EXHIBIT 4.2
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, made as of the 15th
day of August, 1997, by and among Castle Tower Holding Corp., a Delaware
corporation (the "Company"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
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▇▇▇▇▇▇ ▇. Crown and ▇▇▇▇▇▇▇ Crown (collectively, the "Stockholders" and each
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individually, a "Stockholder") and the persons listed on Schedule I hereto
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(collectively, the "Investors" and individually an "Investor").
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WHEREAS ▇▇▇▇▇▇ ▇. Crown and ▇▇▇▇▇▇▇ Crown (collectively, the "Crowns"
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are acquiring an aggregate of 1,465,000 shares of Class B Common Stock, $0.01
par value, of the Company (the "Class B Stock") pursuant to the terms and
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conditions of a First Amended and Restated Asset Purchase and Merger Agreement
dated as of July 11, 1997, as amended and restated on August 14, 1997, among the
Company, the Stockholders and the other parties thereto (the "Crown Purchase
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Agreement");
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WHEREAS certain Investors are acquiring an aggregate of 292,995 shares
of Senior Convertible Preferred Stock, $0.01 par value, of the Company (the
"Senior Preferred Stock") and Warrants of the Company pursuant to the terms and
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conditions of the Securities Purchase Agreement dated as of August 13, 1997
between the Company and such Investors (the "Senior Preferred Agreement");
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WHEREAS the Company has imposed certain restrictions and obligations
or the transfer or disposition of any stock of the Company held by the Crowns
and desires to evidence such restrictions and obligations in writing;
WHEREAS to effect the foregoing, the Company, the Stockholders and
the Investors desire to amend and restate that certain Stockholders Agreement
dated as of February 24, 1997 (the "Stockholders Agreement"), between the
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Company, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. (▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
▇▇. and ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., collectively, the "Initial Stockholders") as
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stockholders and the Investors party thereto; and
WHEREAS it is a condition to the obligations of the parties under the
Crown Purchase Agreement and the Senior Preferred Agreement that this Agreement
be executed by the parties hereto, and the parties are willing to execute this
Agreement and to be bound by the provisions hereof
NOW THEREFORE, the Company, the Stockholders and the Investors, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, agree as follows:
ARTICLE I
Definitions
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SECTION 1.01. Certain Defined Terms. As used in this Agreement,
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capitalized terms shall have the meanings assigned to such terms as set forth
below:
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"Affiliate" of an entity shall mean (a) any entity which controls, is
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controlled by or is under common control with such entity, or any general or
limited partner of such entity or (b) any general or limited partner of any
entity. In addition, (i) each of Centennial Fund IV, L.P. ("Centennial IV"),
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Centennial Fund V, L.P. ("Centennial V") and Centennial Entrepreneurs Fund V,
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L.P. shall be deemed an Affiliate of the other, (ii) each of Berkshire Fund III
Investment Corp. ("Berkshire III Corp."), Berkshire Fund III, a Limited
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Partnership ("Berkshire III"), Berkshire Fund IV Investment Corp. ("Berkshire IV
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Corp."), Berkshire Fund IV, a Limited Partnership ("Berkshire IV") and Berkshire
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Investors LLC shall be deemed an Affiliate of the other and (iii) each of Nassau
Capital Partners II L.P. ("Nassau Capital II") and NAS Partners I L.L.C. ("NAS
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I") shall be deemed an Affiliate of the other.
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"Appraiser" shall have the meaning set forth in Section 2.07(a)(iv).
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"Berkshire Group" shall have the meaning set forth in Section
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2.04(a)(ii).
"Board" shall mean the Board of Directors of the Company.
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"By-laws" shall mean the bylaws of the Company as amended.
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"Call Event" shall have the meaning set forth in Section 2.07(b).
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"Call Group" shall have the meaning set forth in Section 2.07(b).
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"Call Notice" shall have the meaning set forth in Section 2.07(b).
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"Call Option" shall have the meaning set forth in Section 2.07(b).
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"Call Option Closing" shall have the meaning set forth in Section
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2.07(f)(i).
"Call Period" shall have the meaning set forth in Section 2.07(b).
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"Call Price" shall have the meaning set forth in Section 2.07(e).
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"Call Securities" shall have the meaning set forth in Section 2.07(b).
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"Cause" shall have the meaning set forth in Section 2.07(a)(ii).
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"Charter" shall mean the certificate of incorporation of the Company
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as amended.
"Class A Stock" mean the Company's Class A Common Stock $.01 par value
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per share.
"Class B Stock" shall have the meaning set forth in the Recitals.
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"Commission" shall mean the Securities and Exchange Commission, or any
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other Federal agency at the time administering the Securities Act.
"Common Conversion Shares" shall mean the shares of Common Stock
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issuable upon the conversion of the Preferred Stock.
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"Common Stock" includes (a) the Class A Stock as authorized on the
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date of this Agreement, (b) the Class B Stock, (c) any other capital stock of
any class or classes (however designated) of the Company, authorized on or after
the date hereof, the holders of which shall have the right, without limitation
as to amount, either to all or to a share of the balance of current dividends
and liquidating dividends after the payment of dividends and distributions on
any shares entitled to preference, and the holders of which shall ordinarily, in
the absence of contingencies, be entitled to vote for the election of a majority
of directors of the Company (even though the right so to vote has been suspended
by the happening of such a contingency), and (d) any other securities into which
or for which any of the securities described in (a), (b) or (c) may be converted
or exchanged pursuant to a plan of recapitalization, reorganization, merger,
sale of assets or otherwise.
"Company" shall have the meaning set forth in the Preamble.
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"Company Notice" shall have the meaning set forth in Section 2.02(e).
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"Crown Nominee" shall have the meaning set forth in Section 3.01(a).
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"Crown Purchase Agreement" shall have the meaning set forth in the
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Recitals.
"Crown Related Transferees" shall have the meaning set forth in
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Section 3.01(a).
"Crowns" shall have the meaning set forth in the Recitals.
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"Current Liabilities" means all liabilities of any corporation which
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would, in accordance with generally accepted accounting principles consistently
applied, be classified as current liabilities of a corporation conducting a
business the same as or similar to that of such corporation, including, without
limitation, all rental payments due under leases required to be capitalized in
accordance with applicable Statements of Financial Accounting Standards and
fixed prepayments of, and sinking fund payments with respect to, Indebtedness,
which payments are required to be made within one year from the date of
determination.
"Disability" shall have the meaning set forth in Section 2.07(iii).
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"Distributions" shall have the meaning set forth in Section 5.18(g).
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Fair Market Value" shall have the meaning set forth in Section
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2.07(a)(iv).
"Ford Foundation Letter" shall mean that certain letter regarding
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direct or indirect holdings of certain persons affiliated with the Ford
Foundation.
"General Director" and "General Directors shall have the meaning set
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forth in Section 3.02.
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"Indebtedness" means all obligations, contingent and otherwise, which
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should, in accordance with generally accepted accounting principles consistently
applied, be classified upon the obligor's balance sheet as liabilities, but in
any event including, without limitation, liabilities secured by any mortgage on
property owned or acquired subject to such mortgage, whether or not the
liability secured thereby shall have been assumed, and also including, without
limitation, (i) all guaranties, endorsements and other contingent obligations,
in respect of Indebtedness of others, whether or not the same are or should be
so reflected in said balance sheet, except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business and (ii) the present value of any lease payments due
under leases required to be capitalized in accordance with applicable Statements
of Financial Accounting Standards, determined in accordance with applicable
Statements of Financial Accounting Standards.
"Initial General Directors" shall have the meaning set forth in
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Section 3.01(a)(i).
"Initial Stockholders" shall have the meaning set forth in the
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Recitals.
"Initial Shareholder" shall have the meaning set forth in Section
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2.05(b).
"Investment Parties" shall have the meaning set forth in Section
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2.03(a).
"Investment Party" shall have the meaning set forth in Section
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2.03(a).
"Investment Price" shall have the meaning set forth in Section
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2.07(a)(v).
"Investor" shall have the meaning set forth in the Preamble.
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"Investor Notice" shall have the meaning set forth in Section
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2.03(e).
"Investor Offeree" shall have the meaning set forth in Section
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2.04(b)(ii).
"Investor Offerees" shall have the meaning set forth in Section
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2.04(b)(ii).
"Investors" shall have the meaning set forth in the Preamble.
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"Nassau" shall have the meaning set forth in Section 3.01(b).
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"Nominating Group" shall have the meaning set forth in Section
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3.01(a).
"Nominating Investor" shall have the meaning set forth in Section
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3.01(b).
"Nominating Investors" shall have the meaning set forth in Section
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3.01(b).
"Note" shall mean the promissory note issued by the Company to ▇▇▇▇▇▇
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A. Crown and ▇▇▇▇▇▇▇ ▇. Crown pursuant to the Crown Purchase Agreement and any
Indebtedness incurred to refinance such note.
"Offer" shall have the meaning set forth in Section 2.02(a).
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"Offered Investor Shares" shall have the meaning set forth in Section
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2.04(b)(i).
"Offered Shares" shall have the meaning set forth in Section 2.02(a).
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"Offerees" shall have the meaning set forth in Sections 2.02(a) and
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2.03(a), as applicable.
"Offer Price" shall have the meaning set forth in Section 2.04(b)(i).
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"Option Period" shall have the meaning set forth in Section
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2.04(b)(ii).
"Participating Offeree" shall have the meaning set forth in Section
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2.05(b).
"Participating Offerees" shall have the meaning set forth in Section
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2.05(b).
"Participation Notice" shall have the meaning set forth in Section
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2.05(b).
"Participation Securities" shall have the meaning set forth in
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Section 2.05(b).
"Permitted Transfer" shall have the meaning set forth in Section
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2.04(a).
"Permitted Transferee" shall have the meaning set forth in Section
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2.04(a).
"person" means an individual, corporation, limited liability company,
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partnership, joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof
"Preferred Nominee" shall have the meaning set forth in Section
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3.01(b).
"Preferred Nominees" shall have the meaning set forth in Section
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3.01(b).
"Preferred Shares" or "Preferred Stock" shall mean and include all
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shares of Series A Convertible Preferred Stock ("Series A Stock"), Series B
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Convertible Preferred Stock ("Series B Stock"), Series C Convertible Preferred
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Stock ("Series C Stock") and Senior Preferred Stock now owned or hereafter
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acquired by any Investor.
"Pro Rata Call Fraction" shall have the meaning set forth in Section
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2.07(c).
"Pro Rata Fraction" shall have the meaning set forth in Sections
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2.02(b) and 2.03(b), as applicable.
"Purchaser" and "Purchasers" shall have the meanings set forth in
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Article V.
"Put Acceptance Notice" shall have the meaning set forth in Section
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2.08(a).
"Put Event" shall have the meaning set forth in Section 2.08(a).
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"Put Notice" shall have the meaning set forth in Section 2.08(a).
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"Put Option" shall have the meaning set forth in Section 2.08(a).
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"Put Option Closing" shall have the meaning set forth in Section
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2.08(c).
"Put Price" shall have the meaning set forth in Section 2.08(b).
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"Put Securities" shall have the meaning set forth in Section 2.08(a).
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"Qualified Public Offering" shall have the meaning set forth in
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Section 2.02(h)(iii)(A).
"Registration Expenses" shall mean the expenses so described in
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Section 6.07.
"Related Transferees" shall have the meaning set forth in Section
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2.08(a)
"Remaining Shares" shall have the meaning set forth in Section
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2.02(e).
"Remaining Stockholder" shall have the meaning set forth in Section
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2.03(a).
"Restricted Stock" means (a) all of the Common Conversion Shares owned
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by the Purchasers, (b) all other shares of Common Stock now owned or hereafter
acquired by any Purchaser, (c) all shares of Common Stock issuable with respect
to securities of the Company convertible into or exercisable for shares of
Common Stock now owned or hereafter acquired by any Purchaser and (d) any Common
Stock issued in respect of the shares described in clauses (a) through (c) upon
any stock dividend, recapitalization or other similar event but, in each case,
excluding any Common Conversion Shares or shares of Common Stock which have been
(i) registered under the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with the registration
statement covering them or (ii) publicly sold pursuant to Rule 144 under the
Securities Act.
"Sale Request" shall have the meaning set forth in Section 2.06.
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"Securities Act" shall mean the Securities Act of 1933, or any similar
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Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
"Securities Purchase Agreements" shall mean the Securities Purchase
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Agreement dated July 15, 1996, relating to the purchase of the Series B Stock
and the Securities Purchase Agreement dated February 14, 1997, relating to the
purchase of the Series C Stock.
"Selling Expenses" shall mean the expenses so described in Section
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6.07.
"Senior Debt" shall mean (a) all Indebtedness of the Company for money
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borrowed from banks or other institutional lenders, including any extensions or
renewals thereof, whether outstanding on the date hereof or thereafter created
or incurred, which is
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not by its terms subordinate and junior to or on a parity with the Note and (b)
all guaranties by the Company which are not by their terms subordinate and
junior to or on a parity with the Note and (c) Indebtedness of any Subsidiary if
such Indebtedness would have been Senior Debt pursuant to the provisions of
clause (a) or (b) of this sentence had it been Indebtedness of the Company.
