UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
BLOUNT INTERNATIONAL, INC.
(Name of Issuer)
CLASS A COMMON STOCK (par value $.01 per share)
CLASS B COMMON STOCK (par value $.01 per share)
(Title of Class of Securities)
CUSIP NO. 095177 10 1 (Class A Common Stock)
CUSIP NO. 095177 20 0 (Class B Common Stock)
(CUSIP Number)
Teresa P. Rachal, 4520 Executive Park Drive, Montgomery, Alabama 36116
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
October 31, 1995 and November 3, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3)or(4), check the following box. ___
Check the following box if a fee is being paid with this statement _X_ . (A
fee is not required only if the filing person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).<PAGE>
CUSIP No. 095177 10 1 13D
CUSIP No. 095177 20 0
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Winton M. Blount
Social Security No. ###-##-####
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) X
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) ___
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
7 SOLE VOTING POWER
1,468,855 (Class A Common Stock) (See Note 1)
4,969,008 (Class B Common Stock) (See Note 1)
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0 (See Note 1)
OWNED BY EACH
REPORTING
PERSON
WITH 9 SOLE DISPOSITIVE POWER
1,468,855 (Class A Common Stock) (See Note 1)
4,969,008 (Class B Common Stock) (See Note 1)
10 SHARED DISPOSITIVE POWER
0 (See Note 1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,468,855 (Class A Common Stock)
4,969,008 (Class B Common Stock)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* X
Excludes shares owned by Mr. Blount's spouse. See Item 5.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
11.2% (Class A Common Stock)
83.8% (Class B Common Stock)
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.<PAGE>
CUSIP No. 095177 10 1 13D
CUSIP No. 095177 20 0
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BHP, Inc.
Federal Employee Identification No. 63-1153631
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) X
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) ___
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
0 (See Note 1)
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICALLY 0 (See Note 1)
OWNED BY EACH
REPORTING
PERSON
WITH 9 SOLE DISPOSITIVE POWER
0 (See Note 1)
10 SHARED DISPOSITIVE POWER
0 (See Note 1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,468,855 (Class A Common Stock)
4,969,008 (Class B Common Stock)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* X
Excludes shares owned by Mr. Blount's spouse. See Item 5.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
11.2% (Class A Common Stock)
83.8% (Class B Common Stock)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.<PAGE>
CUSIP No. 095177 10 0 13D
CUSIP No. 095177 20 0
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Blount Holding Company, L.P.
Federal Employee Identification No. 63-1156445
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) X
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
0 (See Note 1)
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0 (See Note 1)
OWNED BY EACH
REPORTING
PERSON
WITH 9 SOLE DISPOSITIVE POWER
0 (See Note 1)
10 SHARED DISPOSITIVE POWER
0 (See Note 1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,468,855 (Class A Common Stock)
4,969,008 (Class B Common Stock)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* X
Excludes shares owned by Mr. Blount's spouse. See Item 5.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
11.2% (Class A Common Stock)
83.8% (Class B Common Stock)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.<PAGE>
Note 1 to Schedule 13D
(1) 1,446,072 shares of the Class A Common Stock and 4,204,848
shares of the Class B Common Stock of Blount International,
Inc., a Delaware corporation (the "Issuer"), are directly owned
by The Blount Holding Company, L.P., a Delaware limited
partnership (the "Blount Partnership"). Winton M. Blount is the
sole stockholder, director and executive officer of BHP, Inc.,
a Delaware corporation and the sole general partner of the
Blount Partnership ("BHP"). As the sole general partner of the
Blount Partnership, BHP has the sole voting and dispositive
power with respect to the shares of the Class A and Class B
Common Stock of the Issuer owned directly by the Blount
Partnership, subject only to certain rights of the limited
partners of the Blount Partnership to receive certain of such
shares upon the occurrence of certain events. Due to the
circumstances set forth above, however, Winton M. Blount
controls BHP and effectively has sole voting and dispositive
power with respect to the shares of the Class A Common Stock or
Class B Common Stock of the Issuer owned directly by the Blount
Partnership.<PAGE>
Item 1. Security and Issuer.
This statement relates to the shares of the Class A Common
Stock, par value $.01 per share, of Blount International,
Inc., a Delaware corporation (the "Issuer"), and to the
shares of the Class B Common Stock, par value $.01 per
share, of the Issuer. The address of the principal
executive office of the Issuer is 4520 Executive Park Drive,
Montgomery, Alabama 36116.
Item 2. Identity and Background.
Winton M. Blount
(a) The name of the person filing this statement is Winton
M. Blount, who is (i) Chairman of the Board and a
director of the Issuer; and (ii) the sole stockholder,
executive officer and director of BHP, Inc., a
Delaware corporation ("BHP"). BHP is the sole general
partner of The Blount Holding Company, L.P., a
Delaware limited partnership (the "Blount
Partnership").
(b) Mr. Blount's business address is 4520 Executive Park
Drive, Montgomery, Alabama 36116.
(c) Mr. Blount serves as Chairman of the Board and a
director of the Issuer and as a director and executive
officer of BHP. The Issuer is an international
industrial company with operations in three business
segments: Outdoor Products, Industrial and Power
Equipment, Sporting Equipment. BHP is the sole
general partner of the Blount Partnership, which in
turn directly owns shares of the Issuer. The address
for each of the Issuer, BHP and the Blount Partnership
is 4520 Executive Park Drive, Montgomery, Alabama
36116.
(d) Mr. Blount has not been convicted in any such criminal
proceeding.
(e) Mr. Blount has not been party to any such civil
proceeding.
(f) Mr. Blount is a citizen of the United States of
America.
BHP, Inc.
BHP, Inc. is a corporation formed under the laws of the
State of Delaware. BHP is the sole general partner of the
Blount Partnership, which in turn directly owns the shares
of the Class A Common Stock and the shares of the Class B
Common Stock of the Issuer subject of this statement. The
address of the principal office of BHP is 4520 Executive
Park Drive, Montgomery, Alabama 36116. BHP has not been
convicted in a criminal proceeding and has not been a party
to a civil proceeding of a judicial or administrative body
of competent jurisdiction which resulted in BHP being
subject to a judgment, decree or final order enjoining
future violations, or prohibiting or mandating activities
subject to, Federal or State securities laws or a finding
of a violation in respect to such laws. As stated
previously, the sole stockholder, director and executive
officer of BHP is Winton M. Blount. Please see the
information disclosed regarding Mr. Blount above with
respect to the information required to be disclosed about
each executive officer, director and controlling person of
BHP.
The Blount Holding Company, L.P.
The Blount Holding Company, L.P. is a limited partnership
formed under the laws of the State of Delaware. The
principal business of the Blount Partnership is to directly
own the shares of the Class A Common Stock and the Class
B Common Stock of the Issuer subject to this statement.
The address of the principal offices of the Blount
Partnership is 4520 Executive Park Drive, Montgomery,
Alabama 36116. The Blount Partnership has not been
convicted in a criminal proceeding and has not been a party
to a civil proceeding of a judicial or administrative body
of competent jurisdiction which resulted in the Blount
Partnership being subject to a judgment, decree or a final
order enjoining future violations of, or prohibiting or
mandating activities, subject to Federal or State securities
laws or finding a violation in respect to such laws. As
stated previously, Winton M. Blount is the sole stockholder,
director and executive officer of BHP, the sole general
partner of the Blount Partnership. Please see the
information disclosed regarding Mr. Blount and BHP above
with respect to the information required to be discussed
about each general partner of the Blount Partnership.
Item 3. Source and Amount of Funds or Other Consideration.
The securities of Issuer subject to this statement were
acquired as a result of the reorganization of Blount, Inc.,
a Delaware corporation ("Blount"). Such reorganization was
effected pursuant to a merger of Blount with and into a
wholly-owned subsidiary of the Issuer at a time when the
Blount Partnership was the sole stockholder of the Issuer
(the "Merger"). Prior to the Merger, the Class A Common
Stock and Class B Common Stock of Blount was publicly traded
on the American Stock Exchange. Pursuant to the Merger,
each outstanding share of the Class A Common Stock of Blount
(except those shares owned by the Issuer) was converted into
1.5 shares of the Class A Common Stock of the Issuer, each
outstanding share of the Class B Common Stock of Blount
(except those owned by the Issuer) was converted into 1.5
shares of the Class B Common Stock of the Issuer, and the
shares of the Class A and Class B Common Stock of the Issuer
were listed on the New York Stock Exchange. The Issuer is
a successor registrant of Blount.
Item 4. Purpose of Transaction.
Winton M. Blount is the co-founder and Chairman of the Board
of Directors and a director of the Issuer and in such
capacity participates in the decisions made by the Board
of Directors of the Issuer in the ordinary course of the
business of the Issuer. Except as may arise in such
capacity, none of the reporting persons has any present
plans or proposals (a) acquire additional securities of the
Issuer or to dispose of securities of the Issuer; (b) effect
an extraordinary corporate transaction; (c) to sell or
transfer a material amount of the assets of the Issuer; (d)
change the present Board of Directors of the Issuer; (e)
make any material change to the present capitalization or
dividend policy of the Issuer; (f) make any material change
in the Issuer's business or corporate structure; (g) change
the Issuer's charter, by-laws or instruments corresponding
thereto or any actions that may impede the acquisition of
control of the Issuer by any person; (h) cause a class of
securities of the Issuer to be delisted from a national
securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered
national securities association; (i) cause a class of equity
securities of the Issuer to become eligible for termination
of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended; or (j) take
any action similar to those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) The Blount Holding Company, L.P. directly owns
1,446,072 shares or 11.0% of the outstanding Class A
Common Stock of the Issuer, and directly owns
4,204,848 shares or 71% of the outstanding Class B
Common Stock of the Issuer. BHP, Inc., the sole
general partner of the Blount Partnership, does not
directly own any securities of the Issuer subject to
this statement. Winton M. Blount, the sole
stockholder, director and executive officer of BHP,
and the Chairman of the Board of the Issuer, directly
owns 19,834 shares or less than 1% of the outstanding
shares of Class A Common Stock of the Issuer, and
directly owns 764,211 shares or 12.9% of the
outstanding shares of the Class B Common Stock of the
Issuer. In addition, Winton M. Blount may be deemed
to be the beneficial owner of 2,949 shares of the
outstanding Class A Common Stock of the Issuer and
2,949 shares of the outstanding Class B Common Stock
of the Issuer, held in trust in each instance for the
benefit of his sister and as to which Mr. Blount has
voting and dispositive power as a trustee. Mr. Blount
may also be deemed to be the beneficial owner of 1,359
shares of the outstanding Class B Common Stock of the
Issuer owned by his spouse. Mr. Blount disclaims
beneficial ownership of the securities of the Issuer
held in trust for the benefit of his sister and those
owned by his spouse. Because Winton M. Blount is the
sole stockholder, director and executive officer of
BHP, which in turn is the sole general partner of the
Blount Partnership, Mr. Blount may also be deemed to
beneficially own all of the securities of the Issuer
owned directly by the Blount Partnership.
(b) Winton M. Blount, as the sole stockholder, director
and executive officer of BHP, the sole general partner
of the Blount Partnership, has the effective sole
voting and dispositive power for the securities of the
Issuer directly owned by the Blount Partnership. As
the trustee of a trust to benefit his sister, Winton
M. Blount also has sole voting and dispositive power
over the 2,949 shares of the Class A Common Stock and
the 2,949 shares of the Class B Common Stock of the
Issuer owned by such trust. In addition, Winton M.
Blount has sole voting and dispositive power with
respect to the securities of the Issuer that he owns
directly and that were disclosed in subparagraph (a)
of this Item 5.
(c) Except for the transaction described under Item 3
above, there have been no transactions in the
securities of the Issuer reported on that were
effected during the past 60 (sixty) days.
(d) Certain of the shares owned by the persons filing this
statement or by other persons named in item 2 are
pledged to various creditors to secure financial
obligations of such persons. In most cases, such
creditors have the right to receive dividends with
respect to the shares so pledged only in the event of
default in such obligations.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the
Issuer.
Agreement of Limited Partnership
Pursuant to the Agreement of Limited Partnership of The
Blount Holding Company, L.P. dated October 31, 1995, a copy
of which is attached hereto as Exhibit 2 and the terms of
which are incorporated herein by this reference (the
"Partnership Agreement"), the following terms, among others,
apply to the securities of the Issuer subject to this
statement. The following discussion is not complete,
however, and is qualified by reference in its entirety to
the form of the Partnership Agreement attached hereto as
Exhibit 2.
- In general, BHP, Inc., as the sole general partner of
the Blount Partnership, has the sole and exclusive
right to manage the business of the Blount
Partnership, including, without limitation, the sole
right, subject to certain limitations set forth in the
Partnership Agreement, to vote and dispose of the
securities of the Issuer subject to this statement.
- Upon the limited circumstances set forth in the
Partnership Agreement, but not prior to January 1,
2000, the sole general partner of the Blount
Partnership may be required to make special
distributions to the partners of the Blount
Partnership of securities of the Issuer subject to
this statement.
Stock Option Agreement
The Stock Option Agreement dated October 31, 1995, by and
among Winton M. Blount and each of the limited partners of
the Blount Partnership, a copy of which is attached hereto
as Exhibit 3 and the terms of which are incorporated herein
by reference (the "Option Agreement"), provides that no
sooner than three years following the death of Winton M.
Blount, each of such limited partners has the right, subject
to certain limitations and conditions set forth in the
Option Agreement, to purchase his or her pro rata share of
the outstanding common stock of BHP, Inc., the sole general
partner of the Blount Partnership. Winton M. Blount is the
sole stockholder, executive officer and director of BHP.
Pursuant to the Option Agreement and the Partnership
Agreement, the exercise of this option will terminate the
Blount Partnership. The foregoing discussion is not
complete and is qualified in its entirety by reference to
the form of the Option Agreement attached hereto as Exhibit
3.
Registration Rights and Stock Transfer Restriction Agreement
The Registration Rights and Stock Transfer Restriction
Agreement dated November 3, 1995, by and among Winton M.
Blount, his spouse, certain of the limited partners of the
Blount Partnership and the Issuer, a copy of which is
attached hereto as Exhibit 4 and the terms of which are
incorporated herein by this reference (the "Restriction
Agreement"), places certain restrictions on the ability of
the Blount Partnership, Mr. and Mrs. Blount, and such
limited partners of the Blount Partnership, to sell or
transfer the securities of the Issuer subject to this
statement. In certain instances described in the
Restriction Agreement, shares of the Class B Common Stock
of the Issuer subject to this statement must be converted
into shares of the Class A Common Stock of the Issuer before
a transfer or sale is permitted. The Restriction Agreement
also provides for certain limited registration rights in
favor of the Blount Partnership, Mr. and Mrs. Blount, and
such limited partners. The foregoing discussion is not
complete and is qualified in its entirety by reference to
the form of the Restriction Agreement attached hereto as
Exhibit 4.
Certain of the shares owned by the persons filing this
statement are pledged to various creditors to secure
financial obligations of such persons. In addition, Winton
M. Blount acts as guarantor of loans made to certain members
of his family. In connection with such guarantees, Mr.
Blount has pledged certain securities of the Issuer to the
lenders in such transactions, and certain securities of the
Issuer owned directly by the borrower in such transactions
have been pledged to Mr. Blount to secure his obligations.
Item 7. Material to be Filed as Exhibits.
Exhibit
No. Description of Exhibit
1 Written agreements of certain persons and
entities relating to the filing of this
statement.
2 Agreement of Limited Partnership of The Blount
Holding Company, L.P., dated November 3, 1995.
3 Stock Option Agreement, dated October 31, 1995.
4 Registration Rights and Stock Transfer
Restriction Agreement, dated November 3, 1995.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
DATE: November 13, 1995 /s/ Winton M. Blount
Winton M. Blount
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this statement
is true, complete and correct.
BHP, INC.
DATE: November 13, 1995 By /s/ Winton M. Blount
Winton M. Blount
Its President
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this statement
is true, complete and correct.
THE BLOUNT HOLDING COMPANY, L.P.
DATE: November 13, 1995 By BHP, Inc.,
Its General Partner
By /s/ Winton M. Blount
Winton M. Blount
Its President
<PAGE>
EXHIBIT 1
AGREEMENT
The undersigned hereby states and agrees that the attached
Schedule 13D, to be filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, is being
filed on behalf of the undersigned.
DATE: November 13, 1995 /s/ Winton M. Blount
Winton M. Blount
<PAGE>
EXHIBIT 1
AGREEMENT
The undersigned hereby states and agrees that the attached
Schedule 13D, to be filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, is being
filed on behalf of the undersigned.
BHP, INC.
DATE: November 13, 1995 By /s/ Winton M. Blount
Winton M. Blount
Its President<PAGE>
EXHIBIT 1
AGREEMENT
The undersigned hereby states and agrees that the attached
Schedule 13D, to be filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, is being
filed on behalf of the undersigned.
THE BLOUNT HOLDING COMPANY, L.P.
DATE: November 13, 1995 By BHP, Inc.,
Its General Partner
By /s/ Winton M. Blount
Winton M. Blount
Its President
<PAGE>
EXHIBIT 2
TO SCHEDULE 13D
AGREEMENT OF LIMITED PARTNERSHIP
OF
THE BLOUNT HOLDING COMPANY, L.P.
This Agreement of Limited Partnership is made and entered into
on the 31st day of October, 1995 by and among BHP, Inc., a Delaware
corporation, as the General Partner, and Winton M. Blount III,
Samuel R. Blount, Thomas A. Blount, Katherine Blount Miles, the
Katherine Blount Miles Trust and Joseph W. Blount as Class A
Limited Partners, and Winton M. Blount as the Class B Limited
Partner.
SECTION 1.
THE PARTNERSHIP
1.1 Formation of Partnership. The Partners hereby agree to form
the Partnership pursuant to the provisions of the Act on the terms
and conditions hereinafter set forth.
1.2 Name of Partnership. The name of the Partnership shall be
"The Blount Holding Company, L.P." and all business of the
Partnership shall be conducted in such name. The General Partner
may change the name of the Partnership upon ten (10) Business Days'
notice to the Limited Partners.
1.3 The Business of the Partnership. The Partnership has been
organized to own, buy, manage, trade, sell and hold such stocks,
bonds, securities, real property and other investments as the
General Partner may select from time to time on behalf of the
Partnership, and to conduct any other business which shall be legal
for a limited partnership to conduct under the laws of the State of
Delaware.
1.4 Principal Office. The principal office of the Partnership
shall be maintained at 4520 Executive Park Drive, Post Office Box
5060, Montgomery, Alabama 36103, or such other place as the General
Partner may from time to time designate, and the information
required to be made available to the Limited Partners by the
Partnership under S. 17-305 of the Act shall be maintained at such
office. The office required to be maintained in the state of
Delaware under S. 17-104(a)(1) of the Act shall be located at The
Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801. The General Partner may change
the principal office of the Partnership to any other place within
or without the State of Alabama upon ten (10) Business Days' notice
to the Limited Partners.
1.5 Term of the Partnership. The term of the Partnership shall
commence on the date that a certificate of limited partnership (the
"Certificate") is filed in the Office of the Secretary of State of
Delaware as provided in S. 17-201 of the Act, and shall continue
until the winding up and liquidation of the Partnership and its
business is completed following a Liquidating Event, as provided in
Section 13 hereof. Prior to the time that the Certificate is
filed, no Person shall represent to third parties the existence of
the Partnership or hold himself, herself or itself out as a
Partner.
1.6 Filings; Agent for Service of Process.
(a) The General Partner shall cause the Certificate to be
filed in the office of the Secretary of State of Delaware in
accordance with the Act. The General Partner shall take any and
all other actions reasonably necessary to perfect and maintain the
status of the Partnership as a foreign limited partnership under
the laws of Alabama. The General Partner shall cause amendments to
the Certificate to be filed whenever required by the Act. Articles
of Amendment to implement such amendments may be executed by any
General Partner or by any Person designated in the amendment as a
new General Partner.
(b) The General Partner shall execute and cause to be filed
original or amended certificates and shall take any and all other
actions as may be reasonably necessary to perfect and maintain the
status of the Partnership as a limited partnership or similar type
of entity under the laws of any other states or jurisdictions in
which the Partnership engages in business.
(c) The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801 is hereby designated as the agent for
service of process in Delaware in accordance with S. 17-104(a)(2) of
the Act. Winton M. Blount is hereby designated as the agent for
service of process in Alabama at the address of the principal
office of the Partnership. The General Partner may designate a
successor to the registered agents upon ten (10) Business Days'
notice to the Limited Partners.
(d) Upon the dissolution of the Partnership, the General
Partner (or in the event there is no General Partner, any Person
elected pursuant to the provisions of Section 13.2 hereof) shall
promptly execute and cause to be filed certificates of dissolution
in accordance with the Act and the laws of any other states or
jurisdictions in which the Partnership has filed certificates.
1.7 Title to Property. All real and personal property owned by
the Partnership shall be owned by the Partnership as an entity and
no Partner shall have any ownership interest in such property in
his, her or its individual name or right, and each Partner's
Interest in the Partnership shall be personal property for all
purposes. Except as otherwise provided in this Agreement, the
Partnership shall hold all of its real and personal property in the
name of the Partnership and not in the name of any Partner.
1.8 Payments of Individual Obligations. Except as otherwise
provided herein, the Partnership's credit and assets shall be used
solely for the benefit of the Partnership, and no asset of the
Partnership shall be transferred or encumbered for or in payment of
any individual obligations of any Partner; provided, however, that
no provision of this Agreement shall be construed to prevent the
Partnership from guaranteeing or from providing collateral or other
security for the indebtedness of a Partner, or from pledging,
hypothecating or otherwise applying its assets for the benefit of
any Partner, so long as the Partner benefitting from such
guarantee, pledge or other similar act shall pay reasonable
compensation to the Partnership as determined by the General
Partner in its sole discretion.
1.9 Independent Activities; Transactions with Affiliates.
(a) The General Partner and any of its Affiliates shall be
required to devote only such time to the affairs of the Partnership
as the General Partner determines in its sole discretion may be
necessary to manage and operate the Partnership, and the General
Partner shall be free to serve any other Person or enterprise in
any capacity that it may deem appropriate in its discretion.
(b) Insofar as permitted by applicable law, the General
Partner (acting on its own behalf) and each Limited Partner (acting
on his, her or its own behalf) may, notwithstanding this Agreement,
engage in whatever activities they choose, whether the same or
competitive with the Partnership or otherwise, without having or
incurring any obligation to offer any interest in such activities
to the Partnership or any Partner and neither this Agreement nor
any activity undertaken pursuant hereto shall prevent any Partner
from engaging in such activities, or require any Partner to permit
the Partnership or any Partner to participate in any such
activities, and as a material part of the consideration for the
execution of this Agreement by each Partner, each Partner hereby
waives, relinquishes and renounces any such right or claim of
participation.
(c) To the extent permitted by applicable law and except as
otherwise provided in this Agreement, the General Partner, when
acting on behalf of the Partnership, is hereby authorized to
purchase property from, sell property to, or otherwise deal with
any Partner, acting on his, her or its own behalf, or any Affiliate
of any Partner, provided that any such purchase, sale, or other
transaction shall be made on terms and conditions which are no less
favorable to the Partnership than if the sale, purchase, or other
transaction had been entered into with an independent third party.
1.10 Definitions. Capitalized words and phrases used in this
Agreement shall have the following meanings:
(a) "Act" means the Delaware Revised Uniform Limited
Partnership Act, Del. Code Ann. tit. 6, S. 17-101 through 17-1109,
as the same may be amended from time to time, or any corresponding
provisions of succeeding laws.
(b) "Adjusted Capital Account Deficit" means, with respect to
any Interest Holder, the deficit balance, if any, in such Interest
Holder's Capital Account as of the end of the relevant Fiscal Year,
after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which
such Interest Holder is obligated to restore pursuant to any
provision of this Agreement or is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations
S. 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
S. 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of S. 1.704-1(b)(2)(ii)(d) of
the Regulations and shall be interpreted consistently therewith.
(c) "Adjusted Capital Contributions" means, as of any day, an
Interest Holder's Capital Contributions adjusted as follows:
(i) Increased by the amount of any Partnership
liabilities which, in connection with distributions pursuant
to Sections 4.3(b) and 13.2(c) hereof, are assumed by such
Interest Holder or are secured by any Partnership Property
distributed to such Interest Holder;
(ii) Increased by any amounts actually paid by such
Interest Holder to any Partnership lender; and
(iii) Reduced by the amount of cash and the Gross
Asset Value of any Partnership Property distributed to such
Interest Holder pursuant to Sections 4.3(b), 4.4 and 13.2(c)
hereof and the amount of any liabilities of such Interest
Holder assumed by the Partnership or which are secured by any
property contributed by such Interest Holder to the
Partnership.
