<PAGE>
As filed with the Securities and Exchange Commission on December 22, 1997
Registration No. 33-____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
____________________
KOPPERS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1588399
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
436 Seventh Avenue 15219-1800
Pittsburgh, Pennsylvania (Zip Code)
(Address of Principal
Executive Offices)
KOPPERS INDUSTRIES, INC. STOCK REDEMPTION AND PURCHASE PLAN
(Full title of the plan)
____________________
Robert K. Wagner
President and Chief Executive Officer Copy to:
Koppers Industries, Inc. Clayton A. Sweeney, Esquire
436 Seventh Avenue Dickie, McCamey & Chilcote, P.C.
Pittsburgh, Pennsylvania 15219-1800 Two PPG Place, Suite 400
(412) 227-2001 Pittsburgh, Pennsylvania 15222-5402
(Name, address, and telephone (412) 281-7272
number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================
Title of Amount Proposed Proposed Amount of
Securities to To Be Maximum Maximum Registration
Be Registered(1) Registered Offering Price Aggregate Fee(2)
Per Share Offering Price
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value.................. 175,000 $14.00 $2,450,000 $393.49
=========================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the Koppers Industries, Inc. Stock
Redemption and Purchase Plan described herein.
(2) Pursuant to Rule 457(h)(1), the registration fee has been computed on the
basis of the book value of such securities computed as of November 30,
1997 in the amount of $7.42.
The Registration Statement shall become effective upon filing in accordance with
Rule 462 under the Securities Act of 1933.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION. *
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION. *
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance with
Rule 428 under the Securities Act of 1933 and the Note to Part I of Form
S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Koppers Industries, Inc. (the
"Company") with the Securities and Exchange Commission are incorporated by
reference in this Registration Statement.
(A) Company's Annual Report on Form 10-K (File No. 1-12716) for the
fiscal year ended December 31, 1996.
(B) Company's Quarterly Report on Form 10-Q (File No. 1-12716) for
the quarter ended March 31, 1997. Company's Quarterly Report on
Form 10-Q (File No. 1-12716) for the quarter ended June 30, 1997.
Company's Quarterly Report on Form 10-Q (File No. 1-12716) for the
quarter ended September 30, 1997. Company's Report on Form 8-K
(File No. 1-12716) dated December 15, 1997.
(C) Not applicable.
In addition, all documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Pursuant to its Restated and Amended Articles of Incorporation, the
Company is authorized to issue up to 37,000,000 shares of voting common stock,
$.01 par value per share ("Voting Common Stock"), 3,000,000 shares of non-voting
common stock, $.01 par value per share ("Non-Voting Common Stock" together with
the Voting Common Stock, the "Common Stock") and 10,000,000 shares of preferred
stock, $.01 par value per share ("Preferred Stock"). As of December 12, 1997, an
aggregate of 4,961,807 shares of Common Stock was outstanding and held of record
by 123 stockholders. As of December 12, 1997, 2,145,624 shares of senior
convertible Preferred Stock were outstanding. Holders of Voting Common Stock are
entitled to one vote for each share held on all matters submitted to a vote of
stockholders. The Company, Saratoga Partners III, L.P. and the Management
Investors are parties to a stockholders' agreement dated as of December 1, 1997
(the "Stockholders' Agreement") which controls the election of directors.
Holders of Common Stock are entitled to receive ratably such dividends, if any,
as may be declared by the Board of Directors out of funds legally available
therefor, subject to any preferential dividend rights of outstanding preferred
stock. Upon the liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to receive ratably the net assets of the
Company available after the payment of all debts and other liabilities and
subject to the prior rights of any outstanding preferred stock. Holders of the
Common Stock have no preemptive, subscription, redemption or conversion rights
other than as set forth in the Stockholders' Agreement. The outstanding shares
of Common Stock are, and the Shares offered by the Company in the offerings will
be, when issued and paid for, fully paid and nonassessable. The rights,
preferences and privileges of holders of Common Stock are subject to, and may be
adversely affected by, the rights of the holders of shares of any series of
Preferred Stock which the Company may designate and issue in the future.
<PAGE>
Moreover, as a condition to participating in and acquiring Shares of
Common Stock of the Company through the Stock Redemption and Purchase Plan, each
participant must: (i) agree in writing to be bound by the Stockholders'
Agreement, (ii) execute a proxys appointing Robert K. Wagner and Clayton A.
Sweeney as their representative for the term of the Stockholders' Agreement to
vote on his or her behalf as a stockholder on any matter coming before the
stockholders of the Company, and (iii) appoint Robert K. Wagner and Clayton A.
Sweeney as his or her attorneys-in-fact to execute the Stockholders' Agreement
on his or her behalf and to sign, acknowledge, file and record any instrument
under the laws of any federal or state governmental agency, or which they deem
advisable to file.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Dickie, McCamey & Chilcote, P.C. of Pittsburgh, Pennsylvania, has been
retained as outside counsel to the Company. Clayton A. Sweeney, a shareholder
and Director of the Company, is also a shareholder and Director of Dickie,
McCamey & Chilcote, P.C. Mr. Sweeney is one of two Representatives of the
Management Investors (as such term is defined in the Stockholders' Agreement)
and, as such, was granted an irrevocable proxy for the term of the Stockholders'
Agreement to vote the shares of the Management Investors.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 1741 and 1742 of the BCL provide that a business corporation
shall have the power to indemnify any person who was or is a party, or is
threatened to be made a party, to any proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful. In the case of an action by or in
the right of the corporation, such indemnification is limited to expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person has been adjudged to be liable to the corporation unless, and
only to the extent that, a court determines upon application that, despite the
adjudication of liability but in view of all the circumstances, such person is
fairly and reasonably entitled to indemnity for the expenses that the court
deems proper.
BCL Section 1744 provides that, unless ordered by a court, any
indemnification referred to above shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification is
proper in the circumstances because the indemnitee has met the applicable
standard of conduct. Such determination shall be made:
(1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding; or
(2) if such a quorum is not obtainable, or if obtainable and a
majority vote of a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion; or
(3) by the shareholders.
Notwithstanding the above, BCL Section 1743 provides that to the
extent that a director, officer, employee or agent of a business corporation is
successful on the merits or otherwise in defense of any proceeding referred to
above, or in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith.
BCL Section 1745 provides that expenses (including attorneys' fees)
incurred by an officer, director, employee or agent of a business corporation in
defending any proceeding may be paid by the corporation in advance of the final
disposition of the proceeding upon receipt of an undertaking to repay the amount
advanced if it is ultimately determined that the indemnitee is not entitled to
be indemnified by the corporation.
BCL Section 1746 provides that the indemnification and advancement of
expenses provided by, or granted pursuant to, the foregoing provisions are not
exclusive of any other rights to which a person seeking indemnification may be
entitled under any bylaw, agreement, vote of shareholders or directors or
otherwise, and that indemnification may be
2
<PAGE>
granted under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise for any action taken or any failure to take any action
whether or not the corporation would have the power to indemnify the person
under any other provision of law and whether or not the indemnified liability
arises or arose from any action by or in the right of the corporation, provided,
however, that no indemnification is determined by a court to have constituted
willful misconduct or recklessness.
BCL Section 1747 permits a Pennsylvania business corporation to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or other enterprise, against any liability asserted against
such person and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
the person against such liability under the provisions described above.
The Company's Articles of Incorporation and Bylaws provide for (i)
indemnification of directors, officers, employees and agents of the Company and
its subsidiaries and (ii) the elimination of a director's liability for monetary
damages, to the maximum extent permitted by the BCL. The Company also maintains
directors' and officers' liability insurance covering its directors and officers
with respect to liabilities, including liabilities under the Securities Act of
1933, as amended, which they may incur in connection with their serving as such.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The Exhibits listed on the Index of Exhibits attached hereto are
incorporated by reference and are part of this Registration Statement.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the dollar value of securities offered
would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
3
<PAGE>
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned Company hereby further undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Company's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer, or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8, and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pittsburgh, Pennsylvania on December 15, 1997.
KOPPERS INDUSTRIES, INC.
By: /s/ Robert K. Wagner
----------------------------------------
Robert K. Wagner
Chief Executive Officer
4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert K. Wagner and Clayton A. Sweeney, and each
of them, his or her true and lawful attorneys-in-fact and agents, each with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments,
including post-effective amendments, to this Registration Statement, and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or his or her
substitute or substitutes, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the 15th day of December, 1997.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Name Title(s) Date
- ---- -------- ----
/s/ Robert K. Wagner December 15, 1997
- ------------------------- Chairman, Chief -----------
Robert K. Wagner Executive Officer and Director
/s/ Donald E. Davis December 15, 1997
- ------------------------- Vice President and -----------
Donald E. Davis Chief Financial Officer
/s/ Christian L. Oberbeck December 15, 1997
- ------------------------- Director -----------
Christian L. Oberbeck
/s/ Clayton A. Sweeney December 15, 1997
- ------------------------- Director -----------
Clayton A. Sweeney
/s/ Brooks C. Wilson December 15, 1997
- ------------------------- Director -----------
Brooks C. Wilson
/s/ N. H. Prater December 15, 1997
- ------------------------- Director -----------
N. H. Prater
5
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit Number Exhibit
- -------------- -------
4.1 Articles of Amendment of Koppers Industries, Inc.
Restated and Amended Articles of Incorporation of Koppers
Industries, Inc.
4.2 Restated and Amended Bylaws of Koppers Industries, Inc.
4.3 Stockholders' Agreement by and among Koppers Industries,
Inc., Saratoga Partners, III, L.P. and The Management
Investors
4.4 Koppers Industries, Inc. Stock Redemption and Purchase Plan
5.1 Opinion of Counsel regarding legality of securities to be
offered
15.1 Not applicable
23.1 Consent of Counsel
(included in Exhibit 5.1)
23.2 Consent of Ernst & Young Sydney Australia
23.3 Consent of Ernst & Young LLP, Pittsburgh
24.1 Power of Attorney (See page 5 of this Registration
Statement)
28.1 Not applicable
99.1 Not applicable
6
<PAGE>
Microfilm Number Filed with the Department of State on
------------ -------------
Entity Number
--------------- --------------------------------------------------
Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 90)
In compliance with the requirements of 15 Pa.C.S. (S) 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: Koppers Industries, Inc.
-------------------------------
- --------------------------------------------------------------------------------
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and the
county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a) 436 Seventh Avenue Pittsburgh, PA. 15219 Allegheny
------------------------------------------------------------------------
Number and Street City State Zip County
(b) c/o:
--------------------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which the
corporation is located for venue and official publication purposes.
3. The statute by or under which it was incorporated is: Business Corporation
--------------------
Law of 1988, as amended
- -----------------------
- --------------------------------------------------------------------------------
4. The date of its incorporation is: October 21, 1988
-------------------------------------------
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of Amendment
--- in the Department of State.
The amendment shall be effective on: at
--- ---------------- -----------------
Date Hour
6. (Check one of the following):
X The amendment was adopted by the shareholders (or members) pursuant to
--- 15 Pa.C.S. (S) 1914(a) and (b).
X The amendment was adopted by the board of directors pursuant to 15
--- Pa.C.S. (S) 1914(c).
(Note: Amendment was adopted by both shareholders and the board of
directors.)
7. (Check, and if appropriate complete, one of the following):
The amendment adopted by the corporation, set forth in full, is as
--- follows:
X The amendment adopted by the corporation as set forth in full in
--- Exhibit A attached hereto and made a part hereof.
<PAGE>
8. (Check if the amendment restates the Articles):
The restated Articles of Incorporation supersede the original Articles
--- and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
4th day of December , 1997.
- ----- -----------
Koppers Industries, Inc.
------------------------------------------
(Name of Corporation)
BY: /s/ Donald E. Davis
---------------------------------------
(Signature)
TITLE: Vice President and Secretary
------------------------------------
<PAGE>
RESTATED AND AMENDED
ARTICLES OF INCORPORATION
OF
KOPPERS INDUSTRIES, INC.
(a Pennsylvania Corporation)
ARTICLE I. The name of the corporation is:
KOPPERS INDUSTRIES, INC.
ARTICLE II. The address of the registered office of the corporation in
this Commonwealth is:
436 Seventh Avenue
Pittsburgh, Pennsylvania 15219
ARTICLE III. The purposes for which the corporation is incorporated under
the Pennsylvania Business Corporation Law of 1988, as amended (the "Business
Corporation Law") are to engage in and do any lawful act concerning any or all
lawful business for which corporations may be incorporated under said Business
Corporation Law.
ARTICLE IV.
CAPITAL STOCK
Section 401. Authorized Shares. The aggregate number of shares of all
-----------
classes of capital stock which the corporation shall have authority to issue is
50,000,000 shares, of which 37,000,000 shares shall be voting common stock, $.01
par value ("Voting Common Stock"), 3,000,000 shares shall be non-voting common
stock, $.01 par value ("Non-Voting Common Stock" and together with the Voting
Common Stock, the "Common Stock"), and 10,000,000 shares shall be preferred
stock, $.01 par value ("Preferred Stock")(the Voting Common Stock, the Non-
Voting Common Stock and the Preferred Stock shall hereinafter collectively be
called the "Stock").
Section 402. The Board of Directors of the Corporation (hereinafter
-----------
referred to as the "Board of Directors" or the "Board") may declare, and cause
to be paid, dividends to the holders of shares of the Stock out of any funds of
the Corporation legally available for the payment of dividends.
Section 403. In the event of any liquidation, dissolution or winding up of
-----------
the Corporation, whether voluntary or involuntary, all of the holders of shares
of the Voting Common Stock and Non-Voting Common Stock shall be entitled,
subject to the prior rights of any series of Preferred Stock, to share ratably,
on a share-for-share basis, in any remaining assets of the Corporation available
for distribution to its stockholders.
Section 404. Except as otherwise expressly provided in these Articles of
-----------
Incorporation, all shares of Voting Common Stock and
<PAGE>
Non-Voting Common Stock shall entitle the holders thereof to the same rights and
privileges.
Section 405. Shares of Preferred Stock may be issued from time to time in
-----------
one or more series. The Board is hereby authorized to fix the voting rights, if
any, designations, powers, preferences and the relative, participating, optional
and other rights, if any, and the qualifications, limitations or restrictions
thereof, of any series of Preferred Stock; and to fix the number of shares
constituting such series, and to increase or decrease the number of shares of
any such series (but not below the number of shares then outstanding).
Section 406. Except as may otherwise be provided herein (including any
-----------
certificate filed with the Secretary of State of Pennsylvania establishing the
terms of a series of Preferred Stock) or by applicable law, each holder of
Voting Common Stock shall be entitled to one vote for each share of Voting
Common Stock held of record by such holder on all matters on which stockholders
are entitled to vote.
ARTICLE V
---------
Unless and except to the extent that the By-Laws of the Corporation shall
so require, the election of directors of the Corporation need not be by written
ballot.
ARTICLE VI
----------
The number and election of directors of the Corporation shall be determined
in accordance with the Bylaws of the Corporation subject to the terms of the
Stockholders' Agreement by and between the Corporation, Saratoga Partners III,
L.P. and the Management Investors (as the same may be amended from time to time,
the "Stockholders' Agreement"), a copy of which is on file with the Secretary of
the Corporation.
Whenever holders of one or more series of Preferred Stock shall have the
right, voting separately as a class or series, to elect directors, the election,
removal, term of office, filling of vacancies and other features of such
directorships shall be governed by the terms of any certificate filed with the
Secretary of State of Pennsylvania establishing the terms of such Preferred
Stock.
ARTICLE VII
-----------
Unless otherwise provided by law or in the By-Laws, and subject to the
supermajority vote provisions of the Stockholders' Agreement, (i) the Board of
Directors is expressly authorized and empowered to adopt, amend and repeal any
one or more By-Laws of the Corporation at any regular or special meeting, if
notice of the proposed adoption, amendment or repeal of the By-Laws to be made
is contained in the notice of such special meeting and (ii) any one or
2
<PAGE>
more By-Laws may be adopted, amended or repealed at any annual or special
meeting of the stockholders if notice of the proposed adoption, alteration or
repeal of the By-Laws to be made is contained in the notice of such meeting, by
the affirmative vote of the holders of shares constituting two-thirds of the
voting power of the outstanding Voting Common Stock and Preferred Stock entitled
to vote thereon.
ARTICLE VIII
------------
Subject to the supermajority vote provisions of the Stockholders'
Agreement, and to the provisions of Article VII hereof, the Corporation reserves
the right at any time and from time to time to amend, alter, change or repeal
any provision contained in these Articles of Incorporation, any other provisions
authorized by the laws of the Commonwealth of Pennsylvania at the time in force
may be added or inserted, in the manner now or hereafter prescribed by law; and
all rights, preferences and privileges of whatsoever nature conferred upon
stockholders, directors or any other persons whomsoever by and pursuant to these
Articles of Incorporation in its present form or as hereafter amended are
granted subject to the right reserved in this Article VIII.
ARTICLE IX
----------
The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under Pennsylvania law.
3
<PAGE>
CERTIFICATE OF DESIGNATION
OF
SENIOR CONVERTIBLE PREFERRED STOCK
OF
KOPPERS INDUSTRIES, INC.
Pursuant to Section 1521 of the
Pennsylvania Business Corporation Law
Koppers Industries, Inc., a Pennsylvania corporation (the "Corporation"),
certifies that pursuant to the authority contained in its Restated and Amended
Articles of Incorporation and in accordance with the provisions of Section 1521
of the Pennsylvania Business Corporation Law, its Board of Directors has adopted
the following resolution creating a series of its Preferred Stock, $.01 par
value per share, designated as Senior Convertible Preferred Stock
RESOLVED, that a series of the class of authorized Preferred Stock, $.01
par value per share, of the Corporation be hereby created, and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
----------------------
designated as the "Senior Convertible Preferred Stock" (the "Senior Preferred
Stock") and the number of shares constituting such series shall be 3,000,000,
which number may be decreased (but not increased) by the Board of Directors
without a vote of Stockholders; provided, however, that such number may not be
decreased below the number of then currently outstanding shares of Senior
Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
(a) The holders of shares of Senior Preferred Stock, in preference to the
holders of shares of any class or series of Common Stock, $.01 par value (the
"Common Stock"), of the Corporation and of any other capital stock of the
Corporation, shall be entitled to receive, when and as declared by the Board of
Directors in accordance with the Pennsylvania Business Corporation Law, out of
funds legally available for the payment of dividends, dividends payable as
provided below, in an amount per share (rounded to the nearest cent) equal to
the aggregate per share amount of all cash dividends and the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions,
1
<PAGE>
other than a dividend payable in shares of Common Stock or other than as a
result of a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, subject to
adjustment as provided below. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount of
dividends to which holders of shares of Senior Preferred Stock were entitled
immediately prior to such event under the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the Senior
Preferred Stock as provided herein immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in shares of
Common Stock and other than as a result of a subdivision of the outstanding
shares of Common Stock, by reclassification or otherwise) and shall pay such
dividend or distribution on the same date on which such dividend or distribution
is paid to holders of Common Stock. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Senior Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Senior Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. Except as provided elsewhere herein and in the
-------------
Corporation's Articles of Incorporation, as they may be amended or restated from
time to time (the "Articles of Incorporation"), and except for any voting rights
provided by law, the holders of shares of Senior Preferred Stock shall have no
voting rights, and their consent shall not be required for the taking of any
corporation action, other than as expressly set forth below:
(a) The holders of the Senior Preferred Stock, voting as a separate
series from all other series of Preferred Stock and classes of capital
stock, shall be entitled, at each annual meeting of stockholders of the
Corporation, to elect a number of directors of the Corporation equivalent
to the smallest number representing a majority of the number of members of
the Board of Directors as if there were no vacancies or unfilled
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newly created directorships on such Board. Any director so elected shall
hold office until the next annual meeting and until his or her successor
shall be elected and qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. Any
director elected pursuant to this paragraph (a) may be removed without
cause only by the holders of a majority in voting power of the outstanding
Senior Preferred Stock. Each share of Senior Preferred Stock shall entitle
the holder thereof to one vote per share with respect to election of
directors pursuant to this paragraph (a). At any meeting of stockholders
held for the purpose of electing directors, the presence in person or by
proxy of a majority in voting power of the outstanding shares of Senior
Preferred Stock shall be required to constitute a quorum thereof for the
election of any director by the holders of the Senior Preferred Stock. If
by reason of any resignation, retirement, disqualification, death or
removal there are not in office all such directors that the holders of
Senior Preferred Stock are entitled to elect pursuant to this paragraph
(a), then any such vacancy shall be filled only by the holders of a
majority voting power of the Senior Preferred Stock. Promptly after the
right of the holders of the Senior Preferred Stock to fill any such vacancy
arises, its Board of Directors shall cause a special meeting of the holders
of Senior Preferred Stock entitled to vote thereon to be held at the
earliest practicable date for the purpose of filling such vacancy.
(b) With respect to each matter upon which the holders of Voting
Common Stock (as defined) of the Company are entitled to vote (other than
the election of Directors not elected pursuant to paragraph (a) of this
Section 3), the holders of Senior Preferred Stock, voting together with the
holders of Voting Common Stock, shall be entitled to cast that number of
votes per share of Senior Preferred Stock equal to the number of shares of
Voting Common Stock into which such share of Senior Preferred Stock is, at
the time of such vote, convertible pursuant to Section 6 hereof. At any
meeting of stockholders at which the holders of Senior Preferred Stock are
entitled to vote pursuant to this paragraph (b), the presence in person or
by proxy of a majority in voting power of the outstanding shares of Senior
Preferred Stock and Voting Common Stock shall be required to constitute a
quorum.
(c) In addition to any other vote or consent required by law or the
Articles of Incorporation, the Corporation shall not (A) without the
consent of the holders of at least two-thirds of the outstanding shares of
Senior Preferred Stock, given in person or by proxy, either in writing or
by vote at an annual meeting or special meeting called for the purpose: (i)
alter, change or amend the Articles of Incorporation or By-Laws of the
Corporation or this Certificate of Designation,
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<PAGE>
if any such alteration, change or amendment would alter or change the
powers, preferences or special rights of the shares of Senior Preferred
Stock; (ii) authorize or issue any additional shares of Senior Preferred
Stock or authorize or issue any shares of any class or series of stock
ranking prior to or on a parity with the Senior Preferred Stock as to the
payment of dividends or as to the distribution of assets on liquidation,
dissolution or winding up; (iii) increase or decrease the number of
directors constituting the Board of Directors of the Corporation; (iv)
redeem, repurchase, declare or pay a dividend or distribution with respect
to any class or series of capital stock of the Corporation, except for
redemptions pursuant to restricted stock agreements approved by a
majority of the directors elected by the holders of Senior Preferred Stock
pursuant to paragraph (a) of this Section 3; (v) enter into any transaction
or series of related transactions involving an aggregate amount in excess
of $[ ] with any officer, director, employee or affiliate of the
Corporation; (vi) enter into any business other than a business in which
the Corporation or a Subsidiary of the Corporation is engaged as of the
date of filing hereof (or businesses reasonably related thereto), (vii)
acquire any Person or assets if the fair market value of the purchase price
therefor exceeds 25% of the total consolidated assets of the Corporation
(determined in accordance with generally accepted accounting principles) as
of the most recently completed fiscal quarter of the Corporation; (viii)
approve the annual capital expenditures budget of the Corporation and its
Subsidiaries; or (ix) enter into any employment agreement with any
executive officer of the Corporation; or (B) without the consent of the
holders of at least a majority of the outstanding shares of Senior
Preferred Stock, given in person or by proxy, either in writing or by vote
at an annual meeting or special meeting called for that purpose: merge,
consolidate or combine with any person or transfer all or substantially all
of the consolidated assets of the Corporation and its Subsidiaries,
pursuant to any transaction or series of related transactions, to any
Person or Persons.