"Senior Preferred Agreement" shall have the meaning set forth in the
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recitals.
"Senior Preferred Stock" shall have the meaning set forth in the
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recitals.
"Shares" shall mean and include all shares of Common Stock now owned
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or hereafter acquired by either (i) any Stockholder or (ii) any Investor,
including any shares of Common Stock issuable upon conversion of outstanding
Preferred Shares.
"Stockholder" and "Stockholders" shall have the meanings set forth in
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the Preamble.
"Stockholders Agreement" shall have the meaning set forth in the
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Recitals.
"Subsidiary" or "Subsidiaries" when used with respect to any person
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means any other person, whether incorporated or unincorporated, of which at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect at least a majority of the board of directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such person or by
any one or more of its Subsidiaries.
"Take Along Group" shall have the meaning set forth in Section 2.06.
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"Transfer Notice" shall have the meaning set forth in Section
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2.04(b)(i).
"U.S. Real Property Holding Company" shall have the meaning set forth
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in Section 5.14(a).
"U.S. Real Property Interest" shall have the meaning set forth in
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Section 5.14(b).
ARTICLE II
Transfer Rights
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SECTION 2.01. Prohibited Transfers. Neither of the Crowns so long as
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either of the Crowns is employed by the Company or any of its Subsidiaries or
Affiliates) nor any Initial Stockholder shall sell, assign, transfer, pledge,
hypothecate, mortgage, encumber or otherwise dispose of all or any of his or her
Shares except to the Company or as expressly provided in this Agreement.
Notwithstanding the foregoing, a Stockholder may transfer all or any of his or
her Shares (a) in the case of the Initial Stockholders, to any other Initial
Stockholder, (b) by way of gift or other disposition to any member of his or her
family or to any trust for the benefit of, or any corporation, limited
partnership, limited liability company or other entity 100% beneficially owned
by, any such family
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member or members and/or the Stockholder; provided that any such transferee
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shall agree in writing with the Company and the Investors, as a condition to
such transfer, to be bound by all of the provisions of this Agreement to the
same extent as if such transferee were a Stockholder; provided further that the
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transferor shall retain all rights to vote such Shares for all purposes, by
means of an irrevocable proxy or otherwise, (c) by will or the laws of descent
and distribution, in which event each such transferee shall be bound by all of
the provisions of this Agreement to the same extent as if such transferee were a
Stockholder, (d) to employees of the Company pursuant to terms and conditions
approved by the Board or (e) as permitted or required pursuant to the terms of
Section 2.02, 2.03, 2.05 and 2.06 hereof. As used herein, the word "family"
shall include any spouse, lineal ancestor or descendant, brother or sister.
SECTION 2.02. Right of First Refusal on Disposition by the Crowns. (a)
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If, at any time while either of the Crowns is employed by the Company or any of
its Subsidiaries or Affiliates, the Crowns desire to sell for cash all or part
of their Shares pursuant to a bona fide offer from a third party (the "Proposed
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Transferee"), the Investors and the Company, in that order, shall have the right
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to purchase (in the aggregate) all, but not less than all, of the Shares
proposed to be sold by the Crowns. Upon receipt of a bona fide offer from a
Proposed Transferee for the purchase of the Shares, the Crowns shall submit a
written offer (the "Offer") to sell such Shares (the "Offered Shares") to the
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Investors and the Company (for purposes of this Section 2.02, the "Offerees")
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(subject, in the case of the Company, to the purchase of Offered Shares by the
Investors) on the terms and conditions, including price, not less favorable than
those on which the Crowns propose to sell such Offered Shares to the Proposed
Transferee. The Offer shall disclose the identity of the Proposed Transferee,
the Offered Shares proposed to be sold, the total number of Shares owned by the
Crowns, the terms and conditions, including price, of the proposed sale, and any
other material facts relating to the proposed sale. The Offer shall further
state that the Offerees may acquire, in accordance with the provisions of this
Agreement, all of the Offered Shares for the price and upon the other terms and
conditions, including deferred payment (if applicable), set forth therein.
(b) Each Investor shall have the absolute right to purchase that
number of Offered Shares as shall be equal to the number of such Offered Shares
multiplied by a fraction, the numerator of which shall be the number of Shares
then owned by such Investor and the denominator of which shall be the aggregate
number of Shares then owned by all of the Investors. For purposes of this
Section 2.02, all of the Common Stock which an Investor has the right to acquire
from the Company upon the conversion, exercise or exchange of any of the
securities of the Company then owned by such Investor shall be deemed to be
Shares then owned by such Investor. The amount of Offered Shares each Investor
is entitled to purchase under this Section 2.02 shall be referred to as its "Pro
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Rata Fraction".
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(c) The Investor shall have a right of oversubscription such if any
Investor fails to accept the Offer as to its Pro Rata Fraction, the Investors
shall among them have the right to purchase up to the balance of the Offered
Shares not so purchased. Such right of oversubscription may be exercised by an
Investor by accepting the Offer as to more than its Pro Rata Fraction. If, as a
result thereof, such oversubscriptions exceed the total number of Offered Shares
available in respect of such oversubscription privilege, the oversubscribing
Investors shall be cut back with respect to their oversubscriptions on a pro
rata basis in accordance with their respective Pro Rata Fractions or as they may
otherwise agree among themselves.
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(d) If any Investor desires to purchase all or any part of the
Offered Shares, the Investor shall communicate in writing its election to
purchase to the Crowns, which communication shall state the number of Offered
Shares the Investor desires to purchase, and shall be given to the Crowns in
accordance with Section 7.05 below within 30 days of the date of the Offer.
(e) If the Investors do not purchase all of the Offered Shares, then
the Crowns shall send written notice to the Company indicating the number of
Offered Shares available for purchase (the "Remaining Shares") pursuant to the
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terms and conditions, including price, set forth in the Offer (the "Company
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Notice"). The Company shall communicate in writing its election to purchase all
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of such Remaining Shares, which communication shall be given to the Crowns in
accordance with Section 7.05 below within 30 days of receipt of the Company
Notice.
(f) If the Investors and/or the Company elect to purchase, in the
aggregate, all of the Offered Shares, any written communication of an election
to so purchase delivered by any Investor or the Company shall, when taken in
conjunction with the Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the sale and purchase of the stated Offered Shares.
Sales of the stated Shares to be sold to any Investor and/or the Company
pursuant to this Section 2.02 shall be made at the offices of the Company on the
45th day following the later of the date (i) of the Offer, if the Investors
elect to purchase all of the Offered Shares, or (ii) of the Company Notice, if
the Company and/or the Investors elect to purchase all of the Offered Shares (or
if such 45th day is not a business day, then on the next succeeding business
day). Such sales shall be effected by the Crowns' delivery to the Company of a
certificate or certificates evidencing the Offered Shares to be purchased by the
Investors and/or the Company, duly endorsed for transfer to the Company, against
payment to the Crowns of the purchase price therefor by the party purchasing
such Offered Shares.
(g) If the Investors and/or the Company do not purchase all of the
Offered Shares, then, subject to Section 2.05 hereof, all, but not less than
all, of the Offered Shares may be sold by the Crowns at any time within 180 days
after the date the Offer was made. Any such sale shall be to the Proposed
Transferee, at not less than the price and upon other terms and conditions, if
any, not more favorable to the Proposed Transferee than those specified in the
Offer. If the Offered Shares are not sold within such 180-day period, such
Shares shall continue to be subject to the requirements of a prior offer
pursuant to this Section 2.02. If Offered Shares are sold pursuant to this
Section 2.02 to any purchaser who is not a party to this Agreement, the Offered
Shares so sold shall no longer be subject to this Agreement.
(h) The rights of first refusal provided in this Section 2.02 shall
not apply with respect to (i) sales of Shares to the Company. (ii) sales of
Shares to the other Stockholders or (iii) sales of Shares in the Company's
initial firm commitment public offering of Common Stock in which (A) the
aggregate net proceeds to the Company after deducting underwriters' commissions
and discounts shall be at least $30,000,000 (a "Qualified Public Offering") and
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(B) the price paid by the public for such shares of Common Stock shall be at
least $100 per share, which amount shall be adjusted to reflect any stock split,
stock dividend, combination, reclassification or reorganization in respect of
the Common Stock.
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SECTION 2.03. Right of Refusal on Dispositions by Initial
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Stockholders. (a) If at any time an Initial Stockholder desires to sell for cash
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all or any part of his Shares pursuant to a bona fide offer from a Proposed
Transferee, the other Initial Stockholder, if he is employed by the Company at
the time of such proposed transfer (the "Remaining Stockholder"), the Investors
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and the Crowns as a group (the Investors, together with the Crowns, each an
"Investment Party" and collectively, the "Investment Parties") and the Company
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in that order, shall have the right to purchase (in the aggregate) all, but not
less than all, of the Shares proposed to be sold by the Initial Stockholder.
Upon receipt of a bona fide offer from a Proposed Transferee for the purchase of
Shares, the Initial Stockholder shall submit an Offer to sell the Offered Shares
to the Remaining Stockholder, to the Investment Parties and to the Company (for
purposes of this section 2.03, the "Offerees") (subject, in the case of the
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Investment Parties, to the purchase of Offered Shares by the Remaining
Stockholder and, in the case of the Company, to the purchase of Offered Shares
by the Remaining Stockholder and the Investment Patties) on terms and
conditions, including price, not less favorable than those on which the Initial
Stockholder proposes to sell such Offered Shares to the Proposed Transferee. The
Offer shall disclose the identity of the Proposed Transferee, the Offered Shares
proposed to be sold, the total number of Shares owned by the Initial
Stockholder, the terms and conditions, including price, of the proposed sale,
and any other material facts relating to the proposed sale. The Offer shall
further state that the Offerees may acquire, in accordance with the provisions
of this Agreement, all of the Offered Shares for the price and upon the other
terms and conditions, including deferred payment (if applicable), set forth
therein.
(b) If the Remaining Stockholder does not purchase all of the Offered
Shares, then each Investment Party shall have the absolute right to purchase
that number of remaining Offered Shares as shall be equal to the number of such
Offered Shares multiplied by a fraction, the numerator of which shall be number
of Shares then owned by such Investment Party and the denominator of which shall
be the aggregate number of Shares then owned by all of the Investment Parties.
For purposes of Section 2.03, all of the Common Stock which an Investment Party
has the right to acquire from the Company upon the conversion, exercise or
exchange of any of the securities of the Company then owned by such Investment
Party shall be deemed to be Shares then owned by such investment Party. The
amount of Offered Shares that each Investment Party is entitled to purchase
under this Section 2.03(b) shall be referred to as its "Pro Rata Fraction".
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(c) The Investment Parties shall have a right of oversubscription
such that if any Investment Party fails to accept the Offer as to its Pro Rata
Fraction, the other Investment Parties shall among them have the right to
purchase up to the balance of the Offered Shares not so purchased. Such right of
oversubscription may be exercised by an investment Party by accepting the Offer
as to more than its Pro Rata Fraction. If, as a result thereof, such
oversubscriptions exceed the total number of Offered Shares available in respect
of such oversubscription privilege, the oversubscribing Investment Parties shall
be cut back with respect to their oversubscriptions on a pro rata basis in
accordance with their respective Pro Rata Fractions or as they may otherwise
agree among themselves.
(d) If the Remaining Stockholder desires to purchase all or any part
of the Offered Shares, the Remaining Stockholder shall communicate in writing
its election to purchase to the Stockholder, which communication shall state the
number of Offered Shares the Remaining Stockholder desires to purchase and shall
be given to the Initial Stockholder in accordance with Section 7.05 below within
30 days of the date the Offer
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was made. Such communication shall, when taken in conjunction with the Offer, be
deemed to constitute a valid, legally binding and enforceable agreement for the
sale and purchase of such Offered Shares.
(e) If the Remaining Stockholder does not elect to accept the Offer
as to any or all of the Offered Shares within 30 days of the date the Offer is
made, the Initial Stockholder shall send a written notice to the Investment
Parties indicating the number of Offered Shares available for purchase pursuant
to the terms and conditions, including price, set forth in the Offer (the
"Investor Notice"). Any Investment Party which desires to purchase any Offered
---------------
Shares shall communicate in writing its election to purchase to the Initial
Stockholder, which communication shall state the number of Offered Shares such
Investment Party desires to purchase and shall be given to the Initial
Stockholder in accordance with Section 7.05 below within 30 days of receipt of
the Investor Notice.
(f) If the Remaining Stockholder and the Investment Parties do not
purchase all of the Offered Shares, then the Initial Stockholder shall send a
Company Notice to the Company indicating the number of Offered Shares available
for purchase pursuant to the terms and conditions, including price, set forth in
the Offer. The Company shall communicate in writing its election to purchase all
of such Offered Shares and which communication shall be given to the Initial
Stockholder in accordance with Section 7.05 below within 30 days of receipt of
the Company Notice.