In the event any Interest Holder transfers all or any portion of
his, her or its Interest in accordance with the terms of this
Agreement, the transferee of such Interest shall succeed to the
Adjusted Capital Contribution of the transferor to the extent it
relates to the transferred Interest.
(d) "Affiliate" means, with respect to any Person, (i) any
Person directly or indirectly controlling, controlled by, or under
common control with such Person, (ii) any Person owning or
controlling ten percent (10%) or more of the outstanding voting
interest of such Person, (iii) any officer, director, or general
partner of such Person, or (iv) any Person who is an officer,
director, general partner, trustee, or holder of ten percent (10%)
or more of the voting interests of any Person described in clauses
(i) through (iii) of this sentence. For purposes of this
definition, the terms "controls," "is controlled by," or "is under
common control with" shall mean the possession, direct or indirect,
of the power to direct or cause the direction of the management and
policies of a person or entity, whether through the ownership of
voting securities, by contract or otherwise.
(e) "Agreement" or "Partnership Agreement" means this
Agreement of Limited Partnership, as the same may be amended from
time to time. Words such as "herein," "hereinafter," "hereof,"
"hereto," and "hereunder" refer to this Agreement as a whole,
unless the context indicates otherwise.
(f) "Bankruptcy" means, with respect to any Person, a
"Voluntary Bankruptcy" or an "Involuntary Bankruptcy." A
"Voluntary Bankruptcy" means, with respect to any Person, the
inability of such Person generally to pay its debts as such debts
become due, or an admission in writing by such Person of its
inability to pay its debts generally or a general assignment by
such Person for the benefit of creditors; the filing of any
petition or answer by such Person seeking to adjudicate it a
bankrupt or insolvent, or seeking for itself any liquidation,
winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of such Person or of its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking, consenting to, or acquiescing in the entry of
an order for relief or the appointment of a receiver, trustee,
custodian, or other similar official for such Person or for any
substantial part of its property; or corporate action taken by such
Person to authorize any of the actions set forth above. An
"Involuntary Bankruptcy" means, with respect to any Person, without
the consent or acquiescence of such Person, the entering of an
order for relief or approving a petition for relief or
reorganization or any other petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution,
or other similar relief under any present or future bankruptcy,
insolvency, or similar statute, law or regulation, or the filing of
any such petition against such Person which petition shall not be
dismissed within ninety (90) days, or, without the consent or
acquiescence of such Person, the entering of an order appointing a
trustee, custodian, receiver, or liquidator of such Person or of
all or any substantial part of the property of such Person which
order shall not be dismissed within sixty (60) days.
(g) "Business Day" means a day of the year on which banks are
not required or authorized to close in Alabama.
(h) "Capital Account" means, with respect to any General
Partner or Interest Holder, the Capital Account maintained for such
Person in accordance with the following provisions:
(i) To each Person's Capital Account there shall be
credited such Person's Capital Contributions, such Person's
distributive share of Profits and any items in the nature of
income or gain which are specially allocated pursuant to
Section 3.3 or Section 3.4 hereof.
(ii) To each Person's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any
Property (net of any liabilities encumbering such Property)
distributed to such Person pursuant to any provision of this
Agreement, such Person's distributive share of Losses and any
items in the nature of expenses or losses which are specially
allocated pursuant to Section 3.3 or Section 3.4 hereof, and
the amount of any liabilities of such Person assumed by the
Partnership or which are secured by any property contributed
by such Person to the Partnership.
(iii) In the event all or a portion of an Interest in
the Partnership is transferred in accordance with the terms of
this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent such Capital Account
relates to the transferred Interest.
(iv) In determining the amount of any liability for
purposes of Sections 1.10(c)(ii), 1.10(c)(iii) and 1.10(h)(ii)
hereof, there shall be taken into account Code S. 752(c) and
any other applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to
comply with Regulations S. 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulations. In the event
the General Partner shall determine that it is prudent to modify
the manner in which the Capital Accounts, or any debits and credits
thereto (including, without limitation, debits or credits relating
to liabilities which are secured by contributions or distributed
property or which are assumed by the Partnership, the General
Partner, or Interest Holders) are computed in order to comply with
such Regulations, the General Partner may make such modification,
provided that it is not likely to have a material effect on the
amounts distributed to any Person pursuant to Section 13 hereof
upon the dissolution of the Partnership. The General Partner also
shall (i) make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the General
Partner and Interest Holders and the amount of Partnership capital
reflected on the Partnership's balance sheet, as computed for book
purposes, in accordance with Regulations S. 1.704-1(b)(2)(iv)(g),
and (ii) make any appropriate modifications in the event
unanticipated events (for example, the acquisition by the
Partnership of oil or gas properties) might otherwise cause this
Agreement to fail to comply with Regulations S. 1.704-1(b).
(i) "Capital Contributions" means, with respect to any
Partner, the amount of money and the initial Gross Asset Value of
any property (other than money) contributed to the Partnership with
respect to the Interest in the Partnership held by such Partner.
The principal amount of a promissory note which is not readily
traded on an established securities market and which is contributed
to the Partnership by the maker of the note (or a Person related to
the maker of the note within the meaning of Regulations S. 1.704-1(b)
(2)(ii)(c)) shall not be included in the Capital Account of any
Person until the Partnership makes a taxable disposition of the
note or until (and to the extent that) principal payments are made
on the note, all in accordance with Regulations S. 1.704-1(b)(2)(iv)(d)(2).
(j) "Certificate" has the meaning set forth in Section 1.5
hereof.
(k) "Change of Control" of any corporation means that a
Person (together with any Affiliates of such Person or Persons
otherwise associated with such Person) or a "group" within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), or a group acting together to exercise
any option, warrant or similar rights to purchase stock of such
corporation, who previously owned no stock of such corporation
directly, is or becomes the direct beneficial owner (as the term
"beneficial owner" is defined under Rule 13d of the 1934 Act), of
shares of stock of such corporation entitling such Person to
exercise twenty percent (20%) or more of the total voting power of
all classes of such stock of such corporation entitled to vote in
elections of directors; provided, however, that a Change of Control
shall not be deemed to occur as a result of any Transfer of stock
by gift, devise, bequest, or intestacy.
(l) "Class A Interest" means an ownership interest in the
capital and Profits of the Partnership initially issued to the
Class A Limited Partners as provided in Section 2.2 hereof,
including any and all benefits to which the holder of such an
Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and
provisions of this Agreement.
(m) "Class A Interest Holder" means any Person who holds a
Class A Interest, regardless of whether such Person has been
admitted to the Partnership as a Class A Limited Partner. "Class
A Interest Holders" means all such Persons.
(n) "Class A Limited Partner" means any Limited Partner other
than the Class B Limited Partner.
(o) "Class B Interest" means an ownership Interest in the
capital and Profits of the Partnership as initially issued to the
Class B Limited Partners as provided in Section 2.3 of this
Agreement, including, without limitation, the right of such
Interest Holder to receive a Priority Return in accordance with
Sections 1.10(as) and Section 4.1(a) hereof, together with all
obligations of such person to comply with the terms and provisions
of this Agreement.
(p) "Class B Interest Holder" means any Person who owns a
Class B Interest, regardless of whether such Person has been
admitted to the Partnership as a Class B Limited Partner. "Class
B Interest Holders" means all such Persons.
(q) "Class B Limited Partner" means Winton M. Blount, or any
Person: (i) who has become a Class B Limited Partner pursuant to
the terms of this Agreement, and (ii) who holds a Class B Interest.
(r) "Code" means the Internal Revenue Code of 1986, as
amended, and as the same may be amended from time to time (or any
corresponding provisions of succeeding laws).
(s) "Debt" means (i) any indebtedness for borrowed money or
deferred purchase price of property or evidenced by a note, bonds,
or other instruments, (ii) obligations as lessee under capital
leases, (iii) obligations secured by any mortgage, pledge, security
interest, encumbrance, lien, or charge of any kind existing on any
asset owned or held by the Partnership whether or not the
Partnership has assumed or become liable for the obligations
secured thereby, (iv) any obligation under any interest rate swap
agreement (the principal amount of such obligation shall be deemed
to be the notional principal amount on which such swap is based),
and (v) obligations under direct or indirect guarantees, including
obligations, contingent or otherwise, to assure a creditor against
loss in respect of indebtedness or obligations of the kinds
referred to in clauses (i), (ii), (iii), and (iv) above, provided
that Debt shall not include obligations in respect of any accounts
payable that are incurred in the ordinary course of the
Partnership's business and which are not delinquent or which are
not being contested in good faith by appropriate proceedings.
(t) "Excess Shares" has the meaning set forth in Section 4.4
hereof.
(u) "Fiscal Year" means (i) the period commencing on the
effective date of this Agreement and ending on December 31, (ii)
any subsequent twelve (12) month period commencing on January 1 and
ending on December 31, or (iii) any portion of the period described
in clause (ii) for which the Partnership is required to allocate
Profits, Losses and other items of Partnership income, gain, loss
or deduction pursuant to Section 3 hereof.
(v) "General Partner" means any Person who (i) is referred to
as such in the first paragraph above and in Section 2.1 of this
Agreement, or has become a General Partner pursuant to the terms of
this Agreement, and (ii) has not ceased to be a General Partner
pursuant to the terms of this Agreement. The term "General
Partners" means all such Persons.
(w) "Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as
follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross
fair market value of such asset, as determined by agreement
between the contributing Partner and the General Partner,
provided that, if the contributing Partner is the General
Partner or the Class B Limited Partner, the determination of
the fair market value of a contributed asset shall require the
consent of a majority of the Class A Limited Partners;
(ii) The Gross Asset Value of all Partnership assets
shall be adjusted to equal their respective gross fair market
values as determined by the General Partner as of the
following times: (a) the acquisition of an additional Interest
in the Partnership by any new or existing Partner in exchange
for more than a de minimis Capital Contribution; (b) the
distribution by the Partnership to the General Partner or
Interest Holder of more than a de minimis amount of Property
as consideration for an Interest in the Partnership; and (c)
the liquidation of the Partnership within the meaning of
Regulations S. 1.704-1(b)(2)(ii)(g); provided, however, that
adjustments pursuant to clauses (a) and (b) above shall be
made only if the General Partner reasonably determines that
such adjustments are necessary or appropriate to reflect the
relative economic interests of the General Partner and
Interest Holders in the Partnership;
(iii) The Gross Asset Value of any Partnership asset
distributed to any General Partner or Interest Holder shall be
adjusted to equal the gross fair market value of such asset on
the date of distribution as determined by agreement between
the distributee and the General Partner, provided that, if the
distributee is the General Partner or the Class B Limited
Partner, the determination of the fair market value of the
distributed asset shall require the consent of a majority of
the Class A Limited Partners; and
(iv) The Gross Asset Values of Partnership assets shall
be increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code S. 734(b) or
Code S. 743(b), but only to the extent that such adjustments
are taken into account in determining Capital Accounts
pursuant to Regulation S. 1.704-1(b)(2)(iv)(m) and Sections
1.10(at)(vi) and 3.3(g) hereof; provided, however, that Gross
Asset Values shall not be adjusted pursuant to this Section
1.10(w)(iv) to the extent that the General Partner determines
that an adjustment pursuant to Section 1.10(w)(ii) hereof is
necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this
Section 1.10(w)(iv).
(x) "High Vote Stock" has the meaning set forth in Section
4.4(b) hereof.
(y) "Interest" means an ownership interest in the capital and
Profits of the Partnership, including any and all benefits to which
the holder of such an Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply
with the terms and provisions of this Agreement.
(z) "Interest Holder" means any Person who holds an Interest,
regardless of whether such Person has been admitted to the
Partnership as a Partner. "Interest Holders" means all such
Persons.
(aa) "Issuance Items" has the meaning set forth in Section
3.3(h) hereof.
(bb) "Katherine Blount Miles Trust" means Mary Katherine
Blount and First Alabama Bank as Trustees, and any successor
trustees, under that certain trust agreement dated November 22,
1971 between and among Winton M. Blount, Grantor, and the First
National Bank of Montgomery, Montgomery, Alabama, as corporate
trustee, primarily for the benefit of Katherine Blount, now
Katherine Blount Miles.
(cc) "Limited Partner" means any Person (i) whose name is set
forth in Section 2.2 or Section 2.3 hereof, or who has become a
Limited Partner pursuant to the terms of this Agreement, and (ii)
who holds an Interest. "Limited Partners" means all such Persons.
(dd) "Liquidating Event" has the meaning set forth in Section
13.1 hereof.
(ee) "Net Cash From Operations" means the gross cash proceeds
from Partnership operations (including sales and other dispositions
of Partnership Property in the ordinary course of the Partnership's
business) less the portion thereof used to pay or establish
reserves for all Partnership expenses, debt repayments, capital
improvements, replacements, and contingencies, all as determined by
the General Partner. "Net Cash From Operations" shall not be
reduced by depreciation, amortization, cost recovery deductions, or
similar allowances, but shall be increased by any reductions of
reserves previously established pursuant to the first sentence of
this Section 1.10(ae) and Section 1.10(af) hereof.
(ff) "Net Cash From Sales or Refinancings" means the net cash
proceeds from all sales and other dispositions (other than in the
ordinary course of business) and all refinancings of Property, less
any portion thereof used to establish reserves or to be reinvested
in additional Property in accordance with the Business of the
Partnership as set forth in Section 1.3 hereof, all as determined
by the General Partner. "Net Cash From Sales or Refinancings"
shall include all principal and interest payments with respect to
any note or other obligation received by the Partnership in
connection with sales and other dispositions (other than in the
ordinary course of business) of Property.
(gg) "Nonrecourse Deductions" has the meaning set forth in S.
1.704-2(b)(1) of the Regulations.
(hh) "Nonrecourse Liability" has the meaning set forth in S.
1.704-2(b)(3) of the Regulations.
(ii) "Partner Nonrecourse Debt" has the meaning set forth in
S. 1.704-2(b)(4) of the Regulations.
(jj) "Partner Nonrecourse Debt Minimum Gain" means an amount,
with respect to each Partner Nonrecourse Debt, equal to the
Partnership Minimum Gain that would result if such Partner
Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with S. 1.704-2(i)(3) of the Regulations.
(kk) "Partner Nonrecourse Deductions" has the meaning set
forth in S. 1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
(ll) "Partners" means all General Partners and all Limited
Partners, where no distinction is required by the context in which
the term is used herein. "Partner" means any one of the Partners.
(mm) "Partnership" means the partnership formed pursuant to
this Agreement and the Certificate, and the partnership continuing
the business of this Partnership in the event of dissolution as
provided herein.
(nn) "Partnership Minimum Gain" has the meaning set forth in
S. 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
(oo) "Permitted Transfer" has the meaning set forth in Section
10.2 hereof.
(pp) "Person" means any individual, partnership, limited
liability company, corporation, trust, or other entity.
(qq) "Point" means a numeric measure of the relative size of
an Interest Holder's Interest in the Partnership, as set forth in
Sections 2.2 and 2.3 hereof.
(rr) "Precontribution Gain" means the net gain, if any, which
would be recognized by a Partner or Interest Holder under S.
704(c)(1)(B) or 737 of the Code with respect to property which was
contributed to the Partnership by such Partner or Interest Holder
within the five (5) years prior to the date of the distribution
that created the taxable event; i.e., the excess, if any, of the
fair market value of Property which is contributed to the
Partnership over the basis of such Property at the time of the
contribution.
(ss) "Priority Return" means the right of the General Partner
and Class B Interest Holders to receive a cumulative, noncompounded
distribution in cash, or in property having a fair market value as
of the close of business on the day before the distribution, of an
amount equal to the Applicable Percentage (as defined below) per
annum times the average daily balance of the Adjusted Capital
Contribution of the Class B Interest Holders and the General
Partner for the period to which the Priority Return relates. The
accrual of the Priority Return shall commence on the date that the
Class B Limited Partner and the General Partner are admitted to the
Partnership, and shall terminate when the Adjusted Capital
Contribution of the Class B Interest Holders and General Partner is
reduced to zero, and shall be calculated on the basis of a year of
365 or 366 days, as the case may be, for the actual number of days
in the period for which the Priority Return is being determined.
For purposes of this Section 1.10(as), the "Applicable Percentage"
shall be equal to the following amounts: 8.3% (Eight and Three-Tenths
Percent) for the 1995 Fiscal Year of the Partnership; 8.7%
(Eight and Seven-Tenths Percent) for the 1996 Fiscal Year of the
Partnership; 9.2% (Nine and Two-Tenths Percent) for the 1997 Fiscal
Year of the Partnership; 9.7% (Nine and Seven-Tenths Percent) for
the 1998 Fiscal Year of the Partnership; and 9.9% (Nine and
Nine-Tenths Percent) for the 1999 Fiscal Year and for all succeeding
Fiscal Years of the Partnership.
(tt) "Profits" and "Losses" means, for each Fiscal Year, an
amount equal to the Partnership's taxable income or loss for such
Fiscal Year, determined in accordance with Code S. 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to
be stated separately pursuant to Code S. 703(a)(1) shall be included
in taxable income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in
computing Profits or Losses pursuant to this Section 1.10(at)
shall be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in
Code S. 705(a)(2)(B) or treated as Code S. 705(a)(2)(B)
expenditures pursuant to Regulations S. 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Profits or
Losses pursuant to this Section 1.10(at) shall be subtracted
from such taxable income or loss;
(iii) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to Section 1.10(w)(ii)
or Section 1.10(w)(iii) hereof, the amount of such adjustment
shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Profits or
Losses;
(iv) Gain or loss resulting from any disposition of
Property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to
the Gross Asset Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;
(v) To the extent an adjustment to the adjusted basis of
any Partnership asset pursuant to Code S. 734(b) or Code S.
743(b) is required pursuant to Regulations S. 1.704-1(b)(2)(iv)
(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in
complete liquidation of a Partner's or Interest Holder's
Interest, the amount of such adjustment shall be treated as an
item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken
into account for purposes of computing Profits and Losses; and
(vi) Notwithstanding any other provision of this Section
1.10(at), any items which are specially allocated pursuant to
Section 3.3 or Section 3.4 hereof shall not be taken into
account in computing Profits and Losses.
The amounts of Partnership income, gain, loss or deduction
available to be specially allocated pursuant to Sections 3.3 and
3.4 hereof shall be determined by applying rules analogous to those
set forth in Section 1.10(at)(i) through Section 1.10(at)(v) above.
(uu) "Property" means all real and personal property owned or
acquired by the Partnership and any improvements thereon or
thereto, and shall include both tangible and intangible property.
(vv) "Publicly-Traded Stock" means stock of any corporation
(i) which is listed on a national exchange, including the New York
Stock Exchange and the American Stock Exchange; (ii) for which
price quotations are reported through the Automated Quotation
System of the National Association of Securities Dealers, Inc. -
National Market System ("NASDAQ"); or (iii) for which closing
"asked" prices are reported in the over-the-counter listings in the
Wall Street Journal.
(ww) "Regulations" means the Federal Income Tax Regulations,
including Temporary Regulations, promulgated by the Department of
Treasury and the Internal Revenue Service under the Code, as such
regulations may be amended and revised from time to time (including
corresponding provisions of succeeding regulations).
(xx) "Regulatory Allocations" has the meaning set forth in
Section 3.4 hereof.
(yy) "Special Distributions" has the meaning set forth in
Section 4.4 hereof.
(zz) "Substitute General Partner" means a transferee of an
interest in the Partnership by a General Partner, who has been
admitted to the Partnership as a General Partner pursuant to the
provisions of Section 11.3 hereof.
(aaa) "Substitute Limited Partner" means a transferee of
an Interest who has been admitted to the Partnership as a Limited
Partner pursuant to the provisions of Section 10.6 hereof.
(bbb) "Tax Matters Partner" has the meaning set forth in
Section 5.1(j) hereof.
(ccc) "Transfer" means, as a noun, any voluntary or
involuntary transfer, sale, exchange or other disposition and, as
a verb, voluntarily or involuntarily to transfer, sell, exchange or
otherwise dispose of. A mere pledge, hypothecation or other
encumbrance of an Interest as security for the payment of a Debt
which is made pursuant to the provisions of Section 10.1 hereof
shall not be a Transfer for purposes of this Agreement.
(ddd) "Unit" means a voting Interest in the Partnership
initially received by the Class A Limited Partners and the Class B
Limited Partner in exchange for the Capital Contributions specified
in Sections 2.2 and 2.3 respectively. All references in this
Agreement to a majority or a specified percentage of the Limited
Partners or a class of Limited Partners shall mean that number of
Limited Partners who in the aggregate hold more than fifty percent
(50%) or other specified percentage, respectively, of the total
number of Units held by the Limited Partners or the class of
Limited Partners entitled to consent or to vote upon any action
pursuant to the terms of this Agreement.
(eee) "Wholly Owned Affiliate" of any Person means an
Affiliate of such Person (i) one hundred percent (100%) of the
voting stock or beneficial ownership of which is owned directly by
such Person, or by any Person who, directly or indirectly, owns one
hundred percent (100%) of the voting stock or beneficial ownership
of such Person, (ii) an Affiliate of such Person who, directly or
indirectly, owns one hundred percent (100%) of the voting stock or
beneficial ownership of such Person, and (iii) any Wholly Owned
Affiliate of any Affiliate described in clause (i) or clause (ii)
of this Section 1.10(be).
SECTION 2.
PARTNERS' CAPITAL CONTRIBUTIONS
2.1 General Partner. The name, mailing address, and Capital
Contribution of the General Partner are as follows:
CAPITAL
NAME MAILING ADDRESS CONTRIBUTION
BHP, Inc. 4250 Executive Park Drive $888,515.25
P.O. Box 5060 (373 shares Class A
Montgomery, AL 36103 preferred stock of
Blount International, Inc.)
2.2 Class A Limited Partners. The names, mailing addresses,
Interests (measured in Points), Units and Capital Contributions of
the Class A Limited Partners are as follows:
CAPITAL
NAME MAILING ADDRESS INTEREST UNITS CONTRIBUTION
Winton M. Blount III P.O. Box 23039 1000 Points 1 $30,062,028.40
Montgomery, AL 36123 (1,405.445
shares of
Common Stock of
Blount
International,
Inc.)
Samuel R. Blount 2 Rockledge Road 1000 Points 1 $30,062,028.40
Birmingham, AL 35213 (1,405.445
Shares of
Common Stock of
Blount
International,
Inc.)
Thomas A. Blount 3 Barksdale Drive, N.E. 1000 Points 1 $30,062,028.40
Atlanta, GA 30309 (1,405.445
Shares of
Common Stock of
Blount
International,
Inc.)
Katherine B. Miles 3124 Pine Ridge Road 610 Points 1 $18,341,845.60
Birmingham, AL 35213 (857.5088
Shares of
Common Stock of
Blount
International,
Inc.)
The Katherine Blount First Alabama Bank 390 Points 1 $11,720,182.80
Miles Trust Trustee (547.9362 Shares
8 Commerce Street of Common Stock
P.O. Box 511 of Blount
Montgomery, AL 36101-0511 International,
Inc.)
Joseph W. Blount 781 Myrtle Street, N.E. 1000 Points 1 $30,062,028.40
Atlanta, GA 30308 (1,405.445
Shares of Common
Stock of Blount
International,
Inc.)
2.3 Class B Limited Partner. The name, mailing address, Interest
(measured in Points), Units and Capital Contribution of the Class
B Limited Partner are as follows:
CAPITAL
NAME MAILING ADDRESS INTEREST UNITS CONTRIBUTION
Winton M. Blount Blount, Inc. 1000 Points 1 $26,504,194.75
P.O. Box 949 (10,627 Shares
Montgomery, AL 36192-1201 Class A Preferred
Stock and 498
Shares Class B
Preferred Stock
of Blount
International,
Inc.)
Total for Limited Partnership: 6000 Points 7 $177,702,851.00
2.4 Additional Partners. Additional General Partners and
Substitute General Partners may be added with the written consent
of all of the Partners, and Substitute Limited Partners may be
added with the written consent of the General Partner and a
majority of the Limited Partners as provided in Section 10.6
hereof. No Additional Limited Partners may be admitted to the
Partnership. Upon admission to the Partnership as a Partner in
accordance with Section 10.6 hereof, a Substitute Limited Partner
shall be issued one (1) Unit.
