted, as herein
provided, the Corporation shall promptly, but no later than 10 days after
any request for
Page 67 of 74 Pages
<PAGE>
such an adjustment by a holder of Series A Preferred Stock, cause a notice
setting forth the adjusted Conversion Ratio and, if requested, information
describing the transactions giving rise to such adjustments, to be mailed
to such holder at such holder's last address appearing in the records of
the Corporation, and shall cause a certified copy thereof to be mailed to
its transfer agent, if any. The Corporation may retain a firm of
independent certified public accountants selected by the Board of Directors
(who may be the regular accountants employed by the Corporation) to make
any computation required by this Section (g), and a certificate signed by
such firm shall be conclusive evidence of the correctness of such
adjustment.
10. In the event that at any time, as a result of an adjustment
made pursuant to Subsection (1) above, a holder of Series A Preferred Stock
shall become entitled to receive any shares of the Corporation other than
Common Stock, thereafter the number of such other shares so receivable
shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Subsections (1) to (8), inclusive above.
Section 7. Waivers. Any of the foregoing rights and benefits of the
--------
holders of Series A Preferred Stock may be waived in any instance (without
the necessity of convening any meeting of shareholders of the Corporation)
upon the written agreement of at least a majority of the then outstanding
shares of Series A Preferred Stock (voting as a separate class).
Section 8. Certain Covenants. Any registered holder of Series A
-----------------
Preferred Stock may proceed to protect and enforce its rights and the
rights of such holders by any available remedy by proceeding at law or in
equity to protect and enforce any such rights, whether for the specific
enforcement of any provision in this Certificate of Designation or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
Section 9. Definitions. For the purposes of this Certificate of
-----------
Designation of Series A Cumulative Convertible Preferred Stock, the
following terms shall have the meanings indicated:
"Closing Bid Price" shall mean the average of the closing bid price as
reported by the Nasdaq National Market for the 30 trading days immediately
preceding the date on which a determination is to be made.
"Permitted Issuance" shall mean (i) shares issued in connection with
an Underwritten Public Offering, (ii) shares issued pursuant to the
Company's employee benefit plans in existence on the Issue Date or as
subsequently adopted with the approval of the shareholders of the Company
in the manner required by any applicable law, (iii) shares of Common Stock
issued to strategic partners in an amount not greater than ten percent of
the Corporation's then outstanding shares of Common Stock, (iv) Common
Stock issued as a stock dividend to holders of Common Stock or Series A
Preferred Stock or upon any subdivision or combination of such shares,
(v) shares issued upon conversion
Page 68 of 74 Pages
<PAGE>
of Series A Preferred Stock or as payment of dividends thereon, (vi)
securities issued in connection with the merger or consolidation of the
Corporation or any subsidiary with any other operating entity, or the
exchange of securities for stock of another operating entity; (vii) the
issuance of securities in connection with the purchase of all or
substantially all of the assets of another operating business entity;
(viii) the offering or issuance of securities in connection with the
purchase of any tangible or intangible assets for use in the Corporation's
business, including, without limitation, patents, trade secrets and
leasehold interests, the lease of equipment by the Corporation, the
provision of lease financing to the Corporation or the purchase of capital
equipment by the Corporation; or (ix) shares of Common Stock issued
pursuant to warrants issued to Renwick Capital Management, Inc. in
connection with the issuance of the Series A Preferred Stock.
"Issue Date" shall mean the first date on which shares of Series A
Preferred Stock are issued.
"Face Value" shall mean $2.125.
"Junior Stock" shall mean any capital stock of the Corporation ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock.
"Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
IN WITNESS WHEREOF, Carver Corporation has caused this Certificate to
be duly executed on this 12th day of June, 1996.
CARVER CORPORATION
By: /s/ Stephen M. Williams
-------------------------------
Stephen M. Williams
Title: President
Page 69 of 74 Pages
<PAGE>
EXHIBIT 4.4
Form of Series A Cumulative Convertible
Preferred Stock Certificate
Page 70 of 74 Pages
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PAI 470,588
INCORPORATED UNDER THE LAWS OF THE STATE OF WASHINGTON
CARVER CORPORATION
AUTHORIZED TO ISSUE 20,000,000 SHARES OF COMMON STOCK AND 2,000,000 SHARES
OF PREFERRED STOCK IN ONE OR MORE SERIES
This Certifies that RENWICK ALPHA FUND, L.P. is the
----------------------------------------------------
registered holder of --470,588-- Shares
-------------------------------------------------
of Series A Convertible Preferred stock of CARVER CORPORATION
transferable only on the books of the Corporation by the holder hereof in person
or by duly authorized Attorney upon surrender of the Certificate properly
endorsed.
PREFERRED
In Witness Whereof the said Corporation has caused this Certificate to be signed
by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated June 12, 1996
----------------------------
/s/ Linda S. Rowland /s/ S. M. Williams
- -------------------------- ---------------------------
Assistant Secretary President
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Page 71 of 74 Pages
<PAGE>
EXHIBIT 4.5
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT (i)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH LAWS, (ii)
TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES),
OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION
OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY,
STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH LAW IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, June 11, 2001
No. W1 _______
WARRANT CERTIFICATE
This Warrant Certificate certifies that Renwick Capital Management,
Inc. or registered assigns, is the registered holder of Warrants to
purchase, at any time from June 12, 1996 until 5:00 P.M. New York City time
on June 11, 2001 ("Expiration Date"), up to one hundred thousand (100,000)
fully-paid and non-assessable shares of common stock, $.01 par value
("Common Stock"), of Carver Corporation, a Washington corporation (the
"Company"), at the exercise prices, subject to adjustment in certain events
(the "Exercise Price"), as set forth in Section 1 of that certain Warrant
Agreement dated June 12, 1996 between the Company and Renwick Capital
Management, Inc. (the "Warrant Agreement"), upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the Warrant
Agreement. Payment of the Exercise Price may be made in cash, by certified
or official bank check in New York Clearing House funds payable
Page 72 of 74 Pages
<PAGE>
to the order of the Company, any combination of cash or check, or by wire
transfer of immediately available funds.
No Warrant may be exercised after 5:00 P.M., New York City time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a
part of this instrument and is hereby referred to in a description of the
rights, limitation of rights, obligations, duties and immunities thereunder
of the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be
adjusted. In such event, the Company will, at the request of the holder,
issue a new Warrant Certificate evidencing the adjustment in the Exercise
Price and the number and/or type of securities issuable upon the exercise
of the Warrants; provided, however, that the failure of the Company to
issue such new Warrant Certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the Warrant
Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax,
or other governmental charge imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation
of ownership or other writing hereon made by anyone), for the purpose of
any exercise hereof, and of any distribution to the holder(s) hereof, and
for all other purposes, and the Company shall not be affected by any notice
to the contrary.
No holder of this Warrant Certificate shall be entitled to vote or
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at
any meeting thereof, to give or withhold consent to any corporate action,
or to receive dividends or
Page 73 of 74 Pages
<PAGE>
subscription rights or otherwise, until the Warrant evidenced by this
Warrant Certificate shall have been exercised and the Common Stock issuable
upon the exercise thereof shall have become deliverable as provided in the
Warrant Agreement.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: June 12, 1996 CARVER CORPORATION
[SEAL] By: /s/ Stephen M. Williams
-------------------------------
Name: Stephen M. Williams
Title: President
Attest:
-------------------------
Page 74 of 74 Pages