(g) If the Remaining Stockholder and/or the Investment Parties and/or
the Company elect to purchase, in the aggregate, all of the Offered Shares, any
written communication of an election to so purchase delivered by the Remaining
Stockholder, any Investment Party or the Company shall, when taken in
conjunction with the Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the sale and purchase of the stated Offered Shares
(subject to subsection (d) above). Sales of the stated Shares to be sold to the
Remaining Stockholder and/or any Investment Party and/or Company pursuant to
this Section 2.03 shall be made at the offices of the Company on the 45th day
following the later of the date (i) of the Offer, if the Remaining Stockholder
elects to purchase all of the Offered Shares, (ii) of the Investor Notice, if
the Remaining Stockholder and/or the Investment Parties elect to purchase all of
the Offered Shares or (iii) of the Company Notice, if the Remaining Stockholder
and/or any Investment Party and/or the Company elects to purchase all of the
Offered Shares (or if such 45th day is not a business day, then on the next
succeeding business day). Such sales shall be effected by the Initial
Stockholder's delivery to the Company of a certificate or certificates
evidencing the Offered Shares to be purchased by the Remaining Stockholder
and/or any Investment Party and/or the Company, duly endorsed for transfer, to
the Company, against payment to the Initial Stockholder of the purchase price
therefor by the party purchasing such Offered Shares.
(h) If the Remaining Stockholder and/or the Investment Parties and/or
the Company do not purchase all of the Offered Shares, then, subject to Section
2.05 hereof, all, but not less than all, of the Offered Shares may be sold by
the Stockholder at any time within 180 days after the date the Offer was made.
Any such sale shall be to the Proposed Transferee, at not less than the price
and upon other terms and conditions, if any, not more favorable to the Proposed
Transferee than those specified in the Offer. If the Offered Shares are not sold
within such 180-day period, such Shares shall continue to be subject to the
requirements of a prior offer pursuant to this Section 2.03, If Offered Shares
are sold
12
pursuant to this Section 2.03 to any purchaser who is not a party to this
Agreement, the Offered Shares so sold shall no longer be subject to this
Agreement.
(i) The rights of first refusal provided in this Section 2.03 shall
not apply with respect to (a) sales of Shares to the Company or (b) sales of
Shares in a Qualified Public Offering.
SECTION 2.04. Right of First Refusal on Dispositions of the Crowns and
--------------------------------------------------------
Investors. (a) Permitted Transfer. A "Permitted Transfer" shall include: (i) any
--------- ------------------ ------------------
transfer of Shares or Preferred Shares by an Investor or, if neither of the
Crowns is employed by the Company or any of its Subsidiaries or Affiliates at
the time of the proposed transfer, by the Crowns, to a corporation or
corporations or to a partnership or partnerships (or other entity for collective
investment, such as a fund) which is directly or indirectly controlled by,
controlling or under common control with such Investment Party or the officers,
employees, general partners or limited partners of such Investment Party, (ii)
any transfer between any of Berkshire III Corp., Berkshire III, Berkshire IV
Corp., Berkshire IV, Berkshire Investors LLC, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Present Interest Trust,
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Present Interest Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Present Interest
Trust, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇ ▇. Small, ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇ (collectively, the "Berkshire
---------
Group") and (iii) any transfer by (A) any of the natural persons in the
-----
Berkshire Group or (B) either of the Crowns to any member of his or her family
or to any trust for the benefit of any such individual or family member;
provided that any such transferee under this Section 2.04 shall agree in writing
--------
with the Company and the Investment Parties, as a condition to such transfer, to
be bound by all of the provisions of this Agreement to the same extent as if
such transferee were the individual. Any such transferee is hereinafter referred
to as a "Permitted Transferee".
--------------------
(b) Transfer by the Crowns or Investors. (i) If an Investor or, if
-----------------------------------
neither of the Crowns is employed by the Company or any of its Subsidiaries or
Affiliates at the time of the proposed transfer, the Crowns, or any Permitted
Transferee thereof proposes to transfer Shares or Preferred Shares to anyone
other than a Permitted Transferee or, in the case of an Investor, the partners,
stockholders, officers or employees of such Investor, such Investment Party or
Permitted Transferee thereof shall give notice of such proposed Transfer to each
of the other Investment Parties. Such notice (the "Transfer Notice") shall state
---------------
that it is being delivered under this Section 2.04 and shall state the terms and
conditions of such offer, including the name of the prospective purchaser, the
proposed purchase price per share of such Shares or Preferred Shares (the "Offer
-----
Price") and payment terms (including a description of any proposed noncash
-----
consideration), the type of disposition and the number of such shares to be
transferred (the "Offered Investor Shares"). The Transfer Notice shall further
-----------------------
state (i) that the Investor Offerees may acquire, in accordance with the
provisions of this Agreement, any of the Offered Investor Shares for the price
and upon the other terms and conditions, including deferred payment (if
applicable), set forth therein, (ii) that the Investor Offerees may not purchase
any of such Offered Investor Shares unless collectively the Investor Offerees
purchase all of such Offered Investor Shares and (iii) that if all such Offered
Investor Shares are not purchased by the investor Offerees, the Investor
Offerees may exercise their rights provided pursuant to Section 2.05 hereof
(ii) For a period of 30 days after receipt of the Transfer Notice (the
"Option Period"), each of the other Investment Parties (individually, an
-------------
"Investor
--------
13
Offeree", and collectively, the "Investor Offerees") may, by notice in
------- -----------------
writing to the Investment Party or Permitted Transferee delivering such
Transfer Notice, elect in writing to purchase all, but not less than all,
of the Offered Investor Shares allocated to such Investor Offeree at the
Offer Price. The right to purchase such Offered Investor Shares shall be
allocated to the Investor Offerees pro rata (based on the number of Shares
--- ----
each of the Investor Offerees owns in relation to the total number of such
Shares owned by all of them); provided that if any Investor Offeree does
--------
not elect to purchase the Offered Investor Shares which such Investor
Offeree may purchase pursuant to this Section 2.04, then the other
Investor Offerees may elect to purchase the remaining Offered Investor
Shares.
(iii) If the Investor Offerees do not elect to purchase all of the
Offered Investor Shares, or if the Investor Offerees fail to purchase all
of the Offered Investor Shares in accordance with this Section 2.04, all
but not less than all of the Offered Investor Shares may be transferred,
but only in accordance with the terms of the Transfer Notice, within six
months after expiration of the Option Period, after which, if the Offered
Investor Shares have not been transferred, all restrictions contained
herein shall again be in full force and effect.
(iv) The closing of the purchase of any Offered Investor Shares
pursuant to Section 2.04(b)(ii) hereof shall take place at the principal
office of the Company on the tenth day after the expiration of the Option
Period. At such closing, each purchaser of Offered Investor Shares shall
deliver the Offer Price, on the same terms as set forth in the Transfer
Notice (including any non-cash consideration described therein), payable
in respect of the Offered Investor Shares being purchased by such
Investment Party or Permitted Transferee thereof who delivered the
Transfer Notice against delivery of certificates duly endorsed and stock
powers representing the Offered Investor Shares being acquired by such
Investment Party. All of the foregoing deliveries will be deemed to be
made simultaneously and none shall be deemed completed until all have
been completed.
SECTION 2.05. Come-Along. (a) Except as provided in Section 2.01 and
----------
Section 2.04(a) hereof, and except for transfers by an Investor to any of its
partners, stockholders, officers or employees, no Stockholder, Investor or
Permitted Transferee shall transfer any Shares or Preferred Shares without
complying with the following terms and conditions set forth in Sections 2.05(a)
and 2.05(b) below; provided that this Section 2.05 shall not in any way limit or
--------
affect the restrictions of Section 2.02, 2.03 or Section 2.04, as the case may
be, and any Stockholder, Investor or Permitted Transferee may be an Initiating
Shareholder under this Section 2.05 only if such transfer is made in accordance
with Section 2.02, 2.03 or 2.04, as the case may be.
(b) Any Stockholder, Investor or Permitted Transferee (the
"Initiating Shareholder") desiring to transfer his or her Shares shall, after
----------------------
complying with the provisions of Section 2.02, 2.03 or 2.04, as the case may be,
give nor less than 30 days' prior written notice of such intended transfer to
each Investment Party (individually, a "Participation Offeree" and
---------------------
collectively, the "Participation Offerees") and to the Company. Such notice (the
----------------------
"Participation Notice") shall set forth the terms and conditions of such
--------------------
proposed transfer, including the name of the prospective transferee, the number
of Shares or Preferred Shares proposed to be transferred (the "Participation
-------------
Securities") by the Initiating Shareholder, the purchase price per Share
----------
proposed to be paid therefor, and the payment terms and type of transfer to be
effectuated. The Participation Notice shall
14
further state that the Initiating Shareholder complied with Section 2.02, 2.03
or 2.04 hereof, as the case may be, with respect to such proposed transfer and,
if applicable, the Offered Shares were not purchased by the Initial
Stockholders, the Investment Parties or the Company pursuant to any right of
first refusal described in Section 2.02, 2.03 or 2.04 hereof. Within 20 days
following the delivery of the Participation Notice by the Initiating Shareholder
to each Participating Offeree and to the Company, each Participating Offeree
may, by notice in writing to the Initiating Shareholder and to the Company, have
the opportunity and the right to sell to the purchasers in such proposed
transfer (upon the same terms and conditions as the Initiating Shareholder) up
to that number of Shares owned by such Participating Offeree as shall equal the
product of (i) a fraction, the numerator of which is the number of Shares owned
by such Participating Offeree as of the date of such proposed transfer and the
denominator of which is the aggregate number of Shares owned as of the date of
such Participation Notice by each Initiating Shareholder and by all
Participating Offerees, multiplied by (ii) the number of Participation
Securities. The amount of Participation Securities to be sold by an Initiating
Shareholder shall be reduced to the extent necessary to provide for such sales
of Shares or Preferred Shares by Participating Offerees.
(c) At the closing of any proposed transfer in respect of which a
Participation Notice has been delivered, the Initiating Shareholder, together
with all Participating Offerees electing to sell Shares or Preferred Shares,
shall deliver to the proposed transferee certificates evidencing the Shares or
Preferred Shares to be sold thereto duly endorsed with stock powers and shall
receive in exchange therefor the consideration to be paid or delivered by the
proposed transferee in respect of such Shares or Preferred Shares as described
in the Participation Notice.
(d) The provisions of this Section 2.05 shall not apply to any
transfer (i) pursuant to Section 2.01, (ii) to any Initial Stockholder or any
Investment Party or the Company pursuant to Section 2.02 or 2.03, (iii) to any
Investment Party pursuant to Section 2.04 or (iv) to any Permitted Transferee.
(e) The Permitted Transferees, or any transferees described in
Section 2.01 hereof, of any Initiating Shareholder shall have no rights under,
but shall be bound by the terms of, this Section 2.05.
SECTION 2.06. Take Along. If, at any time prior to a Qualified Public
----------
Offering, Investment Parties holding at least 662/3% of the Shares owned by all
Investment Parties (such persons being referred to in this Section 2.06 as the
"Take Alone Group") shall determine to sell or exchange (in a business
----------------
combination or otherwise) 50% or more of the total number of Shares then
issuable or outstanding in one or a series of bona fide arm's-length
transactions to a third party who is not an Affiliate of the Take Along Group,
then, upon 30 days' written notice of the Take Along Group, which notice shall
include reasonable details of the proposed sale or exchange, including the
proposed time and place of the closing and the consideration to be received by
the Investment Parties (such notice being referred to as the "Sale Request"),
------------
each other Investment Party and Initial Stockholder shall be obligated to, and
shall (a) sell, transfer and deliver or cause to be sold, transferred and
delivered, to such third party, that percentage of its or the Stockholders'
Shares or Preferred Shares that is equal to the aggregate percentage of the Take
Along Group's Shares or Preferred Shares being sold or exchanged by the Take
Along Group in the same transaction at the closing thereof (and deliver
certificates for such percentage of its or the Stockholders' Shares or Preferred
Shares at the closing, free
15
and clear of all claims, liens and encumbrances), and each Investment Party and
the Stockholders, including the members of the Take Along Group, shall receive
the same consideration per share of Common Stock upon such sale or exchange as
members of the Take Along Group, (b) upon request, consent to the cancelation of
any vested stock options for purchase of shares of Common Stock for an amount
per Share equal to the difference, if any, between the consideration per Share
or Preferred Share referenced in the preceding clause and the exercise price of
such vested stock options, and (c) if Stockholder approval of the transaction is
required, vote its or the Stockholders' Shares or Preferred Shares in favor
thereof.
SECTION 2.07. Call by the Company. (a) The following terms shall have
-------------------
the following definitions for the purposes of this Section 2.07 and Section 2.08
hereof.
(i) "Initial Stockholder" shall mean ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------
(ii) "Cause" in the context of termination of employment of the
-----
Initial Stockholder shall mean, in each case as determined in good faith by a
majority of the Board exclusive of any member subject to a "Cause" termination:
(x) conviction of or a plea of guilty or nolo contendere to any criminal
---- ----------
violation involving dishonesty, fraud or breach of trust, or any felony which
materially adversely affects the Company; or (y) willful engagement in gross
misconduct in the performance of duties owed the Company that materially
adversely affects the Company.
(iii) "Disability" used in connection with termination of employment
----------
of the Initial Stockholder shall mean the inability of the Initial Stockholder
for a period of 180 consecutive days to perform in all material respects the
Initial Stockholder's duties to the Company or any of its Subsidiaries because
of serious physical or mental disability or other incapacity as determined by an
independent medical doctor selected by the Board.