2.5 Other Matters.
(a) Except as otherwise provided in this Agreement, no
General Partner or Interest Holder shall demand or receive a return
of Capital Contributions or withdraw from the Partnership without
the consent of all Partners. Under circumstances requiring a
return of any Capital Contributions, no General Partner or Interest
Holder shall have the right to receive property other than cash
except as may be specifically provided herein.
(b) No General Partner or Interest Holder shall receive any
interest, salary, or drawing with respect to his, her or its
Capital Contributions or his, her or its Capital Account or for
services rendered on behalf of the Partnership or otherwise in his,
her or its capacity as a General Partner or Interest Holder, except
as otherwise provided in this Agreement.
(c) Provided that the Limited Partners act in accordance with
this Agreement, no Limited Partner shall be liable for the debts,
liabilities, contracts, or any other obligations of the
Partnership. Except as otherwise provided by any other agreements
among the Partners or mandatory provisions of applicable state law,
a Limited Partner shall be liable only to make his, her or its
Capital Contributions and shall not be required to lend any funds
to the Partnership or, after his, her or its Capital Contributions
have been made, to make any additional Capital Contributions to the
Partnership.
(d) The General Partner shall have no personal liability for
the repayment of any Capital Contributions of any Partner or
Interest Holder.
SECTION 3.
ALLOCATIONS
3.1 Profits. After giving effect to the special allocations set
forth in Section 3.3 and 3.4 hereof, Profits for any Fiscal Year
shall be allocated as follows:
(a) First, to the General Partner an amount equal to the
excess, if any, of (i) the cumulative Losses allocated to the
General Partner pursuant to Section 3.2(d) hereof for all prior
Fiscal Years, over (ii) the cumulative Profits allocated to the
General Partner pursuant to this Section 3.1(a) for all prior
Fiscal Years; and
(b) Next, to the Class B Interest Holders, an amount equal to
the excess, if any, of (i) the cumulative Losses allocated to the
Class B Interest Holders pursuant to Section 3.2(c) hereof for all
prior Fiscal Years, over (ii) the cumulative Profits allocated to
the Class B Interest Holders pursuant to this Section 3.1(b) for
all prior Fiscal Years; and
(c) Next, to the Class A Interest Holders, an amount equal to
the excess, if any, of (i) the cumulative Losses allocated to the
Class A Interest Holders pursuant to Section 3.2(b) hereof for all
prior Fiscal Years, over (ii) the cumulative Profits allocated to
the Class A Interest Holders pursuant to this Section 3.1(c) for
all prior Fiscal Years; and
(d) Next, to the General Partner, an amount equal to the
excess, if any, of (i) the cumulative Losses allocated to the
General Partner pursuant to Section 3.2(a) hereof for all prior
Fiscal Years, over (ii) the cumulative Profits allocated to the
General Partner pursuant to this Section 3.1(d) for all prior
Fiscal Years; and
(e) Next, to the General Partner and the Class B Interest
Holders in proportion to and to the extent of, an amount equal to
the excess, if any, of (i) their respective Priority Returns
accrued for the prior and current Fiscal Years, over (ii) the
cumulative Profits, if any, allocated to the General Partner and
the Class B Interest Holders pursuant to this Section 3.1(e); and
(f) The balance, if any, one-half percent (0.5%) to the
General Partner and ninety-nine and one-half percent (99.5%) to the
Class A Interest Holders.
3.2 Losses. After giving effect to the special allocations set
forth in Sections 3.3 and 3.4 hereof, Losses for any Fiscal Year
shall be allocated as follows:
(a) First, one-half percent (0.5%) to the General Partner;
(b) Next, the balance to the Class A Interest Holders in
proportion to their Interests, provided that Losses shall not be
allocated pursuant to this Section 3.2(b) to the extent such
allocation would cause any Class A Interest Holder to have an
Adjusted Capital Account Deficit at the end of such Fiscal Year;
(c) Next, the balance, if any, to the Class B Interest
Holders, provided that Losses shall not be allocated pursuant to
this Section 3.2(c) to the extent such allocation would cause any
Class B Interest Holders to have an Adjusted Capital Account
Deficit at the end of such Fiscal Year; and
(d) The balance, if any, one hundred percent (100%) to the
General Partner.
3.3 Special Allocations. The following special allocations shall
be made in the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in
S. 1.704-2(f) of the Treasury Regulations, notwithstanding any other
provision of this Section 3, if there is a net decrease in
Partnership Minimum Gain during any Partnership Fiscal Year, each
General Partner and Interest Holder shall be specially allocated
items of Partnership income and gain for such Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to such
Person's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations S. 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to
each General Partner and Interest Holder pursuant thereto. The
items to be so allocated shall be determined in accordance with S.
1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. This
Section 3.3(a) is intended to comply with the minimum gain
chargeback requirement in S. 1.704-2(f) of the Treasury Regulations
and shall be interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Except as otherwise
provided in S. 1.704-2(i)(4) of the Treasury Regulations,
notwithstanding any other provision of this Section 3, if there is
a net decrease in Partner Nonrecourse Debt Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership
Fiscal Year, each person who has a share of the Partner Nonrecourse
Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with S. 1.704-2(i)(5) of the Treasury
Regulations, shall be specially allocated items of Partnership
income and gain for such Fiscal Year (and, if necessary, subsequent
Fiscal Years) in an amount equal to such Person's share of the net
decrease in Partner Nonrecourse Debt Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with
Treasury Regulations S. 1.704-2(i)(4). Allocations pursuant to the
previous sentence shall be made in proportion to the respective
amounts required to be allocated to each General Partner and
Interest Holder pursuant thereto. The items to be so allocated
shall be determined in accordance with S. 1.704-2(i)(4) and 1.704-2(j)
(2) of the Treasury Regulations. This Section 3.3(b) is
intended to comply with the minimum gain chargeback requirement in
S. 1.704-2(i)(4) of the Treasury Regulations and shall be
interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Interest
Holder who is not a General Partner unexpectedly receives any
adjustments, allocations, or distributions described in Treasury
Regulations S. 1.704-1(b)(2)(ii)(d)(4), Treasury Regulations S.
1.704-1(b)(2)(ii)(d)(5), or Treasury Regulations S. 1.704-1(b)(2)
(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to each such Interest Holder in an amount and
manner sufficient to eliminate, to the extent required by the
Treasury Regulations, the Adjusted Capital Account Deficit of such
Interest Holder as quickly as possible, provided that an allocation
pursuant to this Section 3.3(c) shall be made if and only to the
extent that such Interest Holder would have an Adjusted Capital
Account Deficit after all other allocations provided for in this
Section 3.3(c) have been tentatively made as if this Section 3.3(c)
were not in the Agreement.
(d) Gross Income Allocation. In the event any Interest
Holder who is not a General Partner shall have an Adjusted Capital
Account Deficit at the end of any Partnership Fiscal Year which is
in excess of the sum of (i) the amount such Interest Holder is
obligated to restore, and (ii) the amount such Interest Holder is
deemed to be obligated to restore pursuant to the penultimate
sentences of Treasury Regulations S.s 1.704-2(g)(1) and 1.704-2(i)(5),
each such Interest Holder shall be specially allocated
items of Partnership income and gain in the amount of such excess
so as to reduce and eliminate such deficit Capital Account as
quickly as possible, provided that an allocation pursuant to this
Section 3.3(d) shall be made if and only to the extent that such
Interest Holder would have a deficit Capital Account in excess of
such sum after all other allocations provided for in this Section
3.3(d) have been tentatively made as if this Section 3.3(d) and
Section 3.3(c) hereof were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
Fiscal Year shall be specially allocated one-half percent (0.5%) to
the General Partner and ninety-nine and one-half percent (99.5%) to
the Interest Holders.
(f) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the
General Partner or Interest Holder who bears the economic risk of
loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable in accordance with
Regulations S. 1.704-2(i)(1).
(g) S. 754 Adjustments. To the extent an adjustment is
required to the adjusted tax basis of any Partnership asset
pursuant to Code S. 734(b) or Code S. 743(b) pursuant to Regulations
S. 1.704-1(b)(2)(iv)(m)(2) or Regulations S. 1.704-1(b)(2)(iv)(m)(4),
to be taken into account in determining Capital Accounts as the
result of a distribution to a General Partner or Interest Holder in
complete liquidation of his, her or its Interest in the
Partnership, the amount of such adjustment to Capital Accounts
shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases such
basis) and such gain or loss shall be specially allocated to the
General Partner and the Interest Holders in accordance with their
Interest in the Partnership in the event that Regulations S. 1.704-1(b)
(2)(iv)(m)(2) applies, or to the General Partner or Interest
Holder to whom such distribution was made in the event that
Regulations S. 1.704-1(b)(2)(iv)(m)(4) applies.
(h) Allocations Relating to Taxable Issuance of Partnership
Interests. Any income, gain, loss, or deduction realized as a
direct or indirect result of the issuance of an Interest by the
Partnership to a Partner (the "Issuance Items") shall be allocated
among the General Partner and Interest Holders so that, to the
extent possible, the net amount of such issuance items, together
with all other allocations under this Agreement to each General
Partner and Interest Holder, shall be equal to the net amount that
would have been allocated to each such General Partner and Interest
Holder if the Issuance Items had not been realized.
3.4 Curative Allocations. The allocations set forth in Section
3.3 hereof (other than Section 3.3(h) hereof) (the "Regulatory
Allocations") are intended to comply with certain requirements of
the Federal Income Tax Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations
will be offset either with other Regulatory Allocations or with
special allocations of other items of Partnership income, gain,
loss or deduction pursuant to this Section 3.4. Therefore,
notwithstanding any other provision of this Section 3 (other than
the Regulatory Allocations), the General Partner shall make such
offsetting special allocations in whatever manner it determines to
be appropriate so that, after such offsetting allocations have been
made, each Partner's Capital Account balance is, to the extent
possible, equal to the Capital Account balance which each Partner
would have had if the Regulatory Allocations were not a part of
this Agreement and all Partnership items were allocated pursuant to
Sections 3.1 and 3.2 hereof. In exercising its discretion under
this Section 3.4, the General Partner shall take into account
future Regulatory Allocations under Sections 3.3(a) and 3.3(b)
that, although not yet made, are likely to offset other Regulatory
Allocations previously made under Sections 3.3(e) and 3.3(f).
3.5 Tax Allocations: Code S. 704(c). In accordance with Code S.
704(c) and the Regulations thereunder income, gain, loss, and
deduction with respect to any property contributed to the capital
of the Partnership shall, solely for tax purposes, be allocated
among the Partners so as to take account of any variation between
the adjusted basis of such property to the Partnership for federal
income tax purposes and its initial fair market value as set forth
in Section 2 above. Any elections or other decisions relating to
such allocations shall be made by the General Partner in any manner
that reasonably reflects the purpose and intention of this
Agreement. Allocations pursuant to this Section 3.5 are solely for
purposes of federal, state and local taxes and shall not affect, or
in any way be taken into account, in computing any Partner's or
Interest Holder's Capital Account or share of Profits, Losses,
other items, or distributions pursuant to any provisions of this
Agreement.
3.6 Other Allocation Rules.
(a) For purposes of determining the Profits, Losses, or any
other items allocable to any period, Profits, Losses, and any such
other items shall be determined on a daily, monthly, or other
basis, as determined by the General Partner using any permissible
method under Code S. 706 and the Regulations thereunder.
(b) All allocations to the Interest Holders pursuant to this
Section 3 shall, except as otherwise provided, be divided among
them in proportion to the Interests held by each. In the event
there is more than one General Partner, all such allocations to the
General Partners shall be divided among them as they may agree.
(c) The Partners are aware of the income tax consequences of
the allocations made by this Section 3 and hereby agree to be bound
by the provisions of this Section 3 in reporting their shares of
Partnership income and loss for income tax purposes.
(d) Solely for purposes of determining a Partner's or
Interest Holder's proportionate share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of Regulations
S. 1.752-3(a)(3), the Partners' and Interest Holders' interests in
Partnership profits are as follows: General Partner one-half
percent (0.5%) and Interest Holders ninety-nine and one-half
percent (99.5%) (in proportion to their Interests).
(e) To the extent permitted by S. 1.704-2(h)(3) of the
Regulations, the General Partner shall endeavor to treat
distributions of Net Cash From Operations or Net Cash From Sales or
Refinancings as having been made from the proceeds of a Nonrecourse
Liability or a Partner Nonrecourse Debt only to the extent that
such distributions would cause or increase an Adjusted Capital
Account Deficit for any Interest Holder.
SECTION 4.
DISTRIBUTIONS TO PARTNERS
4.1 Net Cash From Operations. Except as otherwise provided in
Section 13.2 hereof, Net Cash From Operations shall be distributed
not later than the thirtieth (30th) day after the end of each
fiscal quarter in the following order of priority:
(a) First, one-half percent (0.5%) to the General Partner and
ninety-nine and one-half percent (99.5%) to the Class B Interest
Holders in proportion to and to the extent of the excess, if any,
of (i) the cumulative Priority Return from the inception of the
Partnership to the end of such fiscal quarter, over (ii) the sum of
all prior distributions to the General Partner and Class B Interest
Holders pursuant to this Section 4.1(a) and Section 4.3(a); and
(b) The balance, if any, one-half percent (0.5%) to the
General Partner and ninety-nine and one-half percent (99.5%) to the
Class A Interest Holders in proportion to the Class A Interest
Holders' respective Interests.
4.2 Priority Return. The "Priority Return" with respect to a
Fiscal Year means the amount described in Section 1.10(as) hereof,
cumulative to the extent not distributed with respect to any given
quarter pursuant to Sections 4.1(a) and 4.3(a) hereof.
4.3 Net Cash From Sales or Refinancings; Nonliquidating
Distributions of Property. Except as otherwise provided in Section
13 hereof, Net Cash From Sales or Refinancings may be distributed,
and Partnership Property in amounts which are determined according
to the Gross Asset Value of such Property may be distributed, at
such times as the General Partner may determine. In the event that
the General Partner shall determine that a distribution under this
Section 4.3 shall be made, such distributions shall be made in the
following order and priority:
(a) First, one-half percent (0.5%) to the General Partner and
ninety-nine and one-half percent (99.5%) to the Class B Interest
Holders (in proportion to their Interests), until the General
Partner and Class B Interest Holders receive an amount equal to the
excess, if any, of (i) the cumulative Priority Return from the
inception of the Partnership to the date such distribution is made,
over (ii) the sum of all prior distributions to the General Partner
and Class B Interest Holders pursuant to Sections 4.1(a) hereof and
this Section 4.3(a); and
(b) Second, to the Interest Holders in amounts proportionate
to (but not in excess of) their respective Adjusted Capital
Contributions; and
(c) The balance, if any, ninety-nine and one-half percent
(99.5%) to the Class A Limited Partners and one-half percent (0.5%)
to the General Partner;
provided that no distributions shall be made pursuant to this
Section 4.3 if and to the extent that the General Partner
determines that such distribution would cause any Partner to
recognize taxable Precontribution Gain under S. 704(c)(1)(B) or 737
of the Code.
4.4 Special Distributions of Publicly-Traded Stock. In the event
that the Partnership Property shall include Publicly-Traded Stock
as of the end of any Fiscal Year, the General Partner shall be
required to make special distributions of the Excess Shares of such
Publicly-Traded Stock to the Class A Interest Holders, in the
amounts and manner, and subject to the terms and conditions set
forth in this Section 4.4. (the "Special Distributions").
(a) No Special Distributions shall be made under this Section
4.4 prior to January 1, 2000, and after such date Special
Distributions may be made only if and to the extent that the total
amount of dividend income received by the Partnership with respect
to such Publicly-Traded Stock during the preceding Fiscal Year,
less the ordinary and necessary operating expenses of the
Partnership for such year, including any management fee paid
pursuant to Section 5.6(c) hereof, was in excess of One Hundred
Fifteen Percent (115%) of the Priority Return for such Fiscal Year
(the number of shares of Publicly-Traded Stock which produced the
Excess Dividends in such preceding Fiscal Year shall be referred to
hereinafter as the "Excess Shares").
(b) Prior to the date which is three years after the date of
death of Winton M. Blount (the "Three-Year Date"), the obligation
of the General Partner to make Special Distributions under this
Section 4.4 shall not extend to any shares of Publicly-Traded Stock
which carry voting rights with respect to the issuing corporation
which are disproportionately higher than the voting rights of any
other class of stock of such corporation which is then issued and
outstanding ("High Vote Stock"); prior to the Three-Year Date the
General Partner may, however, make optional distributions of such
High Vote Stock pursuant to Section 4.3 hereof.
(c) On and after the Three-Year Date the obligation of the
General Partner to make Special Distributions under this Section
4.4 shall include any shares of High Vote Stock held by the
Partnership; provided, however, that no Special Distribution of
High Vote Stock shall be required to be made at any time that a
Special Distribution of High Vote Stock would cause the number of
shares of such High Vote Stock held by the Partnership to fall
below Fifteen Percent (15%) of the total number of shares of
capital stock issued and outstanding by the corporate issuer of
such High Vote Stock.
(d) Special Distributions shall be made by the General
Partner no later than the end of the Fiscal Year with respect to
which the condition set forth in Section 4.4(a) above is met.
(e) Only Excess Shares may be distributed under this Section
4.4.
(f) Special Distributions shall be made in-kind, and not in
cash or in the form of any Property other than shares of Publicly-Traded Stock.
(g) No distributions shall be made pursuant to this Section
4.4 if and to the extent that the General Partner determines that
such distribution would cause any Partner to recognize taxable
Precontribution Gain under S. 704(c)(1)(B) or 737 of the Code.
4.5 Division Among Interest Holders and General Partners. All
distributions to the Class A Interest Holders pursuant to this
Section 4 shall be divided among them in proportion to the Class A
Interests (measured in Points) held by each, and all distributions
to the Class B Interest Holders pursuant to this Section 4 shall be
divided among them in proportion to the Class B Interests (measured
in Points) held by each. In the event there is more than one
General Partner, all amounts distributed to the General Partners
pursuant to this Section 4 shall be divided among them as they may
agree.
4.6 Amounts Withheld. All amounts withheld pursuant to the Code
or any provision of any state or local tax law with respect to any
payment, distribution, or allocation to the Partnership, the
General Partner, or the Interest Holders shall be treated as
amounts distributed to the General Partner and the Interest Holders
pursuant to this Section 4 for all purposes under this Agreement.
The General Partner is authorized to withhold from distributions to
the General Partner and Interest Holders and to pay over to any
federal, state, or local government any amounts required to be so
withheld pursuant to the Code or any provision of any other
federal, state, or local law and any such amounts shall be charged
to the Capital Accounts of the General Partner and Interest Holders
with respect to which such amounts were withheld.
4.7 No Other Rights to Distributions. No Interest Holder shall
have the right to demand or receive any distribution with respect
to any Interest Holder's Capital Contributions, Capital Account or
distributive share of Profits, Net Cash from Operations, Net Cash
from Sales or Refinancings, or Property of the Partnership, except
as specifically provided in Sections 4 and 13 of this Agreement.
SECTION 5.
MANAGEMENT
5.1 Authority of the General Partner. Subject to the limitations
and restrictions set forth in this Agreement (including, without
limitation, those set forth in this Section 5), the General Partner
shall have the sole and exclusive right to manage the business of
the Partnership and shall have all of the rights and powers which
may be possessed by general partners under the Act including,
without limitation, the right and power to:
(a) Acquire by purchase, lease, or otherwise any real or
personal property which may be necessary, convenient, or incidental
to the accomplishment of the purposes of the Partnership;
(b) Operate, maintain, finance, improve, construct, own,
grant options with respect to, sell, convey, assign, mortgage, and
lease any Property, including without limitation any real estate
and any personal property, necessary, convenient, or incidental to
the accomplishment of the purposes of the Partnership (including
for the purpose of enabling the Partnership to pay the Priority
Return pursuant to Sections 1.10(as) and 4.1(a) hereof);
(c) Execute any and all agreements, contracts, documents,
certifications, and instruments necessary or convenient in
connection with the management, maintenance, and operation of
Property, or in connection with managing the affairs of the
Partnership, including executing amendments to the Agreement and
the Certificate in accordance with the terms of the Agreement, both
as General Partner and, if required, as attorney-in-fact for the
Limited Partners pursuant to any power of attorney granted by the
Limited Partners to the General Partner;
(d) Borrow money and issue evidences of indebtedness
necessary, convenient, or incidental to the accomplishment of the
purposes of the Partnership, and secure the same by mortgage,
pledge, or other lien on any Property;
(e) Execute, in furtherance of any or all of the purposes of
the Partnership, any deed, lease, mortgage, deed of trust, mortgage
note, promissory note, bill of sale, contract, or other instrument
purporting to convey or encumber any or all of the Property;
(f) Prepay in whole or in part, refinance, recast, increase,
modify, or extend any liabilities affecting the Property and in
connection therewith execute any extensions or renewals of
encumbrances on any or all of the Property;
(g) Care for and distribute funds to the General Partner and
Interest Holders by way of cash, income, return of capital, or
otherwise, all in accordance with the provisions of this Agreement,
and perform all matters in furtherance of the objectives of the
Partnership or this Agreement;
(h) Contract on behalf of the Partnership for the employment
and services of employees and independent contractors, such as
lawyers and accountants, and delegate to such Persons the duty to
manage or supervise any of the assets or operations of the
Partnership;
(i) Engage in any kind of activity and perform and carry out
contracts of any kind (including contracts of insurance covering
risks to Property and General Partner liability) necessary or
incidental to, or in connection with, the accomplishment of the
purposes of the Partnership, as may be lawfully carried on or
performed by a partnership under the laws of each state in which
the Partnership is then formed or qualified;
(j) Make any and all elections for federal, state, and local
tax purposes including, without limitation, any election, if
permitted by applicable law: (i) to adjust the basis of Property
pursuant to Code S. 754, 734(b), and 743(b), or comparable
provisions of state or local law, in connection with transfers of
Interests in the Partnership and Partnership distributions; (ii)
with the consent of a majority of the Limited Partners, to extend
the statute of limitations for assessment of tax deficiencies
against General Partner and Interest Holders with respect to
adjustments to the Partnership's federal, state, or local tax
returns; and (iii) to the extent provided in Code S. 6221 through
6231, to represent the Partnership, the General Partner, and the
Interest Holders before taxing authorities or courts of competent
jurisdiction in tax matters affecting the Partnership, the General
Partner, and the Interest Holders in their capacities as General
Partner or Interest Holders, and to file any tax returns and to
execute any agreements or other documents relating to or affecting
such tax matters, including agreements or other documents that bind
the General Partner and Interest Holders with respect to such tax
matters or otherwise affect the rights of the Partnership, General
Partner, and Interest Holders. The General Partner is specifically
authorized to act as the "Tax Matters Partner" under the Code and
in any similar capacity under state or local law;
(k) Take, or refrain from taking, action to exercise
conversion rights with respect to any shares of stock, securities,
debt obligations, options, warrants, or other similar instruments
carrying conversion rights which are held by the Partnership;
specifically, without limitation, the General Partner may, at any
time and without incurring any liability to the other Partners,
exercise or refrain from exercising any rights which the
Partnership may hold to convert High Vote Stock to another class of
stock of the issuing corporation;
(l) Take, or refrain from taking, all actions, not expressly
proscribed or limited by this Agreement, as may be necessary or
appropriate to accomplish the purposes of the Partnership; and
(m) Institute, prosecute, defend, settle, compromise, and
dismiss lawsuits or other judicial or administrative proceedings
brought on or in behalf of, or against, the Partnership or the
Partners in connection with activities arising out of, connected
with, or incidental to this Agreement, and to engage counsel or
others in connection therewith.
In the event more than one Person is a General Partner, the rights
and powers of the General Partner hereunder shall be exercised by
them in such manner as they may agree. In the absence of an
agreement among the General Partners, no General Partner shall
exercise any of such rights and powers without the unanimous
consent of all General Partners.
5.2 Right to Rely on General Partner.
(a) Any Person dealing with the Partnership may rely (without
duty of further inquiry) upon a certificate signed by any General
Partner as to:
(i) The identity of any General Partner or any Limited
Partner;
(ii) The existence or nonexistence of any fact or facts
which constitute a condition precedent to acts by a General
Partner or which are in any other manner germane to the
affairs of the Partnership;
(iii) The Persons who are authorized to execute and
deliver any instrument or document of the Partnership; or
(iv) Any act or failure to act by the Partnership or any
other matter whatsoever involving the Partnership or any
Partner.