Section 4. Restricted Shares. Any shares of Senior 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 shall upon their cancellation become authorized but unissued
shares of Preferred Stock, $.01 par value, of the Corporation and may be
reissued as part of another series of Preferred Stock, $.01 par value, of the
Corporation subject to the conditions or restrictions on issuance set forth
herein.
Section 5. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) Upon any liquidation, dissolution or winding up of the
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Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Senior Preferred Stock unless, prior thereto, the holders of
shares of Senior Preferred Stock shall have received $.01 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, provided that the holders of
shares of Senior Preferred Stock shall be entitled to receive an aggregate
amount per share (inclusive of such preferential payment of $.01 per share),
subject to the provision for adjustment hereinafter set forth, equal to the
aggregate amount to be distributed per share to holders of Common Stock. In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Senior Preferred
Stock were entitled immediately prior to such event under the proviso of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) Neither the consolidation, merger or other business combination of the
Corporation with or into any other Person or Persons nor the sale, lease,
exchange or conveyance of all or any part of the property, assets or business of
the Corporation shall be deemed to be a liquidation, dissolution or winding up
of the Corporation for purposes of this Section 5.
Section 6. Conversion. Each share of Senior Preferred Stock may, at the
----------
option of the holder thereof, be converted into shares of Voting common Stock,
$.01 par value (the "Voting Common Stock"), of the Corporation on the terms and
conditions set forth in this Section 6 at any time or from time to time.
(a) Subject to the provisions for adjustment hereinafter set forth, each
share of Senior Preferred Stock shall be convertible in the manner hereinafter
set forth into one fully paid and nonassessable share of Voting Common Stock.
(b) The number of shares of Voting Common Stock into which each share of
Senior Preferred Stock is convertible shall be subject to adjustment from time
to time as follows:
(i) In case the Corporation shall at any time (w) pay a dividend or
make a distribution on the Common Stock in shares of its capital stock, (x)
subdivide the outstanding shares of Common Stock, (y) combine the
outstanding shares of
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Common Stock into a smaller number of shares, or (z) issue any shares of
its capital stock by reclassification of the shares of Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the surviving corporation), the number of
shares of Voting Common Stock into which each share of Senior Preferred
Stock is convertible at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification
shall be proportionately adjusted so that the holder of each share of
Senior Preferred Stock shall be entitled to receive upon conversion thereof
the aggregate number and kind of shares which, if such share of Senior
Preferred Stock had been converted immediately prior to such time or date,
the holder would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification.
Such adjustment shall be effective upon the effective date of such event,
retroactive to the record date, if any, for such event, and shall be made
successively whenever any event listed above shall occur.
(ii) In case the Corporation shall issue to all holders of Common
Stock rights, options or warrants to subscribe for or purchase Common Stock
at a price per share less than the Fair Market Value per share of the
Common Stock on the record date for the determination of stockholders
entitled to receive such rights, options or warrants, then, and in each
such case,
(A) the number of shares of Voting Common Stock into which each
share of Senior Preferred Stock is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to receive,
upon the conversion thereof, the number of shares of Voting Common
Stock determined by multiplying the number of shares of Voting Common
Stock into which such share was convertible on the day immediately
prior to such record date by a fraction, (I) the numerator of which
is the sum of (1) the number of shares of Common Stock outstanding on
such record date and (2) the number of additional shares of Common
Stock which such rights, options or warrants entitle holders thereof
to subscribe for or purchase ("Offered Shares"), and (II) the
denominator of which is the sum of (1) the number of shares of Common
Stock outstanding on the record date and (2) the number of Offered
Shares multiplied by a fraction, (x) the numerator of which is the
subscription or purchase price per share of the Offered Shares and
(y) the denominator of which is the Fair market Value per share of
Common Stock on such record date; and
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<PAGE>
(B) such adjustment shall become effective immediately after
such issuance, retroactive to such record date.
(c) If any adjustment in the number of shares of Voting Common Stock into
which each share of Senior Preferred Stock may be converted pursuant to this
Section 6 would result in an increase or decrease of less than 1% in the number
of shares of Voting Common Stock into which each share of Senior Preferred Stock
is then convertible, the amount of any such adjustment shall be carried forward
and adjustment with respect thereto shall be made at the time of and together
with any subsequent adjustment, which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of the number
of shares of Voting Common Stock into which each share of Senior Preferred Stock
is then convertible.
(d) The Board of Directors may increase the number of shares of Voting
Common Stock into which each share of Senior Preferred Stock may be converted,
in addition to the adjustments required by this Section 6, as shall be
determined (as evidenced by a resolution of the Board of Directors) to be
advisable in order to avoid or diminish any income deemed be received by any
holder for federal income tax purposes of shares of Voting Common Stock or
Senior Preferred Stock resulting from any events or occurrences giving rise to
adjustments pursuant to this Section 6 or from any other similar event.
(e) The holder of any shares of Senior Preferred Stock may exercise his
right to convert such shares into shares of Voting Common Stock by surrendering
for such purpose to the Corporation, at its principal office or at such other
office or agency maintained by the Corporation for that purpose, a certificate
or certificates representing the shares of Senior Preferred Stock to be
converted accompanied by a written notice stating that such holder elects to
convert all or a specified whole number of such shares in accordance with the
provisions of this Section 6 and specifying the name or names in which such
holder wishes the certificate or certificates for shares of voting Common Stock
to be issued. In case such notice shall specify a name or names other than that
of such holder, such notice shall be accompanied by payment of all transfer
taxes payable upon the issuance of shares of Voting Common Stock (or other
securities) in such name or names. Other than such taxes, the Corporation will
pay any and all transfer and other taxes (other than taxes based on income) that
may be payable in respect of any issue or delivery of shares of Voting Common
Stock on conversion of Senior Preferred Stock pursuant hereto. As promptly as
practicable, and in any event within five business days after the surrender of
such certificate or certificates and the receipt of such notice relating thereto
and, if applicable, payment of all transfer taxes (or the
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<PAGE>
demonstration to the satisfaction of the Corporation that such taxes have been
paid), the Corporation shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and nonassessable full
shares of Voting Common Stock to which the holder of shares of Senior Preferred
Stock so converted shall be entitled and (ii) if less than the full number of
shares of Senior Preferred Stock evidenced by the surrendered certificate or
certificates are being converted, a new certificate or certificates, of like
tenor, for the number of shares evidenced by such surrendered certificate or
certificates less the number of shares converted. Such conversion shall be
deemed to have been made at the close of business on the date of giving of such
notice and of such surrender of the certificate or certificates representing the
shares of Senior Preferred Stock to be converted so that the rights of the
holder thereof as to the shares being converted shall cease except for the right
to receive shares of Voting Common Stock in accordance herewith, and any person
entitled to receive the shares of Common Stock shall be treated for all purposes
as having become the record holder of such shares of Voting Common Stock at such
time.
(f) Upon conversion of any shares of Senior Preferred Stock, the holder
thereof shall be entitled to receive in cash any accumulated, accrued or unpaid
dividends in respect of the shares so converted.
(g) In connection with the conversion of any shares of Senior Preferred
Stock, no fractions of shares of Voting 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 Fair Market Value, as determined in good faith by the Board of Directors,
per share of Voting Common Stock, on the day on which such shares of Senior
Preferred Stock are deemed to have been converted.
(h) The Corporation shall at all times reserve and keep available out of
its authorized and unissued Voting Common Stock, solely for the purpose of
effecting the conversion of the Senior Preferred Stock, such number of shares of
Voting Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of Senior Preferred Stock. The
Corporation shall from time to time, subject to and in accordance with the laws
of Pennsylvania, increase the authorized amount of Voting Common Stock if at any
time the number of authorized shares of Voting Common Stock remaining unissued
shall not be sufficient to permit the conversion at such time of all then
outstanding shares of Senior Preferred Stock.
Section 7. Reports as to Adjustments. Whenever the number of shares of
-------------------------
Voting Common Stock into which each share of Senior Preferred Stock is
convertible is adjusted as provided in Section
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6 hereof, the Corporation shall promptly mail to the holders of record of the
outstanding shares of Senior Preferred Stock at their respective addresses as
the same shall appear in the Corporation's stock records a notice stating the
number of shares of Voting Common Stock into which the shares of Senior
Preferred Stock are convertible and setting forth the new number of shares of
Voting Common Stock (or describing the new stock securities, cash or other
property) into which each share of Senior Preferred Stock is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof, and when such adjustment became
effective.
Section 8. No Redemption. The shares of Senior Preferred Stock shall not
-------------
be redeemable. The Corporation shall not, directly or indirectly, purchase or
otherwise acquire any shares of Senior Preferred Stock except pursuant to a pro
rata offer made in writing, on identical terms to each holder of Senior
Preferred Stock at the time outstanding.
Section 9. Rank. The Senior Preferred Stock shall rank senior to each
----
other class or series of capital stock of the Corporation, with respect to the
payment of dividends and the distribution of assets, upon liquidation,
dissolution or winding up of the Corporation.
Section 10. Definitions. For the purposes of the Certificate of
-----------
Designation of Senior Convertible Preferred Stock which embodies this
resolution:
"Fair Market Value" means the amount which a willing buyer would pay
a willing seller in an arm's-length transaction, neither being under any
compulsion to buy or sell (as determined by the Board of Directors, whose
determination shall be evidenced by a resolution and shall be conclusive).
"Person" shall mean any individual, firm, corporation or other entity
and shall include any successor (by merger or otherwise) of such entity.
"Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
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IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
of Senior Convertible Stock to be duly executed by its President and attested to
by its Secretary and has caused its corporate seal to be affixed hereto, this
4th day of December, 1997.
KOPPERS INDUSTRIES, INC.
By: /s/ Donald E. Davis
--------------------------------------
Donald E. Davis
Vice President and
Chief Financial Officer
ATTEST:
/s/ Randall D. Collins
- -------------------------------
Randall D. Collins
Vice President and Secretary
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<PAGE>
RESTATED AND AMENDED
BYLAWS
OF
KOPPERS INDUSTRIES, INC.
(a Pennsylvania Corporation)
ARTICLE I
Offices and Fiscal Year
Section 1.01. Registered Office.--The registered office of the
corporation in the Commonwealth of Pennsylvania shall be at 436 Seventh Avenue,
Pittsburgh, PA 15219 until otherwise established by an amendment of the
articles of incorporation (the "articles") or by the Board of Directors and a
record of such change is filed with the Pennsylvania Department of State in the
manner provided by law.
Section 1.02. Other Offices.--The corporation may also have offices at
such other places within or without the Commonwealth of Pennsylvania as the
Board of Directors may from time to time appoint or the business of the
corporation may require.
Section 1.03. Fiscal Year.--The fiscal year of the corporation shall
begin on the 1st day of January in each year.
ARTICLE II
Notice--Waivers--Meetings Generally
Section 2.01. Manner of Giving Notice.
General Rule.--Whenever written notice is required to be given to any
person under the provisions of the Pennsylvania Business Corporation Law of 1988
(the "Business Corporation Law") or by the articles or these bylaws, it may be
given to the person either personally or by sending a copy thereof by first
class or express mail, postage prepaid, or by courier service, charges prepaid,
or by facsimile transmission, to the address (or to the facsimile number) of the
person appearing on the books of the corporation or, in the case of directors,
supplied by the director to the corporation for the purpose of notice. If the
notice is sent by mail or courier service, it shall be deemed to have been given
to the person entitled thereto when deposited in the United States mail or with
a courier service for delivery to that person or, in the case of facsimile
transmission, when received. A notice
<PAGE>
of meeting shall specify the place, day and hour of the meeting and any other
information required by any other provision of the Business Corporation Law, the
articles or these bylaws.
Section 2.02. Notice of Meetings of Board of Directors.--Notice of a
regular meeting of the Board of Directors need not be given. Notice of every
special meeting of the Board of Directors shall be given to each director by
telephone or in writing at least five days before the time at which the meeting
is to be held. Every such notice shall state the time and place of the meeting.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the board need be specified in a notice of the meeting.
Section 2.03. Notice of Meetings of Shareholders.
(a) General Rule. Written notice of every meeting of the shareholders
shall be given by, or at the direction of, the secretary or other authorized
person to each shareholder of record entitled to vote at the meeting at least
(1) ten days prior to the day named for a meeting called to consider a
fundamental change under 15 Pa. C.S.A. Chapter 19 or (2) five days prior to the
day named for the meeting in any other case. If the secretary neglects or
refuses to give notice of a meeting, the person or persons calling the meeting
may do so. In the case of a special meeting of shareholders, the notice shall
specify the general nature of the business to be transacted.
(b) Notice of Action by Shareholders on Bylaws.--In the case of a meeting
of shareholders that has as one of its purposes action on the bylaws, written
notice shall be given to each shareholder that the purpose, or one of the
purposes, of the meeting is to consider the adoption, amendment or repeal of the
bylaws. There shall be included in, or enclosed with, the notice a copy of the
proposed amendment or a summary of the changes to be affected thereby.
(c) Adjourned Shareholder Meetings.--When a meeting of shareholders is
adjourned, it shall not be necessary to give any notice of the adjourned meeting
or of the business to be transacted at an adjourned meeting, other than by
announcement at the meeting at which the adjournment is taken, unless the board
fixes a new record date for the adjourned meeting in which event notice shall be
given in accordance with this Section 2.03.
Section 2.04. Waiver of Notice.
(a) Written Waiver.--Whenever any written notice is required to be given
under the provisions of the Business Corporation Law, the articles or these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of the notice. Neither the business to be transacted
at, nor the purpose of, a meeting need be specified in the waiver of notice of
the meeting.
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(b) Waiver by Attendance.--Attendance of a person at any meeting shall
constitute a waiver of notice of the meeting except where a person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.
Section 2.05. Modification of Proposal Contained in Notice.--Whenever
the language of a proposed resolution is included in a written notice of a
meeting required to be given under the provisions of the Business Corporation
Law or the articles or these bylaws, the meeting considering the resolution
may without further notice adopt it with such clarifying or other amendments
as do not enlarge its original purpose.
Section 2.06. Exception to Requirement of Notice.--Shareholders
Without Forwarding Addresses.--Notice or other communications need not be sent
to any shareholder with whom the corporation has been unable to communicate for
more than 24 consecutive months because communications to the shareholder are
returned unclaimed or the shareholder has otherwise failed to provide the
corporation with a current address. Whenever the shareholder provides the
corporation with a current address, the corporation shall commence sending
notices and other communications to the shareholder in the same manner as to
other shareholders.
Section 2.07. Use of Conference Telephone and Similar Equipment.--Any
director may participate in any meeting of the Board of Directors, and the
Board of Directors may provide by resolution with respect to a specific meeting
or with respect to a class of meetings that one or more persons may participate
in a meeting of the shareholders of the corporation, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this section shall constitute presence in person at the meeting.
ARTICLE III
Shareholders
Section 3.01. Place of Meeting.--All meetings of the shareholders of the
corporation shall be held at the registered office of the corporation unless
another place is designated by the Board of Directors in the notice of a
meeting.
Section 3.02. Annual Meeting.--The Board of Directors may fix and
designate the date and time of the annual meeting of the shareholders, but if no
such date and time is fixed and designated by the board, the meeting for any
calendar year shall be held on the third Wednesday of April in such year, if not
a legal holiday under the laws of the Commonwealth of Pennsylvania, and, if a
legal holiday, then on the next succeeding business day, not a Saturday, at
10:00 a.m.
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Subject to the terms of the Stockholders' Agreement by and among the
corporation, Saratoga Partners III, L.P. and the Management Investors (as
amended from time to time, the "Stockholders' Agreement"), nominations for the
election of directors may be made by any shareholder entitled to vote for the
election of directors.
Section 3.03. Special Meetings.--Special meetings of the shareholders
may be called at any time by resolution of the Board of Directors, which may
fix the date, time and place of the meeting. If the board does not fix the date,
time or place of the meeting, it shall be the duty of the secretary to do so. A
date fixed by the secretary shall not be more than 60 days after the date of the
adoption of the resolution of the board calling the special meeting.
Section 3.04. Quorum and Adjournment, General Rule.--A meeting of
shareholders of the corporation duly called shall not be organized for the
transaction of business unless a quorum is present. The presence of
representatives of a majority of the shareholders shall constitute a quorum for
the purposes of acting on any matter; provided, however, that such presence
-------- -------
shall be deemed satisfied as to any representative if the corporation shall have
given such representative the notice required by the bylaws and shall have
complied with such requests as may be reasonably made by such representative to
permit his or her presence at such meeting. At any meeting in which
representatives from each of Saratoga Partners III, L.P. and the Management
Investors are not present, no waiver of notice shall be permitted.
Section 3.05. Action by Shareholders.--Except as otherwise provided in
the Business Corporation Law, the articles, these bylaws or the Stockholders'
Agreement, whenever any corporate action is to be taken by vote of the
shareholders of the corporation, it shall be authorized upon receiving the
affirmative vote of a majority of the votes cast by all shareholders entitled to
vote thereon.
Section 3.06. Organization.--At every meeting of the shareholders, the
chairman of the board, if there be one, or, in the case of vacancy in office or
absence of the chairman of the board, one of the following persons present in
the order stated: the Chief Executive Officer, the president, the vice
presidents in their order of rank and seniority, or a person chosen by vote of
the shareholders present, shall act as chairman of the meeting. The secretary
or, in the absence of the secretary, an assistant secretary shall act as
secretary of the meeting.
Section 3.07. Voting Rights of Shareholders.--Unless otherwise provided
in the articles, every shareholder of the corporation shall be entitled to one
vote for every share standing in the name of the shareholder on the books of the
corporation.
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<PAGE>
Section 3.08. Voting and Other Action by Proxy.
(a) General Rule.--
(1) Every shareholder entitled to vote at a meeting of shareholders
may authorize another person to act for the shareholder by proxy.
(2) The presence of, or vote or other action at a meeting of
shareholders by a proxy of a shareholder shall constitute the presence of,
or vote or action by the shareholder.
(b) Execution and Filing.--Every proxy shall be executed in writing by
the shareholder or by the duly authorized attorney-in-fact of the shareholder
and filed with the secretary of the corporation. A proxy, unless coupled with
an interest, shall be revocable at will, notwithstanding any other agreement or
any provision in the proxy to the contrary, but the revocation of a proxy shall
not be effective until written notice thereof has been given to the secretary of
the corporation. An unrevoked proxy shall not be valid after three years from
the date of its execution unless a longer time is expressly provided therein.
Section 3.09. Voting by Fiduciaries and Pledgees.--Shares of the
corporation standing in the name of a trustee or other fiduciary and shares held
by an assignee for the benefit of creditors or by a receiver may be voted by the
trustee, fiduciary, assignee or receiver. A shareholder whose shares are
pledged shall be entitled to vote the shares until the shares have been
transferred into the name of the pledgee, or a nominee of the pledgee, but
nothing in this section shall affect the validity of a proxy given to a pledgee
or nominee.
Section 3.10. Voting by Joint Holders of Shares, General Rule.--Where
shares of the corporation are held jointly or as tenants in common by two or
more persons, as fiduciaries or otherwise:
(a) if only one or more of such persons is present in person or by proxy,
all of the shares standing in the names of such persons shall be deemed to be
represented for the purpose of determining a quorum and the corporation shall
accept as the vote of all the shares the vote case by a joint owner or a
majority of them; and
(b) if the persons are equally divided upon whether the shares held by
them shall be voted or upon the manner of voting the shares, the voting of the
shares shall be divided equally among the persons without prejudice to the
rights of the joint owners or the beneficial owners thereof among themselves.
5
<PAGE>
Section 3.11. Voting by Corporations.
(a) Voting by Corporate Shareholders.--Any corporation that is a
shareholder of this corporation may vote at meetings of shareholders of this
corporation by any of its officers or agents, or by proxy appointed by any
officer or agent, unless some other person, by resolution of the Board of
Directors of the other corporation or a provision of its articles or bylaws, a
copy of which resolution or provision certified to be correct by one of its
officers has been filed with the secretary of this corporation, is appointed its
general or special proxy in which case that person shall be entitled to vote the
shares.
(b) Controlled Shares.--Shares of this corporation owned, directly or
indirectly, by it and controlled, directly or indirectly, by the Board of
Directors of this corporation, as such, shall not be voted at any meeting and
shall not be counted in determining the total number of outstanding shares for
voting purposes at any given time.
ARTICLE IV
Board of Directors
Section 4.01. Powers; Personal Liability.
(a) General Rule.--Unless otherwise provided by statute, all powers
vested by law in the corporation shall be exercised by or under the authority
of, and the business and affairs of the corporation shall be managed under the
direction of, the Board of Directors.
(b) Personal Liability of Directors.--
(1) A director shall not be personally liable, as such, for monetary
damages (including, without limitation, any judgment, amount paid in
settlement, penalty, punitive damages or expense of any nature (including,
without limitation, attorneys' fees and disbursements)) for any action
taken, or any failure to take any action, unless:
(i) the director has breached or failed to perform the duties of
his or her office under Subchapter 17B of the Business Corporation Law
or any successor provision; and
(ii) the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness.
(2) The provisions of paragraph (1) shall not apply to the
responsibility or liability of a director pursuant to any criminal statute,
or the liability of a director for the payment of taxes pursuant to local,
State or Federal law.
6
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(c) Notation of Dissent.--A director of the corporation who is present at
a meeting of the Board of Directors, or of a committee of the board, at which
action on any corporate matter is taken on which the director is generally
competent to act, shall be presumed to have assented to the action taken unless
his or her dissent is entered in the minutes of the meeting or unless the
director files his or her written dissent to the action with the secretary of
the meeting before the adjournment thereof or transmits the dissent in writing
to the secretary of the corporation immediately after the adjournment of the
meeting. The right to dissent shall not apply to a director who voted in favor
of the action. Nothing in this section shall bar a director from asserting that
minutes of the meeting incorrectly omitted his or her dissent if, promptly upon
receipt of a copy of such minutes, the director notifies the secretary, in
writing, of the asserted omission or inaccuracy.
Section 4.02. Selection of Directors. The number, qualifications, manner
of election, time and place of meeting, compensation and powers and duties of
the directors of the corporation shall be fixed from time to time by or pursuant
to these bylaws and the Stockholders' Agreement.
Section 4.03. Number and Term of Office.
(a) Number.--The Board of Directors shall consist of such number of
directors as may be determined from time to time by resolution of the Board of
Directors in accordance with the provisions of the Stockholders' Agreement.
(b) Term of Office.--Each director shall hold office as provided in the
Stockholders' Agreement.
Section 4.04. Place of Meetings.--Meetings of the Board of Directors may
be held at such place within or without the Commonwealth of Pennsylvania as the
Board of Directors may from time to time appoint or as may be designated in the
notice of the meeting.
Section 4.05. Organization of Meetings.--At every meeting of the Board of
Directors, the chairman of the board, if there be one, or, in the case of a
vacancy in the office or absence of the chairman of the board, one of the
following officers present in the order stated: the Chief Executive Officer,
the president, the vice presidents in their order of rank and seniority, or a
person chosen by a majority of the directors present, shall act as chairman of
the meeting. The secretary or, in the absence of the secretary, an assistant
secretary shall act as secretary of the meeting.