(iv) "Fair Market Value" shall mean the fair market per share value of
-----------------
shares of Common Stock based on the value of the Company as a going concern,
determined as of the applicable termination date referenced in this Section 2.07
or Section 2.08 hereof on a fully diluted basis assuming the exercise of any
then outstanding exercisable conversion or option rights with respect to
securities of the Company, as determined in good faith by the affirmative vote
of at least a majority of the entire Board, which majority shall exclude the
Initial Stockholder and shall include each of the Preferred Nominee directors
designated by the holders of Preferred Shares under Section 3.01 below. In
making its determination, the Board shall take into consideration such factors
which it deems reasonable and appropriate, but shall not take into account any
minority or illiquidity discount. The determination of Fair Market Value shall
be made by the Board within 30 days of the applicable termination date
referenced in this Section 2.07 or in Section 2.08 hereof and a notice stating
the Fair Market Value and a reasonably detailed description of the calculation
thereof and the basis for such calculation shall be sent to the Initial
Stockholder.
The Initial Stockholder shall have 30 days from the date of the
delivery of the above notice to object to the determination of Fair Market Value
in writing delivered to the Company with a copy to the Series A Nominees. If the
Initial Stockholder fails to object to such determination within such 30-day
period, the determination of Fair Market Value by the Board shall be conclusive
and binding on the parties. In the event that the Initial Stockholder does
object to the determination within such 30-day period. Fair
16
Market Value shall be determined by an appraisal of the shares of Stock in
question. The appraisal will be performed by an investment banking firm that has
not been engaged on a regular basis by the Company or any Investor within the
last two years and shall be selected in the following manner: (a) the Board by
the affirmative vote of a majority of the entire Board, which majority shall
include each of the Preferred Nominees, shall (giving due consideration to the
fee estimates of such firms) nominate at least three such investment banking
firms with experience giving appraisals and in financial analysis of businesses
similar to the Company's business and then (b) the Initial Stockholder shall
select, from among such firms, one firm which shall act as the appraiser
hereunder (the "Appraiser"). The Appraiser will be instructed to complete its
---------
appraisal within 30 days of appointment and will, in making its determination,
not take into account the considerations required to be excluded from the
Board's determination of Fair Market Value set forth above. The determination of
the appraiser shall be conclusive and binding as to the Fair Market Value.
In the event that the Company is required by the Initial Stockholder
to retain an appraiser, the fees and expenses of such Appraiser shall be borne
(i) by the Company if the determination of Fair Market Value by the Appraiser is
equal to or greater than 90% of the determination made by the Board of Directors
and (ii) by the Initial Stockholder if the determination of Fair Market Value by
the Appraiser is less than 90% of the determination made by the Board; provided,
--------
that the fees and expenses required to be borne by the initial Stockholder shall
not exceed 10% of the aggregate purchase price to be received by the Initial
Stockholder in the transaction giving rise to the Fair Market Value
determination.
(v) "Investment Price" shall mean an amount per share of Common Stock
----------------
equal to the price per share paid to the Company for such Common Stock by the
Initial Stockholder.
(b) If the employment of the Initial Stockholder by the Company and
its Subsidiaries shall terminate (a "Call Event") for any reason prior to the
----------
first Qualified Public Offering, the Company and the Investment Parties as a
group, in that order, shall have the right to purchase (subject to, in the case
of the Investment Parties, purchases by the Company)(the "Call Option"), by
-----------
delivery of a written notice (the "Call Notice") to the terminated Initial
-----------
Stockholder no later than 90 days after the date of such Call Event (the "Call
----
Period"), and the Initial Stockholder and the Initial Stockholder's Permitted
------
Transferees (the "Call Group") shall be required to sell any or all of the
----------
shares of Stock which are owned by the members of the Call Group on the date of
such Call Event. Additionally, the Call Group shall be required to exercise any
or all vested Stock Options and immediately after such exercise shall be
required to sell all shares of Common Stock which, as a result of such exercise,
are then owned by the members of the Call Group on the date of such Call Event
(collectively, the "Call Securities") at a price per share of Common Stock equal
---------------
to the Call Price). All stock options held by the terminated Initial Stockholder
which have not vested on the date of the Call Event shall be canceled.
(c) If the Company does not elect to purchase all Call Securities
available for purchase, each Investment Party shall have the absolute right to
purchase that number of Call Securities not so purchased as shall be equal to
the number of such Call Securities multiplied by a fraction, the numerator of
which shall be the number of Shares then owned by such Investment Party and the
denominator of which shall be the aggregate number of Shares then owned by all
of the Investment Parties. For purposes of this
17
Section 2.07, all of the Common Stock which an Investment Party has the right to
acquire from the Company, directly or indirectly upon the conversion, exercise
or exchange of any securities of the Company then owned by such Investment Party
shall be deemed to be Shares then owned by such Investment Party. The amount of
Call Securities that each Investment Party is entitled to purchase under this
Section 2.07 shall be referred to as its "Pro Rata Call Fraction".
----------------------
(d) The Investment Parties shall have a right of oversubscription
such that if any Investment Party fails to exercise its Call Option for the
purchase of Call Securities as to its Pro Rata Call Fraction, the other
Investment Parties shall, among them, have the right to purchase up to the
balance of the Call Securities not so purchased. Such right of oversubscription
may be exercised by an Investment Party by exercising its Call Option as to more
than its Pro Rata Call Fraction. If, as a result thereof, such oversubscriptions
exceed the total number of Call Securities available in respect of such
oversubscription privilege, the oversubscribing Investment Parties shall be cut
back with respect to their oversubscriptions on a pro rata basis in accordance
with their Pro Rata Call Fractions, or as they may otherwise decide among
themselves.
(e) For purposes of this Section 2.07, the term "Call Price" shall
----------
mean:
(i) with respect to shares of Common Stock,
(aa) in the event of a termination of the employment of the
Initial Stockholder without Cause or by virtue of his (x) death or
Disability, (y) Retirement in accordance with Company policy or (z)
voluntary termination of employment, the Fair Market Value of such
shares of Common Stock; and
(bb) in the event of a termination of the employment of the
Initial Stockholder for Cause, the lower of (x) the Investment Price
of such shares of Common Stock, or (y) the Fair Market Value of such
shares of Common Stock; and
(ii) with respect to any vested stock options,
(aa) in the event of a termination of the employment of the
Initial Stockholder without Cause or by virtue of his (x) death or
disability, (y) retirement in accordance with Company policy or (z)
voluntary termination of employment, the difference between (1) the
Call Price, as determined in (i)(aa) above, payable for shares of
Common Stock and (2) the exercise price of such vested stock options,
multiplied by the number of shares of Common Stock issuable upon the
exercise of such vested stock options; and
(bb) in the event of a termination of the employment of the
Initial Stockholder for Cause, the difference between (x) the Call
Price, as determined in (i)(bb) above, payable for shares of Common
Stock and (y) the exercise price of such vested stock options,
multiplied by the number of shares of Common Stock issuable upon the
exercise of such vested stock options.
18
(f)(i) The closing of any purchase of Call Securities shall take place
at the principal office of the Company on the 20th business day after the date
of the Call Notice or on such other date as the parties may agree (the "Call
----
Option Closing"). At the Call Option Closing, the Company and/or any Investment
--------------
Parties purchasing Call Securities, as the case may be, shall deliver to the
Call Group, against delivery of certificates duly endorsed and stock powers
representing the Call Securities, and against the execution, in a form
reasonably satisfactory to the Company, of an agreement assigning or canceling
the stock options, a certified check or checks payable to the terminated Initial
Stockholder and/or the Permitted Transferees, as the case may be, in an amount
equal to the aggregate Call Price payable for such Call Securities subject to
clause (ii) below.
(ii) To the extent that payment of the Call Price by the Company in
cash would violate applicable law or any bank lending agreement to which
the Company is a party, the Company shall use reasonable efforts to cure
any such violation or have such violation waived in order to permit payment
of the Call Price in cash. To the extent the Company remains unable to make
cash payment as to any portion, or all of, the Call Price, such payment may
be made by delivery of a note issued by the Company (x) bearing interest at
a per annum rate of the prime rate as reported in the Wall Street Journal
-------------------
at the time of issuance plus 2%, or, if lower, the maximum rate permitted
under applicable law, (y) having a term of five years and (z) which is
subordinated in right of payment to all other debt of the Company;
provided, however, that the Company shall not be obligated to make any
-------- -------
payment of principal or interest under such a note if the making of such
payment would violate applicable law or any bank lending agreement to which
the Company is a party; provided further, that if at any time the payment
----------------
of any outstanding amount in respect of a note issued for the Call Price
may be paid in cash without violation of applicable law or any bank lending
agreement to which the Company is a party, the Company shall promptly pay
the outstanding principal and interest on any such note to the extent to be
permitted. All of the foregoing deliveries under clause (i) or (ii) above
will be deemed to be made simultaneously and none shall be deemed completed
until all have been completed.
SECTION 2.08. Put by the Initial Stockholder. (a) If the employment of
------------------------------
the Initial Stockholder by the Company and its Subsidiaries shall terminate
without Cause or by virtue of his (i) death or Disability or (ii) retirement in
accordance with Company policy (such termination being hereinafter referred to
as a "Put Event"), and the Company and the Investment Parties do not elect to
---------
exercise the Call Option in full pursuant to Section 2.07, then the Company
shall give such Stockholder written notice (the "Put Notice") advising him of
----------
his Put Option and specifying the last date on which such Put Option can be
exercised. In such event, in addition to the rights of the Initial Stockholder
to continue to hold Shares, the Initial Stockholder (and his transferees under
Section 2.01(b) and (c)) ("Related Transferees") shall have the right (the "Put
------------------- ---
Option"), by delivery of written notice to the Company (the "Put Acceptance
------ --------------
Notice") within 60 days after the Put Notice to cause the Company to purchase,
------
and the Company shall purchase all, or any part of, the Shares which are owned
by the Initial Stockholder or his Related Transferees on the date of such Put
Event and which are not purchased by the Company and the Investment Parties
pursuant to Section 2.07 (collectively, the "Put Securities") as specified in
--------------
the Put Acceptance Notice, at a price per share equal to the Put Price.
(b) For purposes of this Section 2.08 the term "Put Price" shall mean
---------
the Fair Market Value of the Shares.
19
(c) The closing of the purchase of any Put Securities by the Company
pursuant to this Section 2.08 shall take place at the principal office of the
Company not later than 45 business days after the delivery of the Put Acceptance
Notice (the "Put Option Closing"). At the Put Option Closing the Company shall
------------------
deliver, against delivery of certificates duly endorsed and stock powers
representing the Shares specified in the Put Notice a certified check or checks
payable to the order of the Initial Stockholder and/or Related Transferees
selling Put Securities as specified in the Put Notice, in an amount equal to the
aggregate purchase price payable for such Put Securities. The Company shall not
be obligated to repurchase Shares under this Section 2.08 or under any other
Section of this Agreement if the Company is prohibited from doing so under
applicable law. In addition, the Company shall not be obligated to make any cash
payments by certified check or otherwise under this Section 2.08 if the making
of such payment would violate the terms of any bank lending agreement to which
the Company is a party. In such event, in lieu of such payment by check, the
Initial Stockholder and his Related Transferees shall have the right to cancel
the Put Notices. If the Stockholder and/or his Related Transferees desire to
proceed with the sale of Put Securities or proceed with the sale, then to the
extent the Company is unable to fund the purchase of the Put Securities with
cash, the Company shall deliver to the Initial Stockholder and/or his Related
Transferees selling Put Securities as specified in the Put Acceptance Notice, a
subordinated note having the term set forth in, and subject to the provisions
of, Section 2.07(f)(ii) above.
(d) If and to the extent that, subsequent to a Put Event, the Initial
Stockholder does not give a Put Acceptance Notice within 60 days after receipt
of the Put Notice required to be delivered by the Company under Section 2.08,
all rights to sell Put Securities to the Company pursuant to this Section 2.08
shall terminate.
ARTICLE III
Election of Directors.
---------------------
SECTION 3.01. Designation of Nominees by Crowns and by Investors.
-------------- -----------------------------------
(a) So long as the Crowns or their transferees under Section 2.01(b) and (c)
(the "Crown Related Transferees") shall have in the aggregate a 5% or greater
-------------------------
interest in the Common Stock of the Company, ▇▇▇▇▇▇ ▇. Crown, ▇▇▇▇▇▇▇ Crown
and/or their Crown Related Transferees (collectively, the "Nominating Group"
----------------
and, individually, a "Nominating Person") shall have the right to designate one
-----------------
nominee for election as a director of the Company (a "Crown Nominee"). At least
-------------
ten days prior to any meeting, or written action in lieu of a meeting, of
Stockholders of the Company at or by which directors are to be elected, the
Nominating Group or a Nominating Person shall notify the Company and the
Investors in writing of the Crown Nominee designated by the Nominating Group or
a Nominating Person for election as a director. In the absence of any such
notification, it shall be presumed that the then incumbent Crown Nominee has
been redesignated as the Crown Nominee. in the event that no such nomination is
made by the Nominating Group and either (i) no then incumbent Crown Nominee
exists or (ii) the then incumbent Crown Nominee does not intend to serve as a
director of the Company for the upcoming year, ▇▇▇▇▇▇ ▇. Crown shall be
nominated for election without any further action. The initial Crown Nominee is
▇▇▇▇▇▇ ▇. Crown.