(b) The signature of any General Partner shall be necessary
and sufficient to convey title to any real property owned by the
Partnership or to execute any promissory notes, trust deeds,
mortgages, or other instruments or hypothecation, and all of the
Partners agree that a copy of this Agreement may be shown to the
appropriate parties in order to confirm the same, and further agree
that the signature of any General Partner shall be sufficient to
execute any "statement of partnership" or other documents necessary
to effectuate this or any other provision of this Agreement. All
of the Partners do hereby appoint the General Partner as their
attorney-in-fact for the execution of any or all of the documents
described in this Section 5.2(b).
5.3 Restrictions on Authority of General Partner.
(a) Each General Partner shall not have the authority to, and
covenants and agrees that it shall not, do any of the following
acts without the unanimous consent of the Partners:
(i) Cause or permit the Partnership to engage in any
activity that is not consistent with the purposes of the
Partnership as set forth in Section 1.3 hereof;
(ii) Knowingly do any act in contravention of this
Agreement;
(iii) Knowingly do any act which would make it
impossible to carry on the ordinary business of the
Partnership, except as otherwise provided in this Agreement;
(iv) Possess Property, or assign rights in specific
Property, for other than a Partnership purpose;
(v) Knowingly perform any act that would subject any
Limited Partner to liability as a general partner in any
jurisdiction;
(vi) Cause the Partnership to voluntarily take any action
that would cause a Bankruptcy of the Partnership;
(vii) Cause the Partnership to admit any additional
Limited Partners, or any Substitute Limited Partners other
than pursuant to Section 10.6 hereof; and
(viii) File or attempt to file on behalf of the
Partnership or the other Partners any election under Section
761(a) of the Code for the Partnership to be excluded from the
application of Subchapter K of the Code.
(b) Each General Partner shall not have the authority to, and
covenants and agrees that it shall not, do any of the following
acts without the consent of all the General Partners and a majority
of the Limited Partners:
(i) Sell or otherwise dispose of all or substantially
all of the Property;
(ii) Cause the Partnership to make any charitable
contributions or pledges with respect to Partnership Property.
5.4 Duties and Obligations of General Partner.
(a) The General Partner shall cause the Partnership to
conduct its business and operations separate and apart from that of
any General Partner or any of its Affiliates, including, without
limitation, (i) segregating Partnership assets and not allowing
funds or other assets of the Partnership to be commingled with the
funds or other assets of, held by, or registered in the name of,
any General Partner or any of its Affiliates, (ii) maintaining
books and financial records of the Partnership separate from the
books and financial records of any General Partner and its
Affiliates, and observing all Partnership procedures and
formalities, including, without limitation, maintaining minutes of
Partnership meetings and acting on behalf of the Partnership only
pursuant to the provisions of this Agreement and, where required,
pursuant to the due authorization of the Partners, (iii) causing
the Partnership to pay its liabilities from assets of the
Partnership, and (iv) causing the Partnership to conduct its
dealings with third parties in its own name and as a separate and
independent entity.
(b) The General Partner shall take all actions which may be
necessary or appropriate (i) for the continuation of the
Partnership's valid existence as a limited partnership under the
laws of the State of Delaware and of each other jurisdiction in
which such existence is necessary to protect the limited liability
of the Limited Partners or to enable the Partnership to conduct the
business in which it is engaged and (ii) for the accomplishment of
the Partnership's purposes, including the acquisition, development,
maintenance, preservation, and operation of Property in accordance
with the provisions of this Agreement and applicable laws and
regulations.
(c) The General Partner shall be under a fiduciary duty to
conduct the affairs of the Partnership in the best interests of the
Partnership and of the Limited Partners, including the safekeeping
and use of all of the Property and the use thereof for the
exclusive benefit of the Partnership.
(d) The General Partner shall cause to be provided, or cause
the Partnership to carry, such insurance as is customary in the
business in which the Partnership is engaged and in the places in
which it is so engaged.
5.5 Indemnification of General Partner.
(a) The Partnership, its receiver, or its trustee (in the
case of its receiver or trustee, to the extent of Partnership
Property) shall indemnify, save harmless, and pay all judgments and
claims against each General Partner or any officers or directors of
such General Partner relating to any liability or damage incurred
by reason of any act performed or omitted to be performed by such
General Partner, officer, or director in connection with the
business of the Partnership, including attorneys' fees incurred by
such General Partner, officer, or director in connection with the
defense of any action based on any such act or omission, which
attorneys' fees may be paid as incurred, including all such
liabilities under federal and state securities laws (including the
Securities Act of 1933, as amended) as permitted by law.
(b) The Partnership, its receiver, or its trustee (in the
case of its receiver or trustee, to the extent of Partnership
Property) shall indemnify and hold harmless, to the maximum extent
permitted by law, each General Partner and Interest Holder from and
against any and all liabilities, sums paid in settlement of claims
(if such settlement is consented to by the General Partner),
obligations, charges, actions (formal or informal), claims
(including, without limitation, claims for personal injury under
any theory or for real or personal property damage), liens, taxes,
administrative proceedings, losses, damages (including, without
limitation, punitive damages), penalties, fines, court costs,
administrative service fees, response and remediation costs,
stabilization costs, encapsulation costs, treatment, storage or
disposal costs, ground-water monitoring or environmental study,
sampling or monitoring costs, other causes of action, and any other
costs and reasonable expenses (including, without limitation,
reasonable attorneys', experts', and consultants' fees and
disbursements and investigating, laboratory, and data review fees)
imposed upon or incurred by any General Partner or Interest Holder
(whether or not indemnified against by any other party) arising
from and after the date of this Agreement directly or indirectly
out of:
(i) the past, present, or future treatment, storage,
disposal, generation, use, transport, movement, presence,
release, threatened release, spill, installation, sale,
emission, injection, leaching, dumping, escaping, or seeping
of any hazardous substances, material containing or alleged to
contain hazardous substances at or from any past, present, or
future properties or assets of the Partnership; or
(ii) the violation or alleged violation by the
Partnership or any third party of any environmental laws with
regard to the past, present, or future ownership, operation,
use, or occupying of any property or asset of the Partnership.
(c) In the event of any action by an Interest Holder against
any General Partner, including a Partnership derivative suit, the
Partnership shall indemnify, save harmless, and pay all expenses of
such General Partner, including attorneys' fees, incurred in the
defense of such action, if such General partner is successful in
such action.
(d) The Partnership shall indemnify, save harmless, and pay
all expenses, costs, or liabilities of any General Partner who for
the benefit of the Partnership makes any deposit, acquires any
option, or makes any other similar payment or assumes any
obligations in connection with any property proposed to be acquired
by the Partnership and who suffers any financial loss as the result
of such action.
(e) Notwithstanding the provisions of Sections 5.5(a),
5.5(b), and 5.5(d) above, no General Partner or Interest Holder
shall be indemnified from any liability for fraud, bad faith,
willful misconduct, or gross negligence.
(f) Notwithstanding anything to the contrary in any of
Sections 5.5(a), 5.5(b), and 5.5(d) above, in the event that any
provision in any of such Sections is determined to be invalid in
whole or in part, such Section shall be enforced to the maximum
extent permitted by law.
5.6 Compensation and Loans.
(a) Compensation and Reimbursement. Except as otherwise
provided in this Section 5.6, no Partner shall receive any salary,
fee, or draw for services rendered to or on behalf of the
Partnership, nor shall any Partner be reimbursed for any expenses
incurred by such Partner on behalf of the Partnership.
(b) Expenses. Each General Partner may charge the
Partnership for any direct expenses reasonably incurred in
connection with the Partnership's business.
(c) Compensation. In consideration of its performance of
services on behalf of the Partnership, the General Partner shall
receive, as guaranteed payments within the meaning of Code S. 707(c)
and not as distributions, a monthly management fee of Four Thousand
One Hundred Sixty-six Dollars and Sixty-seven Cents ($4,166.67)
from the Partnership in addition to the distributions of cash and
other Property and allocations of Profits, Losses, and other items
provided for in this Agreement.
(d) Loans. Any Person may, with the consent of the General
Partner, lend or advance money to the Partnership. If any Partner
shall make any loan or loans to the Partnership or advance money on
its behalf, the amount of any such loan or advance shall not be
treated as a Capital Contribution but shall be a debt due from the
Partnership. The amount of any such loan or advance by a lending
Partner shall be repayable out of the Partnership's cash and shall
bear interest at such rate as the General Partner and the lending
Partner shall agree but not in excess of the maximum rate permitted
by law. If any General Partner, or an Affiliate of any General
Partner, is the lending Partner, the rate of interest shall be
determined by the General Partner taking into consideration,
without limitation, prevailing interest rates and the interest
rates the lender is required to pay in the event such lender has
itself borrowed funds to loan or advance to the Partnership and the
terms and conditions of such loan, including the rate of interest,
shall be no less favorable to the Partnership than if the lender
had been an independent third party. None of the Partners shall be
obligated to make any loan or advance to the Partnership.
5.7 Temporary Investments. All Property in the form of cash not
otherwise invested shall be deposited for the benefit of the
Partnership in one or more accounts of the Partnership, maintained
in such financial institutions as the General Partner shall
determine or shall be invested in short-term liquid securities or
other cash-equivalent assets or shall be left in escrow, and
withdrawals shall be made only in the regular course of Partnership
business on such signature or signatures as the General Partner may
determine from time to time.
SECTION 6.
ROLE OF LIMITED PARTNERS
6.1 Rights or Powers. The Limited Partners shall not have any
right or power to take part in the management or control of the
Partnership or its business and affairs or to act for or bind the
Partnership in any way.
6.2 Voting Rights. The Limited Partners shall have the right to
vote on the matters specifically reserved for their approval or
consent which are set forth in this Agreement, and as provided in
the Act.
6.3 Procedure for Consent. In any circumstances requiring the
approval or consent of the Limited Partners as specified in this
Agreement, such approval or consent shall, except as expressly
provided to the contrary in this Agreement, be given or withheld in
the sole and absolute discretion of the Limited Partners and
conveyed in writing to the General Partner not later than thirty
(30) days after such approval or consent was requested by the
General Partner. The General Partner may require response within
a shorter time, but not less than ten (10) Business Days. A
failure to respond in any such time period shall constitute a vote
which is consistent with the General Partner's recommendation with
respect to the proposal. If the General Partner receives the
necessary approval or consent of the Limited Partners to such
action, the General Partner shall be authorized and empowered to
implement such action without further authorization by the Limited
Partners.
6.4 Withdrawal of Limited Partners. Except as otherwise provided
in this Agreement, no Limited Partner may withdraw from the
Partnership without the prior written consent of the General
Partner.
SECTION 7.
REPRESENTATIONS AND WARRANTIES
7.1 In General. As of the date hereof, each of the Partners
hereby makes each of the representations and warranties applicable
to such Partner as set forth in Section 7.2 hereof, and such
warranties and representations shall survive the execution of this
Agreement.
7.2 Representations and Warranties. Each Partner hereby
represents and warrants that:
(a) Due Incorporation or Formation; Authorization of
Agreement. If such Partner is a corporation or a partnership, it
is duly organized or duly formed, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation or
formation and has the corporate or partnership power and authority
to own its property and carry on its business as owned and carried
on at the date hereof and as contemplated hereby. Such Partner is
duly licensed or qualified to do business and in good standing in
each of the jurisdictions in which the failure to be so licensed or
qualified would have a material adverse effect on its financial
condition or its ability to perform its obligations hereunder.
Such Partner has the individual, corporate, or partnership power
and authority to execute and deliver this Agreement and to perform
its obligations hereunder and, if such partner is a corporation or
partnership, the execution, delivery, and performance of this
Agreement has been duly authorized by all necessary corporate or
partnership action. This Agreement constitutes the legal, valid,
and binding obligation of such Partner.
(b) No Conflict With Restrictions; No Default. Neither the
execution, delivery, and performance of this Agreement nor the
consummation by such Partner of the transactions contemplated
hereby (i) will conflict with, violate, or result in a breach of
any of the terms, conditions, or provisions of any law, regulation,
order, writ, injunction, decree, determination, or award of any
court, any governmental department, board, agency, or
instrumentality, domestic or foreign, or any arbitrator, applicable
to such Partner or any of its Wholly Owned Affiliates if such
Partner is a corporation or partnership, (ii) will conflict with,
violate, result in a breach of, or constitute a default under any
of the terms, conditions, or provisions of the articles of
incorporation, bylaws, or partnership agreement of such Partner or
any of its Wholly Owned Affiliates or of any material agreement or
instrument to which such Partner or any of its Wholly Owned
Affiliates is a party or by which such Partner or any of its Wholly
Owned Affiliates is or may be bound or to which any of its material
properties or assets is subject, (iii) will conflict with, violate,
result in a breach of, constitute a default under (whether with
notice or lapse of time or both), accelerate or permit the
acceleration of the performance required by, give to others any
material interests or rights, or require any consent,
authorization, or approval under any indenture, mortgage, lease
agreement, or instrument to which such Partner or any of its Wholly
Owned Affiliates is a party or by which such Partner or any of its
Wholly Owned Affiliates is or may be bound, or (iv) will result in
the creation or imposition of any lien upon any of the material
properties or assets of such Partner or any of its Wholly Owned
Affiliates.
(c) Litigation. There are no actions, suits, proceedings, or
investigations pending or, to the knowledge of such Partner or any
of its Wholly Owned Affiliates, threatened against or affecting
such Partner or any of its Wholly Owned Affiliates or any of their
properties, assets, or businesses in any court or before or by any
governmental department, board, agency, or instrumentality,
domestic or foreign, or any arbitrator which could, if adversely
determined (or, in the case of an investigation could lead to any
action, suit, or proceeding, which if adversely determined could)
reasonably be expected to materially impair such Partner's ability
to perform its obligations under this Agreement or to have a
material adverse effect on the consolidated financial condition of
such Partner; and such Partner or any of its Wholly Owned
Affiliates has not received any currently effective notice of any
default, and such Partner or any of its Wholly Owned Affiliates is
not in, or aware of, any default under any applicable order, writ,
injunction, decree, permit, determination, or award of any court,
any governmental department, board, agency, or instrumentality,
domestic or foreign, or any arbitrator which could reasonably be
expected to materially impair such Partner's ability to perform its
obligations under this Agreement or to have a material adverse
effect on the consolidated financial condition of such Partner.
(d) Investigation. Such Partner is acquiring its Interest in
the Partnership based upon its own investigation, and the exercise
by such Partner of its rights and the performance of its
obligations under this Agreement will be based upon its own
investigation, analysis, and expertise. Such Partner's acquisition
of its Interest in the Partnership is being made for its own
account for investment, and not with a view to the sale or
distribution thereof. In the case of each Limited Partner, such
Partner is a sophisticated investor possessing an expertise in
analyzing the benefits and risks associated with acquiring
investments which are similar to the acquisition of its Interest in
the Partnership.
SECTION 8.
BOOKS AND RECORDS
8.1 Books and Records. The Partnership shall maintain at its
principal place of business separate books of accounts for the
Partnership which shall show a true and accurate record of all
costs and expenses incurred, all changes made, all credits made and
received, and all income derived in connection with the conduct of
the Partnership and the operation of its business in accordance
with generally accepted accounting principles consistently applied,
and, to the extent inconsistent therewith, in accordance with this
Agreement. The Partnership shall use the cash method of accounting
in preparation of its annual reports and for tax purposes and shall
keep its books and records accordingly. Any Partner or his, her or
its designated representative shall have the right, at any
reasonable time, to have access to and inspect and copy the
contents of such books or records.
8.2 Reports.
(a) In general. The General Partner shall be responsible for
the preparation of financial reports of the Partnership and the
coordination of financial matters of the Partnership with the
Partnership's accountants.
(b) Annual Reports. Within ninety (90) days after the end of
each Fiscal Year and at such times as distributions are made to the
Partners and Interest Holders pursuant to Section 13.2 hereof
following the occurrence of a Liquidating Event, the General
Partner shall cause to be prepared and each Partner and Interest
Holder to be furnished with financial statements including the
following:
(i) A copy of the balance sheet of the Partnership as of
the last day of such Fiscal Year;
(ii) A statement of income or loss for the Partnership for
such Fiscal Year;
(iii) A statement of the Partners' and Interest Holders'
Capital Accounts and changes therein for such Fiscal Year; and
(iv) A statement of Partnership cash flow for such Fiscal
Year.
(c) Quarterly Reports. Within forty-five (45) days after the
close of each fiscal quarter, the General Partner shall cause to be
prepared and each Partner furnished with each of the following:
(i) A copy of the balance sheet of the Partnership as of
the last day of such fiscal quarter;
(ii) Statements of income and loss and cash flow for such
fiscal quarter; and
(iii) Written certification by the General Partner that
such statements have been prepared in accordance with this
Agreement.
8.3 Tax Information. Necessary tax information shall be delivered
to each Partner and Interest Holder within 90 days after the end of
each Fiscal Year of the Partnership.
SECTION 9.
AMENDMENTS; MEETINGS
9.1 Amendments.
(a) Amendments to this Agreement may be proposed by any
General Partner or by Limited Partners holding ten percent (10%) or
more of the Units. Following such proposal, the General Partner
shall submit to the Limited Partners a verbatim statement of any
proposed amendment, providing that counsel for the Partnership
shall have approved of the same in writing as to form, and the
General Partner shall include in any such submission a
recommendation as to the proposed amendment. The General Partner
shall seek the written vote of the Partners on the proposed
amendment or shall call a meeting to vote thereon and to transact
any other business that it may deem appropriate. A proposed
amendment shall be adopted and be effective as an amendment hereto
if it receives the affirmative vote of the General Partner and a
majority of the Limited Partners; provided, however, that no
amendment or other change to Section 13.1(c) hereof shall be
adopted and effective unless it receives the affirmative vote of
all of the Partners.
(b) Notwithstanding Sections 6.3 and 9.1(a) hereof, this
Agreement shall not be amended without the consent of each Partner
adversely affected if such amendment would (i) convert a Limited
Partner's Interest in the Partnership into a General Partner's
interest, (ii) modify the limited liability of a Limited Partner,
or (iii) alter the interest of a Partner in Profits, Losses, other
items, or any Partnership distributions.
9.2 Meetings of the Partners.
(a) Meetings of the Partners may be called by any General
Partner and shall be called upon the written request of Limited
Partners holding ten percent (10%) or more of the Interests. The
call shall state the nature of the business to be transacted.
Partners may vote in person or by proxy at such meeting. Except as
otherwise expressly provided in this Agreement, the vote of a
majority of the Limited Partners shall control with respect to any
action or consent to be taken or given by the Limited Partners.
(b) For the purpose of determining the Partners entitled to
consent or vote on, or to vote at, any meeting of the Partners or
any adjournment thereof, or otherwise than at a meeting of the
Partners, the General Partner or Limited Partners requesting such
meeting, vote or consent may fix, in advance, a date as the record
date for any such determination. Such date shall not be more than
thirty (30) days or less than ten (10) Business Days before any
such meeting, or before any such consent or vote is required.
(c) Each Limited Partner may authorize any Person or Persons
to act for him, her or it by proxy on all matters in which a
Limited Partner is entitled to participate, including voting or
participating at a meeting. Every proxy must be signed by the
Limited Partner or his, her or its attorney-in-fact. No proxy
shall be valid after the expiration of eleven (11) months from the
date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Partner executing it.
(d) Each meeting of the Partners shall be conducted by the
General Partner or such other Person as the General Partner may
appoint pursuant to such rules for the conduct of the meeting as
the General Partner or such other Person deems appropriate.
SECTION 10.
TRANSFERS OF INTERESTS
10.1 Restrictions on Transfers. Except as otherwise permitted by
this Agreement, no Partner shall Transfer his, her or its Units or
other Interest in the Partnership that is solely attributable to
the status of Partner, and no Interest Holder shall Transfer all or
any portion of his, her or its Interests. In the event that any
Interest Holder pledges or otherwise encumbers any of its Interests
as security for the payment of a Debt, any such pledge or
hypothecation shall be made pursuant to a pledge or hypothecation
agreement that requires the pledgee or secured party to be bound by
all the terms and conditions of this Section 10.
10.2 Permitted Transfers. Subject to the conditions and
restrictions set forth in Sections 10.3 and 10.5 hereof, an
Interest Holder may at any time Transfer all or any portion of his,
her or its Interests (as measured in Points) to any transferee (any
such Transfer being referred to in this Agreement as a "Permitted
Transfer").
10.3 Conditions to Permitted Transfers. A Transfer shall not be
treated as a Permitted Transfer under Section 10.2 hereof unless
and until the following conditions are satisfied:
(a) Except in the case of a Transfer of Interests at death or
involuntarily by operation of law, the transferor and transferee
shall execute and deliver to the Partnership such documents and
instruments of conveyance as may be necessary or appropriate in the
opinion of counsel to the Partnership to effect such Transfer and
to confirm the agreement of the transferee to be bound by the
provisions of this Section 10. In the case of a Transfer of
Interests at death or involuntarily by operation of law, the
Transfer shall be confirmed by presentation to the Partnership of
legal evidence of such Transfer, in form and substance satisfactory
to counsel to the Partnership. In all cases, the Partnership shall
be reimbursed by the transferor, the transferee or both for all
costs and expenses that it reasonably incurs in connection with
such Transfer.
(b) Except in the case of a Transfer at death or
involuntarily by operation of law, the transferor shall furnish to
the Partnership an opinion of counsel, which counsel and opinion
shall be satisfactory to the Partnership, that the Transfer will
not cause the Partnership to terminate for federal income tax
purposes and that such Transfer will not cause the application of
the rules of Code S. 168(g)(1)(B) and 168(h) (generally referred to
as the "tax exempt entity leasing rules") or similar rules to apply
to the Partnership, Partnership Property, or the General Partner
and Interest Holders.
(c) The transferor and transferee shall furnish the
Partnership with the transferee's taxpayer identification number,
sufficient information to determine the transferee's initial tax
basis in the Interests transferred, and any other information
reasonably necessary to permit the Partnership to file all required
federal and state tax returns and other legally required
information statements or returns. Without limiting the generality
of the foregoing, the Partnership shall not be required to make any
distribution otherwise provided for in this Agreement with respect
to any transferred Interests until it has received such
information.
(d) Except in the case of a Transfer of Interests at death or
involuntarily by operation of law, either (a) such Interests shall
be registered under the Securities Act of 1933, as amended, and any
applicable state securities laws, or (b) the transferor shall
provide an opinion of counsel, which opinion and counsel shall be
satisfactory to the Partnership, to the effect that such Transfer
is exempt from all applicable registration requirements and that
such Transfer will not violate any applicable laws regulating the
Transfer of securities.
(e) Except in the case of a Transfer of Interests at death or
involuntarily by operation of law, the transferor shall provide an
opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the other Partners, to the effect that such
Transfer will not cause the Partnership to be deemed to be an
"investment company" under the Investment Company Act of 1940.
10.4 Prohibited Transfers. Any purported Transfer of Interests
that is not a Permitted Transfer shall be null and void and of no
force or effect whatsoever; provided that, if the Partnership is
required to recognize a Transfer that is not a Permitted Transfer
(or if the Partnership, in its sole discretion, elects to recognize
a Transfer that is not a Permitted Transfer), the Interest
Transferred shall be strictly limited to the transferor's rights to
allocations and distributions as provided by this Agreement with
respect to the Transferred Interests, which allocations and
distributions may be applied (without limiting any other legal or
equitable rights of the Partnership) to satisfy any debts,
obligations, or liabilities for damages that the transferor or
transferee of such Interests may have to the Partnership. In the
case of a Transfer or attempted Transfer of Interests that is not
a Permitted Transfer, the parties engaging or attempting to engage
in such Transfer shall be liable to indemnify and hold harmless the
Partnership and the other Partners from all cost, liability, and
damages that any of such indemnified Persons may incur (including,
without limitation, incremental tax liability and attorneys' fees
and expenses) as a result of such Transfer or attempted Transfer
and efforts to enforce the indemnity granted hereby.