Section 4.06. Regular Meetings.--Regular meetings of the Board of
Directors shall be held at such time and place as shall be designated from time
to time by resolution of the Board of Directors.
7
<PAGE>
Section 4.07. Special Meetings.--Special meetings of the Board of
Directors shall be held whenever called by the chairman or by two or more of the
directors.
Section 4.08. Quorum of and Action by Directors.
(a) General Rule.--A majority of the directors in office of the
corporation shall be necessary to constitute a quorum for the transaction of
business and, except as set forth in the Stockholders' Agreement, the acts of a
majority of the directors present and voting at a meeting at which a quorum is
present shall be the acts of the Board of Directors.
(b) Action by Written Consent.--Any action required or permitted to be
taken at a meeting of the directors may be taken without a meeting if, prior or
subsequent to the action, a consent or consents thereto by all of the directors
in office is filed with the secretary of the corporation.
Section 4.09. Committees.
(a) Establishment and Powers.--The Board of Directors may, by resolution
adopted by a majority of the directors in office, establish one or more
committees to consist of one or more directors of the corporation. There shall
be a Human Resources and Compensation Committee, an Audit Committee, a Pension
Committee, a Finance Committee, and a Corporate Governance and Nominating
Committee. The Human Resources and Compensation Committee may determine to
retain an independent compensation consultant to assist it in carrying out its
duties. Each of these committees shall consist of not less than three members
of the Board of Directors. The Audit Committee must be comprised solely of
directors independent of management and free from any relationship that in the
opinion of the Board of Directors would interfere with the exercise of
independent judgment.
With respect to each such committee, the Board of Directors shall, by one
or more resolutions adopted by a majority of the whole board, determine the
duties and responsibilities, determine the number of members, appoint the
members and the committee chair and fill each vacancy occurring in the
membership.
Section 4.10. Compensation.--The Board of Directors shall have the
authority to fix the compensation of directors for their services as directors
and a director may be a salaried officer of the corporation.
8
<PAGE>
ARTICLE V
Officers
Section 5.01. Officers Generally.
(a) Number, Qualifications and Designation.--The officers of the
corporation shall be a President and Chief Executive Officer, one or more Vice
Presidents, a Secretary, a Treasurer, and such other officers as may be elected
in accordance with the provisions of Section 5.03. Officers may but need not be
directors or shareholders of the corporation. The Board of Directors may elect
from among the members of the board a chairman of the board and a vice chairman
of the board.
(b) Bonding.--The corporation may secure the fidelity of any or all of its
officers by bond or otherwise.
(c) Standard of Care.--In lieu of the standards of conduct otherwise
provided by law, officers of the corporation shall be subject to the same
standards of conduct, including standards of care and loyalty and rights of
justifiable reliance, as shall at the time be applicable to directors of the
corporation. An officer of the corporation shall not be personally liable, as
such, to the corporation or its shareholders for monetary damages (including,
without limitation, any judgment, amount paid in settlement, penalty, punitive
damages or expense of any nature (including, without limitation, attorneys' fees
and disbursements)) for any action taken, or any failure to take any action,
unless the officer has breached or failed to perform the duties of his or her
office under the articles of incorporation, these bylaws, or the applicable
provisions of law and the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness. The provisions of this subsection shall not
apply to the responsibility or liability of an officer pursuant to any criminal
statute or for the payment of taxes pursuant to local, state or federal law.
Section 5.02. Election, Term of Office and Resignations.
(a) Election and Term of Office.--The officers of the corporation, except
those elected by delegated authority pursuant to Section 5.03, shall be elected
annually by the Board of Directors, and each such officer shall hold office for
a term of one year and until a successor has been selected and qualified or
until his or her earlier death, resignation or removal.
(b) Resignations.--Any officer may resign at any time upon written notice
to the corporation. The resignation shall be effective upon receipt thereof by
the corporation or at such subsequent time as may be specified in the notice of
resignation.
Section 5.03. Subordinate Officers, Committees and Agents.--The Board of
Directors may from time to time elect such other officers and appoint such
committees, employees or other agents as the business of the corporation may
require. The Board
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of Directors may delegate to any officer or committee the power to elect
subordinate officers and to retain or appoint employees or other agents, or
committees thereof, and to prescribe the authority and duties of such
subordinate officers, committees, employees or other agents.
Section 5.04. Removal of Officers and Agents.--Any officer or agent of
the corporation may be removed by the Board of Directors with or without cause.
The removal shall be without prejudice to the contract rights, if any, of any
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
Section 5.05. Authority. General Rule.--All officers of the corporation,
as between themselves and the corporation, shall have such authority and perform
such duties in the management of the corporation as may be provided by or
pursuant to resolutions or orders of the Board of Directors or, in the absence
of controlling provisions in the resolutions or orders of the Board of
Directors, as may be determined by or pursuant to these bylaws.
Section 5.06. The Chairman of the Board.--The Chairman of the Board shall
preside at all meetings of the Board of Directors at which he is present and
shall call meetings of the board and board committees when he deems them
necessary. Unless otherwise precluded from doing so by these bylaws, he may be
a member of the committees of the board. He shall act as chairman at all
meetings of the shareholders at which he is present unless he elects that the
Chief Executive Officer shall so preside. The Chairman of the Board may be
designated by the board as an officer of the corporation and may be elected by
the board as the Chief Executive Officer. The Chairman of the Board shall
perform all duties as may be assigned to him by the Board of Directors.
Section 5.07. The President and Chief Executive Officer.--The President
shall have such powers and duties as may, from time to time, be prescribed by
the Board of Directors. Unless the Board of Directors shall otherwise direct,
the President shall be the Chief Executive Officer of the corporation.
The Chief Executive Officer shall have general charge of the affairs of the
corporation, subject to the control of the Board of Directors. He may appoint
all officers and employees of the corporation for whose election no other
provision is made in these bylaws, and may discharge or remove any officer or
employee, subject to action thereon by the Board of Directors as required by
these bylaws. He shall be the officer through whom the board delegates
authority to corporate management, and shall be responsible to see that all
orders and resolutions of the board are carried into effect by the proper
officers or other persons. He shall also perform all duties as may be assigned
to him by the Board of Directors. The Chief Executive Officer shall sign,
execute, and acknowledge, in the name of the corporation, deeds, mortgages,
bonds, contracts or other instruments, authorized by the Board of Directors,
except in cases where the signing and execution
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thereof shall be expressly delegated by the Board of Directors, or by these
bylaws, to some other officer or agent of the corporation.
Section 5.08. The Vice Presidents.--The Vice Presidents shall perform
such duties as may from time to time be assigned to them by the Board of
Directors or the president.
Section 5.09. The Secretary.--The Secretary or an Assistant Secretary
shall attend all meetings of the shareholders and of the Board of Directors and
all committees thereof and shall record all the votes of the shareholders and of
the directors and the minutes of the meetings of the shareholders and of the
Board of Directors and of committees of the board in a book or books to be kept
for that purpose; shall see that notices are given and records and reports
properly kept and filed by the corporation as required by law; shall be the
custodian of the seal of the corporation and see that it is affixed to all
documents to be executed on behalf of the corporation under its seal; and, in
general, shall perform all duties incident to the office of Secretary, and such
other duties as may from time to time be assigned by the board or the President.
Section 5.10. The Treasurer.--The Treasurer or an Assistant Treasurer
shall have or provide for the custody of the funds or other property of the
corporation; shall collect and receive or provide for the collection and receipt
of moneys earned by or in any manner due to or received by the corporation;
shall deposit all funds in his or her custody as treasurer in such banks or
other places of deposit as the board may from time to time designate; shall,
whenever so required by the board, render an account showing all transactions as
Treasurer, and the financial condition of the corporation; and, in general,
shall discharge such other duties as may from time to time be assigned by the
board or the President.
ARTICLE VI
Certificates of Stock, Transfer, Etc.
Section 6.01. Share Certificates.
(a) Form of Certificates.--Certificates for shares of the corporation
shall be in such form as approved by the Board of Directors, and shall state
that the corporation is incorporated under the laws of the Commonwealth of
Pennsylvania, the name of the person to whom issued, and the number and class of
shares and the designation of the series (if any) that the certificate
represents. If the corporation is authorized to issue shares of more than one
class or series, certificates for shares of the corporation shall state on the
face or back of the certificate that the corporation will furnish to any
shareholder upon request and without charge, a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued so far as they have been
fixed and determined and the authority of the board to fix and
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<PAGE>
determine the designations, voting rights, preferences, limitations and special
rights of the classes and series of shares of the corporation.
(b) Share Register.--The share register or transfer books and blank share
certificates shall be kept by the Secretary or by any transfer agent or
registrar designated by the Board of Directors for that purpose.
Section 6.02. Certificates of Stock.--The shares of stock of the
corporation shall be represented by certificates of stock, signed by the
President or one of the Vice Presidents or other officer designated by the
board, countersigned by the Secretary or an Assistant Secretary and sealed with
the corporate seal of the corporation; and if such certificates of stock are
signed or countersigned by a corporate transfer agent or a corporate registrar
of this corporation, such signature of the President, Vice President or other
officer, such counter-signature of the Secretary or Assistant Secretary, and
such seal, or any of them, may be executed in facsimile, engraved or printed.
ARTICLE VII
Indemnification of Directors, Officers and
Other Authorized Representatives
Section 7.01. Scope of Indemnification.
(a) General Rule.--The corporation shall indemnify an indemnified
representative against any liability incurred in connection with any proceeding
in which the indemnified representative may be involved as a party or otherwise
by reason of the fact that such person is or was serving in an indemnified
capacity, including, without limitation, liabilities resulting from any actual
or alleged breach or neglect of duty, error, misstatement or misleading
statement, negligence, gross negligence or act giving rise to strict or products
liability, except:
(1) where such indemnification is expressly prohibited by applicable
law;
(2) until such time as the conduct of the indemnified representative
has been finally determined pursuant to Section 7.06 or otherwise:
(i) to constitute willful misconduct or recklessness within the
meaning of 15 Pa. C.S.A. (S) 1746(b) or any superseding provision of
law sufficient in the circumstances to bar indemnification against
liabilities arising from the conduct; or
(ii) to be based upon or attributable to the receipt by the
indemnified representative from the corporation of
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<PAGE>
a personal benefit to which the indemnified representative is not
legally entitled; or
(3) to the extent such indemnification has been finally determined
in a final adjudication pursuant to Section 7.06 to be otherwise unlawful.
(b) Partial Payment.--If an indemnified representative is entitled to
indemnification in respect of a portion, but not all, of any liabilities to
which such person may be subject, the corporation shall indemnify such
indemnified representative to the maximum extent for such portion of the
liabilities.
(c) Presumption.--The termination of a proceeding by judgment, order,
settlement or conviction or upon a plea of nolo contendere or its equivalent
shall not of itself create a presumption that the indemnified representative is
not entitled to indemnification.
(d) Definitions.--For purposes of this article:
(1) "indemnified capacity" means any and all past, present and future
service by an indemnified representative in one or more capacities as a
director, officer, employee or agent of the corporation, or, at the request
of the corporation, as a director, officer, employee, agent, fiduciary or
trustee of another corporation, partnership, joint venture, trust, employee
benefit plan or other entity or enterprise;
(2) "indemnified representative" means any and all directors and
officers of the corporation and any other person designated as an
indemnified representative by the Board of Directors of the corporation
(which may, but need not, include any person serving at the request of the
corporation, as a director, officer, employee, agent, fiduciary or trustee
of another corporation, partnership, joint venture, trust, employee benefit
plan or other entity or enterprise);
(3) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with
respect to an employee benefit plan, or cost or expense of any nature
(including, without limitation, attorneys' fees and disbursements); and
(4) "proceeding" means any threatened, pending or completed action,
suit, appeal or other proceeding of any nature, whether civil, criminal,
administrative or investigative, whether formal or informal, and whether
brought by or in the right of the corporation, a class of its security
holders or otherwise.
Section 7.02. Proceedings Initiated by Indemnified Representatives.--
Notwithstanding any other provision of this article, the corporation shall not
indemnify under this article an indemnified representative for any liability
incurred in a
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proceeding initiated (which shall not be deemed to include counter claims or
affirmative defenses) or participate in as an intervenor or amicus curiae by the
person seeking indemnification unless such initiation of or participation in the
proceeding is authorized, either before or after its commencement, by the
affirmative vote of a majority of the directors in office. This section does
not apply to reimbursement of expenses incurred in successfully prosecuting or
defending an arbitration under Section 7.06 or otherwise successfully
prosecuting or defending the rights of an indemnified representative granted by
or pursuant to this article.
Section 7.03. Advancing Expenses.--The corporation shall pay the expenses
(including attorneys' fees and disbursements) incurred in good faith by an
indemnified representative in advance of the final disposition of a proceeding
described in Section 7.01 or the initiation of or participation in which is
authorized pursuant to Section 7.02 upon receipt of an undertaking by or on
behalf of the indemnified representative to repay the amount if it is ultimately
determined pursuant to Section 7.06 that such person is not entitled to be
indemnified by the corporation pursuant to this article. The financial ability
of an indemnified representative to repay an advance shall not be a prerequisite
to the making of such advance.
Section 7.04. Securing of Indemnification Obligations.--To further
effect, satisfy or secure the indemnification obligations provided herein or
otherwise, the corporation may maintain insurance, obtain a letter of credit,
act as self-insurer, create a reserve, trust, escrow, cash collateral or other
fund or account, enter into indemnification agreements, pledge or grant a
security interest in any assets or properties of the corporation, or use any
other mechanism or arrangement whatsoever in such amounts, at such costs, and
upon such other terms and conditions as the Board of Directors shall deem
appropriate. Absent fraud, the determination of the Board of Directors with
respect to such amounts, costs, terms and conditions shall be conclusive against
all security holders, officers and directors and shall not be subject to
voidability.
Section 7.05. Payment of Indemnification.--An indemnified representative
shall be entitled to indemnification within 30 days after a written request for
indemnification has been delivered to the secretary of the corporation.
Section 7.06. Arbitration.
(a) General Rule.--Any dispute related to the right to indemnification,
contribution or advancement of expenses as provided under this article, except
with respect to indemnification for liabilities arising under the Securities Act
of 1933 that the corporation has undertaken to submit to a court for
adjudication, shall be decided by arbitration in Pittsburgh, Pennsylvania, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a single arbitrator selected by agreement of the
parties. In the event that the
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parties cannot agree upon the selection of an arbitrator within ten (10) days
after arbitration is initiated, the parties agree that the American Arbitration
Association in Pittsburgh, Pennsylvania will select the arbitrator.
(b) Arbitration Procedures.--The arbitrator shall decide the dispute or
controversy in accordance with the following procedures:
(1) Within ten (10) days of the selection of an arbitrator, each
party shall submit to the arbitrator its written position (the "Initial
Submission") provided that neither memorandum of position shall exceed 10
--------
pages, double spaced plus such documentary evidence as the parties deem
necessary. In connection with the Initial Submission, neither of the
parties may submit (and the arbitrator may not accept) any additional
documentation (including affidavits).
(2) Within ten (10) days of the delivery of the Initial Submission,
each party may submit to the arbitrator a reply memorandum (the "Reply
Submission"), provided that neither reply memorandum shall exceed 5 pages,
--------
double spaced. In connection with the Reply Submission, neither of the
parties may submit (and the arbitrator may not accept) any additional
documentation (including affidavits).
(3) Within ten (10) days of the expiration of the period for the
delivery of the Reply Submission, the arbitrator, if he or she deems it
necessary or advisable, may call a hearing which may be by telephone
conference (the "Hearing"). At any Hearing, the arbitrator may ask
representatives and counsel for the parties questions with respect to the
issue to be decided and positions of the parties. In connection with the
Hearing, neither of the parties may offer (and the arbitrator may not
accept) any testimony or additional documentation (including affidavits).
(4) Within seven (7) days after the later to occur, if such is to
occur, of (i) the Hearing or (ii) the Reply Submission, the arbitrator
shall render his or her decision.
(5) The arbitrator shall notify promptly the parties in writing of the
decision, together with the amount of any dispute resolution costs arising
with respect thereto (the "Notice of Decision"). The Notice of Decision
need not contain an explanation of the decision or grounds therefor.
(6) The decision entered by the arbitrator shall be final, binding
and nonappealable and judgment may be entered thereon by any party in
accordance with applicable law in any court of competent jurisdiction,
except that the corporation shall be entitled to interpose as a defense
in any such judicial enforcement proceeding any prior final judicial
determination adverse to the indemnified representative under Section
8.01(a)(2) in a proceeding not directly involving
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indemnification under this article. This arbitration provision shall be
specifically enforceable.
(c) Qualifications of Arbitrator.--The arbitrator selected as provided
herein is required to be or have been a director or executive officer of a
corporation whose shares of common stock were listed during at least one year of
such service on the New York Stock Exchange or the American Stock Exchange or
quoted on the National Association of Securities Dealers Automated Quotations
System.
(d) Burden of Proof.--The party or parties challenging the right of an
indemnified representative to the benefits of this article shall have the burden
of proof.
(e) Expenses.--The corporation shall reimburse an indemnified
representative for the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.
Section 7.07. Contribution.--If the indemnification provided for in this
article or otherwise is unavailable for any reason in respect of any liability
or portion thereof, the corporation shall contribute to the liabilities to which
the indemnified representative may be subject in such proportion as is
appropriate to reflect the intent of this article or otherwise.
Section 7.08. Contract Rights; Amendment or Repeal.--All rights under
this article shall be deemed a contract between the corporation and the
indemnified representative pursuant to which the corporation and each
indemnified representative intend to be legally bound. Any repeal, amendment
or modification hereof shall be prospective only and shall not affect any
rights or obligations then existing.
Section 7.09. Scope of Article.--The rights granted by this article
shall not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in an indemnified capacity and as to action in any
other capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this article shall continue as to a person
who has ceased to be an indemnified representative in respect of matters arising
prior to such time, and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person.
Section 7.10. Reliance on Provisions.--Each person who shall act as an
indemnified representative of the corporation shall be deemed to be doing so in
reliance upon the rights of indemnification, contribution and advancement of
expenses provided by this article.
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Section 7.11. Interpretation.--The provisions of this article are
intended to constitute bylaws authorized by 15 Pa. C.S.A. (S) 1746.
ARTICLE VIII
Miscellaneous
Section 8.01. Corporate Seal.--The corporation shall have a corporate
seal in the form of a circle containing the name of the corporation, the year of
incorporation and such other details as may be approved by the Board of
Directors. The affixation of the corporate seal shall not be necessary to the
valid execution, assignment or endorsement by the corporation of any instrument
or other document.
Section 8.02. Checks.--All checks, notes, bills of exchange or other
similar orders in writing shall be signed by such one or more officers or
employees of the corporation as the Board of Directors may from time to time
designate.
Section 8.03. Contracts.
(a) General Rule.--Except as otherwise provided in the Business
Corporation Law in the case of transactions that require action by the
shareholders, the Board of Directors may authorize any officer or agent to enter
into any contract or to execute or deliver any instrument on behalf of the
corporation, and such authority may be general or confined to specific
instances.
(b) Statutory Form of Execution of Instruments.--Any note, mortgage,
evidence of indebtedness, contract or other document, or any assignment or
endorsement thereof, executed or entered into between the corporation and any
other person, when signed by one or more officers or agents having actual or
apparent authority to sign it, or by the President or Vice President and
Secretary or Assistant Secretary or Treasurer or Assistant Treasurer of the
corporation, shall be held to have been properly executed for and in behalf of
the corporation, without prejudice to the rights of the corporation against any
person who shall have executed the instrument in excess of his or her actual
authority.
Section 8.04. Corporate Records.
(a) Required Records.--The corporation shall keep complete and accurate
books and records of account, minutes of the proceedings of the incorporators,
shareholders and directors and a share register giving the names and addresses
of all shareholders and the number and class of shares held by each. The share
register shall be kept at either the registered office of the corporation in the
Commonwealth of Pennsylvania or at its principal place of business wherever
situated or at the office of its registrar or transfer agent. Any books,
minutes or other records may be in written form
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or any other form capable of being converted into written form within a
reasonable time.
(b) Right of Inspection.--Every shareholder shall, upon written verified
demand stating the purpose thereof, have a right to examine, in person or by
agent or attorney, during the usual hours for business for any proper purpose,
the share register, books and records of account, and records of the proceedings
of the incorporators, shareholders and directors and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to the
interest of the person as a shareholder. In every instance where an attorney or
other agent is the person who seeks the right of inspection, the demand shall be
accompanied by a verified power of attorney or other writing that authorizes the
attorney or other agent to so act on behalf of the shareholder. The demand shall
be directed to the corporation at its registered office in the Commonwealth of
Pennsylvania or at its principal place of business wherever situated.
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STOCKHOLDERS' AGREEMENT
by and among
KOPPERS INDUSTRIES, INC.,
SARATOGA PARTNERS, III, L.P.
and
THE MANAGEMENT INVESTORS
Dated as of December 1, 1997
<PAGE>
STOCKHOLDERS' AGREEMENT
Table of Contents
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<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. Certain Definitions.................................................. 2
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2. Corporate Governance................................................. 2
--------------------
2.1. Board of Directors............................................ 2
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2.2. Officers of the Company....................................... 5
-----------------------
2.3. Representatives of the Management Investors................... 6
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2.4. Supermajority Vote Requirement................................ 7
------------------------------
2.5. No Recourse................................................... 11
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3. Transfers of Shares.................................................. 11
-------------------
3.1. Legends; Shares Subject to this Agreement..................... 11
-----------------------------------------
3.2. Certain Restrictions.......................................... 12
--------------------
3.3. Transfer to Other Stockholders or to Transferees;
-------------------------------------------------
Purchase Right................................................ 13
--------------
3.4. Form of Consideration for Shares.............................. 15
--------------------------------
4. Involuntary Transfer of Shares....................................... 15
------------------------------
4.1. Certain Involuntary Transfers; Seller's Notice................ 15
----------------------------------------------
4.2. Right to Repurchase........................................... 15
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4.3. Purchase Price................................................ 15
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5. Retirement of Shares Purchased by the Company........................ 16
---------------------------------------------
6. Closing.............................................................. 16
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6.1. Closing....................................................... 16
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6.2. Deliveries at Closing; Method of Payment of Purchase Price.... 16
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7. Sales of Management Investors' Voting Shares on Termination of
--------------------------------------------------------------
Employment........................................................... 16
----------
7.1. Sales Upon Termination........................................ 16
----------------------
8. Other Purchases and Sales of Shares.................................. 19
-------------------------------------------------
8.1 Option to Purchase............................................ 19
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8.2 Initial Redemption............................................ 19
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8.3 Annual Redemption............................................. 19
-----------------
9. Certain Rights....................................................... 20
--------------
9.1. "Piggy Back" Registration..................................... 20
-------------------------
9.2. Required Registrations........................................ 20
----------------------
9.3. Expenses...................................................... 20
--------
9.4. Preemptive Rights............................................. 21
-----------------
9.5 Bring Along Rights............................................ 21
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10. Arbitration.......................................................... 21
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10.1. Dispute Resolution............................................ 21
------------------
10.2. Arbitration Procedures........................................ 21
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</TABLE>
i
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<TABLE>
<CAPTION>
Page
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<C> <S> <C>
11. Miscellaneous........................................................ 22
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11.1. Pension Matters............................................... 22
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11.2. Lock-up Agreements............................................ 22
------------------
11.3. Option........................................................ 23
------
11.4. Negotiation................................................... 23
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11.5. Endorsement of Stock Certificates............................. 23
---------------------------------
11.6. Term.......................................................... 23
----
11.7. Injunctive Relief............................................. 24
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11.9. Administration................................................ 25
--------------
11.10. Successors and Assigns........................................ 25
----------------------
11.11. Company Information........................................... 25
-------------------
11.12. Governing Law................................................. 26
-------------
11.13. Headings...................................................... 26
--------
11.14. Entire Agreement; Amendment................................... 26
---------------------------
11.15. No Waiver..................................................... 26
---------
11.16. Consent to Jurisdiction....................................... 26
-----------------------
11.17. Inspection.................................................... 27
----------
11.18. Counterparts.................................................. 27
------------
SCHEDULE I MANAGEMENT INVESTORS
--------------------
SCHEDULE II DEFINITIONS
-----------
EXHIBIT A ARTICLES OF INCORPORATION
-------------------------
EXHIBIT B BY-LAWS
-------
EXHIBIT C EXCHANGE AGREEMENT/CERTIFICATE OF DESIGNATION -
-----------------------------------------------
SERIES A CONVERTIBLE PREFERRED STOCK
------------------------------------
EXHIBIT D FORM OF EMPLOYMENT CONTRACT
---------------------------
</TABLE>
ii
<PAGE>
STOCKHOLDERS' AGREEMENT
-----------------------
AGREEMENT dated as of December 1, 1997, by and among Koppers Industries,
Inc., a Pennsylvania corporation (the "Company"), Saratoga Partners III, L.P., a
Delaware limited partnership ("Saratoga"), and each individual listed on
Schedule I hereto (each such individual is referred to as a "Management
Investor" and all such individuals are sometimes referred to as the "Management
Investors"). Each of the parties hereto (other than the Company) and any other
person who shall hereafter become a party to or agree to be bound by the terms
of this Agreement is sometimes hereinafter referred to as a "Stockholder" and
all of such parties are sometimes hereinafter referred to as the "Stockholders."