(b) Of the five directors to be elected by holders of Preferred
Shares pursuant to the terms contained in the Company's Charter, (i) Centennial
IV and
20
Centennial V shall each have the right to designate one nominee for election as
a director of the Company; (ii) Berkshire III and either of Berkshire IV Corp.
or Berkshire IV shall each have the right to designate one nominee for election
as a director of the Company; and (iii) Nassau Capital II and NAS I
(collectively, "Nassau") shall have the right to designate one nominee for
------
election as a director of the Company (Centennial IV, Centennial V. Berkshire
III, Berkshire IV Corp., Berkshire IV and Nassau are together, the "Nominating
----------
Investors" and individually, a "Nominating Investor") (together, the "Preferred
--------- ------------------- ---------
Nominees") and individually a "Preferred Nominee"). At least 10 days prior to
-------- -----------------
any meeting (or written action in lieu of a meeting) of stockholders of the
Company at or by which directors are to be elected by the holders of Preferred
Shares, voting separately, each Nominating Investor shall notify the Company and
other Investors in writing of the Preferred Nominee designated by such
Nominating Investor for election as a director. In the absence of any such
notification, it shall be presumed that the Nominating Investor's then incumbent
Preferred Nominee has been redesignated as its Preferred Nominee. The initial
Preferred Nominee of Centennial IV is ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and of Centennial V,
▇▇▇▇▇ ▇▇▇▇, Jr; the initial Preferred Nominee of Berkshire III is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
and of Berkshire IV Corp. and Berkshire IV is ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and the initial
Preferred Nominee of Nassau is ▇▇▇▇▇▇▇ ▇. Hack.
(c) At each meeting, or written action in lieu of a meeting of
Stockholders of the Company, at or by which a director nominated by the
Nominating Group or a Nominating Person is to be elected, each Investor and
Stockholder shall vote all of its or his or her Shares or Preferred Shares, as
the case may be, to elect as a director of the Company, the nominee designated
in the manner provided in Section 3.01(a).
(d) At each meeting, or written action in lieu of a meeting of
Stockholders of the Company, at or by which directors are to be elected by the
holders of Preferred Shares, voting separately, each Investor shall vote all of
its Preferred Shares to elect, as directors of the Company, the nominees
designated in the manner provided in Section 3.01(b).
(e) If a Crown Nominee shall cease to serve as a director for any
reason, the Nominating Group or the Nominating Person who designated such Crown
Nominee shall have the right to designate a successor Crown Nominee and each of
the other Investors and Stockholders shall use its best efforts to ensure that
such Crown Nominee is duly elected as a director. If the Nominating Group or a
Nominating Person notify the Company that they desire to remove their Crown
Nominee as a director and/or designate a successor Crown Nominee, the Company
shall, at the request of the Nominating Group or a Nominating Person, use its
best efforts to ensure that a meeting of Stockholders of the Company is promptly
called for such purpose.
(f) If a Preferred Nominee shall cease to serve as a director for any
reason, the Nominating Investor which designated such Preferred Nominee shall
have the right to designate a successor Preferred Nominee and each of the other
Investors shall use its best efforts to ensure that such successor Preferred
Nominee is duly elected as a director. If a Nominating Investor notifies the
other Investors that it desires to remove its Preferred Nominee as a director,
each of the other Investors shall use its best effort to ensure that such
Preferred Nominee is duly removed as a director. If a Nominating Investor
notifies the Company that it desires to remove its Preferred Nominee as a
director and/or designate a successor Preferred Nominee, the Company shall, at
the request of such
Nominating Investor, use its best efforts to ensure that a meeting of
stockholders of the Company is promptly called for such purpose.
SECTION 3.02. Election of General Directors. In addition to the five
-----------------------------
directors elected solely by the holders of Preferred Shares, the director
elected solely by the holders of Class A Stock pursuant to the Company's Charter
and the director nominated by the Nominating Group, and subject to any changes
arising out of or effected pursuant to the Company's By-laws or Charter or
applicable Delaware law, there shall also be designated four other directors
(collectively, the "General Directors" and individually a "General Director")
----------------- ----------------
pursuant to the terms of this Section 3.02.
(a) (i) The initial four General Directors (the "Initial General
---------------
Directors") shall be designated by the agreement of Stockholders and Investors
---------
as a group holding 662/3% of the outstanding capital stock of the Company
entitled to vote in the election of directors (calculated on an "as converted"
basis). The Initial General Director nominees are ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇. ▇▇▇.
(ii) At the meeting (or written action in lieu of a meeting) of
stockholders of the Company at or by which General Directors are to be
elected each Investor and each Stockholder shall vote all of its Shares to
elect, as directors of the Company, the General Directors designated in the
manner provided in Section 3.02.
(b) Successor Directors. If a General Director shall cease to serve
-------------------
as a director, such vacancy shall be filled in accordance with Section
3.02(a)(i); provided that any General Director can be removed for any reason or
--------
no reason by vote of the stockholders in accordance with Delaware law, the
Company's Charter and/or the Company's By-laws, as applicable, and if so
removed, any successor General Director shall be nominated and shall be elected
by the stockholder vote required under Delaware law, the Company's Charter
and/or the Company's By-laws, as applicable. The Company shall, at the request
of the Investors and/or the Stockholders, use its best efforts to ensure that a
meeting of the Stockholders of the Company is promptly called to effect any such
removal and/or fill any such vacancy.
SECTION 3.03. Subsidiary Boards of Directors. Unless the directors of
------------------------------
the Company unanimously agree otherwise, the Company shall vote its shares of
stock of its Subsidiaries so as to elect as directors of such Subsidiaries the
persons elected as directors, or as successors to any such directors, of the
Company pursuant to the terms of Section 3.01 and those persons elected as
directors of the Company by the holders of the Class A Stock, as provided in the
Charter of the Company; provided, however, that it is hereby acknowledged that
-------- -------
the current directors of the Subsidiaries of the Company are as set forth on
Schedule II and provided further that such directors may remain in office for
-------- -------
the duration of their respective terms without the unanimous consent of the
directors of the Company.
SECTION 3.04. Election of ▇▇▇▇▇▇ ▇. Crown. As of the closing of the
---------------------------
transactions contemplated by the Crown Purchase Agreement, ▇▇▇▇▇▇ ▇. Crown shall
be elected (A) a member of the Board (as Crown Nominee pursuant to Section 3.01)
and executive committee of the Company and (B) director, president and chief
executive officer of Crown Communication Inc.
ARTICLE IV
Representations and Warranties of the Crowns
--------------------------------------------
SECTION 4.01. Each of the Crowns severally represents and warrants to
the Company that: (a) he or she (i) is an "accredited investor" within the
meaning of Rule 501 under the Securities Act or (ii) has sufficient knowledge
and experience in investing and in the business of the Company so as to be able
to evaluate the risks and merits of its investment in the Company and are able
financially to bear the risk thereof, including the risk of the complete loss of
its investment in the Company;
(b) he or she has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management;
(c) the Class B Stock is being acquired by him or her for his or her
own account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof;
(d) he or she understands that (i) the Class B Stock has not been
registered under the Securities Act by reason of its issuance in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) thereof or Rule 505 or 506 promulgated under the Securities Act,
(ii) the Class B Stock must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration, (iii) the Class B Stock will bear a legend to such effect and
(iv) the Company will make a notation on its transfer books to such effect;
(e) (i) he or she will not sell any Class B Stock except pursuant to
registration under the Securities Act or a valid exemption therefrom and (ii) if
her or she sells any Class B Stock pursuant to Rule 144A promulgated under the
Securities Act, they will take all necessary steps in order to perfect exemption
from registration provided thereby, including (x) obtaining on behalf of the
Company information to enable the Company to establish a reasonable belief that
the purchaser is qualified institutional buyer and (y) advising such purchaser
that Rule 144A is being relied upon with respect to such resale;
(f) he or he has the power and authority to enter and perform his or
her obligations under this Agreement and the other agreements and documents
contemplated by this Agreement;
(g) neither the execution of this Agreement or the other agreements
and documents contemplated by this Agreement nor the consummation of the
transactions contemplated thereby will result in any violation or be in conflict
with (i) the terms of any agreement or other instrument to which he or she is
a party or (ii) to the best of the Crown's knowledge, any law, regulation,
judgement, license or order applicable to the Crowns;
(h) each of this Agreement and the other agreements and documents
delivered pursuant to the terms hereof is a valid and legally binding obligation
of each of the Crowns, enforceable in accordance with its terms (subject as to
the enforcement of remedies, to the discretion of courts in awarding equitable
relief and to applicable
23
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
the rights of creditors generally); and
(i) to the best of the Crowns' knowledge and belief, neither the
execution of this Agreement nor the consummation to the transactions
contemplated hereby will result in a transaction prohibited by the Ford
Foundation Letter.
ARTICLE V
Covenants of the Company
------------------------
The Company covenants and agrees with each of the Investors (except as
indicated in Schedule I hereto) and the Stockholders (herein collectively
referred to as "Purchasers" and individually as a "Purchaser") that so long as
---------- ---------
such Purchaser continues to own in the aggregate at least 25% of the shares of
Class B Stock issued or issuable to such Purchase (assuming the conversion of
all Preferred Shares into shares of Class B Stock, appropriately adjusted to
reflect stock splits, stock dividends, combinations of shares and the like with
respect thereto but without giving effect to any optional redemption by the
Company) and, with respect to the covenant contained in Section 5.15 hereof, so
long as any Purchaser holds any shares of Common Stock;
SECTION 5.01. Financial Statements, Reports, etc. Until the closing
----------------------------------
of the Company's initial public offering of Common Stock pursuant to an
effective registration statement filed under the Securities Act, the Company
shall furnish to each Purchaser;
(a) as soon as practicable and in any event within 120 days after the
end of each fiscal year of the Company, a consolidated balance sheet as of the
end of such fiscal year, a consolidated statement of income and a consolidated
statement of cash flows of the Company and its Subsidiaries for such year,
setting forth in each case in comparative form the figures from the Company's
previous fiscal year (if any), all prepared in accordance with generally
accepted accounting principles and practices and audited by nationally
recognized independent certified public accountants;
(b) as soon as practicable, and in any case within 45 days after the
end of each fiscal quarter of the Company (except the last quarter of the
Company's fiscal year), quarterly unaudited consolidated financial statements,
including an unaudited consolidated balance sheet, and an unaudited consolidated
statement of income and an unaudited statement of cash flows, together with a
comparison to the Company's operating plan and consolidated budget and
statements of the Chief Financial Officer of the Company explaining any
significant differences in the statements from the Company's consolidated
operating plan and consolidated budget for the period certified by the Company's
Chief Financial Officer that such statements fairly present the consolidated
financial position and consolidated financial results of the Company for the
fiscal quarter covered;
(c) as soon as practicable, and in any case within 20 days after the
end of each calendar month (expect the last month of the Company's fiscal year),
monthly unaudited consolidated financial statements, including an unaudited
consolidated balance sheet, and an unaudited consolidated statement of income
and unaudited consolidated statement of cash flows, together with a comparison
to the Company's consolidated
24
operating plan and consolidated budget and statements of the Chief Financial
Officer of the Company explaining any significant differences in the statements
from the Company's consolidated operating plan and consolidated budget for the
month covered and certified by the Company's Chief Financial Officer that such
statements fairly present the consolidated financial position and consolidated
financial results of the Company for the month covered;
(d) as soon as practicable and in any event no later than 30 days
after the close of each fiscal year of the Company (i) an annual consolidated
operation plan and consolidated budget, prepared on a monthly basis, for the
next immediate fiscal year, and (ii) a five-year consolidated strategic plan for
the subsequent five fiscal years of the Company. The Company will also promptly
furnish to such Purchaser an amendment to the annual budget and strategic plan,
if any;
(e) promptly (i) following receipt by the Company, each audit
response letter, accountant's management letter and other written report
submitted to the Company by its independent public accountants in connection
with an annual or interim audit of the books of the Company or any of its
Subsidiaries; (ii) after the commencement thereof, notice of all actions, suits,
claims, proceedings, investigations and inquiries that could materially
adversely affect the Company or any of its Subsidiaries; (iii) upon sending,
making available or filing the same, all press releases, reports and financial
statements that the Company sends or makes available to its stockholders or
directors or files with the Commission; and (iv) such other information
regarding the business, prospects, financial condition, operations, property or
affairs of the Company and its Subsidiaries as such Purchaser reasonably may
request from time to time; and
(f) each Purchaser will hold all information received pursuant to
this Section 5.01 and marked "confidential" in confidence, and will not use or
disclose any of such information any third party, except (i) to the extent such
information is made publicly available by the Company, (ii) to the extent any
Purchaser which is a partnership or other venture capital fund desires,
according to its policies as in effect from time to time, to disclose summary or
financial information about the Company to investors in and other partners of
such Purchaser as part of such Purchase's regular communication process with its
investors and partners; (iii) to the extent required by the National Association
of Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to such information.