10.5 Rights of Unadmitted Assignees. A Person who acquires one or
more Interests but who is not admitted as a substituted Limited
Partner pursuant to Section 10.6 hereof shall be entitled only to
allocations and distributions with respect to such Interests in
accordance with this Agreement, and shall have no right to any
information or accounting of the affairs of the Partnership, shall
not be entitled to inspect the books or records of the Partnership,
and shall not have any of the rights of a General Partner or a
Limited Partner under the Act or this Agreement.
10.6 Admission of Interest Holders as Partners. Subject to the
other provisions of this Section 10, a transferee of Interests may
be admitted to the Partnership as a substituted Limited Partner
only upon satisfaction of the conditions set forth below in this
Section 10.6:
(a) The General Partner consents to such admission, which
consent may be given or withheld in the sole and absolute
discretion of the General Partner;
(b) A majority of the Limited Partners consent to such
admission, which consent may be given or withheld in the sole and
absolute discretion of the Limited Partners;
(c) The Interests with respect to which the transferee is
being admitted were acquired by means of a Permitted Transfer;
(d) The transferee becomes a party to this Agreement as a
Limited Partner and executes such documents and instruments as the
General Partner may reasonably request (including without
limitation, amendments to the Certificate) as may be necessary or
appropriate to confirm such transferee as a Limited Partner in the
Partnership and such transferee's agreement to be bound by the
terms and conditions hereof;
(e) The transferee pays or reimburses the Partnership for all
reasonable legal, filing, and publication costs that the
Partnership incurs in connection with the admission of the
transferee as a Limited Partner with respect to the Transferred
Interests;
(f) The transferee provides the Partnership with evidence
satisfactory to counsel for the Partnership that such transferee
has made each of the representations and undertaken each of the
warranties applicable to it described in Section 7 hereof; and
(g) If the transferee is not an individual of legal majority,
the transferee provides the Partnership with evidence satisfactory
to counsel for the Partnership of the authority of the transferee
to become a Partner and to be bound by the terms and conditions of
this Agreement.
10.7 Covenants; Legend.
(a) Each Interest Holder hereby represents, covenants, and
agrees with the Partnership for the benefit of the Partnership and
all Interest Holders, that (i) he, she or it is not currently
making a market in Interests and will not in the future make a
market in Interests, (ii) he, she or it will not Transfer his, her
or its Interests on an established securities market, a secondary
market (or the substantial equivalent thereof) within the meaning
of Code S. 7704(b) (and any regulations, proposed regulations,
revenue rulings, or other official pronouncements of the Internal
Revenue Service or Treasury Department that may be promulgated or
published thereunder), and (iii) in the event such Regulations,
revenue rulings, or other pronouncements treat any or all
arrangements which facilitate the selling of partnership interests
and which are commonly referred to as "matching services" as being
a secondary market or substantial equivalent thereof, he, she or it
will not Transfer any Interest through a matching service that is
not approved in advance by the Partnership. Each Interest Holder
further agrees that he, she or it will not Transfer any Interest to
any Person unless such Person agrees to be bound by this Section
10.7(a) and to Transfer such Interests only to Persons who agree to
be similarly bound. The Partnership shall, from time to time and
at the request of an Interest Holder, consider whether to approve
a matching service and shall notify all Interest Holders of any
matching service that is so approved.
(b) Each Interest Holder hereby agrees that the following
legend may be placed upon any counterpart of this Agreement, the
Certificate, or any other document or instrument evidencing
ownership of Interests:
"The Partnership Interests represented by this
document have not been registered under any securities
laws and the transferability of such Interests is
restricted. Such Interests may not be sold, assigned, or
transferred, nor will any assignee, vendee, transferee,
or endorsee thereof be recognized as having acquired any
such Interests by the issuer for any purposes, unless (1)
a registration statement under the Securities Act of
1933, as amended, with respect to such Interests shall
then be in effect and such transfer has been qualified
under all applicable state securities laws, or (2) the
availability of an exemption from such registration and
qualification shall be established to the satisfaction of
counsel to the Partnership.
"The Interests represented by this document are
subject to further restriction as to their sale,
transfer, hypothecation, or assignment as set forth in
the Agreement of Limited Partnership and agreed to by
each Limited Partner. Said restriction provides, among
other things, that no vendee, transferee, assignee, or
endorsee of an Interest Holder shall have the right to
become a substituted Limited Partner without the consent
of all of the General Partners and of a majority of the
Limited Partners, which consent may be given or withheld
in the sole and absolute discretion of the General
Partner and of each Limited Partner."
10.8 Distributions and Allocations in Respect to Transferred
Interests. If any Partnership Interest is sold, assigned, or
Transferred during any Fiscal Year in compliance with the
provisions of this Section 10, Profits, Losses, each item thereof,
and all other items attributable to the Transferred Interests for
such Fiscal Year shall be divided and allocated between the
transferor and the transferee by taking into account their varying
Interests during such Fiscal Year in accordance with Code S. 706(d),
using any conventions permitted by law or selected by the General
Partner. All distributions on or before the date of such Transfer
shall be made to the transferor, and all distributions thereafter
shall be made to the transferee. Solely for purposes of making
such allocations and distributions, the Partnership shall recognize
such Transfer not later than the end of the calendar month during
which it is given notice of such Transfer, provided that, if the
Partnership is given notice of a Transfer at least ten (10)
Business Days prior to the Transfer the Partnership shall recognize
such Transfer as the date of such Transfer, and provided further
that, if the Partnership does not receive a notice stating the date
such Interest was Transferred and such other information as the
General Partner may reasonably require within thirty (30) days
after the end of the Fiscal Year during which the Transfer occurs,
then all such items shall be allocated, and all distributions shall
be made, to the Person who, according to the books and records of
the Partnership, was the owner of the Interest on the last day of
the Fiscal Year during which the Transfer occurs. Neither the
Partnership nor any General Partner shall incur any liability for
making allocations and distributions in accordance with the
provisions of this Section 10.8, whether or not any General Partner
or the Partnership has knowledge of any Transfer of ownership of
any Interest.
SECTION 11.
GENERAL PARTNERS
11.1 Additional General Partners. Except as provided in this
Section 11 and Section 13.1 hereof, no Person shall be admitted to
the Partnership as a General Partner without the unanimous consent
of the Partners.
11.2 Covenant to Carry Out Duties of General Partner. Each General
Partner hereby covenants and agrees to continue to carry out the
duties of a General Partner hereunder until the Partnership is
dissolved and liquidated pursuant to Section 13 hereof.
11.3 Permitted Transfers.
(a) A General Partner may Transfer all or any portion of his,
her or its interest in the Partnership as a General Partner (1) at
any time to any other General Partner, (2) for a General Partner
who is an individual, at death to his or her estate, heirs, or
legatees by will or intestacy, (3) at any time to any Person who is
such General Partner's Wholly Owned Affiliate on both the day such
General Partner becomes a General Partner and the day of such
Transfer, (4) at any time involuntarily by operation of law, or (5)
to any Person who is approved by all of the other General Partners
and a majority of the Limited Partners; provided that no such
Transfer shall be permitted unless and until (a) all of the
conditions set forth in Section 10.2 hereof are satisfied as if the
Partnership interest being Transferred was an Interest, and (b) the
transferor and transferee provide the Partnership with an opinion
of counsel, which opinion and counsel shall be acceptable to the
other General Partners, to the effect that such Transfer will not
cause the Partnership to become taxable as a corporation for
federal income tax purposes.
(b) A transferee of an interest in the Partnership from a
General Partner hereunder shall be admitted as a General Partner
with respect to such interest if, but only if, (1) at the time of
such Transfer, such transferee is otherwise a General Partner, (2)
the transferee is a Wholly Owned Affiliate of the transferring
General Partner and all of the other General Partners consent to
such admission, or (3) the admission of such transferee as a
General Partner is approved by all of the other General Partners
and a majority of the Limited Partners.
(c) A transferee who acquires a Partnership interest from a
General Partner hereunder by means of a Transfer that is permitted
under this Section 11.3, but who is not admitted as a General
Partner, shall have no authority to act for or bind the
Partnership, to inspect the Partnership's books, or otherwise to be
treated as a General Partner, but such transferee shall be treated
as an Interest Holder who acquired an Interest in a Permitted
Transfer under Section 10 hereof.
11.4 Prohibited Transfers. Any purported Transfer of an interest
in the Partnership held by a General Partner that is not permitted
by Section 11.3 above shall be null and void and of no force or
effect whatsoever; provided that, if the Partnership is required to
recognize a Transfer that is not so permitted (or if the
Partnership, in its sole discretion, elects to recognize a Transfer
that is not so permitted), the interest Transferred shall be
strictly limited to the transferor's rights to allocations and
distributions as provided by this Agreement with respect to the
Transferred interest, which allocations and distributions may be
applied (without limiting any other legal or equitable rights of
the Partnership) to satisfy any debts, obligations, or liabilities
for damages that the transferor or transferee of such interest may
have to the Partnership.
In the case of a Transfer or attempted Transfer of a
Partnership interest that is not permitted by Section 11.3 above,
the parties engaging or attempting to engage in such Transfer shall
be liable to indemnify and hold harmless the Partnership and the
other Partners from all cost, liability, and damage that any of
such indemnified Persons may incur (including, without limitation,
incremental tax liability and attorneys' fees and expenses) as a
result of such Transfer or attempted Transfer and efforts to
enforce the indemnity granted hereby.
11.5 Termination of Status as General Partner.
(a) A General Partner shall cease to be a General Partner
upon the first to occur of (i) the Bankruptcy of such General
Partner, (ii) the Transfer of a portion of such Partner's interest
as a General Partner that causes such General Partner to hold less
than twenty-five percent (25%) of the interest that such Person
initially held as a General Partner, (iii) such General Partner's
death, permanent disability, or mental incompetence, (iv) the
involuntary Transfer by operation of law of such General Partner's
interest in the Partnership, (v) the vote of a majority of the
Limited Partners to approve a request by such General Partner to
retire, or (vi) the vote of a majority of the Limited Partners to
remove such General Partner after such General Partner has
attempted to make a Transfer of his, her or its Partnership
interest that is not permitted by Section 11.3 hereof, committed a
material breach of this Agreement or his, her or its
representations and warranties hereunder, or committed any other
act or suffered any other conditions that would justify a decree of
dissolution of the Partnership under the laws of the State of
Delaware. In the event a Person ceases to be a General Partner
without having Transferred his, her or its entire interest as a
General Partner, such Person shall be treated as an unadmitted
transferee of a Partnership interest as a result of an unpermitted
Transfer of an interest pursuant to Section 11.4 hereof.
If a General Partner ceases to be a General Partner for any
reason hereunder, such Person shall continue to be liable as a
General Partner for all debts and obligations of the Partnership
existing at the time such Person ceases to be a General Partner,
regardless of whether, at such time, such debts or liabilities were
known or unknown, actual or contingent. A Person shall not be
liable as a General Partner for Partnership debts and obligations
arising after such Person ceases to be a General Partner. Any
debts, obligations, or liabilities in damages to the Partnership of
any Person who ceases to be a General Partner shall be collectible
by any legal means and the Partnership is authorized, in addition
to any other remedies at law or in equity, to apply any amounts
otherwise distributable or payable by the Partnership to such
Person to satisfy such debts, obligations, or liabilities.
(b) If at the time a Person ceases to be a General Partner
such Person is also a Limited Partner or an Interest Holder with
respect to Interests other than his, her or its interest as a
General Partner, such cessation shall not affect such Person's
rights and obligations with respect to such Interests.
11.6 Election of New General Partners. Provided the Partnership
has one or more General Partners, any Partner may nominate one or
more Persons for election as additional General Partners. The
election of an additional General Partner shall require an
affirmative vote of all General Partners and a majority of the
Limited Partners.
SECTION 12.
POWER OF ATTORNEY
12.1 General Partner as Attorney-In-Fact. Each Limited Partner
hereby makes, constitutes, and appoints each General Partner and
each successor General Partner, with full power of substitution and
resubstitution, his, her or its true and lawful attorney-in-fact
for him, her or it and in his, her or its name, place, and stead
and for his, her or its use and benefit, to sign, execute, certify,
acknowledge, swear to, file, and record (a) all certificates of
limited partnership, amended name or similar certificates, and
other certificates and instruments (including counterparts of this
Agreement) which the General Partner may deem necessary or
appropriate to be filed by the Partnership under the laws of the
State of Delaware or any other state or jurisdiction in which the
Partnership is doing or intends to do business; (b) any and all
amendments or changes to this Agreement and the instruments
described in (a), as now or hereafter amended, which the General
Partner may deem necessary or appropriate to effect a change or
modification of the Partnership in accordance with the terms of
this Agreement, including, without limitation, amendments or
changes to reflect (i) the exercise by any General Partner of any
power granted to it under this Agreement; (ii) any amendments
adopted by the Partners in accordance with the terms of this
Agreement; (iii) the admission of any substituted Partner; and (iv)
the disposition by any Partner of its Interest; (c) all
certificates of cancellation and other instruments which the
General Partner may deem necessary or appropriate to effect the
dissolution and termination of the Partnership pursuant to the
terms of this Agreement; and (d) any other instrument which is now
or may hereafter be required by law to be filed on behalf of the
Partnership or is deemed necessary or appropriate by the General
Partner to carry out fully the provisions of this Agreement in
accordance with its terms. Each Limited Partner authorizes each
such attorney-in-fact to take any further action which such
attorney-in-fact shall consider necessary or advisable in
connection with any of the foregoing, hereby giving each such
attorney-in-fact full power and authority to do and perform each
and every act or thing whatsoever requisite or advisable to, be
done in connection with the foregoing as fully as such Limited
Partner might or could do personally, and hereby ratifying and
confirming all that any such attorney-in-fact shall lawfully do or
cause to be done by virtue thereof or hereof.
12.2 Nature as Special Power. The power of attorney granted
pursuant to this Section 12:
(a) Is a special power of attorney coupled with an interest
and is irrevocable;
(b) May be exercised by any such attorney-in-fact by listing
the Limited Partners executing any agreement, certificate,
instrument, or other document with the single signature of any such
attorney-in-fact acting as attorney-in-fact for such Limited
Partners; and
(c) Shall survive the death, disability, legal incapacity,
bankruptcy, insolvency, dissolution, or cessation of existence of
a Limited Partner and shall survive the delivery of an assignment
by a Limited Partner of the whole or a portion of his, her or its
Interests, except that where the assignment is of such Limited
Partner's entire Interests and the assignee, with the consent of
the General Partner, is admitted as a substituted Limited Partner,
the power of attorney shall survive the delivery of such assignment
for the sole purpose of enabling any such attorney-in-fact to
effect such substitution.
SECTION 13.
DISSOLUTION AND WINDING UP
13.1 Liquidating Events. The Partnership shall dissolve and
commence winding up and liquidating upon the first to occur of any
of the following ("Liquidating Events"):
(a) The sale of all or substantially all of the Property;
(b) The unanimous vote by all of the Partners to dissolve,
wind up, and liquidate the Partnership;
(c) The date on which a Change of Control occurs with respect
to BHP, Inc., the initial General Partner.
(d) The happening of any other event that makes it unlawful
or impossible to carry on the business of the Partnership; or
(e) The withdrawal or removal of a General Partner, the
assignment by a General Partner of its entire interest in the
Partnership, or any other event that causes a General Partner to
cease to be a general partner under the Act, provided that any such
event shall not constitute a Liquidating Event if the Partnership
is continued pursuant to this Section 13.1.
The Partners hereby agree that, notwithstanding any provision
of the Act, the Partnership shall not dissolve prior to the
occurrence of a Liquidating Event. Upon the occurrence of any
event set forth in Section 13.1(e) hereof, the Partnership shall
not be dissolved or required to be wound up if (x) at the time of
such event there is at least one remaining General Partner and that
General Partner carries on the business of the Partnership (any
such remaining General Partner being hereby authorized to carry on
the business of the Partnership), or (y) within ninety (90) days
after such event all remaining Partners agree in writing to
continue the business of the Partnership and to the appointment,
effective as of the date of such event, of one or more additional
General Partners.
13.2 Winding Up. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purpose of winding up its
affairs in an orderly manner, liquidating its assets, and
satisfying the claims of its creditors and Partners and no Partner
shall take any action that is inconsistent with, or not necessary
to or appropriate for, winding up the Partnership's business and
affairs. To the extent not inconsistent with the foregoing, all
covenants and obligations in this Agreement shall continue in full
force and effect until such time as the Partnership Property has
been distributed pursuant to this Section 13.2 and the Certificate
has been canceled in accordance with the Act. If at the time of
the occurrence of a Liquidating Event described in Section 13.1(c)
above, the Partnership holds shares of Publicly-Traded Stock which
carry voting rights with respect to the issuing corporation which
are disproportionately higher than the voting rights of the shares
of any other class of stock of such corporation which are then
issued and outstanding, and which are at that time convertible into
shares of a different class of stock of such issuing corporation,
the General Partner (or any Person acting in the role of General
Partner under the terms of this Agreement) shall be required to
exercise such conversion rights with respect to such shares of
Publicly-Traded Stock to the maximum extent possible in connection
with the winding up of the Partnership's affairs pursuant to this
Section 13.2. The General Partner (or, in the event there is no
remaining General Partner, any Person elected by a majority of the
Limited Partners) shall be responsible for overseeing the winding
up and dissolution of the Partnership, shall take full account of
the Partnership's liabilities and Property, shall cause the
Partnership Property to be liquidated as promptly as is consistent
with obtaining the fair market value thereof, and shall cause the
proceeds therefrom, to the extent sufficient therefor, to be
applied and distributed in the following order:
(a) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than
Partners;
(b) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to Partners;
(c) The balance, if any, to the General Partner and Interest
Holders in accordance with the positive balances of their
respective Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all periods. In
the event that a Liquidating Event occurs prior to the date on
which the capital stock of Blount International, Inc. contributed
to the Partnership pursuant to Section 2 hereof (including any
shares of capital stock into which or for which such Blount
International, Inc. capital stock contributed to the Partnership
may thereafter be converted or exchanged) first becomes Publicly-Traded,
the General Partner shall, to the maximum possible extent,
make distributions under this Section 13.2(c) in the form of
Partnership Property (i.e., in-kind) in the following order and
priority:
(i) The General Partner shall distribute and return to
the Class B Interest Holders the Property contributed by the Class
B Limited Partner; and next
(ii) The General Partner shall distribute and return to
the Class A Interest Holders the Property contributed to the
Partnership by the Class A Limited Partners.
No General Partner shall receive any additional compensation
for any services performed pursuant to this Section 13. Each
General Partner understands and agrees that by accepting the
provisions of this Section 13.2 setting forth the priority of the
distribution of the assets of the Partnership to be made upon its
liquidation, such General Partner expressly waives any right which
it, as a creditor of the Partnership, might otherwise have under
the Act to receive distributions of assets pari passu with the
other creditors of the Partnership in connection with a
distribution of assets of the Partnership in satisfaction of any
liability of the Partnership, and hereby subordinates to said
creditors any such right.
13.3 Compliance With Certain Requirements of Regulations; Deficit
Capital Accounts. In the event the Partnership is "liquidated"
within the meaning of Regulations S. 1.704-1(b)(2)(ii)(g): (a)
distributions shall be made pursuant to this Section 13 to the
General Partner and Interest Holders who have positive Capital
Accounts in compliance with Regulations S. 1.704-1(b)(2)(ii)(b)(2);
and (b) if any General Partner's Capital Account has a deficit
balance (after giving effect to all contributions, distributions,
and allocations for all Fiscal Years, including the Fiscal Year
during which such liquidation occurs), such General Partner shall
contribute to the capital of the Partnership the amount necessary
to restore such deficit balance to zero in compliance with
Regulations S. 1.704-1(b)(2)(ii)(b)(3). If any Interest Holder has
a deficit balance in his, her or its Capital Account (after giving
effect to all contributions, distributions, and allocations for all
Fiscal Years, including the Fiscal Year during which such
liquidation occurs), such Interest Holder shall have no obligation
to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered
a debt owed to the Partnership or to any other Person for any
purpose whatsoever. In the discretion of the General Partner, a
pro rata portion of the distributions that would otherwise be made
to the General Partner and Interest Holders pursuant to this
Section 13.2 may be:
(a) distributed to a trust established for the benefit of the
General Partner and Interest Holders for the purposes of
liquidating Partnership assets, collecting amounts owed to the
Partnership, and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General Partner arising
out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Interest
Holders from time to time, in the reasonable discretion of the
General Partner, in the same proportions as the amount distributed
to such trust by the Partnership would otherwise have been
distributed to the General Partner and Interest Holders pursuant to
Section 13.2 hereof; or
(b) withheld to provide a reasonable reserve of Partnership
liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership,
provided that such withheld amounts shall be distributed to the
General Partner and Interest Holders as soon as practicable.
13.4 Deemed Distribution and Recontribution. Notwithstanding any
other provisions of this Section 13, in the event the Partnership
is liquidated within the meaning of Regulations S. 1.704-1(b)(2)(ii)(g)
but no Liquidating Event has occurred, the Property
shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, solely for federal income tax purposes, the
Partnership shall be deemed to have distributed the Property in
kind to the General Partner and Interest Holders, who shall be
deemed to have assumed and taken subject to all Partnership
liabilities, all in accordance with their respective Capital
Accounts and if any General Partner's Capital Account has a deficit
balance (after giving effect to all contributions, distributions,
and allocations for all Fiscal Years, including the Fiscal Year
during which such liquidation occurs), such General Partner shall
contribute to the capital of the Partnership the amount necessary
to restore such deficit balance to zero in compliance with
Regulations S. 1.704-1(b)(2)(ii)(b)(3). Immediately thereafter, the
General Partner and Interest Holders shall be deemed to have
recontributed the Property in kind to the Partnership, which shall
be deemed to have assumed and taken subject to all such
liabilities.
13.5 Rights of General Partner and Interest Holders. Except as
otherwise provided in this Agreement, (a) each General Partner and
Interest Holder shall look solely to the assets of the Partnership
for the return of his, her or its Capital Contributions and shall
have no right or power to demand or receive property other than
cash from the Partnership and (b) no Interest Holder shall have
priority over any other Interest Holder as to the return of his,
her or its Capital Contributions, distributions, or allocations.
13.6 Notice of Dissolution. In the event a Liquidating Event
occurs or an event occurs that would, but for provisions of Section
13.1, result in a dissolution of the Partnership, the General
Partner shall, within thirty (30) days thereafter, (a) provide
written notice thereof to each of the Partners and to all other
parties with whom the Partnership regularly conducts business (as
determined in the discretion of the General Partner) and (b)
publish notice thereof in a newspaper of general circulation in
each place in which the Partnership regularly conducts business (as
determined in the discretion of the General Partner).
SECTION 14.
MISCELLANEOUS
14.1 Notices. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this
Agreement shall be in writing and sent by overnight courier, by
facsimile or by telephone, if such telephone conversation is
followed by a hard copy of the telephone conversation sent by
regular mail, postage and charges prepaid, and addressed as
follows, or to such other address as such Person may from time to
time specify by notice to the Partners:
(a) If to the Partnership, to the Partnership at the address
set forth in Section 1.4 hereof;
(b) If to the General Partner, to the address set forth in
Section 2.1 hereof; and
(c) If to the Class B Limited Partner, to the address set
forth in Section 2.3 hereof; and
(d) If to a Class A Limited Partner, to the address set forth
opposite his, her or its name in Section 2.2 hereof.
Any such notice shall be deemed to be delivered, given, and
received for all purposes as of the date so delivered.
14.2 Binding Effect. Except as otherwise provided in this
Agreement, every covenant, term, and provision of this Agreement
shall be binding upon and inure to the benefit of the Partners and
their respective heirs, legatees, legal representatives,
successors, transferees, and assigns.
14.3 Construction. Every covenant, term, and provision of this
Agreement shall be construed simply according to its fair meaning
and not strictly for or against any Partner. The terms of this
Agreement are intended to embody the economic relationship among
the Partners and shall not be subject to modification by, or be
conformed with, any actions by the Internal Revenue Service except
as this Agreement may be explicitly so amended and except as may
relate specifically to the filing of tax returns.
14.4 Time. Time is of the essence with respect to this Agreement.
14.5 Headings. Section and other headings contained in this
Agreement are for reference purposes only and are not intended to
describe, interpret, define, or limit the scope, extent, or intent
of this Agreement or any provision hereof. Throughout this
Agreement the symbol "S." is used to designate sections of the Code
and of the Act, and the capitalized word "Section" is used to
designate Sections of this Agreement.