Each of the parties hereto, and any other person who shall hereafter become a
party to or agree to be bound by the terms of this Agreement, who in any such
case holds Voting Shares (as hereinafter defined) is sometimes hereinafter
referred to as a "Voting Stockholder" and all such holders of Voting Shares are
sometimes hereinafter referred to as the "Voting Stockholders." This Agreement
shall become effective (the "Effective Date") as of the date first written
above.
As of the Effective Date, the Company will have an authorized capital stock
consisting of 37,000,000 shares of voting common stock, $.01 par value,
3,000,000 shares of non-voting common stock, $.01 par value (the voting common
stock together with the non-voting common stock is hereinafter referred to as
the "Common Shares"), and 10,000,000 shares of Preferred Stock, $.01 par value
(the "Preferred Shares") of which 2,500,000 shares have been designated Senior
Convertible Preferred Shares in accordance with the terms set forth in Exhibit C
(the "Senior Convertible Preferred Shares"). The Voting Shares and the non-
voting shares are sometimes collectively referred to herein as the "Shares."
The voting common stock and the Senior Convertible Preferred Shares are
sometimes collectively referred to as the "Voting Shares".
Upon the Effective Date, assuming the conversion of all Common Shares held
by Saratoga into Senior Convertible Preferred Shares pursuant to the terms of
the Exchange Agreement, a copy of which is attached hereto as Exhibit C, the
approximate holdings of Saratoga and the Management Investors as a group, will
be as follows:
<TABLE>
<CAPTION>
Percentage
Stockholder Number and Class of Shares of Class
- ----------- ------------------------------ --------------
<S> <C> <C> <C>
Saratoga 2,145,624 Senior Convertible
Preferred Shares 100%
Management approx. 1,429,183 Voting Shares 100%
Investors -------
</TABLE>
The parties hereto deem it in their best interests and in the best interest
of the Company to provide consistent and uniform management for the Company and
to regulate certain of their rights
<PAGE>
in connection with their interests in the Company, and desire to enter into this
Agreement in order to effectuate those purposes.
The parties hereto also desire to restrict the sale, assignment, transfer,
encumbrance or other disposition of the Shares, including issued and outstanding
Shares as well as Shares which may be issued hereafter, or which may become
issuable pursuant to the exercise of options or warrants granted hereafter, and
to provide for certain rights and obligations with respect thereto as
hereinafter provided.
Accordingly, in consideration of the premises and of the terms and
conditions herein contained, the parties hereto mutually agree as follows:
1. Certain Definitions. In addition to the terms defined elsewhere herein,
-------------------
for purposes of this Agreement the capitalized words set forth in Schedule II
attached hereto and incorporated herein by reference shall have the meanings set
forth in Schedule II, unless otherwise defined herein or the context otherwise
clearly requires.
2. Corporate Governance.
--------------------
2.1. Board of Directors.
------------------
(a) Number of Directors. The Company shall be governed by a board of
-------------------
directors (the "Board of Directors") which, as of the Effective Date, shall
initially consist of six members. Except as provided in Section 2.1(c), the
number of directors may not be increased or decreased except as provided herein
and in the Company's Restated Articles of Incorporation and By-Laws, copies of
which are attached hereto as Exhibits A and B, respectively.
(b) Nomination of Directors. It is the intention of the parties that
-----------------------
Saratoga remain in a majority position with respect to stock ownership and board
representation. The following procedures shall govern the nomination of
directors of the Company:
(i) Two directors of the Board of Directors (the "Saratoga
Directors") shall be nominated by Saratoga; provided, however, that
Saratoga shall be entitled to nominate a majority of the directors to the
Board of Directors so long as it and any of its Permitted Transferees (as
hereinafter defined);(a) continue to hold a majority of the Voting Shares
or, (b) if Saratoga does not alienate any of its stock and becomes diluted
below 50% Saratoga shall continue to have the right to elect a majority of
the Board of Directors, or (c) if Saratoga does alienate a portion of its
stock, and as a result of such alienation its shareholdings are not less
than 52%, and Saratoga subsequently becomes diluted below 50%, Saratoga
shall continue to have the right to elect a majority of the Board of
Directors. During any period when Saratoga owns less than 52 percent (52%)
it cannot redeem any shares. If at any time Saratoga no longer holds a
majority of the Voting Shares, other
2
<PAGE>
than as a result of a sale of Voting Shares to a third party, Saratoga
shall have the option to purchase such number of additional Preferred
Shares as is necessary to increase its shareholding to 52 percent (52%) of
the Voting Shares. Any purchase pursuant to this Section 2.1(b)(i) shall be
at the then current Fair Value.
(ii) Two directors of the Board of Directors (the "Management
Directors") shall be nominated by the Representatives of the Management
Investors (as hereinafter defined).
(iii) One director of the Board of Directors shall be nominated
by mutual agreement of Saratoga and the Representatives of the Management
Investors, which director shall not be an employee of the Company (the
"Independent Director").
(iv) Any other director of the Board of Directors (a "Non-
Designated Director") may be nominated by mutual agreement of Saratoga and
the Management Investors.
(c) Initial Board of Directors. The initial Board of Directors of
--------------------------
the Company shall consist of six members as follows:
<TABLE>
<CAPTION>
Name of Director Type of Nominee
---------------- ---------------
<S> <C>
N.H. Prater Independent Director
Brooks C. Wilson Non-Designated
Director
Robert K. Wagner Management Director
Clayton A. Sweeney Management Director
Christian L. Oberbeck Saratoga Director
Saratoga Director
---------------------
</TABLE>
each of whom shall hold his office until his successor shall have been elected
and qualified. As provided in Section 2.1(b)(i) hereof, Saratoga shall be
entitled to nominate a majority of the Board of Directors any time, and in such
event, the number of directors shall be increased accordingly.
(d) Removal of Directors. Except as otherwise provided in this
--------------------
Section 2.1(d) or in Section 2.1(e), each Voting Stockholder agrees not to take
any action to remove, with or without cause, any director of the Company.
Notwithstanding the foregoing:
(i) if any director would no longer be entitled to be nominated
as a director pursuant to Section 2.1(b) because the person who originally
nominated such director would no longer be entitled to nominate directors,
such director shall resign immediately or be subject to removal by a vote
of the Voting Stockholders, and in such event, except as provided in
Section 2.1(g), the number of directors shall be reduced by the number of
directors resigning or removed,
3
<PAGE>
(ii) each of Saratoga and the Representatives of the Management
Investors shall at all times have the right to recommend the removal, with
or without cause, of, respectively, the Saratoga Directors and the
Management Directors,
(iii) the Independent Director may be recommended for removal,
with or without cause, at any time by mutual agreement of Saratoga and the
Representatives of the Management Investors, and
(iv) any Non-Designated Director may be recommended for removal,
with or without cause, at any time by either Saratoga or the
Representatives of the Management Investors.
If a director shall fail to resign as required by clause (i) above or if the
removal of any director is recommended as provided by clause (ii), (iii) or (iv)
above, then the Voting Stockholders immediately shall cause a special meeting of
Stockholders to be held, or shall act by written consent without a meeting, for
the purpose of removing such director, and each Voting Stockholder agrees to
vote all his Voting Shares, or to execute a written consent in respect of all
such Voting Shares, in favor of such removal.
(e) Vacancies. Any time a vacancy is created on the Board of
---------
Directors of the Company by the death, removal or resignation of any of the
directors nominated pursuant to clause (i) or (ii) of Section 2.1(b), no action
shall be taken (except as provided in this Section 2.1(e)) by the Board of
Directors of the Company until such time as each such Board is reconstituted
with the appropriate number of such directors; provided that action may be taken
by the Board of Directors so long as (i) the Voting Stockholder entitled to fill
such vacancy pursuant to Section 2.1(b) is given all notices and the right to
participate in any action to the same extent to which a director of the Company
would be entitled and (ii) the action is approved by the same number of
directors as would be required to approve such action if all vacancies on such
Board were filled. If a vacancy is created on the Board of Directors by reason
of the death, removal (in accordance with Section 2.1(d) above) or resignation
of any one of the directors, the remaining directors shall meet within 30 days
after the date such vacancy occurs for the purpose of electing a director to
fill such vacancy in accordance with the nomination procedures set forth in
Section 2.1(b) above and pursuant to the nomination or nominations made by
Saratoga and/or the Representatives of the Management Investors, as the case may
be. If the appropriate party or parties fail to nominate a director to fill any
such vacancy within such 30-day period or if the remaining directors fill such
vacancy otherwise than in accordance with the nomination procedures set forth in
Section 2.1(b) above, the Voting Stockholders shall immediately cause a special
meeting of stockholders to be called, or shall act by written consent without a
meeting, for the purpose of filling such vacancy and each Voting Stockholder
agrees to vote all his Voting Shares, or to execute a written consent in respect
of all such Voting Shares, as the case
4
<PAGE>
may be, in favor of removing, if necessary, any director elected to fill such
vacancy otherwise than in accordance with Section 2.1(b) and this Section 2.1(e)
and filling such vacancy in accordance with the nomination procedures in Section
2.1(b) above.
(f) Covenant to Vote. Each of the Voting Stockholders agrees to vote,
----------------
in person or by proxy, all of the Voting Shares owned or controlled by such
Voting Stockholder, at any annual or special meeting of stockholders of the
Company called for the purpose of voting on the election of directors or by
consensual action of stockholders without a meeting with respect to the election
of directors, in favor of the election of the directors nominated in accordance
with Section 2.1(b) or 2.1(e) hereof. Each Voting Stockholder shall vote the
Voting Shares owned by such Voting Stockholder and shall take all other actions
necessary to ensure that the Company's Articles of Incorporation and By-Laws do
not at any time conflict with the provisions of this Agreement.
(g) Transfer of Right to Nominate. In the event that Saratoga
-----------------------------
transfers to any person or group (other than a Permitted Transferee), in
accordance with the provisions of this Agreement, Shares constituting a majority
of the Voting Shares then outstanding, such person or group shall succeed to the
rights of Saratoga under this Section 2.1(b)(i) and Section 2.4, and to
transfer such rights, pursuant to, and subject to all the terms and conditions
of, this Section 2.1 and Section 2.4.
(h) Notice of Meetings. Each director of the Company shall be given
------------------
at least ten days' notice of any regular meeting of the Board of Directors or
any committee thereof of which he is a member and at least fourteen days' notice
of any special meeting of the Board of Directors of the Company or any such
committee thereof; provided that notice to any director may be waived in writing
by such director either before or after the meeting.
(i) Quorum. No action shall be taken at any meeting of the Board of
------
Directors of the Company or any committee thereof, except for the adjournment of
such meeting, unless at least one director nominated by each of the Voting
Stockholders entitled to nominate directors pursuant to Section 2.1(b) shall be
present; provided, however, that such presence shall be deemed satisfied as to
-------- -------
any director if the Company shall have given such director the notice required
by Section 2.1(h) and shall have complied with such requests as may be
reasonably made by such director or the Voting Stockholder that nominated such
director to permit the presence of such director at such meeting. For purposes
of the foregoing, any director may be present at any meeting in person, by means
of telephone or similar communication equipment by means of which each person
participating in the meeting can hear and speak to each other or, to the extent
permitted under applicable law, by proxy or by nominee director.
2.2. Officers of the Company. Each of the Voting Stockholders agrees
-----------------------
as of the Effective Date to cause the Board of Directors of the Company to
appoint the following persons as officers of the
5
<PAGE>
Company in the following positions (to the extent they do not already hold such
positions):
<TABLE>
<CAPTION>
Name Office
---- ------
<S> <C>
Robert K. Wagner Chairman and Chief Executive Officer
Joseph E. Boan Vice President, Human Resources
Randall D. Collins Vice President and Secretary
Donald E. Davis Vice President and Chief Financial Officer
William R. Donley Vice President and General Manager,
Utility & Construction Products
Thomas D. Loadman Vice President and General Manager,
Railroad Products & Services
M. Claire Schaming Treasurer and Assistant Secretary
Walter W. Turner Vice President and General Manager,
Carbon Materials & Chemicals
Robert H. Wombles Vice President, Technology
</TABLE>
If any of such officers are unable to serve, or cease for any reason to be an
officer of the Company, their successors shall be appointed by the Board of
Directors of the Company.
Upon the execution of this Agreement, the Company will enter into
employment agreements with each of the officers of the Company, other than
Robert K. Wagner, in the form attached hereto as Exhibit D.
2.3. Representatives of the Management Investors. Each of the
-------------------------------------------
Management Investors hereby appoints Robert K. Wagner and Clayton A. Sweeney as
their representatives (such persons and any successors or replacements as
provided in this Section 2.3, are referred to herein as the "Representatives of
the Management Investors") for purposes of this Agreement and hereby grants to
the Representatives of the Management Investors, and each of them, an
irrevocable proxy for the term of this Agreement to vote (or execute consents
with respect to) all the Voting Shares owned by such Management Investor on any
matter coming before the stockholders of the Company. In the event of any
disagreement on any matter between the Representatives of the Management
Investors, the decision of the Representative holding the most senior office
6
<PAGE>
with the Company shall be the decision of the Representatives of the Management
Investors. Either or both of the Representatives of the Management Investors
may be removed by the vote of the holders of at least three-fourths of the
Voting Shares held by the Management Investors.
At any time a vacancy is created with respect to either Representative of
the Management Investors by reason of the death, removal or resignation of a
Representative of the Management Investors, a special meeting of the Board of
Directors of the Company shall be called as promptly as practicable after such
vacancy is created for the purpose of filling such vacancy. Any such vacancy
shall be filled by the election by the Board of Directors of the Company of a
Management Investor who is an employee of the Company and one of the ten largest
holders of Voting Shares among the Management Investors who are employees of the
Company. If there shall be no such Management Investors willing to act as a
Representative of the Management Investors, the Board of Directors may fill such
vacancy with any other person; provided that such person may be removed as a
Representative of the Management Investors by the vote of the holders of at
least a majority of the Voting Shares held by the Management Investors.
2.4. Supermajority Vote Requirement. Without either (A) the prior
------------------------------
affirmative vote of at least a number of voting members of the Board of
Directors of the Company equal to (x) a majority (i.e., more than 50%) of the
----
number of directors of the Company as last fixed pursuant to the provisions of
the By-Laws of the Company (a "Majority of the Directors"), plus (y) one
director (the vote required pursuant to the foregoing being sometimes referred
to herein as a "Supermajority Vote"), or (B) the prior unanimous affirmative
vote of a committee of the Board of Directors of the Company where such
committee is established, the authority delegated and the members of the
committee selected by a Supermajority Vote (as described in clause (A) of this
Section 2.4) and in respect of which all matters to be voted upon are within the
authority delegated to such committee, the Company shall not, and the Voting
Stockholders shall use their respective best efforts not to permit the Company
to take any action described in this Section 2.4. For purposes of this Section
2.4 only, for so long as the Board of Directors consists of six members, and two
members are nominated by Saratoga and two members are nominated by the
Management Investors and the remaining two members are Independent or Non-
Designated Directors, each of the Saratoga nominees shall be entitled to two and
one-half votes (or if there shall be only one Saratoga director, such director
shall have five votes) and each of the remaining directors shall be entitled to
one vote, and the Supermajority Vote shall be six votes. For purposes of this
Section 2.4 only, if Saratoga elects to nominate a majority of the Board of
Directors pursuant to Section 2.1(b)(i) hereof, each director shall be entitled
to one vote to:
(a) issue or sell any shares of, or permit any of its Subsidiaries
(as hereinafter defined) to issue or sell any shares of, any class or
series of capital stock of the Company
7
<PAGE>
or such Subsidiary, or any securities convertible into, or exercisable or
exchangeable for, any shares of any class or series of capital stock of the
Company or such Subsidiary, other than (i) employee stock options or
restricted stock issued pursuant to a plan approved by a Supermajority Vote
(an "Approved Plan"), (ii) Shares issued upon exercise of employee stock
options granted pursuant to the Koppers Industries 1997 Stock Option Plan
or an Approved Plan,(iii) issuances of voting common stock upon conversion
of Senior Convertible Preferred Shares and (iv) other issuances expressly
provided for in this Agreement. As used herein, "Subsidiary" means any
corporation, partnership or other entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
Board of Directors (or other persons performing similar functions) are at
the relevant time directly or indirectly owned by the Company;
(b) declare, set aside or pay any dividend or other distribution,
or permit any Subsidiary of the Company to declare, set aside or pay any
dividend or other distribution, on any shares of any class or series of
capital stock of the Company or such Subsidiary (other than pursuant to the
terms of any outstanding series of Preferred Stock and other than, in the
case of any such Subsidiary, any dividends or distributions to the Company
or a wholly owned Subsidiary thereof);
(c) purchase, redeem, retire or otherwise acquire, or set aside any
assets or deposit any funds for the purchase, redemption, retirement or
other acquisition of, any shares of any class or series of capital stock of
the Company or any securities convertible into, or exercisable or
exchangeable for, any shares of any class or series of capital stock of the
Company, other than pursuant to Sections 7 or 8 hereof;
(d) directly or indirectly, purchase or otherwise acquire, in one
transaction or a series of related transactions (other than purchases of
inventory in the ordinary course of business), any business or assets for a
purchase price (including in such purchase price the Fair Market Value (as
defined below) of any non-cash consideration) in excess of 30% of the
consolidated assets of the Company and its Consolidated Subsidiaries (as
defined below), computed in accordance with generally accepted accounting
principles, consistently applied, and determined on the basis of the most
recently available quarterly or year-end consolidated financial statements
of the Company and its Consolidated Subsidiaries without giving effect to
such purchase or other acquisition. The "Fair Market Value" of any business
or assets means the fair market value of such business or assets, as
determined by a Supermajority Vote of the Board of Directors of the Company
in good faith. "Consolidated Subsidiaries" means, as of any date, any
corporation, partnership or other entity the accounts of which would, in
accordance with generally accepted accounting principles, consistently
applied, be consolidated with those of
8
<PAGE>
the Company in its consolidated financial statements as of such date;
(e) directly or indirectly, sell, lease, assign or otherwise
transfer or dispose of, in one transaction or a series of related
transactions (other than sales of inventory in the ordinary course of
business), any business or assets having a Fair Market Value (in the case
of an arm's-length transaction, such Fair Market Value to be determined by
reference to the purchase price therefor) in excess of 30% of the
consolidated assets of the Company and its Consolidated Subsidiaries
computed in accordance with generally accepted accounting principles,
consistently applied, and determined on the basis of the most recently
available quarterly or year-end consolidated financial statements of the
Company and its Consolidated Subsidiaries without giving effect to such
sale, lease, assignment or other transfer;
(f) enter into any agreement, or adopt any resolution, or permit
any Subsidiary of the Company to enter into any agreement or adopt any
resolution, in respect of (i) any merger of the Company or such Subsidiary
with or into any other corporation, partnership or other entity, (ii) any
consolidation of the Company or such Subsidiary with any other corporation,
partnership or other entity (other than with the Company or a wholly owned
Subsidiary of the Company), (iii) any transaction or series of related
transactions in which the Company shall sell or otherwise transfer all or
substantially all of the Company's business, property or assets or (iv) any
dissolution or liquidation of the Company;
(g) directly or indirectly, effect any reclassification of
securities (including any reverse stock split), or recapitalization of
the Company;
(h) make, or permit any of its Subsidiaries to make, directly or
indirectly, during any fiscal year, any expenditures or commitments for
fixed or capital assets in excess of $25 million over the amount set forth
in the Capital Budget for such fiscal year. The "Capital Budget" for any
fiscal year shall mean a capital budget for such fiscal year prepared by
the management of the Company and approved by a Supermajority Vote on or
prior to the first day of such fiscal year;
(i) amend, modify, alter or repeal its Articles of Incorporation or
By-Laws in any respect whatever;
(j) incur or assume, or permit any of its Subsidiaries to incur or
assume, any Debt not reflected on the balance sheet of the Company and its
Subsidiaries as of the Effective Date which is more than $10 million in
aggregate amount, other than (x) Debt incurred pursuant to the Bank Credit
Agreement (the "Bank Credit Agreement") to be entered into by the Company
with Swiss Bank and Mellon Bank, N.A. and the issuance of
9
<PAGE>
$175 million of high yield debt in connection with the transactions
contemplated by the refinancing of the existing 8 1/2% senior notes and
bank credit agreement with Mellon Bank, N.A. (the "Refinancing")and (y)
refinancings of Debt referred to in the preceding clause (x). "Debt" of any
person means at any date, without duplication, (i) all indebtedness of such
person for borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such person or only to a portion thereof), (ii)
all obligations of such person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such person in respect
of letters of credit or other similar instruments (or reimbursement
obligations with respect thereto), (iv) all obligations of such person to
pay the deferred and unpaid purchase price of property or services, (v) all
Capital Lease Obligations of such person, (vi) all Debt of others secured
by a Lien on any asset of such person, whether or not such Debt is assumed
by such person, and (vii) all Debt of others guaranteed by such person. The
amount of Debt of the Company and its Subsidiaries at any date shall be the
outstanding balance at such date of all unconditional obligations as
described above and the maximum liability of any such contingent
obligations at such date. "Lien" means any lien, mortgage, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale
or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest). "Capital Lease Obligations" of
any person means any obligation which is required to be classified and
accounted for as a capital lease on the face of a balance sheet of such
person prepared in accordance with generally accepted accounting
principles, consistently applied; the amount of such obligation shall be
the capitalized amount thereof, determined in accordance with generally
accepted accounting principles, and the stated maturity thereof shall be
the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by
the lessee without payment of a penalty. "Guarantee" by any person means
any obligation, contingent or otherwise, of such person directly or
indirectly guaranteeing any Debt or other obligation of any other person
and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such person (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation of such other person (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation
of the payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided that the term Guarantee shall not
--------
include endorsements for collection or deposit in the ordinary course of
business;
10
<PAGE>
(k) except pursuant to this Agreement, grant to any person or entity
any contractual or other right to the Company's cooperation or assistance,
or cooperate with or assist any person or entity, in registering any shares
of any class or series of capital stock of the Company or any securities
convertible into, or exercisable or exchangeable for, any shares of any
class or series of capital stock of the Company pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), or any other state, federal
or other securities laws;
(l) enter into, or permit any Subsidiary to enter into, any
transaction with an Affiliate (as hereinafter defined) of the Company other
than (i) the employment by the Company or any Subsidiary of an Affiliate as
a director, officer or other employee for commercially reasonable
compensation, (ii) the repurchase and sale or resale of Shares pursuant to
Sections 7 or 8 hereof, (iii) the registration of Shares pursuant to the
terms of Section 9 hereof,(iv) transactions contemplated by the Advisory
Services Agreement between Saratoga and the Company of even date herewith,
and (v) any other transaction in the ordinary course of business and on
terms no less favorable to the Company or such Subsidiary than would be
obtained in a comparable arm's-length transaction; provided, however, that
-------- -------
any director nominated by a Stockholder who is, or whose Affiliate is, a
party to a transaction requiring a Supermajority Vote pursuant to this
Section 2.4(l) shall not be permitted to vote on such transaction, and the
number of votes required for a Supermajority Vote will be computed as if
the Board of Directors did not include such director or directors;
(m) adopt any new employee stock option plans; it being understood
that the Stockholders have agreed to use their best efforts to adopt a new
Approved Plan covering up to 15% of the Voting Shares of the Company on a
fully diluted basis;
(n) extend the term of this Agreement, or;
(o) amend or modify on behalf of the Company the terms, provisions
or conditions of this Agreement.