SECTION 5.02 Corporate Existence. The Company shall maintain and,
-------------------
except as otherwise permitted herein, cause each of its Subsidiaries to
maintain, their respective corporate existence, rights and franchises in full
force and effect.
SECTION 5.03 Properties, Business, Insurance. The Company shall
-------------------------------
maintain and cause each of its Subsidiaries to maintain as to their respective
properties and business, with financially sound and reputable insurers,
insurance against such casualties and contingencies and of such types and in
such amounts as is customary for companies similarly situated, which insurance
shall be deemed by the Company to be sufficient. The Company shall also
maintain in effect "key person" life insurance policies, payable to the Company,
on the life of each of ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇ and ▇▇▇▇▇▇ ▇. Crown (so
long as each remains an employee of the Company), in the amount of $2,000,000
each. The Company shall not cause or permit any assignment or change in
beneficiary and shall
25
not borrow against any such policy. If requested by the Purchasers holding at
least a majority of the outstanding Preferred Shares, the Company will add one
designee of such Purchasers as a notice party for each such policy and shall
request that the issuer of each policy provide such designee with ten days'
notice before such policy is terminated (for failure to pay premiums or
otherwise) or assigned or before any change is made in the beneficiary thereof.
SECTION 5.04. Restrictive Agreements Prohibited. Neither the Company
---------------------------------
nor any of its Subsidiaries shall become a party to any agreement which by its
terms restricts the Company's performance of this Agreement or the Company's
Charter.
SECTION 5.05. Transactions with Affiliates. Except for transactions
----------------------------
contemplated by this Agreement or as otherwise approved by the Board (including
the approval of at least 66 2/3% of the directors nominated by the holders of
the Preferred Shares and the Nominating Group, considered as a group), neither
the Company nor any of its Subsidiaries shall enter into any transaction with
any director, officer, employee or holder of more than 5% of the outstanding
capital stock of any class or series of capital stock of the Company or any of
its Subsidiaries, member of the family of any such person, or any corporation,
partnership, trust or other entity in which any such person, or member of the
family of any such person, is a director, officer, trustee, partner or holder of
more than 5% of the outstanding capital stock thereof, except for transactions
on customary terms related to such person's employment.
SECTION 5.06. Right of First Refusal. The Company shall, prior to any
----------------------
issuance by the Company of any of its securities (other than debt securities
with no equity feature), offer to each Purchaser by written notice the right,
for a period of 30 days, to purchase all of such securities for cash at an
amount equal to the price or other consideration for which such securities are
to be issued; provided, however, that the first refusal rights of the Purchasers
-------- -------
pursuant to this Section 5.06 shall not apply to securities issued (A) upon
conversion of any of the Preferred Shares, (B) as a stock dividend or upon any
subdivision of shares of any series or class of Preferred Stock or Common Stock,
provided that the securities issued pursuant to such stock dividend or
subdivision are limited to additional shares of Preferred Stock or Common Stock,
(C) pursuant to subscriptions, warrants, options, convertible securities, or
other rights which are listed in Schedule II as being outstanding on the date of
this Agreement or listed on Schedule II as being reserved for grant pursuant to
any stock option plan listed thereon, (D) solely in consideration for the
acquisition (whether by merger or otherwise) by the Company or any of its
subsidiaries of all or substantially all of the stock or assets of any other
entity, (E) pursuant to a Qualified Public Offering, and (F) upon the exercise
of any right which was not itself in violation of the terms of this Section
5.06. The Company's written notice to the Purchasers shall describe the
securities proposed to be issued by the Company and specify the number, price
and payment terms. Each Purchaser may accept the Company's offer as to the full
number of securities offered to it or any lesser number, by written notice
thereof given by it to the Company prior to the expiration of the aforesaid 30
day period, in which event the Company shall promptly sell and such Stockholder
or Investor shall buy, upon the terms specified, the number of securities agreed
to be purchased by such Purchaser. Notwithstanding the foregoing, if the
Purchasers agree, in the aggregate, to purchase more than the full number or
securities offered by the Company, then each Purchaser accepting the Company's
offer shall first be allocated the lesser of (i) the number of securities which
such Purchaser agreed to purchase and (ii) the number of securities as is equal
to the full number of securities offered by the Company multiplied by a
fraction,
26
the numerator of which shall be the number of shares of Class B Stock held by
such Purchaser as of the date of the Company's notice of offer (treating such
Purchaser, for the purpose of such calculation, as the holder of the number of
shares of Class B Stock which would be issuable to such Purchaser upon
conversion, exercise or exchange of all securities (including but not limited to
the Preferred Shares) held by such Purchaser on the date such offer is made,
that are convertible exercisable or exchangeable into or for (whether directly
or indirectly) shares of Class B Stock) and the denominator of which shall be
the aggregate number of shares of Class B Stock (calculated as aforesaid) held
on such date by all Purchasers who accepted the Company's offer, and the balance
of the securities (if any) offered by the Company shall be allocated among the
Purchasers accepting the Company's offer in proportion to their relative equity
ownership interests in the Company (calculated as aforesaid); provided that no
--------
Purchaser shall be allocated more than the number of securities which such
Purchaser agreed to purchase; and provided further that in cases covered by this
-------- -------
sentence all Purchasers shall be free at any time prior to 90 days after the
date of its notice of offer to the Purchasers to offer and sell to any third-
party or parties the number of such securities not agreed by the Purchaser to be
purchased by them, at a price and on payment terms no less favorable to the
Company than those specified in such notice of offer to the Purchasers. However,
if such third-party sale or sales are not consummated within such 90-day period,
the Company shall not sell such securities as shall not have been purchased
within such period without again complying with this Section 5.06.
SECTION 5.07. Management Rights. Until the closing of the Company's
-----------------
initial public offering of Common Stock pursuant to an effective registration
statement filed under the Securities Act.
(a) Each Purchaser (regardless of whether such Purchaser currently
has a designee on the Company's Board) shall be entitled to designate an
observer to attend any meeting of the Board of the Company or of any Subsidiary
or any committee thereof. Such observer may, at the reasonable discretion of the
Board, participate in Board or committee discussions and may address the Board
or committee with respect to the Purchaser's concerns regarding significant
business issues respecting the Company or any such Subsidiary. Upon request, the
Company shall, and shall cause any Subsidiary to, send to such observer copies
of all meeting consents and other material provided to the Company directors at
the same time and manner as they are sent to the directors. The Company shall
have the right to exclude an observer from the Board discussions upon advice of
counsel that such exclusion is necessary to protect highly confidential
proprietary information or for similar reasons. Any observer shall comply with
reasonable confidentiality provisions, including without limitation the
execution of customary confidentiality agreements.
(b) The Company shall permit, and shall cause each Subsidiary to
permit, each Purchaser (regardless of whether such Purchaser currently has a
designee on the Company's Board) and such persons as it may designate to visit
and inspect any of the properties of the Company and its Subsidiaries, examine
their books and take copies and extracts therefrom, discuss the affairs,
finances and accounts of the Company and any Subsidiary with their officers,
employees and public accountants (and the Company hereby authorizes said
accountants to discuss with such Purchaser and such designees such affairs,
finances and accounts), and consult with and advise the management of the
27
Company and any Subsidiary as to their affairs, finances and accounts, all at
reasonable times and upon reasonable notice.
SECTION 5.08. Expenses of Directors and Observers. The Company shall
------------------------------------
promptly reimburse in full, (a) each observer of a Purchaser (including, for
purposes of this Section, its affiliated Purchasers, taken as a group) which
does not have a representative on the Board and which has invested in the
aggregate at least $7.4 million in the Company, for all reasonable out-of-pocket
expenses incurred in attending each domestic meeting of the Board of the Company
or any Subsidiary or any committee thereof, and (b) each director of the Company
who is not an employee of the Company and who was elected as a director solely
or in part by the holders of the Preferred Shares, for all reasonable out-of-
pocket expenses incurred in attending each meeting of the Board of the Company
or any Subsidiary or any committee thereof.
SECTION 5.09. Board of Directors Meeting. The Company shall use its best
---------------------------
efforts to ensure that meetings of the Board of the Company and of the Company's
Subsidiaries Castle Tower Corporation, TEA Group Incorporated and Crown
Communication Inc. are held at least four times each year and at least once each
quarter.
SECTION 5.10. By-laws. The Company shall at all times cause its By-laws and
-------
those of its Subsidiaries to provide that (a) unless otherwise required by the
laws of the State of Delaware or, as applicable, the Commonwealth of
Pennsylvania, (i) any two directors and (ii) any holder or holders of at least
25% of the shares of Class B Stock issued or issuable to such Purchaser(s)
(assuming the conversation of all Preferred Shares held by such Purchaser(s)
into shares of Class B Stock), shall have the right to call a meeting of the
Board of the Company or its Subsidiaries or the Stockholders of the Company and
(b) the number of directors fixed in accordance therewith shall in no event
conflict with any of the terms or provisions of the Preferred Stock as set forth
in the Charter or this Agreement. The Company and its Subsidiaries shall at all
times maintain provisions in their By-laws and/or articles of incorporation
indemnifying all directors against liability and absolving all directors from
liability to the Company and its Stockholders to the maximum extent permitted
under the laws of the state of their incorporation.
SECTION 5.11. Employee Nondisclosure and Developments Agreements. The
--------------------------------------------------
Company shall use its best efforts to obtain, and shall cause its Subsidiaries
to use their best efforts to obtain, an Employee Nondisclosure and Developments
Agreement in such form as shall be approved by the Board from all future
officers, key employees and other employees who will have access to confidential
information of the Company or any of its Subsidiaries, upon their employment by
the Company or any of its Subsidiaries.
SECTION 5.12. Compliance with Laws. The Company shall and shall cause its
--------------------
Subsidiaries to, comply with all applicable laws, rules, regulations and
orders noncompliance with which could materially adversely affect its business
or condition, financial or otherwise.
SECTION 5.13. Keeping of Records and Books of Account. The Company shall
---------------------------------------
keep, and cause each Subsidiary to keep, adequate records and books of account,
in which complete entries will be made in accordance with generally accepted
accounting principles consistently applied, reflecting all financial
transactions of the company and such Subsidiaries, and in which, for each fiscal
year, all proper reserves for
28
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
SECTION 5.14. U.S. Real Property Interest Statement. (a) The Company
-------------------------------------
shall use its best efforts, consistent with sound commercial practice and
overriding economic or business interest of the Company as determined by the
Company using reasonable business judgment, to avoid becoming a "U.S. real
property holding company" within the meaning of Sections 897(c)(1)(B) and
897(c)(2) of the Code and Treasury Regulations 1.897-2(b)("U.S. Real Property
------------------
Holding Company").
---------------
(b) Notwithstanding the above, should the Company determine that it
has become a U.S. Real Property Holding Company, it shall provide prompt written
notice to the Purchasers following any "determination date" as defined in
Treasury Regulation Section 1.8972(c)(i)) on which the Company becomes a United
States Real Property Holding Company. In addition, upon a written request by a
Purchaser, the Company shall provide the Purchaser with a written statement
informing the Purchaser whether such Purchaser's interest in the Company
constitutes a "U.S. real property interest" within the meaning of Treasury
Regulation Section 1.897-1(c)("U.S. Real Property Interest"). The Company's
---------------------------
determination shall comply with the requirements of Treasury Regulation Section
1.897-2(h)(1) or any successor regulation, and the Company shall provide timely
notice to the Internal Revenue Service, in accordance with and to the extent
required by Treasury Regulation Section 1.897-2(h)(2) or any successor
regulation, that such statement has been made. The Company's written statement
to a Purchaser's written request, if reasonably possible, therefor. The
Company's obligation to furnish a written statement pursuant to this Section
5.14 shall continue notwithstanding the fact that a class of the Company's stock
may be regularly traded on an established securities market.
SECTION 5.15. International Investment Survey Act of 1976. The
-------------------------------------------
Company shall use its best efforts to file on a timely basis all reports
required of it under 22 U.S.C. Section 3104, or any similar statute, relating
to a foreign person's direct or indirect investment in the Company.
SECTION 5.16. Rule 144A Information. The Company shall provide the
---------------------
Purchasers, upon request, with such written information and shall take such
reasonable actions as may be required to permit the Purchasers to resell any
shares of the Company's capital stock pursuant to Rule 144A promulgated under
the Securities Act.
SECTION 5.17. Payment of Taxes. Pay and discharge all taxes,
----------------
assessments and governmental charges or levies imposed upon it or upon its
income or profits or business, or upon any properties belonging to it, prior to
the same being due and payable to cause its Subsidiaries to do likewise.