14.6 Severability. Every provision of this Agreement is intended
to be severable. If any term or provision hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity
shall not affect the validity or legality of the remainder of this
Agreement.
14.7 Incorporation by Reference. Every exhibit, schedule, and
other appendix attached to this Agreement and referred to herein is
not incorporated in this Agreement by reference unless this
Agreement expressly otherwise provides.
14.8 Further Action. Each Partner, upon the request of any General
Partner, agrees to perform all further acts and execute,
acknowledge, and deliver any documents which may be reasonably
necessary, appropriate, or desirable to carry out the provisions of
this Agreement.
14.9 Variation of Pronouns. All pronouns and any variations
thereof shall be deemed to refer to masculine, feminine, or neuter,
singular or plural, as the identity of the person or persons may
require.
14.10 Governing Law. The laws of the State of Delaware shall
govern the validity of this Agreement, the construction of its
terms, and the interpretation of the rights and duties of the
Partners.
14.11 Waiver of Action for Partition; No Bill for Partnership
Accounting. Each of the Partners irrevocably waives any right that
he, she or it may have to maintain any action for partition with
respect to any of the Property. To the fullest extent permitted by
law, each Partner covenants that he, she or it will not (except
with the consent of the General Partner) file a bill for
Partnership accounting.
14.12 Counterpart Execution. This Agreement may be executed in
any number of counterparts with the same effect as if all of the
Partners had signed the same document. All counterparts shall be
construed together and shall constitute one agreement.
14.13 Sole and Absolute Discretion. Except as otherwise
provided in this Agreement, all action which any General Partner
may take and all determinations which any General Partner may make
pursuant to this Agreement may be taken and made at the sole and
absolute discretion of such General Partner.
14.14 Specific Performance. Each Partner agrees with the other
Partners that the other Partners would be irreparably damaged if
any of the provisions of this Agreement are not performed in
accordance with their specific terms and that monetary damages
would not provide an adequate remedy in such event. Accordingly,
it is agreed that, in addition to any other remedy to which the
nonbreaching Partners may be entitled, at law or in equity, the
nonbreaching Partners shall be entitled to injunctive relief to
prevent breaches of the provisions of this Agreement and
specifically to enforce the terms and provisions hereof in any
action instituted in any court of the United States or any state
thereof having subject matter jurisdiction thereof.
IN WITNESS WHEREOF, the parties have entered into this
Agreement of Limited Partnership as of the day first above written.
GENERAL PARTNER
BHP, INC.
By: /s/ Winton M. Blount
Winton M. Blount
Its: President
CLASS A LIMITED PARTNERS
/s/ Winton M. Blount III
Winton M. Blount III
/s/ Samuel R. Blount
Samuel R. Blount
/s/ Thomas A. Blount
Thomas A. Blount
/s/ Katherine Blount Miles
Katherine Blount Miles
/s/ Mary Katherine Blount
Mary Katherine Blount as Trustee of
the Katherine Blount Miles Trust
First Alabama Bank as Trustee of
the Katherine Blount Miles Trust
By: /s/ Mark C. Keith
Mark C. Keith
Its: Trust Officer
/s/ Joseph W. Blount
Joseph W. Blount
CLASS B LIMITED PARTNER
/s/ Winton M. Blount
Winton M. Blount
<PAGE>
INDEX OF IMPORTANT DEFINED TERMS
Showing the page numbers upon which they appear
Adjusted Capital Account Deficit 3, 17, 18, 20
Adjusted Capital Contribution 4, 11, 21
Capital Account 5, 15, 18, 19, 22, 32, 42-44
Capital Contribution 6, 13-16, 22, 28, 44
Change of Control 6, 41
Excess Shares 7, 21, 22
Gross Asset Value 4-6, 8, 11, 20
High Vote Stock 9, 21
Issuance Items 9, 19
Liquidating Event 1, 9, 32, 41, 42, 44
Net Cash From Operations 9, 20
Net Cash From Sales or Refinancings 9, 20
Nonrecourse Deductions 10, 18
Nonrecourse Liability 10, 20
Partner Nonrecourse Debt 10, 17, 18, 20
Partner Nonrecourse Debt Minimum Gain 10, 17
Partner Nonrecourse Deductions 10, 18
Partnership Minimum Gain 10, 17
Permitted Transfer 10, 34-36, 38, 39
Precontribution Gain 10, 21, 22
Priority Return 11, 16, 20, 21, 23
Profits 11, 12, 16, 19, 22, 28, 33, 37
Publicly-Traded Stock 12, 21, 22, 42
Regulatory Allocations 12, 19
Special Distributions 12, 21, 22
Substitute General Partner 12, 15
Substitute Limited Partner 12, 15, 26
Tax Matters Partner 12, 24
Unit 13-15, 34
Wholly Owned Affiliate 13, 30, 31, 38
<PAGE>
EXHIBIT 3
TO SCHEDULE 13D
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of the 31st day of October, 1995, by and among Winton M. Blount, an individual
residing in Montgomery, Alabama (the "Stockholder"), and Winton M. Blount III,
an individual residing in Montgomery, Alabama, Thomas A. Blount, an individual
residing in Atlanta, Georgia, Samuel R. Blount, an individual residing in
Birmingham, Alabama, Katherine Blount Miles, an individual residing in
Birmingham, Alabama, the Katherine Blount Miles Trust, and Joseph W. Blount, an
individual residing in Atlanta, Georgia (each of the foregoing Persons is
hereinafter referred to as an "Optionee" and collectively as the "Optionees").
W I T N E S S E T H :
WHEREAS, Stockholder is the sole stockholder of BHP, Inc., a Delaware
corporation ("BHP");
WHEREAS, BHP is the sole general partner of The Blount Holding Company,
L.P., a Delaware limited partnership (the "Partnership");
WHEREAS, Stockholder and the Optionees are presently all of the limited
partners of the Partnership;
WHEREAS, Stockholder through his ownership of the capital stock of BHP
controls the Partnership; and
WHEREAS, the parties hereto desire to provide for an orderly transition of
control over the Partnership after the death of the Stockholder, and in order to
do so, wish to provide for the purchase by the Optionees of the decedent
Stockholder's interest in BHP.
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and for $10.00 and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Stockholder and the Optionees,
on the basis of, and in reliance upon, the representations, warranties,
covenants, obligations and agreements set forth in this Agreement, and upon the
terms and subject to the conditions contained herein, hereby agree as follows:
Section 1. Definitions.
1.1 Defined Terms. As used in this Agreement:
"Agreement" shall mean this Agreement, as the same may be
modified or amended from time to time.
"Assignee" shall mean any person who obtains an interest in the
Partnership from an Optionee and who becomes a party to this Agreement pursuant
to Section 13 hereof.
"BHP" shall mean BHP, Inc., a Delaware corporation, any successor
corporation or entity arising from any merger, consolidation, reorganization or
other change in corporate name or form.
"Blount International" shall mean Blount International, Inc., a
Delaware corporation formerly named HBC, Incorporated, and any successor
corporation or other entity arising from any merger, consolidation,
reorganization or other change in corporate name or form.
"Closing" shall have the meaning given to such term in Section
2.6 of this Agreement.
"Closing Date" shall have the meaning given to such term in
Section 2.6 of this Agreement.
"Defaulting Optionee" shall have the meaning given to such term
in Section 2.5 of this Agreement.
"Exercise Period" shall have the meaning given to such term in
Section 2.2 of this Agreement.
"Exercise Price" shall have the meaning given to such term in
Section 2.1 of this Agreement.
"Katherine Blount Miles Trust" shall mean Mary Katherine Blount
and First Alabama Bank as Trustees, and any successor trustees, under that
certain trust agreement dated November 22, 1971 between and among Winton M.
Blount, Grantor, and the First National Bank of Montgomery, Montgomery, Alabama,
as corporate trustee, primarily for the benefit of Katherine Blount, now
Katherine Blount Miles.
"Majority in Interest" shall have the meaning given to such term
in Section 2.1(b)(iii) of this Agreement.
"Notes" shall have the meaning given to such term in Section 2.4
of this Agreement.
"Option" shall mean the right and option of the Optionees to
purchase the shares of Stock pursuant to the terms of this Agreement.
"Optionee" and "Optionees" shall have the meanings given to such
terms in the preamble to this Agreement and shall include any Assignee and any
transferee of each such Person's interests in the Partnership by reasons of
death or operation of law (including beneficiaries or heirs by will or
intestacy).
"Partnership" shall mean The Blount Holding Company, L.P., a
Delaware limited partnership, and any successor entity arising from any merger,
consolidation, reorganization or other change in partnership name or form.
"Partnership Agreement" shall mean the written partnership
agreement of the Partnership, dated October 31, 1995, among the parties hereto
and BHP as general partner.
"Partnership Interest" shall mean any interest in the Partnership
as a Class A Interest Holder as provided in the Partnership Agreement.
"Person" shall mean an individual, a corporation, a partnership,
a limited liability company, a joint stock association, a trust (including a
business trust), and shall include the singular and the plural.
"Pro Rata Share" shall mean, with respect to an Optionee's right
to purchase Stock pursuant to Section 2.1(a) of this Agreement, a fraction the
numerator of which is such Optionee's Class A Interests in the Partnership
(measured in Points, as defined in the Partnership Agreement) and the
denominator of which is the sum of all Optionees' Class A Interests in the
Partnership (also measured in Points). For all purposes under this Agreement,
an Optionee's Pro Rata Share shall be determined as of the date on which notice
of intent to exercise the Option is given pursuant to Section 2.5 hereof.
"Stock" shall mean all of the issued and outstanding shares of
the common stock of BHP.
"Stockholder" shall have the meaning given to such term in the
preamble to this Agreement.
"Transferee" and "Stockholder's Transferee" shall mean all
persons other than the Stockholder who shall obtain a beneficial ownership
interest in any of the Stock from the Stockholder after the date first above
written, whether by sale, exchange, assignment, pledge, hypothecation,
encumbrance, foreclosure, gift, bequest, devise, passage by intestacy, or
otherwise by operation of law. The term "Transferee" specifically shall
include, without limitation, the personal representative of the Stockholder in
the event that Stock is included in the Stockholder's estate under the
provisions of the Stockholder's will, or by the applicable laws of descent and
distribution.
1.2 Accounting Terms and Calculations. Accounting terms used and
not otherwise defined in this Agreement have the meanings determined by, and all
calculations with respect to accounting or financial matters unless otherwise
provided herein shall be computed in accordance with, generally accepted
accounting principles in effect from time to time in the United States,
consistently applied.
1.3 Construction of Terms. Whenever used in this Agreement, the
pronouns of one gender shall include all genders. References herein to
articles, sections, paragraphs or subsections or the like shall refer to the
corresponding articles, sections, paragraphs or subsections or the like of this
Agreement. The words "hereof," "herein," and terms of similar import shall
refer to this entire Agreement. Unless the context clearly requires otherwise,
the use of the words "including," "such as," or terms of similar meaning, shall
not be construed to imply the exclusion of any other particular elements.
Section 2. Option to Purchase Stock.
2.1 Grant of Option.
(a) Subject to the terms and conditions of this Agreement,
Stockholder hereby grants to each Optionee, severally, the right and
Option to purchase during an Exercise Period (as hereafter defined)
from the Stockholder's Transferee a Pro Rata Share of the Stock, at
and for a total purchase price (the "Exercise Price") determined in
accordance with Section 2.3 below, payable at the time of the exercise
of such Option in accordance with Section 2.4 below.
(b) The Option herein granted may be exercised and the Stock
may be purchased by the Optionees as the result of such exercise, only
within the periods and to the extent hereinafter set forth, namely:
(i) No part of the Option may be exercised and none of
the Stock may be purchased until the date which is three (3) years
after the death of the Stockholder, and then only during one of the
Exercise Periods.
(ii) The Option shall only be exercisable with respect to
all, and no less than all, of the Stock.
(iii) The Option shall only be exercisable if at least a
Majority in Interest of the Optionees who are Class A Interest Holders
in the Partnership agrees to exercise the Option, and in such event,
all of the Optionees shall be required to purchase their Pro Rata
Shares of the Stock; for this purpose a "Majority in Interest" of
Optionees shall be those Optionees who are Class A Interest Holders in
the Partnership and who hold rights to purchase more than fifty
percent (50%) of the Stock as of the time of such determination.
2.2 Exercise Dates. The Optionees shall be entitled to exercise the
option herein granted only during the following periods (each, an "Exercise
Period") to the extent hereinafter provided:
(a) The Option will first be exercisable during the ninety (90)
day period which begins on the date which is three (3) years after the
death of the Stockholder (the "First Exercise Period");
(b) If the Option is not exercised during the First Exercise
Period, it will next become exercisable during the ninety (90) day
period which begins on the date which is two (2) years after the date
on which the First Exercise Period began (the "Second Exercise
Period");
(c) If the Option is not exercised during the First Exercise
Period or the Second Exercise Period, it will next become exercisable
during the ninety (90) day period which begins on the date which is two
(2) years after the date on which the Second Exercise Period began (the
"Third Exercise Period");
(d) If the Option is not exercised during the First Exercise
Period, the Second Exercise Period or the Third Exercise Period, it will
last become exercisable during the ninety (90) day period which begins on
the date which is two (2) years after the date on which the Third
Excercise Period began (the "Final Exercise Period"); and
(e) If the Option is not exercised during the First Exercise
Period, the Second Exercise Period, the Third Exercise Period or the Final
Exercise Period, it shall lapse and cease to be exercisable and all shares
of Stock covered thereby shall be considered released from the provisions
of this Agreement.
(f) For purposes of the preceding subparagraphs 2.2(a) through
2.2(e), an Exercise Period shall be measured commencing on the date after
the death of the Stockholder.
2.3 Exercise Price. The Exercise Price for the Stock due upon the
exercise of the Option shall be determined by the accounting firm regularly
employed by the Partnership to prepare the Partnership's federal income tax
return in accordance with the following formula:
Exercise Price = [($2,800,000 / R) - $26,504,194.75] / (1 - T)
where,
R = the annual rate of interest payable on ten-year U.S.
Treasury bonds as of the date notice is given by the
Optionees of their intent to exercise the Option; and
T = the effective combined federal and Alabama income tax rate
(taking into account the extent to which each such tax is
deductible for purposes of determining the other) which
is, or will be, applicable to the sale of the Stock;
provided that, in no event will T exceed the actual tax
rate payable on the sale of the Stock in accordance with
applicable state and federal tax laws.
2.4 Payment of the Exercise Price.
(a) The Exercise Price for the Stock shall be payable in: (i)
legal tender of the United States of America, (ii) shares of
publicly-traded securities of Blount International valued at the fair
market value of such shares on the date of exercise, (iii) a promissory
note or notes of the exercising Optionees (the "Notes"), or (iv) in any
combination of such legal tender, shares of stock and Notes having an
aggregate value equal to the Exercise Price. The term "fair market value"
shall be the mean between the high and low price of such stock on the New
York Stock Exchange on the date that the Option is exercised, for purposes
of establishing the value of shares of such stock tendered in payment of
the Exercise Price, or if said exercise date is not a trading day on such
exchange, on the trading day next preceding said exercise date. Any Notes
shall be in form satisfactory to the Transferee, shall be secured by such
collateral as shall be acceptable to the Transferee, and bear interest
(payable monthly) at the per annum rate equal to the annual rate of
interest payable on ten-year U.S. Treasury bonds on the date of exercise
plus one percent (1%) and the principal amount of the Notes shall be
payable in full no later than one year after the date on which the
Option is exercised.
(b) If any Optionee shall fail to pay his, her or its share of
the Exercise Price (a "Defaulting Optionee"), the other Optionees (the
"Non-Defaulting Optionees") shall be required to make up the deficiency in
order to effectuate closing the purchase and sale of the Stock in
accordance with Section 2.1 hereof, and such deficiency shall be charged
against the Defaulting Optionee's share of Partnership assets to be
distributed in liquidation of the Partnership. Each Optionee hereby
agrees that if he or she shall become a Defaulting Optionee, then, without
notice to or from any such party and without any further action of any
kind, he or she hereby pledges and grants to the Non-Defaulting Optionees
a lien and security interest in such Defaulting Optionee's Partnership
Interest, to secure such Defaulting Optionee's obligation to pay his or
her Pro Rata Share of the Exercise Price and other obligations under this
Agreement. Each Defaulting Optionee hereby further agrees that he or she
shall, on demand, execute such UCC-1 financing statements and other
instruments and documents which may be necessary or desirable in order for
the Non-Defaulting Optionees to perfect their security interests in such
Defaulting Optionee's Partnership Interest, and agrees that such
Non-Defaulting Optionees shall have in addition to all other rights and
remedies afforded to them under this Agreement and under the Partnership
Agreement, or otherwise at law or in equity, the rights of a secured party
under the Uniform Commercial Code.
2.5 Notice of Exercise of Option.
(a) At any time during an Exercise Period, the Optionees may
deliver notice to the Stockholder's Transferee stating that at least a
Majority in Interest of the Optionees has agreed to exercise the Option
and that the Optionees thereby exercise their rights hereunder to purchase
all of the Stock. Such notice (i) shall be in writing, signed by
Optionees holding at least a Majority in Interest and in substantially
the form of Exhibit A attached hereto; (ii) shall be deemed to have been
duly given if sent in accordance with Section 11 below, addressed to
Stockholder's Transferee at his address described in Section 11 below; and
(iii) shall be deemed to have been delivered on the date of its mailing or
date of delivery if delivered by courier service.
(b) At any time during the period beginning sixty (60) days
before the first (1st) day of any Exercise Period and ending on the
eightieth (80th) day of such Exercise Period, any one or more Optionee(s)
who individually or together own at least twenty percent (20%) of the
Class A Interests (as defined in the Partnership Agreement and measured in
Points) may call a meeting of the Optionees for the purpose of taking a
vote of the Optionees to determine whether a Majority in Interest of the
Optionees desires to exercise the Option during such Exercise Period.
Such meeting shall be held at such place in the State of Alabama or the
State of Georgia, as may be designated by the Optionee(s) calling the
meeting and stated in the notice of the meeting. The Optionee(s) calling
the meeting shall notify the other Optionees in writing (addressed to the
Optionees at their respective addresses described in Section 11 below or
as appear on the records of the Partnership) of the date, time, and place
of such meeting no fewer than ten (10) nor more than twenty (20) days
before the meeting date. The Optionee(s) calling the meeting shall use
their, his or her, as the case may be, reasonable efforts to take into
consideration the schedules and places of residence of as many other
Optionees as reasonably possible in making the determination of the date,
time and specific place of the meeting in an effort to choose a date, time
and specific place reasonably convenient to a Majority in Interest of the
other Optionees. Any or all of the Optionees may participate in the
meeting by, or conduct the meeting through the use of, any means of
communication by which all participating may simultaneously hear each
other during the meeting. An Optionee participating in a meeting by this
means is deemed to be present. The notice of the meeting shall include a
statement of the purpose or purposes for which the meeting is called. The
record date for determining Optionees entitled to notice of and to vote at
the meeting shall be the day before the first notice is delivered to the
other Optionees. If any such meeting is adjourned to a different date,
time or place, notice need not be given of the new date, time, or place if
the new date, time, or place is announced at the meeting before
adjournment. An Optionee may waive any notice required by this section
before or after the date and time stated in the notice. Any such waiver
shall be in writing, be signed by the Optionee entitled to the notice, and
be delivered to the corporate secretary of BHP. An Optionee's attendance
at such meeting: (a) waives objection to lack of notice or defective
notice of the meeting, unless the Optionee at the beginning of the
meeting objects to holding the meeting or transacting business at the
meeting and (b) waives objection to consideration of a particular matter
at the meeting that is not within the purpose or purposes described in the
meeting notice, unless the Optionee objects to considering the matter
before action is taken on the matter. Each Optionee shall have the number
of votes equal to such Optionee's Class A Interest in the Partnership
(measured in Points, as defined in the Partnership Agreement). Each
Optionee may vote in person or by proxy. An Optionee may appoint a proxy
to vote or otherwise act for the Optionee by signing an appointment form,
either personally or by the Optionee's attorney-in-fact. The attendance
of Optionees who are Class A Interest Holders (as defined in the
Partnership Agreement) owning at least a majority of the Class A Interests
(as defined in the Partnership Agreement and measured in Points) shall
constitute a quorum for purposes of the meeting. Once a Point is
represented for any purpose at a meeting, it is, unless it is established
to the contrary, presumed present for quorum purposes for the remainder of
the meeting. The exercise of the Option shall be considered approved by
the Optionees if the votes cast in favor of exercising the Option equal or
exceed a Majority in Interest. Notwithstanding the foregoing, the
Optionees may elect to exercise the Option without a meeting if the vote
is evidenced by one or more written consents describing the action taken,
signed by Optionees having at least a Majority in Interest, and delivered
to the corporate secretary of BHP. Notwithstanding anything in this
subsection (b) or otherwise in this Agreement to the contrary, neither the
Stockholder nor the Stockholder's Transferee shall have any duty or
responsibility whatsoever to ascertain, nor shall have any right to object
as to whether or not the Optionees have complied with the procedures set
forth in this subsection (b), and the Stockholder's Transferee shall be
entitled to and shall rely conclusively on the notice provided for in
subsection (a) above as to whether a Majority in Interest has agreed to
exercise the Option.
2.6 Closing of Purchase and Sale of Stock.
(a) The closing of the purchase of the Stock (the "Closing")
will take place on such date and at such time as the Optionees may specify
in their notice of exercise of the Option given pursuant to Section 2.5(a)
above, but not later than thirty (30) days after the date of such notice
(the "Closing Date").
(b) The Closing will take place at the offices of Bradley,
Arant, Rose & White, 2001 Park Place, Suite 1400, Birmingham, Alabama
35203 (or such other place as agreed upon by the parties in writing), on
the Closing Date.
(c) At the Closing, the Optionees shall make payment to the
Transferee of the aggregate Exercise Price for the Stock so purchased, and
the Transferee shall deliver to the Optionees certificates representing
the number of shares of Stock purchased by each pursuant to the exercise
of theOption, which certificates shall be fully endorsed for transfer or
accompanied by properly executed stock transfer powers.
Section 3. Certain Representations, Warranties and Additional
Covenants of the Parties.
3.1 Legend. Concurrently with the execution of this Agreement,
Stockholder shall cause the following legend to be placed on each certificate
representing Stock now owned or hereafter acquired by him:
"The shares of stock represented by this
certificate are subject to the right of certain
persons to purchase said shares in accordance with
the terms and conditions of that certain Stock
Option Agreement dated October 31, 1995, among
Winton M. Blount and Winton M. Blount III, Thomas A.
Blount, Samuel R. Blount, Katherine Blount Miles,
the Katherine Blount Miles Trust and Joseph W.
Blount."
Stockholder or his Transferee shall not remove such legend, nor permit
its removal by anyone other than the Optionees, so long as this Agreement shall
remain in effect in any respect.
3.2 Transfers by Stockholder. Stockholder shall not sell, transfer,
assign, pledge, give or otherwise dispose of any of his ownership interest in
BHP at any time during which this Agreement is in effect unless such interest is
transferred subject to the rights of the Optionees under this Agreement, and the
Stockholder's Transferee becomes a party to this Agreement by executing a copy
or counterpart of this Agreement evidencing such Transferee's agreement to
become subject to all of the terms and conditions hereof to which the
Stockholder is subject. Nothing in this Section 3.2 shall restrict or prohibit
the transfer of such ownership interests by operation of law at the death of
Stockholder, provided that any such transfer shall be made subject to this
provision of this Agreement in favor of the Optionees. The Stockholder shall
give written notice to the Optionees of any proposed transfer of a beneficial
interest in the Stock at least ten (10) days in advance of such proposed
transfer. Such written notice shall include the following information:
(i) The name and mailing address of the Transferee;
(ii) The number of shares of Stock to be transferred;
(iii) A copy of the copy or counterpart of this Agreement
executed by the Transferee in accordance with this Section 3.2.
3.3 Prohibited Actions. So long as this Agreement shall remain in
effect, unless the prior written consent of the Optionees is first obtained,
Stockholder will not cause or allow BHP to (i) make any change in its authorized
capital stock, (ii) issue any stock options, warrants or other rights calling
for the issue, sale or delivery of its capital stock or other equity securities,
(iii) pay any stock dividend or make any reclassification in respect of its
outstanding shares of capital stock, (iv) issue, sell or deliver any shares of
its capital stock (or securities convertible into or exchangeable, with or
without additional consideration, for such capital stock), or (v) purchase or
otherwise acquire for a consideration any outstanding shares of its capital
stock.