2.5. No Recourse. The requirement of a Supermajority Vote as set forth
-----------
in Section 2.4 hereof shall inure solely to the benefit of, and be enforceable
solely by, the Voting Stockholders. No other person shall have any claim against
the Company, its Subsidiaries or any Voting Stockholder for taking action that
fails to comply with such Supermajority Vote requirement but that is otherwise
in accordance with law and any agreements or other instruments by which they are
bound.
11
<PAGE>
3. Transfers of Shares.
-------------------
3.1. Legends; Shares Subject to this Agreement. Unless otherwise
-----------------------------------------
expressly provided herein, no Stockholder shall sell, assign, pledge, encumber
or otherwise transfer any Shares to any person (regardless of the manner in
which such Stockholder initially acquired such Shares) nor shall the Company
issue, sell or otherwise transfer any Shares to any person (all persons
acquiring Shares from a Stockholder or from the Company, regardless of the
method of transfer, shall be referred to collectively as "Transferees" and
individually as a "Transferee") unless (i) such Shares bear legends as provided
in Section 11.5 and (ii) such Transferee shall have executed and delivered to
the Company, as a condition precedent to any acquisition of such Shares, an
instrument in form and substance reasonably satisfactory to the Company
confirming that such Transferee agrees to become a party to this Agreement and
takes such Shares subject to all the terms and conditions of this Agreement;
provided that the provisions of this Section 3.1 shall not apply in respect of a
- --------
sale of Shares included in a registered public offering under the Securities Act
and the rules and regulations promulgated thereunder. The Company shall not
transfer upon its books any Shares to any person except in accordance with this
Agreement.
3.2. Certain Restrictions. (a) Notwithstanding anything to the contrary
--------------------
set forth herein, no Stockholder or Transferee shall directly or indirectly
sell, assign, pledge, encumber, hypothecate or otherwise transfer any Shares,
unless any such sale, assignment, pledge, encumbrance, hypothecation or other
transfer shall have been effected in accordance with the terms of this
Agreement.
(b) No Stockholder shall sell, assign, pledge, encumber, hypothecate
or otherwise transfer any Shares at any time if such action would constitute a
violation of any federal or state securities or blue sky laws or a breach of the
conditions to any exemption from registration of Shares under any such laws or a
breach of any undertaking or agreement of such Stockholder entered into pursuant
to such laws or in connection with obtaining an exemption thereunder. Each
Stockholder agrees that any Shares to be purchased by such Stockholder shall
bear appropriate legends restricting the sale or other transfer of such stock in
accordance with applicable federal and state securities or blue sky laws.
(c) Except for the proxies granted by the Management Investors to
the Representatives of the Management Investors pursuant to this Agreement or
proxies granted to Saratoga by holders of Senior Convertible Preferred Shares
and shares of voting common stock issued upon conversion thereof, no Stockholder
shall grant any proxy or enter into or agree to be bound by any voting trust
with respect to any Shares nor shall any Stockholder enter into any stockholder
agreements or arrangements of any kind with any person with respect to any
Shares inconsistent with the provisions of this Agreement (whether or not such
agreements and arrangements are with other Stockholders or holders of Shares who
are not parties to this Agreement), including agreements or
12
<PAGE>
arrangements with respect to the acquisition, disposition or voting (if
applicable) of any Shares, nor shall any Stockholder act, for any reason, as a
member of a group or in concert with any other persons in connection with the
acquisition, disposition or voting (if applicable) of any Shares in any manner
which is inconsistent with the provisions of this Agreement.
(d) None of the restrictions contained in this Agreement with respect
to transfers of Shares (other than those set forth in Sections 3.1, 3.2(a) and
3.2(b)) shall apply, with respect to a corporate or partnership Stockholder, to
transfers of Shares to any affiliate (as such term is defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
thereof (an "Affiliate"). Any such Affiliate Transferee shall be considered a
"Permitted Transferee" for purposes of this Agreement. Such Affiliate Transferee
shall agree that it will not cease to be an Affiliate of such transferor
Stockholder unless, prior to ceasing to be such an Affiliate, such Affiliate
Transferee transfers to such Stockholder or an Affiliate thereof all the Shares
owned by it.
(e) A Stockholder shall be entitled to pledge such Stockholder's
Shares to an Affiliate of such Stockholder or to a commercial bank, savings and
loan institution or any other lending institution as security for any
indebtedness of such Stockholder or the Company to such lender; provided that,
--------
prior to any such pledge, the pledgee shall deliver to the Company its written
agreement, in form and substance satisfactory to the Company, that such pledgee
shall agree to be bound by all the terms of this Agreement with respect to the
Shares so pledged.
(f) The provisions of Section 3.3 of this Agreement shall not apply
to transfers of Shares by any Transferee unaffiliated with any Stockholder,
which Shares were acquired pursuant to the terms of this Agreement from a
Stockholder or from a subsequent Transferee of such Stockholder; provided that
--------
any such Transferee (if such Transferee is or is required to become a party to
this Agreement) agrees to take such Shares, and any transfer of such Shares by
such Transferee shall be, subject to all the other provisions of this Agreement.
(g) The provisions of Section 3.3 of this Agreement shall not apply
to transfers of Shares by a Management Investor to any employee of the Company;
provided that any such purchaser of Shares agrees to take such Shares subject to
- --------
all of the other provisions of this Agreement.
(h) The provisions of Sections 3.1 and 3.3 of this Agreement shall
not apply to any transfer of Shares by a Management Investor to the Management
Investor and his/her spouse jointly; provided, that the spouse acquiring an
--------
interest in the Shares shall agree to be bound by the provisions of this
Agreement.
3.3. Transfer to Other Stockholders or to Transferees; Purchase Right.
----------------------------------------------------------------
(a) Except as provided in Sections 3.2(d), (e),
13
<PAGE>
(f), (g) and (h), any Stockholder (the "Selling Stockholder") who desires to
sell or otherwise transfer any Shares, other than pursuant to or after a
registered public offering under the Securities Act, shall first give written
notice (a "Seller's Notice") to the Company, and to the Representatives of the
Management Investors on behalf of the Management Investors as a group and to any
other Stockholders (collectively, the "Offeree Stockholders"), stating (i) the
Selling Stockholder's desire to make such transfer, (ii) the number of Shares to
be transferred (the "Offered Shares"), and (iii) the total consideration which
the Selling Stockholder proposes to be paid for the Offered Shares including the
cash price and any other consideration and terms proposed for the sale of such
Offered Shares (the "First Offer Price").
(b) Upon receipt of the Seller's Notice (the "First Offer"), the
Company and the Management Investors shall have the irrevocable and exclusive
option to purchase up to all of the Offered Shares at the First Offer Price.
The Company or the Management Investors must provide a written notice to the
Selling Stockholder, with copies to all Offeree Stockholders, given within 30
days from the date of the Seller's Notice if the Company or the Management
Investors intend to purchase Offered Shares pursuant to this Section 3.3.
(c) If the Company or the Management Investors do not exercise their
irrevocable and exclusive option to purchase the Offered Shares, or if the
Company and/or the Management Investors exercise their option to purchase less
than all the Offered Shares, then the Selling Stockholder shall be free, for a
period of 90 days from the earlier of (i) the 30th day following the date of
the Seller's Notice or (ii) the date the Selling Stockholder shall have
received written notice from the Company and the Management Investors stating
their intention not to exercise the options granted under Sections 3.3(b) and
(c), to sell the Offered Shares to any third party Transferee for total
consideration, including cash purchase price equal to or greater than 95% of the
First Offer Price; provided that the Transferee complies with the provisions of
--------
Section 3.1 of this Agreement (including such Transferee's agreement to become a
party to and be bound by the terms of this Agreement).
(d) If the proposed purchase price for the Offered Shares is equal
to or greater than 95% of the First Offer Price or the terms of a transfer of
the Offered Shares are less favorable than those set forth in the Sellers
Notice, the Selling Stockholder shall not sell or otherwise transfer any of the
Offered Shares unless the Selling Stockholder shall first reoffer the Offered
Shares at such lesser price and terms to the Company and the Management
Investors by giving written notice (the "Reoffer Notice") thereto, stating the
Selling Stockholder's intention to make such transfer at such lower price (the
"Reoffer Price").
(e) Upon receipt of the Reoffer Notice (the "First Reoffer"), the
Company and the Management Investors shall have the
14
<PAGE>
irrevocable and exclusive option to purchase up to all of the Offered Shares at
the Reoffer Price. The Company or the Management Investors must provide a
written notice to the Selling Stockholder, with copies to all Offeree
Stockholders, given within 15 days from the date of the Reoffer Notice if it
intends to purchase Offered Shares pursuant to this Section 3.3.
(f) If the Company or the Management Investors do not exercise their
irrevocable and exclusive option to purchase the Offered Shares, or if the
Company and/or the Management Investors exercise their option to purchase less
than all the Offered Shares, then the Selling Stockholder shall be free, for a
period of 90 days from the earlier of (i) the 15th day following the date of the
Reoffer Notice or (ii) the date the Selling Stockholder shall have received
written notice from the Company and the Management Investors stating their
intention not to exercise the options granted under Sections 3.3(d) and (e), to
sell the Offered Shares to any third party Transferee at a price (and terms)
equal to or greater than the Reoffer Price; provided that the Transferee
--------
complies with the provisions of Section 3.1 of this Agreement (including such
Transferee's agreement to become a party to and be bound by the terms of this
Agreement).
3.4. Form of Consideration for Shares. No offer to purchase Shares
--------------------------------
under any section of this Section 3 shall be deemed to be valid unless (i) the
purchase price for such Shares is payable in cash, marketable securities that
can be readily valued by reference to quoted trading prices or installment
notes, (ii) all Stockholders entitled to sell any Shares pursuant to such offer
are offered the same form of consideration for their Shares and (iii) if
installment notes comprise all or part of the consideration for such purchase,
the offeror offers all Stockholders entitled to sell any Shares pursuant to such
offer cash as an alternative to such installment notes. In determining whether
consideration offered under any section of this Agreement is greater than, less
than or equal to an Offer Price, Reoffer Price or the price offered pursuant to
Section 9.5, only the per Share value of the cash consideration or the
marketable securities offered shall be considered.
3.5 Transfer by Management Investors. No Management Investor shall sell
--------------------------------
or otherwise transfer any Shares other than (a) to the Company, (b) to another
Management Investor in accordance with Section 3.2(g) of this Agreement, (c) to
such Management Investor's spouse in accordance with Section 3.2(h) of this
Agreement, (d) to a Buyer pursuant to Section 9.5 of this Agreement or (e) in
connection with an involuntary transfer in accordance with Section 4 of this
Agreement.
4. Involuntary Transfer of Shares.
------------------------------
4.1. Certain Involuntary Transfers; Seller's Notice. If a Stockholder
----------------------------------------------
shall involuntarily transfer directly or indirectly any or all of his Shares
such Stockholder shall give written notice within 30 days of such involuntary
transfer to the Company and the
15
<PAGE>
other Stockholders, with a copy to the Transferee, stating the fact that the
involuntary transfer occurred, the reason therefor, the date of the transfer,
the name and address of the Transferee and the number of Shares acquired by the
Transferee.
4.2. Right to Repurchase. For a period of 60 days from the date the
-------------------
Company sends written notice to the Transferee that the transfer is deemed to
be an involuntary transfer subject to repurchase under this Agreement, the
Company shall have the irrevocable and exclusive option to buy all of the
Shares.
4.3. Purchase Price. The purchase price for Shares purchased pursuant
--------------
to Section 4.2 shall be equal to the lesser of (i) the price which the
involuntary Transferee paid for the Offered Shares, (ii) Adjusted Book Value (as
such term is hereinafter defined). Adjusted Book Value shall be determined by
the Company using accounting principles then in effect and as applied by the
Company and shall be accompanied by a letter from the Company's independent
accountants stating that the calculations made by the Company have been made in
accordance with the applicable provisions of this Agreement.
5. Retirement of Shares Purchased by the Company.
---------------------------------------------
Any Shares purchased by the Company from a Stockholder or such
Stockholder's personal representative, estate or heirs or Permitted Transferees
pursuant to this Agreement shall be retired and canceled; provided, however,
------------------
that any Voting Shares purchased by the Company from a Management Investor may
be resold to other employees or Directors of the Company or its Subsidiaries who
concurrently therewith are or become a party to this Agreement as Management
Investors.
6. Closing.
-------
6.1. Closing. Any Selling Stockholder and the parties hereto who are
-------
purchasing any of the Offered Shares pursuant to the foregoing provisions of
this Agreement shall mutually determine a closing date (the "Closing Date")
which shall not be more than ten business days, subject to any applicable
regulatory waiting periods, after the date upon which a purchaser shall have the
right to purchase Shares in accordance with this Agreement.
6.2. Deliveries at Closing; Method of Payment of Purchase Price. On the
----------------------------------------------------------
Closing Date, any Selling Stockholder shall deliver certificates with
appropriate transfer tax stamps affixed and with stock powers endorsed in blank,
representing the Shares to be purchased by the persons exercising their options
hereunder, each of whom shall deliver to such Selling Stockholder, by means of
certified check payable in New York Clearing House funds, his or its portion of
the purchase price which is payable in cash and his or its portion of the other
consideration, if any, to be paid in exchange for such Shares. In addition, if
the person selling
16
<PAGE>
Shares is the personal representative of a deceased Stockholder, the personal
representative shall also deliver to the purchaser or purchasers (i) copies of
letters testamentary or letters of administration evidencing his appointment and
qualification, (ii) a certificate issued by the Internal Revenue Service
pursuant to Section 6325 of the Internal Revenue Code of 1986, as amended (the
"Code"), discharging the Shares being sold from liens imposed by the Code and
(iii) an estate tax waiver issued by the state of the decedent's domicile.
7. Sales of Management Investors' Voting Shares on Termination of Employment.
--------------------------------------------------------------------------
7.1. Sales Upon Termination. (a) Upon a Management Investor's ceasing
----------------------
for any reason (a "Termination Event") to be employed by the Company or any of
its Subsidiaries (whether due to such Management Investor's death, disability,
termination for cause, involuntary termination, voluntary resignation or
retirement, as such terms are hereinafter defined) (a "Terminated Investor"),
subject to the provisions of Sections 7.1(b) through (d) hereof, the Company, in
its sole discretion, may purchase and such Terminated Investor shall sell to the
Company on one occasion all of the Voting Shares owned by such Terminated
Investor, including any Voting Shares owned jointly by a Terminated Investor
with his/her spouse pursuant to Section 3.2(h) hereof (the "Termination
Shares"), at a price per Termination Share equal to the Termination Price.
If the Company does not elect to purchase all of the Termination Shares of
any given Terminated Investor upon the occurrence of a Termination Event, the
Company shall purchase and each such Terminated Investor, subject to the
provisions of Section 7.1(b) through (d) hereof, shall sell to the Company the
Termination Shares owned by such Terminated Investor on the following terms.
Twenty-five percent (25%) of the Termination Shares shall be tendered upon
termination as provided in this Section 7.1, and the remaining Termination
Shares shall be tendered in three (3) equal annual tenders on the anniversary
date of the Termination Event. The Price per Termination Share for each
installment shall be determined in accordance with one of the following
alternative redemption options, to be chosen by the Terminated Investor:
either
(i) The price per Termination Share for each installment shall be
equal to the Termination Price that would be effective if the
Terminated Investor had terminated employment on the anniversary
date;
or
(ii) The price per Termination Share for each tender shall be equal
to the Termination Price in effect on the date of the
Termination Event.
17
<PAGE>
As used in this Agreement, the term "Termination Price" shall mean the Fair
Value (as hereinafter defined) of the Termination Shares on the date of the
Termination Event.
The closing of the purchase of the Terminated Shares (the "Termination
Closing") pursuant to this Section 7.1(a) shall take place at the principal
offices of the Company on the date chosen by the Company which date shall not,
except as otherwise provided in this Section 7, be more than sixty days after
the occurrence of the Termination Event. At the Termination Closing, the
Company shall deliver to the Terminated Investor against delivery of Duly
Endorsed (as hereinafter defined) certificates representing such Termination
Shares, free and clear of all Encumbrances (as hereinafter defined), a certified
check or checks in the amount of the Termination Price and share certificates as
required.
(b) Notwithstanding anything to the contrary contained in this
Section 7.1, the Company shall not be obligated to acquire any Termination
Shares in exchange for a payment pursuant to Section 7.1(a) to the extent that,
(i) despite its ability to deliver all or any portion of the Termination Price
in a Note, the acquisition thereof would violate any law, statute, order, writ,
injunction, decree, rule, regulation, policy or guideline promulgated, or
judgment entered, by any federal, state, local or foreign court or governmental
authority applicable to the Company or any of its Subsidiaries, provided, that
the Company shall use all legally permissible methods in the reduction of
capital and, if the Board of Directors determines that the Company's assets (or
a portion thereof) may be revalued without receipt of an appraisal, in the
revaluation of assets in obtaining a legal source of funds, (ii) constitute or
cause a breach or default (immediately or with notice or lapse of time or both)
of any agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or any of their
respective assets is bound, or (iii) other than Management Investors who retire
(as such term is defined in a Koppers Industries Pension Plan) or who are
involuntarily terminated, if Management Investors holding more than ten percent
of the Shares owned by Management Investors terminate employment in any thirty
day period, the Company may at its option delay its obligation to acquire shares
pursuant to this Section 7.1 for a period of twelve months.
(c) To the extent that the provisions of Section 7.1(b) limit but do
not preclude the Company from acquiring any Termination Shares in exchange for a
payment, the Company shall purchase such Termination Shares on the date
specified in Section 7.1(a) to the extent permitted pro rata from each
Terminated Investor as to whom or which a Termination Closing has not occurred,
on the basis of the number of Termination Shares owned by each Terminated
Investor.
(d) Contemporaneously with any Termination Closing, the Company may
sell or resell a number of Voting Shares equal to or less than the number of
Termination Shares to be acquired at such Termination Closing, at a price no
less than the Termination Price
18
<PAGE>
for such Termination Shares, to employees of the Company or its Subsidiaries who
are or concurrently therewith become parties to this Agreement as Management
Investors, and may use the proceeds from any such sale or resale of Voting
Shares to acquire such Termination Shares.
(e) The Company shall purchase any Termination Shares not acquired by
it or the Management Investors pursuant to Sections 7.1(a), (b), (c) and (d)
hereof on the date chosen by the Company (not later than the fifteenth business
day) after such date as the Company learns that it is no longer restricted under
Section 7.1(b) hereof from acquiring all such Termination Shares. The price to
be paid to acquire such Termination Shares shall be the amount that would have
been paid pursuant to Section 7.1(a) hereof if such acquisition had not been
delayed.
8. Other Purchases and Sales of Shares.
-----------------------------------
8.1 Option to Purchase. For a period of sixty (60) days following the
------------------
Effective Date and the compliance with any applicable securities laws,
Management Investors, including certain Koppers Australia managers and certain
employees selected by the Board of Directors shall have the option to purchase
Voting Shares (on a pro rata basis or such other basis as the Board of Directors
shall determine) purchased by the Company pursuant to Section 8.2 hereof at a
price per share of $14, provided however, that no Management Investor shall be
entitled to purchase Voting Shares pursuant to this Section 8.1 and also sell
Voting Shares pursuant to Section 8.2.
8.2 Initial Redemption. For a period of sixty (60) days following the
------------------
Effective Date and the compliance with any applicable securities laws (i)
Management Investors who are not, as of the effective date, executive officers
of the Company shall have the right to sell to the Company up to one hundred
percent (100%) of the Voting Shares owned by such Management Investors at a
price per share equal to $17, and (ii) Management Investors who are, as of the
effective date, executive officers of the Company and Clayton A. Sweeney shall
have the right to sell to the Company up to twenty-five percent (25%) of the
Voting Shares owned by such Management Investors or Clayton A. Sweeney at a
price per share equal to $17. To the extent that total redemptions pursuant to
this Section 8 exceed $15 million, $15 million of redemptions shall be made on a
pro-rata basis in 1997, and all, to the extent permitted by law and any
agreements to which the Company or any of its Subsidiaries are a party,
remaining redemptions shall be made on a pro rata basis in two (2) equal annual
installments on the anniversary date of the Effective Date.
8.3 Annual Redemption. Subject to the approval of the Board, each of
-----------------
the Management Investors and Saratoga shall be entitled to request that the
Company redeem up to 5% of their outstanding Voting Shares on an annual basis.
All such redemptions so approved by the Board shall be at Fair Value.
19
<PAGE>
8.4 Priority in Repurchases. To the extent that the Company is not
-----------------------
permitted at any time to effect repurchases of Shares contemplated by Sections
7, 8.2 and 8.3 hereof by reason of restrictions arising under law or any
agreement to which the Company or any of its Subsidiaries is a party, the
priority as among the repurchases contemplated by such Section shall be as
follows: first, repurchases pursuant to Section 8.2 shall be satisfied; second,
----- ------
repurchases contemplated by Section 7.1 shall be satisfied; and third
-----
repurchases contemplated by Section 8.3 shall be satisfied.
8.5 Saratoga Option. Upon the completion of the Option to Purchase and
---------------
Initial Redemption described in Sections 8.1 and 8.2 hereof, Saratoga shall have
the option for a period of sixty days to purchase additional Preferred Shares at
a price of $14 per share, so that upon completion of the sixty day period
described in this Section 8.5, they hold up to 56 percent (56%) of the
outstanding Voting Shares.