29
SECTION 5.18. Negative Covenants of the Company. Without limiting any
---------------------------------
other covenants and provisions hereof, the Company covenants and agrees that, as
long as at least 25% of the Class B Stock outstanding (determined on a
post-conversion basis of the Preferred Stock to Class B Stock) is held by the
Purchasers, it will comply with and observe the following covenants and
provisions, and will not, without the prior approval of two-thirds of the
representatives of the Purchasers on the Board:
(a) Liens. Except with respect to Senior Debt, create, incur, assume
-----
or suffer to exist, or permit any Subsidiary to create, incur, assume or
suffer to exist, any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance (including the lien or retained
security title of a conditional vendor) of any nature, upon or with respect
to any of its properties, now owned or hereinafter acquired, or assign or
otherwise convey any right to receive income, except that the foregoing
restrictions shall not apply to mortgages, deeds of trust, pledges, liens,
security interests or other charges or encumbrances:
(i) for taxes, assessments or governmental charges or levies
on property of the Company or any Subsidiary if the same shall not at
the time be delinquent or thereafter can be paid without penalty, or
are being contested in good faith and by appropriate proceedings;
(ii) imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary
course of business;
(iii) arising out of pledges or deposits under workmen's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation;
(iv) securing the performance of bids, tenders, contracts
(other than for the repayment of borrowed money), statutory
obligations and surety bonds;
(v) in the nature of zoning restrictions, easements and rights
or restrictions of record on the use of real property which do not
materially detract from its value or impair its use;
(vi) arising by operation of law in favor of the owner or
sublessor of leased premises and confined to the property rented;
(vii) arising from any litigation or proceeding which is being
contested in good faith by appropriate proceedings; provided, however,
-------- -------
that no execution or levy has been made; and
(viii) which secure the Note or other Indebtedness assumed
pursuant to the Crown Purchase Agreement.
(b) Indebtedness. Create, incur, assume or suffer to exist, or permit
------------
any Subsidiary to create, incur, assume or suffer to exist, any liability
with respect to Indebtedness except for:
30
(i) Current Liabilities, other than for borrowed money,
which are incurred in the ordinary course of business;
(ii) Indebtedness with respect to lease obligations;
provided that such lease obligations do not violate Section
--------
5.18(c) below;
(iii) Indebtedness (x) represented by the Note, (y) assumed
pursuant to the Crown Purchase Agreement or (z) all or part of
the proceeds of which are used to refinance the Note,
irrespective of the dollar amount of such refinancing; and
(iv) Senior Debt.
(c) Lease Obligations. Create, incur, assume or suffer to exist,
-----------------
or permit any Subsidiary to create, incur, assume or suffer to exist,
any obligations as lessee for the rental or hire of real or personal
property in connection with any sale and leaseback transaction; or
become obligated to pay any rent for real property or personal
property under any lease with an original term, including any lessor
options to renew or extend, of more than three years if the aggregate
of consolidated fixed annual rent which would be payable in any fiscal
year by the Company and its Subsidiaries under all such leases would
exceed $250,000.
(d) Assumptions or Guaranties of Indebtedness other Persons.
-------------------------------------------------------
Except with respect to Senior Debt, assume, guarantee, endorse or
otherwise become directly or contingently liable on, or permit any
Subsidiary to assume, guarantee, endorse or otherwise become directly
or contingently liable on (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide
funds for payment, to supply funds to or otherwise invest in the
debtor or otherwise to assure the creditor against loss) any
Indebtedness of any other person, except for guaranties by endorsement
of negotiable instruments for deposit or collection in the ordinary
course of business and Indebtedness specified in paragraph (b) of this
Section 5.18.
(e) Mergers, Sale of Assets, etc. Merge or consolidate with, or
----------------------------
sell, assign, lease or otherwise dispose of or voluntarily part with
the control of (whether in one transaction or in a series of
transactions) a material portion of its assets (whether now owned or
hereinafter acquired) or sell, assign or otherwise dispose of (whether
in one transaction or in a series of transactions) any of its accounts
receivable (whether now in existence or hereinafter created) at a
discount or with recourse to, any person, or permit any Subsidiary to
do any of the foregoing, except for sales or other dispositions of
assets in the ordinary course of business and except that (i) any
Subsidiary may merge into or consolidate with or transfer assets to
any other Subsidiary, (ii) any Subsidiary may merge into or transfer
assets to the Company, and (iii) the Company may merge any person into
it or otherwise acquire such person as long as the Company is the
surviving entity, such merger or acquisition does not result in the
violation of any of the provisions of this Agreement or the Charter
and no such violation exists at the time of such merger or
acquisition; provided that such merger or acquisition does not result
--------
in the issuance (in one or more transactions) of shares of the voting
stock of the Company representing in the aggregate more than 20% of
the total outstanding
31
voting stock of the Company, on a fully diluted basis, immediately
following the issuance thereof.
(f) Investments in Other Persons. Make or permit any Subsidiary
----------------------------
to make, any loan or advance to any person, or purchase, otherwise
acquire, or permit any Subsidiary to purchase or otherwise acquire,
the capital stock, assets comprising the business of, obligations of,
or any interest in, any person, except:
(i) transactions by the Company or its Subsidiaries set
forth in Schedule II hereof;
(ii) investments by the Company or a Subsidiary in
evidences of indebtedness issued or fully guaranteed by the
United States of America and having a maturity of not more than
one year from the date of acquisition;
(iii) investments by the Company or a Subsidiary in
certificates of deposit, notes, acceptances and repurchase
agreements having a maturity of not more than one year from the
date of acquisition issued by a bank organized in the United
States having capital, surplus and undivided profits of at least
$100,000,000 and whose parent holding company has long-term debt
rated Aa 1 or higher, and whose commercial paper (if rated) is
rated Prime 1, by ▇▇▇▇▇'▇ Investors Service, Inc.;
(iv) loans or advances from a Subsidiary to the Company or
to another Subsidiary of the Company or by the Company to a
Subsidiary;
(v) investments by the Company or a Subsidiary in the
highest-rated commercial paper having a maturity of not more than
one year from the date of acquisition; and
(vi) other loans, advances and investments not exceeding
10% of consolidated net worth in the aggregate, at any one time
outstanding including, without limitation, loans and advances to
officers and employees of the Company or any Subsidiary.
(g) Distributions. Declare or pay any dividends, purchase,
-------------
redeem, retire, or otherwise acquire for value any of its capital
stock (or rights, options or warrants to purchase such shares) now or
hereafter outstanding, return any capital to its stockholders as such,
or make any distribution of assets to its stockholders as such, or
permit any Subsidiary to do any of the foregoing (such transactions
being hereinafter referred to as "Distributions"), except that
-------------
nothing herein contained shall prevent the Company from:
(i) effecting a stock split or declaring or paying any
dividend consisting of shares of any class of capital stock to
the holders of shares of such class of capital stock;
(ii) redeeming any stock of a deceased stockholder out of
insurance held by the Company on that stockholder's life;
32
(iii) effecting the repurchase of stock issued to employees
pursuant to stock plans or arrangements approved by the Board,
including the representatives of the Purchasers on the Board;
(iv) redeeming shares of Preferred Stock pursuant to the
terms of the Charter; or
(v) making payment of dividends with respect to the Senior
Preferred Stock pursuant to the terms of the Charter.
(h) Dealings with Affiliates. Enter or permit any Subsidiary to
------------------------
enter into any transaction with any holder of 5% or more of any class
of capital stock of the Company, or any member of their families or
any corporation or other entity in which any one or more of such
stockholders or members of their immediate families directly or
indirectly holds 5% or more of any class of capital stock except in
the ordinary course of business and on terms not less favorable to the
Company or the Subsidiary than it would obtain in a transaction
between unrelated parties.
(i) Maintenance of Ownership of Subsidiaries. Sell or otherwise
----------------------------------------
dispose of any shares of capital stock of any Subsidiary, except to
the Company or another Subsidiary, or permit any Subsidiary to issue,
sell or otherwise dispose of any shares of its capital stock or the
capital stock of any Subsidiary, except to the Company or another
Subsidiary; provided, however, that nothing herein contained shall
-------- -------
prevent any merger, consolidation or transfer of assets permitted by
Section 5.18(e).
SECTION 5.19 Reserve for Shares Issued Upon Conversion. The
-----------------------------------------
Company shall at all times reserve and keep available out of its authorized
but unissued shares of Class B Stock, for the purpose of effecting the
conversion of the Preferred Shares and otherwise to comply with the terms
of this Agreement, such number of its duly authorized shares of Common
Stock as shall be sufficient to effect the conversion of the Preferred
Shares from time to time outstanding or otherwise to comply with the terms
of this Agreement. If at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of
or otherwise to comply with the terms of this Agreement, the Company will
forthwith take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes. The Company will obtain any
authorization, consent, approval or other action by, or make any filing
with, any court or administrative body that may be required under
applicable state securities laws in connection with the issuance of shares
of Common Stock upon conversion of the Preferred Shares.
ARTICLE VI
Legends; Registration Rights
----------------------------
SECTION 6.01. Restrictive Legend. Each certificate representing
------------------
shares of Restricted Stock or Preferred Stock shall, except as otherwise
provided in this Section 6.01 or in Section 6.02, be stamped or otherwise
imprinted with a legend substantially in the following form;
33
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND ALL SUCH APPLICABLE
LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company (it being agreed that the opinion of any of ▇▇▇▇▇,
▇▇▇▇▇▇▇ & Thibeault, Hutchins, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ shall
be satisfactory) the securities represented thereby may be publicly sold without
registration under the Securities Act and any applicable state securities laws.
SECTION 6.02. Notice of Proposed Transfer. Prior to any proposed
---------------------------
transfer of any Restricted Stock or Preferred Stock (other than under the
circumstances described in Sections 6.03, 6.04 or 6.05), the holder thereof
shall give written notice to the Company of its intention to effect such
transfer. Each such notice shall describe the manner of the proposed transfer
and, if requested by the Company, shall be accompanied by an opinion of counsel
satisfactory to the Company (it being agreed that the opinion of any of ▇▇▇▇▇,
▇▇▇▇▇▇▇ & Thibeault, Hutchins, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ shall
be satisfactory) to the effect that the proposed transfer may be effected
without registration under the Securities Act and any applicable state
securities laws, whereupon the holder of such stock shall be entitled to
transfer such stock in accordance with the terms of its notice; provided,
--------
however, that no such opinion of counsel shall be required for a transfer,
-------
without receipt of consideration, to an Affiliate. Each certificate for
Restricted Stock or Preferred Stock transferred as above provided shall bear the
legend set forth in Section 6.01, except that such certificate shall not bear
such legend if (a) such transfer is in accordance with the provisions of Rule
144 (or any other rule permitting public sale without registration under the
Securities Act) or (b) the opinion of counsel referred to above is to the
further effect that the transferee and any subsequent transferee (other than an
Affiliate of the Company) would be entitled to transfer such securities in a
public sale without registration under the Securities Act. The restrictions
provided for in this Section 6.02 shall not apply to securities which are not
required to bear the legend prescribed by Section 6.01 in accordance with the
provisions of that Section.
SECTION 6.03. Required Registration. (a) At any time after the
---------------------
earliest of (i) six months after the first registration statement covering a
public offering of securities of the Company under the Securities Act shall have
become effective, (ii) six months after the Company shall have become a
reporting company under Section 12 of the Exchange Act, and (iii) July 1, 1999,
the holders of Restricted Stock constituting at least 33% of the total shares of
Restricted Stock then issuable or outstanding may request the Company to
register under the Securities Act all or any portion of the shares of Restricted
Stock held by such requesting holder or holders for sale in the manner specified
in such notice, provided that the reasonably anticipated aggregate net proceeds
--------
to the sellers from such public offering would exceed $5,000,000. For purposes
of this Section 6.03 and Sections 6.04 and 6.05, the term "Restricted Stock"
----------------
shall be deemed to include, without limitation, the number of shares of
Restricted Stock which would be issuable to a holder of Preferred Shares upon
conversion of all Preferred Shares held by such holder at such time, provided,
--------
however, that the only securities which the Company shall be required to
-------
register pursuant hereto shall be shares of Common Stock, and
34
provided further, however, that, in any underwritten public offering
---------------- -------
contemplated by this Section 6.03 or Sections 6.04 and 6.05, the holders of
Preferred Shares shall be entitled to sell such Preferred Shares to the
underwriters for conversion and sale of the shares of Common Stock issued upon
conversion thereof. Notwithstanding anything to the contrary contained herein,
no request may be made under this Section 6.03 within 90 days after the
effective date of a registration statement filed by the Company covering a firm
commitment underwritten public offering in which the holders of Restricted Stock
shall have been entitled to join pursuant to Sections 6.04 or 6.05 and in which
there shall have been effectively registered all shares of Restricted Stock as
to which registration shall have been requested.