3.4 Change of Control. Each of the Stockholder and the Optionees
acknowledges that the exercise of the Option will cause a "Change of Control" of
BHP (as defined in Section 1.10(k) of the Partnership Agreement) and as provided
in Section 13.1 of the Partnership Agreement will result in an automatic
termination and liquidation of the Partnership.
Section 4. Conditions to the Obligations of the Parties.
4.1 Conditions to Obligations of the Optionees. The obligations of
the Optionees to purchase the Stock shall be subject to the fulfillment at or
prior to the time of the Closing of the condition that the Stockholder and the
Transferee shall have performed and complied with all of the obligations and
conditions required by this Agreement to be performed or complied with by the
Stockholder or the Transferee at or prior to the time of Closing.
4.2 Conditions to the Obligations of the Stockholder. The
obligations of the Stockholder and the Transferee to sell the Stock shall be
subject to the fulfillment at or prior to the time of the Closing of the
condition that the Optionees shall have performed and complied with all of the
obligations and conditions required by this Agreement to be performed or
complied with by each of them at or prior to the time of Closing.
Section 5. Expenses of the Parties.
All expenses incurred by or on behalf of the Stockholder and the
Transferee in connection with the negotiation, execution and performance of this
Agreement, including the fees and expenses of counsel for Stockholder and the
Transferee, shall be paid by the Stockholder and the Transferee, whether or not
the transactions contemplated in this Agreement are consummated. All expenses
incurred by or on behalf of the Optionees in connection with the negotiation,
execution and performance of this Agreement, including the fees and expenses of
counsel for the Optionees, shall be paid by the Optionees, whether or not the
transactions contemplated in this Agreement are consummated.
Section 6. Survival of Representations, Warranties and Agreements.
All representations, warranties, covenants and agreements contained
herein shall survive the execution and delivery of this Agreement and the
Closing Date hereunder, except to the extent otherwise specifically indicated
herein.
Section 7. Dispute Resolution.
Except as otherwise provided for in this Section 7 or agreed to in
writing by the parties hereto, the parties hereto, including Assignees and
Transferees, by executing this Agreement, waive their right to trial by jury of
disputes among themselves arising out of relating to this Agreement or any
agreement or instrument relating to this Agreement, and the parties hereto agree
that all such disputes shall be resolved exclusively by binding arbitration, as
more specifically set forth below. Except as otherwise provided for in this
Section 7 or agreed in writing by the parties hereto, any dispute among the
parties hereto, whether based in contract, tort or otherwise, in any way arising
out of or relating to this Agreement or any agreements or instruments relating
to this Agreement shall be resolved exclusively by binding arbitration in
accordance with the Federal Arbitration Act (9 U.S.C. S. 1 et. seq.) and the
Commercial Arbitration Rules then obtaining ("Rules") of the American
Arbitration Association ("AAA"). In the event of any inconsistency between this
Section 7 and the Rules, this Section 7 shall control. All statutes of
limitations which otherwise would be applicable to an action brought by a party
in court shall be applicable in any such arbitration proceedings, and the
commencement of an arbitration proceeding under this Agreement shall be deemed
the commencement of an action for such purposes. An arbitration proceeding
shall be deemed commenced upon the receipt by the AAA of a party's written
demand for arbitration. The arbitration proceeding shall be conducted in
Birmingham, Alabama or at such other place as may be selected by mutual
agreement of the parties hereto. Judgment upon the award rendered in
arbitration may be entered in the Circuit Court of Jefferson County, Alabama,
and each party hereto specifically consents to venue and jurisdiction in the
Circuit Court of Jefferson County, Alabama with respect to any award so entered.
The arbitrator or arbitrators shall not act as amiable compositeurs. No
provision of, or the exercise of any rights under, this Section 7 shall limit
the right of any party to exercise (in addition to its rights to arbitrate) any
self-help remedies or to realize upon or foreclose against any collateral or
security whether pursuant to a power of sale or by judicial foreclosure or
otherwise before, after or during the pendency of any arbitration. The Federal
Arbitration Act shall apply to the construction and interpretation of this
Section 7 notwithstanding any other choice of law provision contained elsewhere
in this Agreement. The parties acknowledge and agree that the transactions
contemplated by this Agreement, and any disputes which may arise hereunder or in
relation to or involving this Agreement, involve interstate commerce and the
performance of the obligations of the parties hereunder involve substantial
interstate activities. This arbitration agreement shall survive termination of
this Agreement.
Section 8. Amendments.
This Agreement may be amended only by a writing executed by all of the
parties hereto (including any Assignees and Transferees).
Section 9. Entire Agreement.
This Agreement and the other agreements (if any) expressly provided
for herein set forth the entire understanding of the parties hereto and
supersede all prior contracts, agreement, arrangements, communications,
discussions, representations and warranties, whether oral or written, between
the parties with respect to the subject matter hereof, and no term or provision
of this Agreement may be altered, amended, or waived except in writing signed by
the parties.
Section 10. Governing Law.
This Agreement shall in all respects be governed by and construed in
accordance with the laws of the State of Alabama, without regard to its
principles
governing conflicts of law.
Section 11. Notices.
Any notice, request or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
sent by registered or certified mail, return receipt requested, postage prepaid,
facsimile transmission (provided that receipt of such facsimile is confirmed by
the addressee), or by any recognized courier service, to the parties at their
respective addresses set forth below:
To the Stockholder:
Winton M. Blount
c/o BHP, Inc.
4520 Executive Park Drive
Montgomery, Alabama 36116
Telephone: 334-244-4354
Facsimile: 334-271-8188
With a copy to:
Bradley, Arant, Rose & White
2001 Park Place, Suite 1400
Birmingham, Alabama 35203
Attention: Thomas N. Carruthers, Esq.
Telephone: 205-521-8263
Facsimile: 205-521-8714
To the Stockholder's Transferee:
To the address included in the written notice described in
Section 3.2 hereof.
To the Optionees:
Winton M. Blount III
1919 South Hull Street
Montgomery, Alabama 36104
Telephone: 334-271-3991
Facsimile: 334-271-2566
Thomas A. Blount
3 Barksdale Drive, N.E.
Atlanta, Georgia 30309
Telephone: 404-875-9505
Facsimile: 404-875-9405
Samuel R. Blount
2 Rockledge Road
Birmingham, Alabama 35213
Telephone: 205-853-9898 - X290
Facsimile: 205-854-4054
Katherine Blount Miles
3124 Pine Ridge Road
Birmingham, Alabama 35213
Telephone: 205-870-5381
Facsimile: 205-870-5382
Joseph W. Blount
781 Myrtle Street, N.E.
Atlanta, Georgia 30308
Telephone: 404-872-0800
Facsimile: 404-872-0859
To the Assignees:
To the address included in the written notice described in
Section 13.2 hereof.
Any party by written notice to the others may change the address or the persons
to whom notices or copies thereof shall be directed.
Section 12. Counterparts.
This Agreement and any other written agreement provided for herein may
be executed in any number of counterparts, each of which shall be deemed to be
an original, and all of which together will constitute one and the same
instrument.
Section 13. Assignment.
13.1 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the heirs, personal representatives, legal
representatives, executors, administrators, successors and assigns of each party
hereto. Provided, however, none of the Optionees may assign his or her rights,
powers or interests or delegate his or her obligations under this Agreement
other than to Assignees of his, her or its Partnership Interest as provided
herein below.
13.2 Required Assignment in the Event of an Assignment of Partnership
Interest.
Each Optionee hereby agrees to transfer and assign all or a portion of
his or her rights and obligations under this Agreement in the event and to the
extent that such Optionee makes an assignment of his or her Partnership
Interest. The portion of the Option rights and obligations which shall be
assigned shall be proportionate to the amount of such Partnership Interest
assigned. Each Optionee further agrees that he or she shall make no such
assignment of any Partnership Interest unless the Assignee thereof shall become
a party to this Agreement by executing a copy or counterpart of this Agreement
evidencing such Assignee's agreement to become subject to all of the terms and
conditions hereof to which the Optionees are subject. Nothing in this Section
13 shall restrict or prohibit the transfer of such ownership interests by
operation of law at the death of an Optionee, provided that any such transfer
shall be made subject to this provision of this Agreement in favor of the
Stockholder. Each Optionee shall give written notice to the Stockholder or to
the Stockholder's Transferee of any proposed assignment of a beneficial interest
in the Partnership at least ten (10) days in advance of such proposed
assignment. Such written notice shall include the following information:
(a) The name and mailing address of the Assignee;
(b) The portion of the Partnership interest to be assigned;
(c) A copy of the copy or counterpart of this Agreement executed by
the Assignee in accordance with this Section 13.
Section 14. Waivers.
Any waiver by any party of any violation of, breach of or default
under any provision of this Agreement or any other agreements provided for
herein, by any other party shall not be construed as, or constitute, a
continuing waiver of such provision, or waiver of any other violation of, breach
of or default under any other provision, or waiver of any other violation of,
breach of or default under any other provision of this Agreement or any other
agreements provided for herein.
Section 15. Severability.
Any provision of this Agreement that is invalid or unenforceable in
any situation or in any jurisdiction shall not affect the validity or
enforceability of the remaining provisions hereof or the validity or
enforceability of the offending provision in any other situations or in any
other jurisdictions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
STOCKHOLDER:
/s/ Winton M. Blount
Winton M. Blount
OPTIONEES:
/s/ Winton M. Blount III
Winton M. Blount III
/s/ Thomas A. Blount
Thomas A. Blount
/s/ Samuel R. Blount
Samuel R. Blount
/s/ Katherine Blount Miles
Katherine Blount Miles
/s/ Mary Katherine Blount
Mary Katherine Blount as Trustee of
the Katherine Blount Miles Trust
First Alabama Bank as Trustee of
the Katherine Blount Miles Trust
By: /s/ Mark C. Keith
Mark C. Keith
Its: Trust Officer
/s/ Joseph W. Blount
Joseph W. Blount
<PAGE>
EXHIBIT 4
TO SCHEDULE 13D
REGISTRATION RIGHTS AND STOCK TRANSFER RESTRICTION AGREEMENT
This REGISTRATION RIGHTS AND STOCK TRANSFER RESTRICTION AGREEMENT
(the "Agreement") made as of the 3rd day of November, 1995, by and between
Blount International, Inc., a Delaware corporation formerly named HBC,
Incorporated (the "Company"), and Winton M. Blount ("Mr. Blount"), Carolyn S.
Blount ("Mrs. Blount"), Winton M. Blount III, Samuel R. Blount, Joseph W.
Blount, Thomas A. Blount, and Katherine Blount Miles (Mr. Blount, Mrs. Blount
and said other individuals being herein referred to collectively as the "Blount
Family"), and The Blount Holding Company, L.P., a Delaware limited partnership
(the "Blount Family Partnership," and, together with the Blount Family, being
sometimes referred to herein as the "Primary Holders"),
Witnesseth:
Whereas, as of the date of this Agreement, a wholly-owned subsidiary
of the Company is being merged with and into Blount, Inc., a Delaware
corporation (the "Blount Subsidiary"), pursuant to that certain Plan and
Agreement of Merger dated August 17, 1995 (the "Merger Agreement"), which
transaction is herein sometimes referred to as the "Merger;" and
Whereas, pursuant to the terms of the Merger Agreement, the parties
hereto desire to provide certain registration rights to the Primary Holders and
certain related parties with respect to the shares of Company Class A Common
Stock, par value $0.01 per share (the "Company Class A Common Stock"), and the
shares of Company Class B Common Stock, par value $0.01 per share (the "Company
Class B Common Stock," and, together with the Company Class A Common Stock,
being sometimes referred to herein as the "Company Common Stock"), owned
following the Merger by the Primary Holders and such related parties, and to
provide for restrictions on the transfer and sale of the Company Common Stock
owned by the Primary Holders upon the terms and subject to the conditions
contained herein;
Now, Therefore, in consideration of the mutual promises and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Primary
Holders hereby agree as follows:
Article 1. Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings:
(a) "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute, and the rules and
regulations thereunder, all as the same shall be in effect at the time.
(c) "Family Transferee" shall mean any of the lineal descendants,
spouses of lineal descendants and lineal descendants of such spouses, including
adoptive children of each of such persons, of Mr. Blount's parents.
(d) "Form S-3" shall mean such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the Commission which permits inclusion or incorporation
of substantial information by reference to other documents filed by the Company
with the Commission.
(e) "Holders" shall mean the Primary Holders and the related persons and
entities to whom transfers of Company Common Stock may be made by Primary
Holders pursuant to Section 3.1(i) of this Agreement, provided, that notice of
such transfer is given to the Company in the manner provided therefor in this
Agreement.
(f) "Minimum Registrable Amount" shall mean the lesser of (i) shares of
Company Common Stock having a minimum value of $20,000,000, based upon the
trading price of Company Class A Common Stock at the time registration is
demanded or (ii) 600,000 shares of Company Common Stock, or such lesser number
of shares of Registrable Securities as the Board of Directors of the Company
shall approve.
(g) "Permitted Transferee" shall mean the following:
(i) In the case of a Restricted Holder who is a natural
person holding the shares of Company Common Stock in question,
"Permitted Transferee" means (I) a Family Transferee, (II) the
custodian under any Uniform Transfers to Minors Act or similar law
for a minor who is a Family Transferee, (III) the trustee of a trust
(including a voting trust) created principally for the benefit of
one or more Family Transferees, (IV) any split-interest trust
described in Section 4947 of the Internal Revenue Code, as it may
from time to time be amended (herein referred to as a "Charitable
Organization") of which one or more Family Transferees is a
beneficiary, (V) a corporation of which one or more Family
Transferees or such Family Transferees' Permitted Transferees (as
determined under this clause (i)) collectively beneficially own a
majority of the combined voting power of the outstanding capital
stock entitled to vote for the election of directors, a partnership
of which one or more Family Transferees or such Family Transferees'
Permitted Transferees (as determined under this clause (i))
collectively beneficially own a majority of the partnership
interests entitled to participate in the management of the
partnership, a member managed limited liability company of which one
or more Family Transferees or such Family Transferees' Permitted
Transferees (as determined under this clause (i)) collectively
beneficially own a majority of the outstanding member interests
entitled to participate in the management of the limited liability
company, or a manager managed limited liability company of which all
of the managers entitled to participate in decisions with respect to
the voting or disposition by the limited liability company of the
Company Common Stock are either Family Transferees or such Family
Transferees' Permitted Transferees (as determined under this clause
(i)), provided, that no such corporation, partnership or company
shall be a "Permitted Transferee" unless such corporation,
partnership or company agrees in writing with the Company to be
bound by the provisions of Section 3.3 hereof, (VI) the estate of a
Family Transferee, or the executor, administrator or personal
representative of the estate of a Family Transferee, (VII) the
guardian, conservator, or custodian of any Family Transferee
adjudged disabled by a court of competent jurisdiction, (VIII) a
nominee of a Family Transferee, provided such Family Transferee
possesses the power to direct the voting and disposition of the
shares of Company Common Stock placed in the nominee's name, and
(IX) the Company or any subsidiary of the Company (herein
collectively referred to sometimes as the "Company").
(ii) In the case of a Restricted Holder holding the shares of
Company Common Stock in question as a custodian under the Uniform
Transfers to Minors Act or similar law, "Permitted Transferee" means
(I) the minor for whose benefit such shares are being held, (II) the
executor, administrator, or personal representative of the estate of
such minor, and (III) any Permitted Transferee (as determined under
clause (i) above) of such minor.
(iii) In the case of a Restricted Holder holding the shares of
Company Common Stock in question as a trustee of a trust (other than
a Charitable Organization), "Permitted Transferee" means (I) any
person transferring such Company Common Stock to such trust, (II)
any Permitted Transferee (as determined under clause (i) above) of
any such transferor, (III) any person to whom or for whose benefit
income or principal of a trust which was irrevocable on the date
hereof may be distributed during or at the end of the term of such
trust whether by power of appointment or otherwise, and (IV) any
Permitted Transferee (as determined under clause (i) above) of any
such person to whom or for whose benefit income or principal of a
trust described in subclause (III) of this clause (iii) may be
distributed.
(iv) In the case of a Restricted Holder which is a Charitable
Organization holding the shares of Company Common Stock in question,
"Permitted Transferee" means (I) any person transferring such
Company Common Stock to such Charitable Organization, (II) any
Permitted Transferee (as determined under clause (i) above) of such
transferor, and (III) the Company.
(v) In the case of a Restricted Holder which is a
corporation, partnership or limited liability company (other than a
Charitable Organization) holding record and beneficial ownership of
the shares of Company Common Stock in question on the date hereof,
"Permitted Transferee" means (I) any person who was, on the date
hereof, a stockholder of such corporation, a partner of such
partnership, or a member of such limited liability company, (II) any
Permitted Transferee (as determined under this paragraph (g) of this
Article 1) of any such stockholder, partner or member referred to in
this clause (v), and (III) the Company.
(vi) In the case of a Restricted Holder which is a
corporation or partnership (other than a Charitable Organization or
a corporation, partnership, or limited liability company described
in clause (v) above) holding the shares of Company Common Stock in
question, "Permitted Transferee" means (I) any person who previously
transferred such shares of Company Common Stock to such corporation,
partnership or limited liability company, and (II) any Permitted
Transferee (as determined under clause (i) above) of any such
transferor.
(vii) In the case of a Restricted Holder holding the shares of
Company Common Stock in question as the estate of a deceased person
(the "Decedent") or as the executor, administrator, personal
representative of the estate of a Decedent, "Permitted Transferee"
means (I) any Permitted Transferee (as determined under clause (i)
above) of the Decedent, and (II) the Company.
(viii) In the case of a Restricted Holder holding the
shares of Company Common Stock in question as the trustee or
receiver of the estate of a bankrupt or insolvent Restricted Holder,
"Permitted Transferee" means (I) such bankrupt or insolvent
Restricted Holder, and (II) any Permitted Transferee (as determined
under clause (i) above) of such bankrupt or insolvent Restricted
Holder.
(ix) In the case of a Restricted Holder holding of record
(but not beneficially) the shares of Company Common Stock in
question as nominee for any person who is the beneficial owner
thereof, "Permitted Transferee" means (I) such beneficial owner, and
(II) any Permitted Transferee (as determined under clause (i) above)
of such beneficial owner.
For purposes of this definition of "Permitted Transferee:"
(A) The relationship of any person that is derived by or
through legal adoption shall be considered a natural one.
(B) Each joint owner of shares of Company Common Stock shall
be considered a holder of such shares who must qualify as a
Permitted Transferee.
(C) Unless otherwise specified, the term "person" means both
natural persons and legal entities.
(D) Each reference to a corporation or the Company shall
include any successor corporation or limited liability company
resulting from merger, consolidation, reorganization or
recapitalization; each reference to a partnership shall include any
successor partnership resulting from the death or withdrawal of a
partner; each reference to a trustee, executor or any other personal
representative shall include any successor trustee, successor
executor or successor personal representative.
(h) "Register", "Registered," and "Registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document by the
Commission.
(i) "Registrable Securities" shall mean any shares of Company Common
Stock owned at the time in question by any of the Holders and shall include any
security of the Company or any other entity for which any shares of the Company
Common Stock shall have been exchanged or converted into by reason of a merger,
consolidation, reorganization or other similar transaction.
(j) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Company Common Stock outstanding
which are, and the number of shares of Company Common Stock issuable pursuant
to then exercisable or convertible securities which are, Registrable Securities.
(k) "Restricted Holder" shall mean (i) a Primary Holder or (ii) any
person or legal entity which from time to time becomes subject to any of the
restrictions on transfer of Company Common Stock set forth in Sections 2.15,
3.1(i), 3.1(iv), 3.1(vi) or 3.2 of this Agreement.
(l) "Rule 144" shall mean Rule 144 as promulgated by the Commission
under the Securities Act, as such rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
(m) "Rule 145" shall mean Rule 145 as promulgated by the Commission
under the Securities Act, as such rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
(n) "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar successor federal statue, and the rules and regulations
thereunder, all as the same shall be in effect at the time.
Article 2. Registration. The Company covenants and agrees with the
Primary Holders and the Holders, as third party beneficiaries of this
Agreement, as follows:
Section 2.1 Request for Registration.
(a) If the Company shall receive at any time a written request from
Primary Holders requesting that the Company file a registration statement under
the Securities Act covering the registration for sale in the aggregate of not
less than the Minimum Registrable Amount of Registrable Securities (which shall,
unless otherwise consented to by the Company, be by means of an underwriting),
then the Company shall, within ten (10) days of the receipt thereof, give
written notice of such request to all Holders and shall, subject to the
limitations of subsection 2.1(b), effect as soon as practicable (including
filing an initial registration statement with the Commission with respect
thereto within 45 days of the receipt of such notice from the Primary Holders)
the registration under the Securities Act of all Registrable Securities which
the Holders request to be registered by written notice to the Company, which
notices shall be given within twenty (20) days of the mailing of such notice by
the Company in accordance with Section 4.5 hereof; provided, that the Company
may delay the filing of such registration for up to 75 additional days, or a
total of 120 days after the receipt by the Company of the initial notice from
the Primary Holders, if, as a result of such registration, the Company would be
required to disclose information not theretofore disclosed as to which the
Company has a valid business reason for deferring disclosure thereof.
(b) If the distribution of the Registrable Securities is to be by means
of an underwriting, the underwriter will be selected by a majority in interest
of the Primary Holders initiating the registration request hereunder
("Initiating Holders") and approved by the Company, which approval shall not be
unreasonably withheld. In such event, the right of any Holder to include such
Holder's Registrable Securities in such registration shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company as
provided in Subsection 2.3(e)) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by a
majority in interest of the Initiating Holders. Notwithstanding any other
provision of this Section 2.1, if the underwriter advises the Initiating Holders
in writing that marketing factors require a limitation of the number of shares
to be underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder or in such other
proportions as may be mutually agreed to by such Holders; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting; and provided further, however, that the number
of shares of Registrable Securities held by Primary Holders to be included in
such underwriting shall not be reduced unless Registrable Securities held by
Holders other than the Primary Holders are first excluded entirely from the
underwriting.
(c) The Company is obligated to effect only three (3) such registrations
pursuant to this Section 2.1, and shall not be obligated to take action in
response to a written request pursuant to Section 2.1(a) hereof until eighteen
(18) months have elapsed following the effective date of a registration
statement filed in response to a written request pursuant to Section 2.1(a).
Section 2.2 Company Registration. If (but without any obligation to
do so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the Holders)
any of its stock under the Securities Act in connection with the public offering
of such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days after mailing of
such notice by the Company in accordance with Section 4.5, the Company shall,
subject to the provisions of Section 2.7, cause to be registered under the
Securities Act all of the Registrable Securities that each such Holder has
requested to be registered.
Section 2.3 Obligations of the Company. Whenever required under
this Article 2 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to one hundred twenty (120) days (or the
remainder of the two-year period during which registration may be required, if
pursuant to Section 2.11) for the purpose of selling all stock or securities
registered thereunder.
(b) Prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Holders, provided,
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Article 2, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Article 2, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
Section 2.4 Furnish Information.
(a) It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Article 2 with respect to the Registrable
Securities of any selling Holder that such Holder shall furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of such Holder's Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 2.1 or Section 2.11 if, due to the
operation of subsection 2.4(a), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 2.1(a) or subsection
2.11(b) (2), whichever is applicable.
Section 2.5 Expenses of Demand Registration or Form S-3. All
expenses other than underwriting discounts and commissions and the fees and
disbursements of counsel for the selling stockholders incurred in connection
with registrations, filings or qualifications pursuant to Section 2.1 or 2.11,
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, and fees and disbursements of counsel for the
Company shall be borne by the Company; provided, however, that the Company shall
not be required to pay for any expenses of any registration proceeding begun
pursuant to Section 2.1 or Section 2.11 which it is obligated to pay pursuant to
this Section 2.5 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses);
provided further, however, that if at the time of such withdrawal, the Holders
have learned of a material adverse change in the condition, business, or
prospects of the Company from that known to the Holders at the time of their
request and have withdrawn the request with reasonable promptness following
disclosure by the Company of such material adverse change, then the Holders
shall not be required to pay any of such expenses and shall retain their rights
pursuant to Section 2.1 or Section 2.11; and provided further, however, that
after the Company has effected two (2) such registrations pursuant to Section
2.1(a) hereof and such registrations have been declared or ordered effective,
the Company shall not be obligated to pay for any expenses of any further such
registration pursuant to Section 2.1(a).