9. Certain Rights.
--------------
9.1. "Piggy Back" Registration. If at any time the Company shall
-------------------------
determine to register under the Securities Act (including pursuant to a demand
of any stockholder of the Company exercising registration rights) any of its
Shares (except shares issuable solely upon exercise of stock options, or shares
issuable solely pursuant to employee benefit plans), it shall send to each
Stockholder written notice of such determination and, if within thirty (30) days
after receipt of such notice, such holder shall so request in writing, the
Company shall use its best efforts to include in such registration statement all
or any part of the Shares such holder requests to be registered, except that if,
in connection with any offering involving an underwriting of Shares to be issued
by the Company, the managing underwriter shall impose a limitation on the number
of Shares which may be included in any such registration statement because, in
its judgment, such limitation is necessary to effect an orderly public
distribution, then the Company shall be obligated to include in such
registration statement only the amount as is determined in good faith by the
managing underwriters in the case of an Initial Public Offering. As used in the
preceding sentence, "pro rata" means proportionately to the relative amount of
such Shares requested to be registered by such holders, and not to the amount of
such Shares then owned by such holders, and "Initial Public Offering" means the
first fully underwritten public offering pursuant to an effective registration
under the Securities Act on Form S-1 or Form S-8 or their then equivalents,
covering the offer and sale by the Company of its Shares. No incidental right
under this Section 9.1 shall be construed to limit any registration required
under Section 9.2.
9.2. Required Registrations. Upon written request of Saratoga, the
----------------------
Company will use its best efforts to cause such of the Shares as may be
requested by Saratoga to be registered under the Securities Act as expeditiously
as possible. The Company shall not be obligated to take any action to effect any
such
20
<PAGE>
registration after the Company has effected two such registrations pursuant to
this Section 9.2, and such registrations have been declared or ordered
effective.
9.3. Expenses. In the case of each registration under this Section 9,
--------
the Company shall bear all costs and expenses of each such registration,
including, but not limited to, printing, legal and accounting expenses,
Securities and Exchange Commission filing fees and "blue sky" fees and
expenses; provided, however, that the Company shall have no obligation to pay
-------- -------
or otherwise bear (i) any portion of the fees or disbursements of more than one
counsel for Saratoga in connection with the registration of their Shares, or
(ii) any portion of the underwriters' commissions or discounts attributable to
the Shares being offered and sold by any Stockholder.
9.4. Preemptive Rights. In the event that the Company offers to sell
-----------------
additional Shares, each Stockholder hereof shall have the right to subscribe for
such additional Shares (for a period of 30 days following written notice of such
offer), at the offered price, in proportion to the number of Shares outstanding.
This Section 9.4 shall not apply to issuances or sales of Shares
pursuant to (a) a registered public offering under the Securities Act, (b) the
conversion of Senior Convertible Preferred Shares into shares of voting common
stock, (c) employee stock options and (d) sales of Shares to employees of the
Company or any of its Subsidiaries to the extent of Shares that have been
repurchased from Management Investors pursuant to Section 7 hereof.
9.5 Bring Along Rights. In the event Saratoga proposes to sell a
------------------
portion of its Shares to a person or entity who is not a party to this Agreement
(the "Buyer"), and such sale would entitle the Buyer to elect a majority of the
Board of Directors, notwithstanding compliance by Saratoga with the other
provisions of this Agreement, no transfer of Shares shall be made unless the
Buyer shall agree to purchase from each Management Investor the same percentage
of Shares as Saratoga is selling (such percentage calculation shall be based
upon the number of Shares Saratoga owns at the time of the proposed sale,
divided by the total number of Shares outstanding), upon the same terms.
10. Arbitration.
-----------
10.1. Dispute Resolution. If a dispute or controversy arises under or
------------------
in connection with this Agreement, the parties agree first to try in good faith
to settle the dispute or controversy. Any party may initiate the negotiation
process by written notice to the others, identifying the dispute or controversy
and the desire for negotiation. If the parties have not resolved the dispute or
controversy by direct negotiations within thirty (30) days of such notice, any
party may initiate arbitration as herein provided. All disputes or controversies
arising under or in connection with this Agreement which are not resolved by
negotiation shall be decided by arbitration before a single arbitrator selected
by agreement of the
21
<PAGE>
parties, and judgment upon the award or decision of the arbitrator may be
entered and enforced in any court of competent jurisdiction. It is specifically
intended by the parties that any equitable relief granted by an arbitrator may
be enforced in any court of competent jurisdiction. The forum of such
arbitration shall be in Pittsburgh, Pennsylvania to the exclusion of all other
jurisdictions. In the event that the parties cannot agree upon the selection of
an arbitrator, the parties agree that the American Arbitration Association in
Pittsburgh, Pennsylvania will select the arbitrator.
10.2. Arbitration Procedures. The arbitrator shall decide the dispute
----------------------
or controversy in accordance with the following procedures:
(a) Within ten (10) days of the selection of an arbitrator, each
party shall submit to the arbitrator its written position (the "Initial
Submission") provided that neither memorandum of position shall exceed
--------
10 pages, double spaced plus such other documentary evidence as the
parties deem necessary.
(b) Within ten (10) days of the delivery of the Initial Submission,
each party may submit to the arbitrator and the other party a reply
memorandum (the "Reply Submission"), provided that neither reply memorandum
--------
shall exceed 5 pages, double spaced. In connection with the Reply
Submission, neither of the parties may submit (and the arbitrator may not
accept) any additional documentation (including affidavits).
(c) Within ten (10) days of the expiration of the period for the
delivery of the Reply Submission, the arbitrator, if he or she deems it
necessary or advisable, may call a hearing which may be by telephone
conference (the "Hearing"). At any Hearing, the arbitrator may ask
representatives and counsel for the parties questions with respect to the
issue to be decided and positions of the parties. In connection with the
Hearing, neither of the parties may offer (and the arbitrator may not
accept) any testimony or additional documentation (including affidavits).
(d) Within seven (7) days after the later to occur, if such is to
occur, of (a) the Hearing or (b) the Reply Submission, the arbitrator
shall render his or her position.
(e) The arbitrator shall promptly notify the parties in writing
of the decision, together with the amount of any dispute resolution costs
arising with respect thereto (the "Notice of Decision"). The Notice of
Decision need not contain an explanation of the decision or grounds
therefor.
(f) The decision of the arbitrator shall be final, binding and
not subject to appeal.
(g) All dispute resolution costs, which shall include any fee for
the arbitrator for services rendered shall be borne
22
<PAGE>
equally by the parties. Each party is to pay its own counsel fees and
expenses.
11. Miscellaneous.
-------------
11.1. Pension Matters. The Stockholders agree to cooperate in the
---------------
amendment of the Company's Pension Plan for Salaried Employees, the Retirement
Excess Benefit Plan and the Supplemental Executive Retirement Plan to provide
benefit payments that reflect combined service with Koppers Company, Inc. and
the Company, less any benefits payable from retirement plans of Koppers Company,
Inc.
11.2. Lock-up Agreements. All of the current officers of the Company
------------------
and Clayton A. Sweeney will execute lock-up agreements with the Company pursuant
to which they will agree not to sell or otherwise transfer any Shares during the
24-month period following the Effective Date, except for the sales pursuant to
Section 8.2 or Section 7.1 in the event of an involuntary termination.
11.3. Option. The Company or the Management Investors may make an offer
------
to purchase all outstanding Shares owned by Saratoga after three years
at a fair market value to be agreed or to be established by an independent
appraisal; provided, however, that Saratoga, in its sole discretion may elect to
-----------------
accept or reject any such offer.
11.4. Negotiation. Saratoga agrees that it will not sell any Shares to
-----------
U.S. Industries, Inc., Hanson PLC or any of their affiliates for a period of
eighteen (18) months from the Effective Date.
11.5. Endorsement of Stock Certificates. A copy of this Agreement shall
---------------------------------
be filed with the Secretary of the Company and kept with the records of the
Company. Each of the Stockholders hereby agrees that each outstanding
certificate representing Shares subject to this Agreement (other than those
Shares which shall have been registered under the Securities Act, in which case
such Shares shall, if required by Section 4.6(b), bear only the endorsement set
forth in paragraph (b) below) shall bear endorsements reading substantially as
follows:
(a) The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be transferred, sold or otherwise disposed of except
pursuant to an effective registration statement or pursuant to
an exemption from registration, under the Act.
(b) The shares represented by this certificate are subject to
restrictions on transfer, certain voting restrictions, certain
rights of the Company and the Stockholders of the Company to
repurchase such shares and certain rights of the registered
holder to sell such shares to the Company on the terms and
conditions set forth in a Stockholders' Agreement
23
<PAGE>
dated as of December 1, 1997, a copy of which may be obtained
from the Company or from the holder of this certificate. No
transfer of such shares will be made on the books of the
Company unless accompanied by evidence of compliance with the
terms of such Agreement.
Such certificate shall bear any additional endorsement which may be required for
compliance with state securities or blue sky laws.
11.6. Term. This Agreement shall terminate on the date of the first to
----
occur of any of the following events: (i) the closing of the sale to any person
or group of persons who are not, and who do not become, at the time of sale,
parties to this Agreement of at least 35% of the outstanding Voting Shares
(after giving effect to such sale) pursuant to an offering registered under the
Securities Act, or (ii) 10 years from the date of the Effective Date.
11.7. Injunctive Relief. It is hereby agreed and acknowledged that it
-----------------
will be impossible to measure in money the damages that would be suffered if the
parties fail to comply with any of the obligations herein imposed on them and
that in the event of any such failure, an aggrieved person will be irreparably
damaged and will not have an adequate remedy at law. Any such person shall,
therefore, be entitled to injunctive relief, including specific performance, to
enforce such obligations, and none of the parties hereto shall raise the defense
that there is an adequate remedy at law.
11.8. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
<TABLE>
<CAPTION>
If to Saratoga: Copy to:
- -------------- -------
<S> <C>
Saratoga Partners III, L.P. Cahill, Gordon & Reindel
535 Madison Avenue 80 Pine Street
New York, NY 10022 New York, NY 10005
Attn: Christian O. Oberbeck Attn: Bart Friedman, Esq.
</TABLE>
<TABLE>
<CAPTION>
If to the Company: Copy to:
- ----------------- -------
<S> <C>
Koppers Industries, Inc. Dickie, McCamey & Chilcote, P.C.
436 Seventh Avenue Two PPG Place, Ste. 400
Pittsburgh, PA 15219 Pittsburgh, PA 15222
Attn: Robert K. Wagner Attn: Clayton A. Sweeney, Esq.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
If to the Management Investors: Copy to:
- ------------------------------ -------
<S> <C>
Dickie, McCamey & Chilcote, P.C.
436 Seventh Avenue Two PPG Place, Ste. 400
Pittsburgh, PA 15219 Pittsburgh, PA 15222
Attn: Robert K. Wagner Attn: Attn: Clayton A. Sweeney, Esq.
</TABLE>
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address or individual to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.
11.9. Administration. In the event of any First Offer, or Reoffer, or
--------------
the occurrence of any event which entitles any Stockholder to exercise any put
or call granted herein, the Company shall administer and coordinate the exercise
of such put or call, including the determination, where applicable, of each
participating Stockholder's proportionate share.
11.10. Successors and Assigns. (a) This Agreement shall be binding upon
----------------------
and shall inure to the benefit of the parties, and their respective successors
and assigns. If any Transferee of any Stockholder shall acquire any Voting
Shares in any manner, whether by operation of law or otherwise, such Voting
Shares shall be held subject to all of the terms of this Agreement, and by
taking and holding such Voting Shares such person shall be conclusively deemed
to have agreed to be bound by and to perform all of the terms and provisions of
this Agreement.
(b) Shares which have been distributed in a registered public
offering shall no longer be subject to this Agreement; provided that if any such
--------
Shares are directly or indirectly acquired for any reason by any person who is a
Stockholder then such Shares, irrespective of the fact that they were not
legended or subject to this Agreement, shall be deemed subject to this Agreement
and shall not be transferred on the books of the Company until such Shares have
been appropriately legended.
11.11. Company Information. The Company agrees to deliver to each
-------------------
Stockholder, so long as such Stockholder owns any Shares:
(a) Within 60 days after the end of each quarterly period (except
the last) in each fiscal year of the Company, a consolidated balance sheet of
the Company and its consolidated Subsidiaries as of the end of such quarter, and
consolidated
25
<PAGE>
statements of income, changes in stockholders' equity and changes in financial
position of the Company and its consolidated Subsidiaries for such quarter and
the portion of the fiscal year ending with such quarter, setting forth in each
case in comparative form the figures for the corresponding periods a year
earlier;
(b) Within 120 days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the end of such fiscal year, and consolidated statements of
income, changes in stockholders' equity and changes in financial position of the
Company and its consolidated Subsidiaries for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year; and
(c) With reasonable promptness, such other data and information
as from time to time may be reasonably requested.
11.12. Governing Law. Regardless of the place of execution, this
-------------
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania applicable to agreements made and to be wholly
performed in such Commonwealth.
11.13. Headings. All headings are inserted herein for convenience only
--------
and do not form a part of this Agreement.
11.14. Entire Agreement; Amendment. This Agreement contains the entire
---------------------------
agreement among the parties hereto with respect to the transactions contemplated
herein, supersedes all prior written agreements and negotiations and oral
understandings, if any, and may not be amended, supplemented or discharged
except by an instrument in writing signed by Saratoga, the Company, the
Representatives of the Management Investors (so long as the Management Investors
as a group then own at least 5% of the outstanding Voting Shares), and any
Stockholder or Transferee holding at least 5% of the outstanding Voting Shares.
In the event of the amendment or modification of this Agreement in accordance
with its terms, the Voting Stockholders shall cause the Board of Directors of
the Company to meet within 30 days following such amendment, modification or
termination or as soon thereafter as is practicable for the purpose of amending
the Articles of Incorporation and By-Laws of the Company, as may be required as
a result of such amendment or modification, and proposing such amendments to the
stockholders of the Company entitled to vote thereon, and such action shall be
the first action to be taken at such meeting. In the event that any
Stockholder, or the Company shall be required, as a result of the enactment,
amendment or modification, subsequent to the date hereof, of any applicable law
or regulation, or by the order of any governmental authority, to take any action
which is inconsistent with or which would constitute a violation or breach of
any terms of this Agreement, then the Stockholders and the Company shall use
their best efforts to negotiate an appropriate amendment or modification of, or
waiver of compliance with, such terms.
26
<PAGE>
11.15. No Waiver. No failure to exercise and no delay in exercising any
---------
right, power or privilege of a party hereunder shall operate as a waiver nor a
consent to the modification of the terms hereof unless given by that party in
writing.
11.16. Consent to Jurisdiction. Each of the parties hereby submits to the
-----------------------
exclusive jurisdiction of the courts of the Commonwealth of Pennsylvania and the
federal courts of the United States of America located in such state for the
purpose of interpreting and enforcing the arbitration provisions of this
Agreement contained in Section 10 hereof and for the purposes of confirming a
decision or award of the arbitrator and entering judgment upon said decision or
award. Each of the parties further waives, and agrees not to assert, as a
defense in any such action, suit or proceeding that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that its property is exempt or immune from execution, that the
suit, action or proceeding is brought in an inconvenient forum, or that the
venue of the suit, action or proceeding is improper. Each of the parties agrees
that service of process in any such action, suit or proceeding shall be deemed
in every respect effective service of process upon it if given in the manner set
forth in Section 11.8 hereof.
11.17. Inspection. So long as this Agreement shall be in effect, this
----------
Agreement shall be made available for inspection by any stockholder of the
Company at the principal offices of the Company.
11.18. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed on the date first written above.
KOPPERS INDUSTRIES, INC.
By /S/Robert K. Wagner
----------------------------------
SARATOGA PARTNERS III, L.P.
By /S/Christian O. Oberbeck
----------------------------------
27
<PAGE>
MANAGEMENT INVESTORS
By /S/Robert K. Wagner
----------------------------------
Representative of the
Management Investors
By /S/Clayton A. Sweeney
----------------------------------
Representative of the
Management Investors
28
<PAGE>
SCHEDULE I
MANAGEMENT INVESTORS
--------------------
Incorporated by reference from Schedule I to Exhibit 4.2, Indenture,
dated as of December 1, 1997 between the Company and PNC Bank, National
Association (the "Trustee"), to Koppers Industries, Inc. Form S-4
Registration Statement, dated December 23, 1997.
<PAGE>
SCHEDULE II
DEFINITIONS
-----------
In addition to other words and terms defined elsewhere in the Agreement
(including its preamble and recitals), as used in the Agreement and in any of
the exhibits and schedules thereto, the following words and terms shall have the
following respective meanings, unless otherwise defined or the context otherwise
clearly requires:
"Adjusted Book Value" shall mean the book value per share of Common Shares,
-------------------
calculated by dividing (A) the sum of (x) common stockholders' equity (except
that retained earnings may be adjusted at the sole discretion of the Board of
Directors to reduce or eliminate the effect of unusual, non-recurring and/or
extraordinary items regardless of whether such items are so characterized by
generally accepted accounting principles) reflected in the Company's most recent
quarterly or year-end consolidated financial statements, plus (y) the total
proceeds to be realized by the Company upon the exercise of all outstanding
dilutive stock options by (B) Common Shares outstanding plus total outstanding
dilutive stock options. For purposes of this calculation, stock options shall
be considered dilutive if the exercise price per share is less than per share
Adjusted Book Value calculated without regard to outstanding stock options.
"Advisory Services Agreement" means the agreement of even date herewith between
---------------------------
Saratoga and the Company.
"Affiliate" has the meaning set forth in (S)3.2(d).
---------
"Agreement" means this Stockholders' Agreement.
---------
"Approved Plan" has the meaning set forth in (S)2.4(a).
-------------
"Bank Credit Agreement" has the meaning set forth in (S)2.4(j).
---------------------
"Board of Directors" has the meaning set forth in (S)2.1(a).
------------------
"Capital Budget" has the meaning set forth in (S)2.4(h).
--------------
"Capital Lease Obligations" has the meaning set forth in (S)2.4(j).
-------------------------
"Cause" as used in connection with a termination of employment of a Management
-----
Investor shall mean (A) the willful and continued failure by such Management
Investor to perform substantially his or her duties to the Company or any of its
Subsidiaries (other than any such failure resulting from his or her Disability)
within a reasonable period of time after a written demand for substantial
<PAGE>
performance is delivered to such Management Investor by the Board of Directors
of the Company, which demand specifically identifies the manner in which the
Board of Directors believes that such Management Investor has not substantially
performed his or her duties, (B) the willful misconduct by such Management
Investor in, the performance of his or her duties to the Company or any of its
Subsidiaries (including, without limitation, the conviction by a court of
competent jurisdiction of the Management Investor of any offense, regardless of
classification, related to the Management Investor's duties and responsibilities
to the Company or any of its Subsidiaries), (c) the negligent performance, by
such Management Investor of his or her duties to the Company or any of its
Subsidiaries if such performance is determined by the Board to have had or to be
reasonably likely to have a material adverse effect on the business, assets,
prospects or financial condition of the Company or the Subsidiary employing the
Management Investor, or (D) the conviction of such Management Investor by a
court of competent jurisdiction of a felony.
"Code" has the meaning set forth in (S)6.2
----
"Company" has the meaning set forth in the preface of the Agreement.
-------
"Consolidated Subsidiaries" has the meaning set forth in (S)2.4(d).
-------------------------
"Debt" has the meaning set forth in (S)2.4(j).
----
"Disability," with respect to a Management Investor, shall mean the inability of
----------
such Management Investor to perform substantially his or her duties and
responsibilities to the Company or any of its Subsidiaries by reason of a
physical or mental disability or infirmity (i) for a continuous period of six
months or (ii) at such earlier time as such Management Investor submits medical
evidence satisfactory to the Company that such Management Investor has a
physical or mental disability or infirmity that will likely prevent such
Management Investor from substantially performing his or her duties and
responsibilities for six months or longer. The date of such Disability shall be
on the last day of such six-month period or the day on which such Management
Investor submits such evidence, as the case may be.
"Duly Endorsed" shall mean duly endorsed in blank by the person or persons in
-------------
whose name a stock certificate is registered or
<PAGE>
accompanied by a duly executed stock or security assignment separate from the
certificate with the signature(s) thereon guaranteed by a commercial bank or
trust company or a member of a national securities exchange or the National
Association of Securities Dealers, Inc.
"Effective Date" has the meaning set forth in the preface of the Agreement.
--------------
"Encumbrances" shall mean any and all liens, claims, charges, security
------------
interests, options or other legal or equitable encumbrances.
"Exchange Act" has the meaning set forth in (S)3.2(d).
------------
"Fair Market Value" has the meaning set forth in (S)2.4(d).
-----------------
"Fair Value" shall mean the value of the Voting Shares as determined in good
----------
faith by the Board of Directors based upon an independent appraisal.
"First Offer" has the meaning set forth in (S)3.3(b).
-----------
"First Offer Price" has the meaning set forth in (S)3.3(a).
-----------------
"First Reoffer" has the meaning set forth in (S)3.3(e).
-------------
"Guarantee" has the meaning set forth in (S)2.4(j).
---------
"Hearing" has the meaning set forth in (S)10.2(c).
-------
"Initial Public Offering" has the meaning set forth in (S)9.1
-----------------------
"Initial Submission" has the meaning set forth in (S)10.2(a).
------------------
"Investment Price" shall mean the price per Share that such Stockholder paid for
----------------
the Shares owned by him or it.
"Involuntary Termination" shall mean termination of a Management Investor's
-----------------------
employment with the Company or its Subsidiaries by the Company or such
Subsidiary, which termination is not for Cause or the result of Retirement,
death or Disability.
"Koppers Industries Stock Option Plan" shall mean the stock option plan adopted
------------------------------------
by resolution of the Company on August 17, 1997.
"Majority of the Directors" has the meaning set forth in (S)2.4.
-------------------------
"Management Director" has the meaning set forth in (S)2.1(b)(ii).
--------------------
"Management Investor" has the meaning set forth in the preface of the Agreement.
-------------------
"Notice of Decision" has the meaning set forth in (S)10.2(e).
------------------
"Offered Shares" has the meaning set forth in (S)3.3(a).
--------------
"Offeree Stockholders" has the meaning set forth in (S)3.3(a).
--------------------
<PAGE>
"Permitted Transferee" has the meaning set forth in (S)3.2(d).
--------------------
"Preferred Shares" has the meaning set forth in the preface of the Agreement.
----------------
"Refinancing" has the meaning set forth in (S)2.4(j).
-----------
"Reoffer Price" has the meaning set forth in (S)3.3(d).
-------------
"Reoffer Notice" has the meaning set forth in (S)3.3(d).
--------------
"Reply Submission" has the meaning set forth in (S)10.2(b).
----------------
"Representatives of the Management Investors" has the meaning set forth in
-------------------------------------------
(S)2.3.
"Retirement" shall mean with respect to any Management Investor such Management
----------
Investor's termination of employment at or after (i) attainment of age 65 if the
Management Investor has been continuously employed by the Company or any of its
Subsidiaries for at least one year or (ii) attainment of age 60 if the
Management Investor has been continuously employed by the Company or any of its
Subsidiaries for at least three years.
"Saratoga" has the meaning set forth in the preface of the Agreement.
--------
"Saratoga Director" has the meaning set forth in (S)2.1(b)(i).
------------------
"Securities Act" has the meaning set forth in (S)2.4(k).
--------------
"Seller's Notice" has the meaning set forth in (S)3.3(a).
---------------
"Selling Stockholder" has the meaning set forth in (S)3.3(a).