Section 2.6 Expenses of Company Registration. The Company shall
bear and pay all expenses incurred in connection with any registration, filing
or qualification of Registrable Securities with respect to all registrations
pursuant to Section 2.2 for each Holder, including, without limitation, all
registration, filing, and qualification fees, printers' and accounting fees
relating or apportionable thereto, but excluding underwriting discounts and
commissions relating to Registrable Securities and the fees and disbursements of
any separate counsel for the selling Holders.
Section 2.7 Underwriting Requirements. In connection with any
offering involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under Section 2.2 to include any of the Holders'
Registrable Securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters), and then only in
such quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders) but in no event shall any shares being sold by a
stockholder exercising a demand registration right similar to that granted in
Section 2.1 be excluded from such offering. For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder which is a
holder of Registrable Securities and which is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
stockholder", and any pro rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
Section 2.8 Delay of Registration. No Holder shall have any right
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Article 2.
Section 2.9 Indemnification. In the event any Registrable
Securities are included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities, joint or several, to which they may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; and the Company will pay to each
such Holder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Subsection 2.9(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Company, which
consent shall not be unreasonably withheld, nor shall the Company be liable in
any such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any Holder, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities, joint or several, to which any of the foregoing persons
may become subject, under the Securities Act, or the Exchange Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any Violation, in each case to the
extent, and only to the extent, that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Subsection 2.9(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Subsection
2.9(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; and provided
further, that, in no event shall any indemnity under this Subsection 2.9(b)
exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
2.9 of notice of the commencement of any action, including any governmental
action, such indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 2.9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party,
together with all other indemnified parties which may be represented without
conflict by one counsel, shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.9, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.9.
(d) If the indemnification provided for in this Section 2.9 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holders under this Section 2.9
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
Section 2.10 Reports Under Exchange Act. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission that may at
any time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to
furnish to any Holder, so long as the Holder owns any Registrable Securities,
forthwith upon request (i) a written statement by the Company that it has
complied with the reporting requirements of Commission Rule 144, the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the Commission which permits
the selling of any such securities without registration.
Section 2.11 Form S-3 Registration. In case the Company shall
receive, at any time during the two year period following the Merger in which,
because of the provisions of paragraph (d) of Rule 144 (including the
application thereof under Rule 145), one or more Holders are not able to sell
shares of Registrable Securities under the provisions of Rule 144 or Rule 145,
from any such Holder or Holders a written request or requests that the Company
effect a registration on Form S-3 and any related qualification or compliance
with respect to all or a part of the Registrable Securities owned by such Holder
or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
similarly situated joining in such request as are specified in a written request
given within 15 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 2.11:
(1) if Form S-3 is not available for such offering by the
Holders;
(2) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $1,000,000;
(3) if the Company shall furnish to the Holders a
certificate signed by the chief executive officer of the Company
stating that, as a result of such registration, the Company would be
required to disclose information not theretofore disclosed as to
which the Company has a valid business reason for deferring
disclosure thereof, the Company shall have the right to defer the
filing of the Form S-3 registration statement for a period of not
more than 120 days after receipt of the request of the Holder or
Holders under this Section 2.11; provided, however, that the Company
shall not utilize this right more than once in any twelve month
period; or
(4) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration,
qualification or compliance.
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders. Registrations effected pursuant to this Section 2.11 shall not
be counted as demands for registration or registrations effected pursuant to
Sections 2.1 or 2.2, respectively.
Section 2.12 Limitations on Subsequent Registration Rights.
From and after the date of this Agreement, the Company shall not, without the
prior written consent of the Holders of a majority of the outstanding
Registrable Securities, enter into any agreement with any holder or prospective
holder of any securities of the Company which would allow such holder or
prospective holder to include such securities in any registration filed under
Section 2.1 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of his securities will not reduce the amount of
the Registrable Securities of the Holders which is included.
Section 2.13 Termination of Registration Rights. The Holders
shall be entitled to exercise any right provided for in Sections 2.1, 2.2 or
2.11 for not less than three (3) years following the date of this Agreement, and
for so long thereafter as either the restrictions on sale or transfer set forth
in Article 3 of this Agreement remain in effect or any shares of Company Common
Stock held by or beneficially owned by any Primary Holder remain ineligible for
sale pursuant to paragraph (k) of Rule 144.
Section 2.14 Restriction on Sale of Company Class B Common
Stock. Except as provided in Section 3.2 of this Agreement, no sale of shares
of Company Class B Common Stock may be made pursuant to this Article 2 unless
prior to the time such shares are actually sold pursuant to a registration
effected pursuant to this Article 2 such shares are converted to shares of
Company Class A Common Stock.
Section 2.15 Restrictions on Sales of Company Common Stock
During Registration. No Restricted Holder will effect any transaction pursuant
to Section 3.1(iii) of this Agreement or under any Form S-3 filed pursuant to
Section 2.11 of this Agreement during any period in which the Company would be
prohibited, in connection with an underwritten registration pursuant to Section
2.1 hereof, from buying or selling shares of Company Common Stock pursuant to
Rule 10b-6 under the Exchange Act, nor will any Restricted Holder sell any
shares of Company Common Stock pursuant to Section 3.1(iii) of this Agreement or
under any Form S-3 filed pursuant to Section 2.11 of this Agreement during the
period of 90 days from the effective date of a registration statement filed in
connection with an underwritten distribution pursuant to Section 2.1 hereof,
regardless of whether such Restricted Holder elects to include such Restricted
Holder's Registrable Securities in such registration, and each Restricted Holder
agrees to enter into agreements respecting such restrictions with the
underwriter for any such registered offering pursuant to Section 2.1 hereof.
The provisions of this Section 2.15 shall not be applicable to shares of Company
Common Stock held by a Restricted Holder as trustee or custodian under trusts or
custodianships in effect with respect to such shares of Company Common Stock on
August 17, 1995 or under trusts or custodianships thereafter created other than
pursuant to Section 3.1(i) hereof.
Article 3. Restrictions on Transfer and Sale of Company Common Stock.
Section 3.1 Restrictions on Transfer and Sale of Company Common
Stock. Each Primary Holder hereby agrees that no shares of Company Common Stock
now owned or hereafter acquired (other than as a trustee or custodian under
trusts or custodianships in effect with respect to such shares of Company Common
Stock on August 17, 1995 or under trusts or custodianships thereafter created
other than pursuant to clause (i) of this Section 3.1 or paragraph (c) of
Section 3.2) by such Primary Holder will be sold, transferred, pledged,
hypothecated or otherwise disposed of by such Primary Holder, either directly or
indirectly, except as follows:
(i) Shares of Company Common Stock may be sold, transferred,
pledged, hypothecated or otherwise disposed of by a Primary Holder
to a Permitted Transferee without restriction or limit; provided,
that sales, transfers, pledges, hypothecations or other dispositions
of Company Common Stock (other than transfers during any calendar
quarter to any individual Permitted Transferee of 1,500 shares or
less of Company Common Stock) may only be made if the Permitted
Transferee agrees in writing, a copy of which is delivered to the
Company, to be bound, with respect to the shares of Company Common
Stock so sold, transferred, pledged, hypothecated or otherwise
disposed of, by the restrictions on sale, transfer, pledge,
hypothecation or other disposition of shares of Company Common Stock
by Primary Holders contained in Sections 2.15, 3.1(iii), 3.1(iv) and
3.1 (vi) hereof; and provided further, that sales, transfers,
pledges, hypothecations or other dispositions of Company Class B
Common Stock to a Permitted Transferee in which such shares of
Company Class B Common Stock are not converted to Company Class A
Common Stock at the time of such sale, transfer, pledge,
hypothecation or other disposition may only be made if the Permitted
Transferee agrees in writing, a copy of which is delivered to the
Company, to be bound, with respect to the shares of Company Class B
Common Stock so sold, transferred, pledged, hypothecated or
otherwise disposed of, by the restrictions on sale, transfer,
pledge, hypothecation or other disposition of Company Class B Common
Stock without conversion to Company Class A Common Stock by Primary
Holders contained in Sections 3.1(vi) and 3.2 hereof;
(ii) Gifts of the entire interest of the Company Common Stock
so transferred may be made by a Primary Holder or any Permitted
Transferee to any organization to which contributions are deductible
for federal income, estate, or gift tax purposes, provided, that,
subject to the provisions of Section 3.2 of this Agreement, any
shares of Company Class B Common Stock transferred pursuant to this
clause (ii) are first converted to shares of Company Class A Common
Stock;
(iii) Sales on a national securities exchange or by means of
an inter-dealer quotation system maintained by a registered
securities association may be made by each Primary Holder, together
with sales by such Primary Holder's Permitted Transferees of shares
of Company Common Stock transferred by such Primary Holder to such
Permitted Transferees after August 17, 1995, up to the amount which
would be permitted to be sold by each such Primary Holder under Rule
144 if such Primary Holder were deemed to be an "affiliate" of the
Company, whether or not such Primary Holder is in fact an
"affiliate" of the Company or otherwise subject to the provisions of
Rule 144; provided, that (I) any shares of Company Class B Common
Stock sold pursuant to this clause (iii) are first converted to
shares of Company Class A Common Stock and (II) such limitation on
the number of shares of Company Common Stock which may be sold by
such Primary Holder and such Primary Holder's Permitted Transferees
pursuant to this clause (iii) shall terminate four (4) years
following the date of this Agreement;
(iv) Transfers or sales of shares of Company Common Stock
effected without registration on terms and under circumstances
corresponding to those terms and circumstances on and under which
exempt private placements may be made by the Company pursuant to
Section 4(2) of the Securities Act may be made by a Primary Holder
without limit; provided, that,
(A) subject to the provisions of Section 3.2 of this
Agreement, any shares of Company Class B Common Stock
transferred or sold pursuant to this clause (iv) are first
converted to shares of Company Class A Common Stock, and
(B) if, as a result of, and after giving effect to,
such transaction the transferee of such shares of Company
Common Stock, together with any group (within the meaning of
Section 13(d)(3) of the Exchange Act) of which such transferee
is a member, would hold shares of Company Common Stock having
the right to cast five percent (5%) or more of the total votes
entitled to be cast by the holders of Company Common Stock
when voting together as a single class, then the transferee in
such transaction (i) agrees in writing, a copy of which is
delivered to the Company, as a part of such transaction to
offer, within 180 days of such transaction, to acquire any and
all shares of Company Common Stock, at the highest price per
share paid by the transferee to the transferor, by means of a
tender offer, merger or other similar transaction, and (ii)
such agreement provides that the Company and the other
stockholders of the Company shall be third party beneficiaries
thereof and that, unless the transferee thereafter makes such
offer and acquires all such shares of Company Common Stock
tendered to such transferee pursuant to, or otherwise electing
to participate in, such offer or transaction within such 180
day period, such transferee shall have no voting rights with
respect to, and may be enjoined from exercising any voting
rights with respect to, any shares of Company Common Stock
beneficially owned by such transferee (but without relieving
such transferee of its obligation to make such offer and
acquisition); provided, this subclause (B) shall not be
applicable to any transaction as to which the Company agrees
in writing not to require such agreement; and provided
further, this subclause (B) shall not be applicable
(I) at any time after the Restricted Holders
beneficially own, directly or indirectly, in the
aggregate shares of Company Common Stock which are
subject to the provisions of this Agreement either
having the right to cast less than 15% of the total
votes entitled to be cast by the holders of the Company
Common Stock voting together as a single class or
constituting less than 15% of the aggregate number of
the outstanding shares of Company Common Stock,
whichever shall first occur, or
(II) at any time after a person or group (within
the meaning of Section 13(d)(3) of the Exchange Act) who
is not or does not include a Restricted Holder
beneficially owns, directly or indirectly, shares of
Company Common Stock having the right to cast a majority
of the votes entitled to be cast by the holders of
Company Common Stock when voting together as a single
class;
(v) Sales of Company Common Stock pursuant to Article 2 of
this Agreement may be made by a Primary Holder;
(vi) Pledges may be made by a Primary Holder or a Restricted
Holder subject to the provisions of this Section 3.1(vi) of such
Primary Holder's or Restricted Holder's shares of Company Common
Stock, to the extent the sale, transfer, pledge, hypothecation or
other disposition of such shares is restricted pursuant to the
provisions of this Agreement, to a pledgee pursuant to a bona fide
pledge of such shares as collateral security for indebtedness due to
the pledgee, provided, that shares of Company Class B Common Stock
so pledged shall not be transferred to or registered in the name of
the pledgee and all shares of Company Common Stock so pledged shall
remain subject to the provisions of this Agreement; and provided
further, that, in the event of foreclosure or other similar action
by the pledgee, any such pledged shares of Company Class B Common
Stock may only be (I) transferred to a Permitted Transferee of the
pledgor who, if not a Primary Holder, becomes a Restricted Holder
with respect to such shares of Company Class B Common Stock or (II)
converted into shares of Company Class A Common Stock, as the
pledgee may elect;
(vii) Sales, transfers or exchanges of Company Common Stock
may be made pursuant to any tender or exchange offer to purchase or
acquire any portion of the outstanding Company Common Stock which is
extended equally to all stockholders of the Company based on their
percentage ownership of the outstanding Company Common Stock,
provided, that (A) the per share consideration received in such
transaction by the Restricted Holders for their Company Common Stock
is the same as the per share consideration offered to the other
holders of Company Common Stock, (B) unless the Restricted Holders
no longer beneficially own, directly or indirectly, in the aggregate
shares of Company Common Stock which are subject to the provisions
of this Agreement having the right to cast 15% or more of the total
votes entitled to be cast by the holders of the Company Common Stock
voting together as a single class or a person or group (within the
meaning of Section 13(d)(3) of the Exchange Act) who is not or does
not include a Restricted Holder beneficially owns, directly or
indirectly, shares of Company Common Stock having the right to cast
a majority of the votes entitled to be cast by the holders of
Company Common Stock when voting together as a single class, such
offer is to acquire all of the outstanding Company Common Stock, (C)
unless such offer is to acquire all of the outstanding Company
Common Stock, sales, transfers or exchanges may be made only of
Company Class A Common Stock pursuant to the provisions of this
clause (vii), and (D) if, as a result of any such offer, the holders
of shares of Company Common Stock immediately prior to such offer,
in their capacity as such holders, would be entitled to receive
capital stock of the entity making such offer having 50% or more of
the combined voting power of the capital stock of such entity, then
the provisions of this Agreement shall remain in effect with respect
to the capital stock of such entity received by the Restricted
Holders pursuant to such offer;
(viii) Transfers, exchanges or other dispositions of
Company Common Stock may be made pursuant to any merger or
consolidation involving the Company, provided, that the per share
consideration received in such transaction by the Restricted Holders
for their Company Common Stock is the same as the per share
consideration received by the other holders of Company Common Stock,
and provided further, that, unless as a result of such transaction
the conditions of Section 3.6 hereof are met, the provisions of this
Agreement shall remain in effect with respect to the capital stock
of such surviving or resulting entity; and
(ix) Transfers, exchanges or other dispositions of Company
Common Stock may be made in connection with any recapitalization,
reorganization, reclassification, change of domicile merger or other
similar transaction in which there is no change in the relative
percentages of ownership among the holders of the capital stock of
the resulting or surviving entity from the percentages of ownership
of the Company Common Stock which existed immediately prior to such
transaction, provided, that the provisions of this Agreement shall
remain in effect with respect to the capital stock of such surviving
or resulting entity.
It shall be a condition to any sale pursuant to clause (iv) of this Section 3.1
that the transferor of Company Common Stock in such transaction give written
notice to the transferee in such transaction of the existence of and the
provisions of this Agreement and the applicability of this Agreement, if any, to
the shares of Company Common Stock being transferred in such transaction and
certify in writing to the Company that such notice was given.
Section 3.2 Permitted Transfers of Company Class B Common Stock
Without Conversion. Notwithstanding the provisions of Section 3.1 of this
Agreement, a Primary Holder and any Restricted Holder may sell or otherwise
transfer shares of Company Class B Common Stock, to the extent the sale or
transfer of such shares of Company Class B Common Stock is subject to this
Agreement, without the requirement that such shares be converted to shares of
Company Class A Common Stock in such transaction, if:
(a) as a result of, and after giving effect to, such
transaction the transferee of such shares of Company Class B Common
Stock, together with any group (within the meaning of Section
13(d)(3) of the Exchange Act) of which such transferee is a member,
would not hold shares of Company Common Stock having the right to
cast five percent (5%) or more of the total votes entitled to be
cast by the holders of Company Common Stock when voting together as
a single class; or
(b) the transferee in such transaction (i) agrees as a part
of such transaction to offer, within 180 days of such transaction,
to acquire any and all shares of Company Common Stock, at the
highest price per share paid by the transferee to the transferor, by
means of a tender offer, merger or other similar transaction, which
agreement provides that the Company and the other stockholders of
the Company shall be third party beneficiaries thereof, and (ii)
such agreement provides that, unless the transferee thereafter makes
such offer and acquires all such shares of Company Common Stock
tendered to such transferee pursuant to, or otherwise electing to
participate in, such offer or transaction within such 180 day
period, (A) such transferee shall have no voting rights with respect
to, and may be enjoined from exercising any voting rights with
respect to, any shares of Company Common Stock beneficially owned by
such transferee and (B) any shares of Company Class B Common Stock
acquired by such transferee pursuant to the provisions of this
paragraph (b) shall, without further act on anyone's part, be
converted into shares of Company Class A Common Stock effective upon
the expiration of such 180 day period and stock certificates
formerly representing such shares of Company Class B Common Stock
shall thereafter be deemed to represent an equal number of shares of
Company Class A Common Stock; provided, that such termination of
voting rights and conversion of Company Class B Common Stock shall
not relieve such transferee of such transferee's obligations to make
such offer and acquisition; and provided further, this paragraph (b)
shall not be applicable to any transaction as to which the Company
agrees in writing not to require such agreement; or
(c) The transferee in such transaction is either (i) a
Primary Holder or (ii) a Permitted Transferee who agrees at the time
of such sale or transfer, with respect to the shares of Company
Class B Common Stock acquired in such sale or transfer, in form
reasonably satisfactory to the Company, to become subject to the
restrictions on transfer contained in Section 3.1(vi) and Section
3.2 of this Agreement; or
(d) The transaction complies with the provisions of Sections
3.1(vii), 3.1(viii) or 3.1(ix) hereof.
Section 3.3 Changes in Ownership of Certain Entities.
(a) If by reason of any proposed change in the ownership of the stock,
partnership interests or member interests, or the identity or ownership
interests of the managers of a Permitted Transferee under the provisions of
paragraph (g)(i)(V) of Article 1, such corporation, partnership or limited
liability company would no longer qualify as a Permitted Transferee under
paragraph (g)(i)(V) of Article 1, then the event by which such proposed change
of ownership shall occur shall be deemed to be a sale, transfer, pledge,
hypothecation or other disposition of all of the Company Common Stock previously
transferred to such corporation, partnership or limited liability company
pursuant to the provisions of paragraph (g)(i)(V) of Article 1 hereof then held
by such corporation, partnership or limited liability company, partnership or
limited liability company which sale, transfer, pledge, hypothecation or other
disposition must comply with the provisions of this Agreement.
(b) Notwithstanding the provisions of paragraph (a) of this Section 3.3,
pledges may be made of the stock, partnership interests or member interests in,
or the ownership interests in the managers of, a Permitted Transferee which has
qualified as a Permitted Transferee under the provisions of Paragraph (g)(i)(V)
of Article 1 hereof, provided, such Permitted Transferee has agreed in
connection with such pledge that, in the event of foreclosure or other similar
action by the pledgee, any shares of Company Class B Common Stock owned by such
Permitted Transferee will either be (I) transferred to a Permitted Transferee of
the pledgor who, if not a Primary Holder, becomes a Restricted Holder with
respect to such shares of Company Class B Common Stock or (II) converted into
shares of Company Class A Common Stock.
Section 3.4 Changes in Ownership of the Blount Family Partnership.
No general or limited partnership interest in, and no stock of any corporate
general partner of, the Blount Family Partnership may be transferred to any
person who is not a Primary Holder, a Family Transferee, a Permitted Transferee
or an organization to which contributions are deductible for federal income,
estate or gift tax purposes without the prior written consent of the Company.
The provisions of this Section 3.4 shall not be applicable and shall be of no
further force and effect at any time after either (i) the Restricted Holders no
longer beneficially own, directly or indirectly, in the aggregate shares of
Company Common Stock which are subject to the provisions of this Agreement
having the right to cast 15% or more of the total votes entitled to be cast by
the holders of the Company Common Stock voting together as a single class or
(ii) a person or group (within the meaning of Section 13(d)(3) of the Exchange
Act) who is not or does not include a Restricted Holder beneficially owns,
directly or indirectly, shares of Company Common Stock having the right to cast
a majority of the votes entitled to be cast by the holders of Company Common
Stock when voting together as a single class, whichever shall first occur.
Section 3.5 No Adverse Effect on Registration Rights. No violation
of, or failure to comply with, the provisions of this Article 3 shall adversely
effect, limit or otherwise restrict
the rights of the Primary Holders and Holders pursuant to Article 2 of this
Agreement.
Section 3.6 Termination in Certain Events. Upon the liquidation or
dissolution of the Company or upon the occurrence of any reorganization, merger
or other transaction in which holders of shares of Company Common Stock
immediately prior to such event, in their capacity as such holders, receive less
than 50% of the combined voting power of the surviving or resulting entity, the
provisions of this Article 3 shall terminate and be of no further force and
effect.
Article 4. Miscellaneous.
Section 4.1 Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
Section 4.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware, applied without giving effect
to conflict-of-law principles.
Section 4.3 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.
Section 4.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 4.5 Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
Section 4.6 Expenses. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
Section 4.7 Antidilution. In the event there is any increase or
decrease in the number of issued and outstanding shares of Company Common Stock
following the Effective Time of the Merger resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Company Common Stock) or any other increase or decrease in the number of issued
and outstanding shares of Company Common Stock effected without receipt of
consideration by the Company, the shares resulting from such subdivision or
consolidation or issued as such dividend shall be subject to the provisions of
this Agreement to the same extent as were the shares as to which such
subdivision or consolidation occurred or the shares with respect to which such
dividend was distributed and the number of shares of Company Common Stock set
forth in any provision of this Agreement shall be appropriately adjusted for any
such increase or decrease.
Section 4.8 Legends. All certificates evidencing shares of Company
Common Stock now owned or hereafter transferred by the Blount Family Partnership
shall bear, so long as the restrictions hereunder are applicable to such shares,
legends to the effect that the shares represented thereby and the transfer
thereof are subject to the provisions of this Agreement.
Section 4.9 Amendments and Waiver.. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent or the Company and each Primary
Holder affected by such amendment or waiver.
Section 4.10 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
<PAGE>
In Witness Whereof, the parties have executed this Agreement as of the
date first above written.
BLOUNT INTERNATIONAL, INC.
By/s/ Winton M. Blount
Winton M. Blount
Its President
Address: P. O. Box 949
Montgomery, Alabama 36101-0949
/s/ Winton M. Blount
Winton M. Blount
Address: c/o Blount, Inc.
P. O. Box 949
Montgomery, Alabama 36101-0949
/s/ Carolyn S. Blount
Carolyn S. Blount
Address: c/o Blount, Inc.
P. O. Box 949
Montgomery, Alabama 36101-0949
<PAGE>
/s/ Winton M. Blount III
Winton M. Blount III
Address: P. O. Box 23039
Montgomery, Alabama 36123
/s/ Samuel R. Blount
Samuel R. Blount
Address: 2 Rockledge Road
Birmingham, Alabama 35213
/s/ Joseph W. Blount
Joseph W. Blount
Address: 781 Myrtle Street, N. E.
Atlanta, Georgia 30308
/s/ Thomas A. Blount
Thomas A. Blount
Address: 3 Barksdale Drive, N. E.
Atlanta, Georgia 30309
/s/ Katherine Blount Miles
Katherine Blount Miles
Address: 3124 Pine Ridge Road
Birmingham, Alabama 35213
<PAGE>
THE BLOUNT HOLDING COMPANY, L.P.
By BHP, Inc.,
Its General Partner
By/s/ Winton M. Blount
Winton M. Blount
Its President
Address: P. O. Box 5060
Montgomery, Alabama 36103