-------------------
"Senior Convertible Preferred Shares" has the meaning set forth in the preface
-----------------------------------
of the Agreement.
"Shares" has the meaning set forth in the preface of the Agreement.
------
"Stockholder" has the meaning set forth in the preface of the Agreement.
-----------
"Subsidiary" has the meaning set forth in (S)2.4(a).
----------
"Supermajority Vote" has the meaning set forth in (S)2.4.
------------------
"Terminated Investor" has the meaning set forth in (S)7.1(a).
-------------------
"Termination Closing" has the meaning set forth in (S)7.1(a).
-------------------
"Termination Event" has the meaning set forth in (S)7.1(a).
-----------------
"Termination Price" has the meaning set forth in (S)7.1(a).
-----------------
"Termination Shares" has the meaning set forth in (S)7.1(a).
------------------
"Voluntary Resignation" shall mean the termination of a Management Investor's
---------------------
employment with the Company or its Subsidiaries by such Management Investor,
other than for Retirement, death or Disability.
<PAGE>
"Voting Shares" has the meaning set forth in the preface of the Agreement.
-------------
"Voting Stockholder" has the meaning set forth in the preface of the Agreement.
------------------
<PAGE>
EXHIBIT A
ARTICLES OF INCORPORATION
-------------------------
See Exhibit 4.1 to the Koppers Industries, Inc.
Stock Redemption and Purchase Plan, Form S-8
Registration Statement.
<PAGE>
EXHIBIT B
BY-LAWS
-------
See Exhibit 4.2 to the Koppers Industries, Inc.
Stock Redemption and Purchase Plan, Form S-8
Registration Statement
<PAGE>
EXHIBIT C
EXCHANGE AGREEMENT/CERTIFICATE OF DESIGNATION -
-----------------------------------------------
SERIES A CONVERTIBLE PREFERRED STOCK
------------------------------------
EXCHANGE AGREEMENT, dated as of December 1, 1997 between Koppers
Industries, Inc., a Pennsylvania corporation (the "Company"), and Saratoga
Partners III, L.P., a Delaware limited partnership (the "Purchaser").
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the following
meanings (with terms defined in the singular having comparable meanings when
used in the plural and vice versa), unless the context otherwise requires:
Agreement: This Exchange Agreement, as the same may be amended,
---------
supplemented or modified from time to time in accordance with the terms hereof.
Business Day: A day that is not a Saturday, a Sunday or a day on which
------------
banking institutions in the State of New York are not required to be open.
Certificate of Designation: The Certificate of Designation of the Senior
--------------------------
Convertible Preferred Stock, par value $.01 per share, of the Company
designating the relative rights and preferences of the Senior Preferred Stock,
substantially in the form attached hereto as Exhibit 1.
---------
Charter Documents: The Articles of Incorporation and By-Laws of the
-----------------
Company.
Commission: The Securities and Exchange Commission.
----------
Documents: All documents necessary to consummate the transaction
---------
contemplated hereby, including, without limitation, this Agreement, the
Stockholders Agreement and the Certificate of Designation, collectively, or each
of such documents singularly, and any documents or instruments executed in
connection with any of them.
Lien: Any mortgage, lien (statutory or other), pledge, security interest,
----
encumbrance, claim, hypothecation, assignment for security, deposit arrangement
or preference or other security agreement of any kind or nature whatsoever. For
the purposes of this Agreement, a Person shall be deemed to own, subject to a
lien, any property which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to indebtedness of such Person.
Losses: See Section 2.4.
------
<PAGE>
-2-
Material Adverse Effect: With respect to the Company and its Subsidiaries,
-----------------------
if any, a material adverse effect on the business, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries, taken
as a whole; provided, that with respect to the Company, "Material Adverse
--------
Effect" shall also mean a material adverse effect on the ability of the Company
to perform its obligations under this Agreement.
Person: Any individual, partnership, corporation, joint venture,
------
association, joint-stock company, trust, unincorporated organization, government
or agency or political subdivision thereof, or other entity.
Securities Act: The Securities Act of 1933, as amended, and the rules and
--------------
regulations promulgated by the Commission thereunder.
Senior Preferred Stock: The Senior Convertible Preferred Stock, par value
----------------------
$.01 per share, of the Company.
Stockholders Agreement: The stockholders agreement to be entered into on
----------------------
the Closing Date among the Company, the management investors named therein and
the Purchaser.
Subsidiary: With respect to any Person (i) any corporation of which the
----------
outstanding capital stock having at least a majority of the votes entitled to be
cast in the election of directors shall be owned, directly or indirectly, by
such Person, or (ii) any other Person of which at least a majority of the voting
interest is, directly or indirectly, owned by such Person.
SECTION 2. Exchange of securities
----------------------
2.1. Exchange of Securities.
----------------------
Subject to the terms and conditions hereof, (a) the Company agrees to issue
to the Purchaser on the Closing Date 2,145,624 shares of Senior Preferred Stock
in exchange for 2,117,952 shares of voting common stock, par value $.01 per
share, of the Company ("Voting Common Stock"), and 27,672 shares of non-voting
common stock, par value $.01 per share, of the Company ("Non-Voting Common
Stock"), and (b) the Purchaser agrees to surrender to the Company 2,117,952
shares of Voting Common Stock and 27,672 shares of Non-Voting Common Stock in
exchange for 2,145,624 shares of Senior Preferred Stock.
2.2.
2.2. Closing.
-------
The exchange of the Senior Preferred Stock for the Voting and Non-Voting
Common Stock contemplated under Section 2.1 shall
<PAGE>
-3-
take place at a closing (the "Closing") at the offices of Cahill Gordon &
Reindel, 80 Pine Street, New York, New York 10005, at 9:00 A.M., New York City
time, on December 1, 1997, or such other Business Day and time as may be agreed
upon by the Purchaser and the Company (such time and date being referred to as
the "Closing Date"). At the Closing, (a) the Company will deliver to the
Purchaser a certificate representing 2,145,624 shares of Senior Preferred Stock,
registered in the Purchaser's name or in the name of such nominee or designee as
such Purchaser may request and (b) the Purchaser shall surrender to the Company
certificates representing 2,117,952 shares of Voting Common Stock and 27,672
shares of Non-Voting Common Stock.
2.3. Expenses
--------
The Company agrees to pay the reasonable fees and expenses of the Purchaser
(including reasonable fees and expenses of its counsel) incurred in connection
with the transactions contemplated hereby.
2.4. Indemnification
---------------
(a) The Company shall indemnify and hold harmless, to the fullest extent
permitted by law, the Purchaser and any officer, director, general or limited
partner (and each director and officer thereof), employee, agent, stockholder or
affiliate of the Purchaser (an "indemnified party") against any losses, claims,
damages and liabilities, joint or several, and expenses (including, without
limitation, judgments and costs of settlement) (collectively, "Losses") arising
out of or resulting from litigation to which an indemnified party is a party and
arising from events which would constitute a breach or alleged breach of any
representation or warranty made by the Company in this Agreement or the other
Documents or any breach or alleged breach of any covenant or agreement by the
Company contained in this Agreement or the other Documents, and the Company
shall periodically reimburse any such indemnified party for any legal or other
costs and expenses (including costs of investigation) reasonably incurred by
such indemnified party in connection with the foregoing.
(b) Any Person entitled to indemnification under this Agreement shall
notify the indemnifying party promptly in writing if it receives notice of the
commencement of any action or proceeding, if a claim for indemnification in
respect thereof is to be made against an indemnifying party under this
Agreement, but the omission of such notice shall not relieve the indemnifying
party from any liability it may have to any indemnified party under this
Agreement, except to the extent that the indemnifying party is materially
prejudiced thereby, and shall not relieve the
<PAGE>
-4-
indemnifying party from any liability it may have to any indemnified party
otherwise than under this Section 2.4. In case any action or proceeding is
brought against an indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein, and, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, to the extent that it chooses, with
counsel reasonably satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party that it so chooses, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof; provided, however, that (i) if such indemnified party
-------- -------
who is a defendant in any action or proceeding that is also brought against such
indemnifying party shall reasonably have concluded that there may be one or more
legal defenses available to such indemnified party which are not available to
the indemnifying party; or (ii) if representation of both parties by the same
counsel is otherwise inappropriate under applicable standards of professional
conduct, then, in any such case, the indemnified party shall have the right to
assume or continue its own defense as set forth above (but with no more than one
firm of counsel for each indemnified party in each jurisdiction) and the
indemnifying party shall be liable for any reasonable fees and expenses
therefor. No indemnifying party shall be liable for any settlement effected
without its consent. No indemnifying party shall consent to any settlement or
the entry of any judgment that (i) provides for other than monetary damages
without the consent of the indemnified party or (ii) does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of the underlying
claim or litigation.
(c) If for any reason the foregoing indemnity is unavailable to, or is
insufficient to hold harmless, an indemnified party, then the indemnifying party
shall contribute to the Losses paid or payable by such indemnified party in such
proportion as is appropriate to reflect the relative fault of the indemnified
party and the indemnifying party as well as any other relevant equitable
considerations. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this paragraph (c) were to be determined
by pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the preceding sentences
of this paragraph (c). The amount paid or payable in respect of any Losses
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
Losses.
<PAGE>
-5-
(d) Any indemnity agreements contained herein shall be in addition to any
other rights to indemnification or contribution any indemnified party may have
pursuant to law or contract and shall remain operative and in full force and
effect regardless of any investigation made or omitted by or on behalf of any
indemnified party.
SECTION 3. CLOSING CONDITIONS
------------------
The obligations of the Purchaser at the Closing shall be subject to the
satisfaction of the following conditions:
3.1. Opinions of Counsel at Funding Date
-----------------------------------
The Purchaser shall have received a favorable opinion, dated the Closing
Date and addressed to the Purchaser, from Dickie, McCamey & Chilcote, P.C.,
satisfactory to the Purchaser in the form set forth in Exhibit 2.
---------
3.2. Representations and Warranties True
-----------------------------------
The representations and warranties of the Company contained in Section 4
shall be true and correct in all material respects at and as of the Closing
Date, after giving effect to the transactions contemplated by this Agreement and
the other Documents as if made on and as of such date.
3.3. Compliance with Agreements
--------------------------
The Company shall have performed and complied in all material respects with
all agreements, covenants and conditions contained herein and in each of the
Documents, and in all other documents contemplated hereby or thereby that are
required to be performed or complied with by the Company on or before the
Closing Date, except for such performance or compliance that has been expressly
waived by the parties thereto.
3.4. Consents and Permits
--------------------
The Company shall have received all consents, permits, and other
authorizations in connection with the transactions contemplated by this
Agreement and the other Documents and as are necessary to permit the Company to
consummate the transactions contemplated hereby and thereby to be consummated by
the Company on or before the Closing Date.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Purchaser as of the date of this
Agreement as follows:
<PAGE>
-6-
4.1. Organization, Standing, Qualification and Subsidiaries
------------------------------------------------------
(a) The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania.
(b) The Company has all requisite corporate power and authority to execute,
deliver and perform all of its obligations under this Agreement, the other
Documents, and to issue and deliver the Senior Preferred Stock to be issued by
it, and to carry out the other transactions contemplated hereby and thereby.
4.2. Capitalization
--------------
(a) The Certificate of Designation and the issuance of the Senior Preferred
Stock have been duly authorized by all necessary corporate action.
(b) The Company has reserved for issuance upon conversion of the Senior
Preferred Stock, a sufficient number of shares of Voting Common Stock for
issuance upon conversion of the Senior Preferred Stock. The shares of Voting
Common Stock so reserved have been duly authorized and, when issued upon the
conversion of the Senior Preferred Stock will be validly issued, fully paid and
non-assessable and will not have been issued in violation of any preemptive
rights.
4.3. Authorization of Agreement and Other Documents
----------------------------------------------
The Company has taken all corporate action necessary to authorize the
issuance and sale of the Senior Preferred Stock. The Company has taken all
corporate actions necessary to authorize it to enter into and perform its
obligations under each of this Agreement and all of the other Documents and to
consummate the transactions contemplated hereby and thereby.
This Agreement is a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except that (a) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and general principles of equity and (b) the enforceability of the
indemnification and contribution provisions may, under certain circumstances, be
limited by Federal or state securities laws or the policies underlying such
laws.
4.4. No Violation
------------
<PAGE>
-7-
Neither the execution, delivery or performance by the Company of this
Agreement, the other Documents, the issuance or delivery of the Senior Preferred
Stock nor the consummation of the transactions contemplated hereby or thereby
will conflict with, violate, constitute a breach of or a default (with the
passage of time or otherwise) under, result in the imposition of a Lien on any
properties of the Company or an acceleration of indebtedness pursuant to, or,
with respect to clause (ii) below, require the consent of any Person (other than
consents already obtained or waived) under (i) the Charter Documents of the
Company, (ii) any material bond, debenture, note or any other evidence of
indebtedness or any material indenture, mortgage, deed of trust, stockholder
agreement or any other agreement or instrument (collectively, the "Instruments")
to which the Company is a party or by which it is bound or to which any of its
property or assets is subject or (iii) any material law, judgment, decree,
order, regulation or rule (excluding state securities or "blue sky" laws) or
order of any court or governmental agency or authority applicable to the Company
or any of its properties or assets (collectively, "Applicable Laws"), other than
any such conflicts with, violations or breaches of, defaults under, and failures
to obtain consents under, Instruments that are not reasonably likely to have,
singly or in the aggregate, a Material Adverse Effect.
4.5. Governmental Consents
---------------------
No consent, approval or authorization of, or filing, registration or
qualification with (collectively, a "consent"), any governmental or regulatory
authority or body (and no consent of any other Person under any Applicable Laws)
is required in connection with or as a condition to the execution and delivery
by the Company of this Agreement or any of the other Documents, or the
consummation by the Company of transactions contemplated hereby to be
consummated on or before the Closing Date other than filings or consents
required to be made or obtained on or before the Closing Date, which shall have
been made or obtained on or before the Closing Date and except such filings or
consents as may be required under state securities laws.
4.6. Survival of Representations and Warranties
------------------------------------------
All representations and warranties of the Company in this Agreement shall
survive the execution and delivery of this Agreement, any investigation by the
Purchaser and the issuance of the Senior Preferred Stock.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER
-------------------------------------
<PAGE>
-8-
The Purchaser represents and warrants to the Company as of the date of this
Agreement as follows:
5.1. Authorization of Agreement and Other
Documents
------------------------------------
The Purchaser has taken all partnership actions necessary to authorize it
to enter into and perform its obligations under each of this Agreement and all
of the other Documents and to consummate the transactions contemplated hereby
and thereby.
This Agreement is a legal, valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, except that (a) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and general principles of equity and (b) the enforceability of the
indemnification and contribution provisions may, under certain circumstances, be
limited by Federal or state securities laws or the policies underlying such
laws.
5.2. No Violation
------------
Neither the execution, delivery or performance of this Agreement and the
other Documents nor the consummation of the transactions contemplated hereby or
thereby will conflict with, violate, constitute a breach of or a default (with
the passage of time or otherwise) under (i) the Charter Documents of the
Purchaser, (ii) any material Instrument to which the Purchaser is a party or by
which the Purchaser is bound or (iii) any material Applicable Law.
5.3. Governmental Consents
---------------------
No consent of any governmental or regulatory authority or body (and no
consent of any other Person under any Applicable Laws) is required in connection
with or as a condition to the execution and delivery by the Purchaser of this
Agreement or any of the other Documents, or the consummation by the Purchaser of
the transactions contemplated hereby.
SECTION 6. MISCELLANEOUS
-------------
6.1. Notices
-------
All notices and other communications provided for or permitted hereunder
shall be made by hand-delivery, next-day air courier or registered or certified
first-class mail, return receipt requested:
<PAGE>
-9-
(a) if to the Purchaser, at 535 Madison Avenue, New York, New York
10022, Attention: Christian L. Oberbeck, with a copy to Cahill Gordon &
Reindel, 80 Pine Street, New York, New York 10005, Attention: Bart
Friedman, Esq.; and
(b) if to the Company, 436 Seventh Avenue, Pittsburgh, PA 15214,
Attention: Robert K. Wagner, with a copy to Dickie, McCamey & Chilcote,
P.C., Two PPG Place, Suite 400, Pittsburgh, PA 15222, Attention: Clayton
A. Sweeney, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one Business Day after
being deposited with a next-day air courier; and five Business Days after being
deposited in the mail, registered or certified, return receipt requested.
6.2. Successors and Assigns
----------------------
This Agreement shall inure to the benefit of and be binding upon the
successors and, if assigned in accordance with the terms hereof, the assigns of
each of the parties and, to the extent set forth in Section 2.4, the indemnified
parties and their respective heirs, personal representatives, successors and
assigns and no other persons shall acquire or have any right under or by virtue
of this Agreement.
6.3. Amendment and Waiver
--------------------
This Agreement may be amended, modified or supplemented, and waivers
or consents to departures from the provisions hereof may be given, provided that
the same are in writing and signed by the Purchaser and the Company.
6.4. Counterparts
------------
This Agreement may be executed in counterparts and by the parties
hereto, each of which when so executed shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
6.5. Headings
--------
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
6.6. Governing Law
-------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
<PAGE>
-10-
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
6.7. Entire Agreement
----------------
This Agreement, together with the other Documents are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement, together with the other
Documents, supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
6.8. Severability
------------
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the 1st day of December, 1997.
Very truly yours,
KOPPERS INDUSTRIES, INC.
By: /s/ Robert K. Wagner
----------------------------------
Name: Robert K. Wagner
Title: Chief Executive Officer
<PAGE>
-11-
SARATOGA PARTNERS III, L.P.
By: DR Associates IV, L.P.,
Its General Partner
By: Dillon, Read Inc.,
Its General Partner
By: /s/ Christian L. Oberbeck
---------------------------------
Name: Christian L. Oberbeck
Title: Director
<PAGE>
EXHIBIT 1
---------
CERTIFICATE OF DESIGNATION
OF
SENIOR CONVERTIBLE PREFERRED STOCK
OF
KOPPERS INDUSTRIES, INC.
See Exhibit 4.1 to the Koppers Industries, Inc. Stock Redemption and Purchase
Plan, Form S-8 Registration Statement
<PAGE>
EXHIBIT 2
---------
1. The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the Commonwealth of
Pennsylvania, with full corporate power and authority to enter into and to
consummate the transactions contemplated by the Purchase Agreement, the
Stockholders Agreement and the Certificate of Designation and to issue and
deliver the Senior Preferred Stock.
2. Each of the Purchase Agreement and the Stockholders Agreement has
been duly authorized, executed and delivered by, and each is a valid and binding
agreement of, the Company, enforceable in accordance with their respective terms
except as (A) the enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers) or similar laws affecting creditors' rights generally or other
judicial or regulatory precedent and (B) the availability of equitable remedies
may be limited by equitable principles of general applicability.
3. The Senior Preferred Stock has been duly authorized and is validly
issued, fully paid and non-assessable and free of any preemptive rights (other
than those arising under the Stockholders Agreement).
4. The Certificate of Designation with respect to the Senior
Preferred Stock has been duly authorized and executed by the Company and has
been filed with the Commonwealth of Pennsylvania.
5. The shares of Voting Common Stock issuable upon conversion of the
Senior Preferred Stock have been duly authorized and reserved and, when so
issued and delivered in accordance with the terms set forth in the Certificate
of Designation, will be validly issued, fully paid and non-assessable and free
of any preemptive or similar statutory rights.
<PAGE>
EXHIBIT D
FORM OF EMPLOYMENT CONTRACT
---------------------------
EMPLOYMENT CONTRACT
-------------------
Dear
Koppers Industries, Inc. (the "Company") considers it essential to the
best interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that the possibility of a change in control of the
Company exists and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the Company, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement (the "Agreement") in the event your employment with the Company
is terminated under the circumstances described below subsequent to a "change in
control of the Company" (as defined in Section 2).
1. Term of Agreement. The Agreement shall continue in effect through September
-----------------
30, 1999; provided, however, that commencing on October 1, 1999, and each
October 1 thereafter, the term of this Agreement shall automatically be extended
for one additional year unless, not later than March 31, the Company shall have
given notice that it does not wish to extend this Agreement; and provided,
further, that if a Change in Control of the Company, as defined in Section 2,
shall have occurred during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period of not less than twenty-four
(24) months beyond the month in which such change in control occurred. In no
event, however, shall the term of this Agreement extend beyond the end of the
calendar month in which your 65th birthday occurs.
2. Change in Control. Accept as provided in Section 3(i) below, no benefits
------------------
shall be payable hereunder unless there shall have been a Change in Control of
the Company, as set forth below. For purposes of this Agreement, a "Change in
Control of the Company" shall be deemed to have occurred upon the first to occur
of the following events:
<PAGE>
Page 2
(i) any person, or more than one person acting as a group,(other than
Saratoga or the Management Investors) acquires ownership of stock of the Company
that, together with the stock held by such person or group, represents a
majority of the total voting power of the stock of the Company ("Change in
Ownership"); or,
(ii) during any twelve month period, a majority of the Company's Board
is replaced by new directors whose appointment or election is not endorsed by a
majority of the Company's Board, Saratoga, or the Representatives of the
Management Investors prior to the date of the new directors' appointment or
election ("Change in Effective Control"); or,
(iii) during any twelve month period, any one person, or more than one
person acting as a group, acquires assets from the Company having a total fair
market value equal to or more than one-third (1/3) of the total fair market
value of all of the assets of the Company immediately prior to such
acquisition(s) and you are employed in the business which relates to the assest
transferred ("Change in Ownership of Substantial Assets"); notwithstanding the
preceding, a Change in Ownership of Substantial Assets does not occur when
assets are transferred to (a) a shareholder in exchange for stock; (b) an entity
that is at least fifty (50%) percent owned, directly or indirectly, by the
Company; (c) a person, or more than one person acting as a group, that owns at
least fifty (50%) percent of the total value or voting power of the stock of the
Company; or, (d) an entity that is at least fifty (50%) percent owned by a
person, or more than one person acting as a group, that owns at least fifty
(50%) percent of the total value or voting power of the stock of the Company;
or,
(iv) the Company's termination of its business and liquidation of its
assets; or,
(v) the reorganization, merger or consolidation of the Company into or
with another person or entity, by which reorganization, merger or consolidation
the shareholders of the Company receive less than fifty percent (50%) of the
outstanding voting shares of the new or continuing corporation.
For purposes of the preceding Change in Ownership, Change in Effective
Control and Change in Ownership of Substantial Assets, persons are considered to
be acting as a group when such persons are owners of an entity that enters into
a merger, consolidation, purchase or acquisition of stock, or a similar business
transaction with the Company. Persons are not considered to be acting as a
group merely because such persons happen to purchase or own stock of the Company
at the same time or as a result of the same public offering.
<PAGE>
Page 3
3. Termination Following Change in Control.
---------------------------------------
(i) General. If any of the events, described in Section 2
--------
constituting a Change in Control of the Company shall have occurred, you shall
be entitled to the benefits provided in Section 4 upon the termination of your
employment by the Company for any reason during a two-year period following such
change in control or the extended term of this Agreement, whichever is later,
unless such termination is (a) because of your death or Disability, or (b) by
the Company for Cause.
(ii) Disability. If, as a result of your incapacity due to physical or
-----------
mental illness, you shall have been absent from the full-time performance of
your duties with the Company for six (6) consecutive months, and within thirty
(30) days after written notice of termination is given you shall not have
returned to the full-time performance of your duties, your employment may be
terminated for "Disability."
(iii) Cause. Termination by the Company of your employment for "Cause"
------
shall mean termination (a) upon the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness) or any such
actual or anticipated failure after the issuance of a Notice of Termination (as
defined in Subsection (iv) hereof), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, and you are given a reasonable opportunity
to remedy such identified failure to perform, or (b) the willful engaging by you
in conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this Subsection, no act, or failure to
act, on your part shall be deemed "willful" unless done, or omitted to be done,
by you not in good faith and without reasonable belief that your action or
omission was in the best interest of the Company. Notwithstanding the foregoing,
you shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board you were guilty of conduct set forth above in this Subsection and
specifying the particulars thereof in detail.
(iv) Notice of Termination. Any purported termination of your
----------------------
employment by the Company shall be communicated by written Notice of
Termination to you in accordance with Section 6. "Notice of Termination" shall
mean a notice that shall indicate the specific termination provision in this
Agreement relied upon and shall set
<PAGE>
Page 4
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so indicated.
(v) Date of Termination, Etc. "Date of Termination" shall mean (a) if
-------------------------
your employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30)-day period), and (b) if your
employment is terminated pursuant to Subsection (iii) hereof or for any other
reason (other than Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause shall not be less than thirty
(30) days from the date such Notice of Termination is given); provided, however,
that if within fifteen (15) days after any Notice of Termination is given, or,
if later, prior to the Date of Termination, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, then the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties, or by
a binding arbitration award; and provided, further, that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation, benefit and
insurance plans in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Subsection. Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement, and shall not be offset against or reduce any
other amounts due under this Agreement and shall not be reduced by any
compensation earned by you as the result of employment by another employer.
4. Compensation Upon Termination or During Disability.
---------------------------------------------------
Following a Change in Control of the Company, you shall be entitled to the
following benefits during a period of Disability, or upon termination of your
employment, as the case may be, provided that such period or termination occurs
either within two (2) years after the occurrence of the events described in
Section 2 constituting a Change in Control of the Company shall have occurred,
or during the extended term of this Agreement, whichever is later.
(i) Disability - During any period that you fail to perform your full-
----------
time duties with the Company as a result of incapacity due to physical or mental
illness, you shall continue to receive your base salary at the rate in effect at
the commencement of any such period, until this Agreement is terminated pursuant
to Section 3(ii) hereof. Thereafter, or in the event your employment shall be
<PAGE>
Page 5
terminated by reason of your death, your benefits shall be determined under the
Company's retirement, insurance, disability and other compensation programs then
in effect in accordance with the terms of such programs.
(ii) For Cause - If your employment shall be terminated by the Company
---------
for Cause, the Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
plus all other amounts to which you are entitled under any compensation plan of
the Company at the time such payments are due, and the Company shall have no
further obligations to you under this Agreement.
(iii) Other Termination - If your employment by the Company shall be
-----------------
terminated by the Company other than for Cause or Disability, then you shall be
entitled to the benefits provided below:
(a) Payment of Compensation - no later than the fifth day following
-----------------------
the Date of Termination, the Company shall pay to you your full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled under any
incentive, bonus or other compensation plan of the Company, at the time such
payments are due;
(b) Severance Payments - in lieu of any further salary payments to you
------------------
for periods subsequent to the Date of Termination, the Company shall pay as
severance pay to you, at the time specified in Subsection (iv) hereof, a lump
sum severance payment (together with the payments provided in paragraph (c),
below, the "Severance Payments") equal to two, or if less, the number of years,
including fractional years, from the Date of Termination until you reach age 65
times the sum of (1) your annual salary rate as in effect as of the Date of
Termination or immediately prior to the change in control of the Company,
whichever is greater, and (2) one-half of the sum of the amounts awarded to you
under the applicable incentive plan and bonus plans in respect of each of the
two calendar years preceding that in which occurs the Date of Termination or
that in which occurs the change in control, whichever is greater;
(c) Payment of Bonuses and Incentive Compensation - in lieu of any
---------------------------------------------
payments under the Executive Incentive Plan or other bonus plan in effect for
the year in which your Date of Termination occurs, the Company shall pay you, at
the time specified in Subsection (iv) hereof, a pro rata portion of all
contingent awards granted under such plans for all uncompleted periods, assuming
for this purpose that the amount of each award that would have been paid upon
completion of such period would at least equal the average of the payments
from the Executive Incentive Plan for the previous two (2) years, and basing
such pro rata portion upon the
<PAGE>
Page 6
portion of the award period that has elapsed as of the Date of Termination;
(d) Retirement Benefits - in addition to the retirement benefits to
-------------------
which you are entitled under the Retirement Plan of Koppers Industries, Inc. and
Subsidiaries for Salaried Employees (the "Qualified Plan") and the Company's
"excess benefit plan" (the "Supplemental Plan") or any successor plans thereto,
lump sum payment equal to the excess of (1) over (2), where (1) equals the sum
of (A) the aggregate retirement pension to which you would have been entitled
under the terms of the Qualified Plan (without regard to any amendment to the
Qualified Plan made subsequent to the Change in Control of the Company, which
amendment adversely affects in any manner the computation of retirement benefits
under such plan), determined as if you had accumulated thereunder two (2)
additional years of Credited Service or such lesser number of years of Credited
Service, including fractional years, to your 65th birthday (after any
Termination pursuant to Section 3) at your rate of Annual Salary in effect on
the Date of Termination, and (B) the retirement pension to which you would have
been entitled under the terms of the Supplemental Plan, determined as if you had
accumulated thereunder two (2) additional Years of Service or such lesser number
of Years of Service, including fractional years, to your 65th birthday (after
any Termination pursuant to Section 3) at your rate of Annual Salary in effect
on the Date of Termination; and where (2) equals the sum of (A) the aggregate
retirement pension to which you are entitled pursuant to the provisions of the
Qualified Plan, and (B) the retirement pension to which you are entitled
pursuant to the provisions of the Supplemental Plan. The supplemental pension
benefit determined under the paragraph (d) shall be payable to the Company in a
lump sum payment using the discount specified in the Qualified Plan. Benefits
hereunder which commence prior to age 60 with 25 years of service, or age 55
with 10 years of service, shall be actuarially reduced to reflect early
commencement in accordance with the terms of any such Plan or Plans. All
defined terms used in this paragraph (d) shall have the same meaning as in the
Qualified Plan, unless otherwise defined herein or otherwise required by the
context;
(e) Legal Fees and Expenses - the Company shall pay to you all
-----------------------
reasonable legal fees and expenses incurred by you as a result of such
termination (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement), unless the decision-maker in
any proceeding, contest or dispute arising hereunder makes a formal finding
that you did not have a reasonable basis for instituting contest or dispute such
proceeding; and
(f) Continuation of Benefits - for a twenty-four (24) month period or
------------------------
for the term of this Agreement, whichever is later, or such lesser period to
your 65th birthday after such termination,
<PAGE>
Page 7
the Company shall arrange to provide you with life, disability, accident and
group health insurance benefits substantially similar to those which you were
receiving immediately prior to the Notice of Termination. Benefits otherwise
receivable by you pursuant to this paragraph (f) shall be reduced to the extent
comparable benefits are actually received by you during the twenty-four (24)
month period following your termination, and any such benefits actually received
by you shall be reported to the Company.
(iv) Except as provided in Subsection (vi) hereof, the payments
provided for in Subsections (iii) (b) and (c), above, shall be made not later
than the fifth day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before such day,
the Company shall pay to you on such day an estimate, as determined in good
faith by the Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate provided in
section 1274(b)(2)(B) of the Internal Revenue Code as amended (the "Code")) as
soon as the amount thereof can be determined but in no event later than the
thirtieth day after the Date of Termination. in the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to you, payable on the fifth
day after demand by the Company (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code).
(v) Except as provided in Subsection (iii)(f) hereof, you shall not be
required to mitigate the amount of any payment provided for in this Section 4 by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Company, or
otherwise.
(vi) Notwithstanding the provisions of this Section 4,in no event
shall the aggregate present value of "parachute payments" as defined in Section
280G of the Code, exceed three times your "base amount", as defined in Section
280G(b)(3) of the Code. If the preceding limitation is exceeded, then your
payments and benefits in this Section 4 shall be reduced to the extent necessary
to cause the total payments and "parachute payments" to comply with the
limitation.
5. Successors; Binding Agreement.(i) The Company will require any successor
-----------------------------
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such
<PAGE>
Page 8
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle you to compensation from the
Company in the same amount and on the same terms to which you would be entitled
hereunder if you elect to terminate your employment following a Change in
Control of the Company, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed the Date
of Termination. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to our devisee, legatee or other designee or,
if there is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
-------
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived or
--------------
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity
interpretation, construction and performance of this Agreement shall be governed
by the laws of the Commonwealth of Pennsylvania without regard to its conflicts
of law principles. All references to sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to such sections. Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or
<PAGE>
Page 9
local law. The obligations of the Company under Section 4 shall survive the
expiration of the term of this Agreement.
8. Validity. The invalidity or unenforceability of any provision of this
---------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts, each
-------------
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Arbitration.
-----------
10.1. Dispute Resolution. If a dispute or controversy arises under
------------------
or in connection with this Agreement, the parties agree first to try in good
faith to settle the dispute or controversy. Any party may initiate the
negotiation process by written notice to the others, identifying the dispute or
controversy and the desire for negotiation. If the parties have not resolved
the dispute or controversy by direct negotiations within thirty (30) days of
such notice, any party may initiate arbitration as herein provided. All
disputes or controversies arising under or in connection with this Agreement
which are not resolved by negotiation shall be decided by arbitration before a
single arbitrator selected by agreement of the parties, and judgment upon the
award or decision of the arbitrator may be entered and enforced in any court of
competent jurisdiction. It is specifically intended by the parties that any
equitable relief granted by an arbitrator may be enforced in any court of
competent jurisdiction. The forum of such arbitration shall be in Pittsburgh,
Pennsylvania to the exclusion of all other jurisdictions. In the event that the
parties cannot agree upon the selection of an arbitrator, the parties agree that
the American Arbitration Association in Pittsburgh, Pennsylvania will select the
arbitrator.
10.2. Arbitration Procedures. The arbitrator shall decide the
----------------------
dispute or controversy in accordance with the following procedures:
(a) Within ten (10) days of the selection of an arbitrator, each party
shall submit to the arbitrator its written position (the "Initial Submission")
provided that neither memorandum of position shall exceed 10 pages, double
- --------
spaced plus such other documentary evidence as the parties deem necessary. In
connection with the Initial Submission, neither of the parties may submit (and
the arbitrator may not accept) any additional documentation (including
affidavits).
<PAGE>
Page 10
(b) Within ten (10) days of the delivery of the Initial Submission,
each party may submit to the arbitrator and the other party a reply memorandum
(the "Reply Submission"), provided that neither reply memorandum shall exceed 5
--------
pages, double spaced. In connection with the Reply Submission, neither of the
parties may submit (and the arbitrator may not accept) any additional
documentation (including affidavits).
(c) Within ten (10) days of the expiration of the period for the
delivery of the Reply Submission, the arbitrator, if he or she deems it
necessary or advisable, may call a hearing which may be by telephone conference
(the "Hearing"). At any Hearing, the arbitrator may ask representatives and
counsel for the parties' questions with respect to the issue to be decided and
positions of the parties. In connection with the Hearing, neither of the
parties may offer (and the arbitrator may not accept) any testimony or
additional documentation (including affidavits).
(d) Within seven (7) days after the later to occur, if such is to
occur, of (a) the Hearing or (b) the Reply Submission, the arbitrator shall
render his or her position.
(e) The arbitrator shall promptly notify the parties in writing of the
decision, together with the amount of any dispute resolution costs arising with
respect thereto (the "Notice of Decision"). The Notice of Decision need not
contain an explanation of the decision or grounds therefor.
(f) The decision of the arbitrator shall be final, binding and not
subject to appeal.
(g) All dispute resolution costs, which shall include any fee for the
arbitrator for services rendered shall be borne equally by the parties. Each
party is to pay its own counsel fees and expenses.
11. Entire Agreement. This Agreement sets forth the entire agreement of the
-----------------
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein is hereby terminated
and canceled.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
<PAGE>
Page 11
Sincerely,
KOPPERS INDUSTRIES, INC.
By___________________________
Name :
Title:
Agreed to this ______
day of ________ , 1997.
_____________________
Name:
<PAGE>
KOPPERS INDUSTRIES, INC.
STOCK REDEMPTION AND PURCHASE PLAN
December 17, 1997
This document constitutes part of a prospectus covering securities that have
been registered under the Securities Act of 1933.
Theses securities will be offered and sold only in jurisdiction in which a
registration statement is in effect or in which the offering is exempt
from registration.
<PAGE>
KOPPERS INDUSTRIES, INC.
STOCK REDEMPTION AND PURCHASE PLAN
ARTICLE ONE
Purpose
The Koppers Industries, Inc. Stock Redemption and Purchase Plan (the
"Plan") is designed to enable eligible Management Investors to redeem shares of
voting common stock ("Common Stock"), and to encourage and assist all Eligible
Employees, where permitted by applicable law, to acquire an equity interest in
the Company through the purchase of shares of Common Stock.
ARTICLE TWO
Definitions
The capitalized terms used herein shall have the meaning prescribed to them
in this Article Two:
"Board" shall mean the Board of Directors of the Company.
"Committee" shall mean the Company's Stock Redemption and Purchase Plan
Committee, which shall be appointed by the Company's Chief Executive Officer and
which shall be subject to the direction of the Chief Executive Officer and the
Board.
"Common Stock" shall have the meaning set forth in Article One.
"Company" shall mean Koppers Industries, Inc.
"Effective Date" shall mean the day on which the Company complies with all
applicable securities laws regarding the redemption or sale of Common Stock
pursuant to the Plan and provides Eligible Employees with Participation Forms.
"Eligible Employees" shall mean Management Investors, certain salaried
employees of the Company and certain employees of Koppers Australia Pty. Limited
and its affiliates.
"Fair Value" means the value as determined by the Board pursuant to the
Stockholders' Agreement.
"Management Investor" has the meaning set forth in the Stockholders'
Agreement.
"Management Representative" shall mean Clayton A. Sweeney.
"Participant" shall mean an Eligible Employee who has elected to
participate in the Plan in accordance with its terms.
Page 2 of 5
<PAGE>
"Plan" shall have the meaning set forth in Article One.
"Plan Period" shall mean the sixty-day period commencing on the Effective
Date.
"Stockholders' Agreement" shall have the meaning set forth in Section 6.2.
"Subscription Form" shall mean the form which an Eligible Employee completes and
delivers to the Committee to commence participation in the Plan.
ARTICLE THREE
Administration
3.1 Authority of the Committee. The Plan shall be administered by
--------------------------
the Committee. The Committee shall supervise the administration and enforcement
of the Plan and, subject to the provisions of the Plan, shall have all powers
necessary to discharge its duties hereunder, including, but not limited to, the
power to (i) employ and compensate agents of the Committee for the purposes of
administering the Plan, (ii) construe, interpret and enforce the provisions of
the Plan, (iii) determine all questions of eligibility under the Plan, and (iv)
establish, amend or waive rules and regulations for the administration of the
Plan. All of the determinations by the Committee under the Plan shall be in its
sole discretion and shall be binding upon all Eligible Employees (including
Participants) and any person claiming by, under or through such Eligible
Employees.
3.2 Committee Governance. The Board may from time to time increase
--------------------
the number of members of the Committee, remove and appoint members of the
Committee, and fill vacancies in the Committee however caused.
ARTICLE FOUR
Redemption of Common Stock
4.1 Election to Redeem. During the Plan Period, each Management
------------------
Investor who is not an elected officer or a Management Representative of the
Company may elect to sell to the Company up to 100% of the Common Stock owned by
such Management Investor at a price of $17.00 per share. During the Plan
Period, each Management Investor who is an elected officer of the Company or a
Management Representative may elect to sell to the Company up to 25% of the
Common Stock owned by such Management Investor or Management Representative at a
price of $17.00 per share. Any Management Investor may elect to redeem as a
Participant under the Plan by executing and delivering to the Committee a
Subscription Form indicating that the Management Investor desires to redeem
shares. Management Investors who purchase Common Stock pursuant to Article Five
hereof may not redeem shares pursuant to this Article Four. An election to
redeem will not preclude the exercise of any applicable stock options. However,
option shares obtained through the exercise of stock options on or after
November 13, 1997, may not be redeemed pursuant to this Article Four.
4.2 Payment for Redeemed Stock. Payment by the Company shall be made
--------------------------
within thirty (30) days of the close of the Plan Period or such earlier date as
determined by the Company.
Page 3 of 5
<PAGE>
4.3 Excess Redemptions. To the extent that total redemptions exceed
------------------
$15 million, $15 million of redemptions shall be made on a pro-rata basis during
the Plan Period, and all remaining redemptions may be made at the option of the
Board and subject to compliance with all financial covenants of the Company, on
a pro-rata basis in two equal annual installments on the first and second
anniversary dates of the Effective Date.
ARTICLE FIVE
Purchase of Common Stock
5.1. Election to Purchase. During the Plan Period, any Eligible
--------------------
Employee may elect to purchase a minimum of $1,000 of Common Stock at a price of
$14.00 per share; provided that such purchase is allowable under applicable law
and the Company's various agreements, and further provided that such Eligible
Employee did not elect to redeem Common Stock under Article Four. Any Eligible
Employee may elect to purchase Common Stock under the Plan by executing and
delivering to the Committee a Subscription Form indicating that the Eligible
Employee desires to purchase Common Stock.
5.2. Payment for Purchased Stock. Eligible Employees shall pay for
---------------------------
the Common Stock purchased under Section 5.1 by delivering a check payable to
Koppers Industries, Inc. within the Plan Period.
ARTICLE SIX
Restrictions and Conditions
6.1 Restrictions on Transfer. No rights to redeem or purchase Common
------------------------
Stock under the Plan may be assigned, transferred, pledged, or otherwise
alienated in any way.
6.2 Stockholders' Agreement. As a condition to participation in the
-----------------------
Plan, each Participant purchasing Common Stock under the Plan must agree to be
bound by the terms of the Stockholders' Agreement by and among Koppers
Industries, Inc., Saratoga Partners III, L.P., and the Management Investors
dated as of December __, 1997, and to the appointment of Robert K. Wagner and
Clayton A. Sweeney as the Participant's representatives under the Stockholders'
Agreement. Pursuant to the terms of the Stockholders' Agreement, the Company is
under no obligation to purchase the shares of any Participant for any reason,
other than pursuant to Section 7 (Sales of Management Investors' Voting Shares
on Termination of Employment) of the Stockholders' Agreement. PARTICIPANTS
SHOULD BE AWARE THAT THERE IS NO PUBLIC MARKET FOR THE SHARES AVAILABLE UNDER
THE PLAN. THERE CAN BE NO ASSURANCE THAT THE SHARES WILL EVER BECOME PUBLICLY
TRADED AS A RESULT OF A PUBLIC OFFERING, OR THAT, IF A PUBLIC OFFERING IS
CONSUMMATED, AN ACTIVE TRADING MARKET WILL DEVELOP OR WILL BE SUSTAINED
THEREAFTER.
6.3 Obligation to Sell Shares. Upon a Participant ceasing to be an
-------------------------
employee of the Company or any affiliates, the Participant or the
Participant's estate shall be required to sell any Common Stock to the Company
pursuant to Section 7 (Sales of Management Investors' Voting Shares on
Termination of Employment) of the Stockholders' Agreement.
Page 4 of 5
<PAGE>
ARTICLE SEVEN
Miscellaneous
7.1 Use of Funds. All funds received or held by the Company under
------------
this Plan may be used by the Company for any corporate purpose and the Company
shall not be obligated to segregate such funds.
7.2 Commencement Date. The Plan shall commence on the Effective
-----------------
Date.
7.3 Amendment of Plan. The Board shall have complete power and
-----------------
authority to amend the Plan.
7.4 No Employment Rights. The Plan does not, directly or indirectly,
--------------------
create any right for the benefit of any Eligible Employee or class of Eligible
Employees to redeem or purchase any shares under the Plan, or create in any
Eligible Employee or class of Eligible Employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise modify,
an Eligible Employee's employment at any time.
7.5 Effect of Plan. The provisions of the Plan shall, in accordance
--------------
with its terms, be binding upon, and inure to the benefit of, each Eligible
Employee participating in the Plan and such Eligible Employee's estate, the
executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such Eligible
Employee.
7.6 Governing Law. The laws of the United States of America and the
-------------
Commonwealth of Pennsylvania will govern all matters relating to this Plan.
Page 5 of 5
<PAGE>
Exhibit 5.1
LAW OFFICES OF
DICKIE, McCAMEY & CHILCOTE
A Professional Corporation
Two PPG Place, Suite 400
Pittsburgh, Pennsylvania
15222-5402
Tel. 412/281-7272 Fax 412/392-5367
December 15, 1997
Koppers Industries, Inc.
436 Seventh Avenue
Pittsburgh, PA 15219
Gentlemen:
We have acted as counsel for Koppers Industries, Inc., a Pennsylvania
corporation (the "Company"), with respect to the preparation of a Prospectus and
related Registration Statement on Form S-8 (the "Registration Statement"), to be
filed by the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration of an aggregate of 175,000 shares of the Company's Common Stock
(the "Common Stock") pursuant to the Company's Stock Redemption and Purchase
Plan (the "Plan").
In connection with our representation, we have examined: (a) the
Registration Statement; (b) the Articles of Incorporation and By-laws of the
Company, as amended to date; (c) the Plan; and (d) such other minutes of
corporate proceedings, documents and records as we have deemed necessary to
enable us to render this opinion.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation validly existing under the laws of the
Commonwealth of Pennsylvania.
2. The shares of Common Stock offered by the Company as contemplated in
the Registration Statement are validly issued, fully paid and nonassessable.
We are admitted to the Bar of the Commonwealth of Pennsylvania and we
express no opinion herein as to the laws of any jurisdiction other than the laws
of the Commonwealth of Pennsylvania and the federal laws of the United States of
America.
We assume no obligation to supplement this opinion letter if any applicable
laws change after the date hereof or if we become aware of any facts that might
change the opinions expressed herein after the date hereof. This opinion letter
is rendered solely for your benefit in connection with the transactions
described above. This opinion letter may not be used or relied upon by any other
person and may not be disclosed, quoted, filed with a
<PAGE>
Koppers Industries, Inc.
December 15, 1997
Page 2
governmental agency or otherwise referred to without our prior written consent.
The opinions expressed in this letter are limited to the matters set forth in
this letter, and no other opinion or opinions should be inferred beyond the
matters expressly stated.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
DICKIE, McCAMEY & CHILCOTE, P.C.
/s/ Dickie, McCamey & Chilcote, P.C.
-------------------------------------
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITOR
We consent to the incorporation by reference of our report dated August
25, 1997 with respect to the Consolidated Financial Statements of Koppers
Australia Pty. Limited included in the 1996 Koppers Industries, Inc. Annual
Report (Form 10-K) filed with the Securities and Exchange Commission.
/s/ Ernst & Young
Sydney, Australia
December 22, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITOR
We consent to the incorporation by reference of our reports dated
February 18, 1997 with respect to the Consolidated Financial Statements and
Schedule of Koppers Industries, Inc. included in its 1996 Annual Report (Form
10-K) filed with the Securities and Exchange Commission.
/s/ Ernst & Young, LLP
Pittsburgh, Pennsylvania
December 22, 1997