(b) Following receipt of any notice under this Section 6.03, the
Company shall immediately notify all holders of Restricted Stock from whom
notice has not been received and shall use its best efforts to register under
the Securities Act, for public sale in accordance with the method of disposition
specified in such notice from requesting holders; the number of shares of
Restricted Stock specified in such notice (and in all notices received by the
Company from other holders within 20 days after the giving of such notice by the
Company). If such method of disposition shall be an underwritten public
offering, the holders of a majority of the shares of Restricted Stock to be sold
in such offering may designate the managing underwriter of such offering,
subject to the approval of the Company, which approval shall not be unreasonably
withheld or delayed. The Company shall be obligated to register Restricted Stock
pursuant to this Section 6.03 on two occasions only, provided, however, that
-------- -------
such obligation shall be deemed satisfied only when a registration statement
covering all shares of Restricted Stock specified in notices received as
aforesaid, for sale in accordance with the method of disposition specified by
the requesting holders, shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering, all such shares
shall have been sold pursuant thereto unless (i) any such registration statement
does not become effective due to the withdrawal thereof by or on the request of
the holders of 66 2/3% of the shares of Restricted Stock to be registered, or
(ii) the reason all shares of Restricted Stock specified in notices pursuant to
this Section 6.03 are not registered is due to a limitation on the registration
of shares by the managing underwriter or the voluntary withdrawal of any such
shares from registration by the holder thereof
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 6.03, for sale in accordance with the
method of disposition specified by the requesting holders, shares of Common
Stock to be sold by the Company for its own account, except as and to the extent
that, in the opinion of the managing underwriter (if such method of disposition
shall be an underwritten public offering), such inclusion would adversely affect
the marketing of the Restricted Stock to be sold. Except for registration
statements on Forms ▇-▇, ▇-▇ or any successor thereto, the Company will not file
with the Commission any other registration statement with respect to its Common
Stock, whether for its own account or that of other stockholders, from the date
of receipt of a notice from requesting holders pursuant to this Section 6.03
until the completion of the period of distribution of the registration
contemplated thereby.
SECTION 6.04 "Piggy-Back" Registration. If the Company at any time
------------------------
(other than pursuant to Section 6.03 or Section 6.05) proposes to register any
of its securities under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both (except
with respect to registration statements on Forms ▇-▇, ▇-▇ or another form not
available for registering the Restricted
35
Stock for sale to the public), each such time it will give written notice to all
holders of outstanding Restricted Stock of its intention so to do. Upon the
written request of any such holder, received by the Company within 20 days after
the giving of any such notice by the Company, to register any of its Restricted
Stock, the Company will use its best efforts to cause the Restricted Stock as to
which registration shall have been so requested to be included in the securities
to be covered by the registration statement proposed to be filed by the Company,
all to the extent requisite to permit the sale or other disposition by the
holder of such Restricted Stock so registered. In the event that any
registration pursuant to this Section 6.04 shall be, in whole or in part, an
underwritten public offering of Common Stock, the number of shares of Restricted
Stock to be included in such an underwriting may be reduced (pro rata among the
requesting holders based upon the number of shares of Restricted Stock owned by
such holders) if and to the extent that the managing underwriter shall be of the
opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein; provided, however, that such
-------- -------
number of shares of Restricted Stock shall not be reduced if any shares are to
be included in such underwriting for the account of any person other than the
Company or requesting holders of Restricted Stock. Notwithstanding the foregoing
provisions, the Company may withdraw any registration statement referred to in
this Section 6.04 without thereby incurring any liability to the holders of
Restricted Stock. There shall be no limit to the number of registrations of
Restricted Stock which may be effected under this Section 6.04.
SECTION 6.05. Registration on Form S-3. If at any time (a) a holder or
------------------------
holders of 17.5% of the shares of Restricted Stock request that the Company file
a registration statement on Form S-3 or any successor thereto for a public
offering of all or any portion of the shares of Restricted Stock held by such
requesting holder or holders, the reasonably anticipated aggregate price to the
public of which would exceed $1,000,000, and (b) the Company is a registrant
entitled to use Form S-3 or any successor thereto to register such shares, then
the Company shall use its best efforts to register under the Securities Act on
Form S-3 or any successor thereto, for public sale in accordance with the method
of disposition specified in such notice, the number of shares of Restricted
Stock specified in such notice. Whenever the Company is required by this Section
6.05 to use its best efforts to effect the registration of Restricted Stock,
each of the procedures and requirements of Section 6.03 (including but not
limited to the requirement that the Company notify all holders of Restricted
Stock from whom notice has not been received and provide them with the
opportunity to participate in the offering) shall apply to such registration,
provided, however, the Company shall not be required to effect more than five
-------- -------
registrations on Form S-3 which may be requested and obtained under this Section
6.05, and provided, further, however that the requirements contained in the
-------- ------- -------
first sentence of Section 6.03(a) shall not apply to any registration on Form S-
3 which may be requested and obtained under this Section 6.05.
SECTION 6.06. Registration Procedures. If and whenever the Company is
-----------------------
required by the provisions of Sections 6.03, 6.04 or 6.05 to use its best
efforts to effect the registration of any shares of Restricted Stock under the
Securities Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section
6.03, shall be on Form S-1 or other form of general applicability
satisfactory to the managing underwriter selected as therein provided) with
respect to such securities;
36
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period specified in paragraph (i) below and
comply with the provisions of the Securities Act with respect to the
disposition of all Restricted Stock covered by such registration statement
in accordance with the sellers' intended method of disposition set forth in
such registration statement for such period;
(c) furnish to each seller of Restricted Stock and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or
other disposition of the Restricted Stock covered by such registration
statement;
(d) use its best efforts to register or qualify the Restricted Stock
covered by such registration statement under the securities or "blue sky"
laws of such jurisdictions as the sellers of Restricted Stock or, in the
case of an underwritten public offering, the managing underwriter
reasonably shall request; provided, however, that the Company shall not for
-------- -------
any such purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;
(e) use its best efforts to list the Restricted Stock covered by such
registration statement with any securities exchange or market on which the
Common Stock of the Company is then listed or quoted;
(f) immediately notify each seller of Restricted Stock and each
underwriter under 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 of which the Company has
knowledge as a result of which the prospectus contained 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 light
of the circumstances then existing;
(g) if the offering is underwritten and at the request of any seller
of Restricted Stock, use its best efforts to furnish on the date that
Restricted Stock is delivered to the underwriters for sale pursuant to such
registration: (i) an opinion dated such date of counsel representing the
Company for the purposes of such registration, addressed to the
underwriters and to such seller, stating that such registration statement
has become effective under the Securities Act and that (A) to the best
knowledge of such counsel, no stop order suspending the effectiveness
thereof has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Securities Act, (B) the
registration statement, the related prospectus and each amendment or
supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not
express any opinion as to financial statements contained therein) and (C)
to such other effects as reasonably may be requested by counsel for the
underwriters or by such seller or its counsel and (ii) a letter dated such
date from the independent public accountants retained by the Company,
addressed to the underwriters and to such seller stating that they
37
are independent public accountants within the meaning of the Securities Act
and that, in the opinion of such accountants, the financial statements of
the Company included in the registration statement or the prospectus, or
any amendment or supplement thereof, comply as to form in all material
respects with the applicable accounting requirements of the Securities Act,
and such letter shall additionally cover such other financial matters
(including information as to the period ending no more than five business
days prior to the date of such letter) with respect to such registration as
such underwriters reasonably may request;
(h) make available for inspection by each seller of Restricted Stock,
any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant
or agent in connection with such registration statement; and
(i) with respect to any registration statement filed by the Company
pursuant to Section 6.03 or 6.05 or any registration statement pursuant to
which Restricted Shares are to be sold pursuant to Section 6.04, the
Company shall use its best efforts to cause such registration statement to
become and remain effective for 180 days.
In connection with each registration hereunder, the sellers of
Restricted Stock will furnish to the Company in writing such information with
respect to themselves and the proposed distribution by them as shall be
reasonably necessary in order to assure compliance with Federal and applicable
state securities laws.
In connection with each registration pursuant to Sections 6.03, 6.04
or 6.05 covering an underwritten public offering, the Company and each seller
agree to enter into a written agreement with the managing underwriter selected
in the manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
SECTION 6.07. Expenses. All expenses incurred by the Company in
--------
complying with Sections 6.03, 6.04 or 6.05, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of
insurance and fees and disbursements of one counsel for the sellers of
Restricted Stock, but excluding any Selling Expenses, are called "Registration
------------
Expenses". All underwriting discounts and selling commissions applicable to the
--------
sale of Restricted Stock are called "Selling Expenses".
----------------
The Company will pay all Registration Expenses in connection with each
registration statement under Sections 6.03, 6.04 or 6.05. All Selling Expenses
in connection with each registration statement under Sections 6.03, 6.04 or
6.05, shall be borne by the participating sellers in proportion to the number of
shares sold by each, or by
38
such participating sellers other than the Company (except to the extent the
Company shall be a seller) as they may agree.
SECTION 6.08. Indemnification and Contribution. (a) In the event of a
--------------------------------
registration of any of the Restricted Stock under the Securities Act pursuant to
Sections 6.03, 6.04 or 6.05, the Company will indemnify and hold harmless each
seller of such Restricted Stock thereunder, each underwriter of such Restricted
Stock thereunder and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise our of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Restricted Stock was registered under the Securities Act
pursuant to Sections 6.03, 6.04 or 6.05, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon 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 will reimburse each such seller, each such
underwriter and each such controlling person for 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
-------- -------
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by any such seller, any such underwriter
or any such controlling person in writing specifically for use in such
registration statement or prospectus.
(b) In the event of a registration of any of the Restricted Stock
under the Securities Act pursuant to Sections 6.03, 6.04 or 6.05, each seller of
such Restricted Stock thereunder, severally and not jointly, will indemnify and
hold harmless the Company, each person, if any, who controls the Company within
the meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
the Company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Restricted Stock
was registered under the Securities Act pursuant to Sections 6.03, 6.04 or 6.05,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon 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 will
reimburse the Company and each such officer, director, underwriter and
controlling person for 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 such seller will be liable
-------- -------
hereunder in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such seller, as such, furnished
in writing to the Company by such seller specifically for use in such
registration statement or
39
prospectus; and provided further, however, that the liability of each seller
---------------- -------
hereunder shall be limited to the proportion of any such loss, claim, damage,
liability or expense which is equal to the proportion that the public offering
price of the shares sold by such seller under such registration statement bears
to the total public offering price of all securities sold thereunder, but not in
any event to exceed the proceeds received by such seller from the sale of
Restricted Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 6.08 and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 6.08 if and to the extent the indemnifying party is prejudiced by
such omission. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 6.08 for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected;
provided, however, that, if the defendants in any such action include both the
--------- -------
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any
indemnified party exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 6.08 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 6.08
provides for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any such selling holder or any
such controlling person in circumstances for which indemnification is provided
under this Section 6.08; then, and in each such case, the Company and such
holder will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such proportion
so that each such person is responsible for the portion represented by the
percentage that the public offering price of the securities offered by such
person under the registration statement bears to the public offering price of
all securities offered by such registration statement, and the Company is
responsible for the remaining portion; provided, however, that, in any such
-------- -------
case, (A) no person will be required to contribute any amount in excess of the
public offering price of all such Restricted Stock offered by it pursuant to
such
40
registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
SECTION 6.09. Changes in Common Stock. If, and as often as, there is
-----------------------
any change in the Common Stock or the Preferred Stock or by way of a stock
split, stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the rights
and privileges granted hereby shall continue with respect to the Common Stock or
the Preferred Stock as so changed.
SECTION 6.10. Rule 144 Reporting. With a view to making available the
------------------
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Stock to the public without registration,
at all times 90 days after any registration statement covering a public offering
of securities of the Company under the Securities Act shall have become
effective, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Restricted Stock forthwith upon request
a written statement by the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and the Exchange
Act, a copy of the most recent annual or quarterly report of the Company,
and such other reports and documents so filed by the Company as such holder
may reasonably request in availing itself of any rule or regulation of the
Commission allowing such holder to sell any Restricted Stock without
registration.
SECTION 6.11. Transferability of Registration Rights: Termination.
---------------------------------------------------
(a) Registration rights conferred herein on the holders of Restricted
Stock shall only inure to the benefit of a transferee of Restricted Stock
if (i) there is transferred to such transferee at least 20% of the total
shares of Restricted Stock originally issued to such Purchaser or to the
direct or indirect transferor of such transferee or (ii) such transferee is
a partner, shareholder or Affiliate of a party hereto.
(b) The obligations of the Company to register shares of Restricted
Stock under Sections 6.03, 6.04 or 6.05 shall terminate on the fifteenth
anniversary of the date of this Agreement.
SECTION 6.12. Suspension of Registration Obligations. Notwithstanding
--------------------------------------
provisions of Section 6.06(a), the Company's obligation to file a registration
statement, or cause such registration statement to become and remain effective
(a) may be suspended on one occasion for a period not to exceed 180 days if
there exists at the time material nonpublic information relating to the Company
which, in the reasonable opinion of the Company, should not be disclosed and (b)
shall not apply for the period which begins seven days prior to and ends 90 days
after the commencement of a public offering of the
41
Company's Common Stock, so long as the Company has fulfilled its notice
obligations under Section 6.04 with respect to such offering.
SECTION 6.13. Other Registration Rights. The Company shall not grant
-------------------------
to any third party any registration rights more favorable than or inconsistent
with any of those contained herein, so long as any of the registration rights
under this Agreement remain in effect.
ARTICLE VII
Miscellaneous
-------------
SECTION 7.01. Term. Other than (a) Section 3.01(a), (c) and (e),
----
which shall continue in effect for so long as the Crowns or their Crown Related
Transferees shall have in the aggregate a 5% or greater interest in the Common
Stock of the Company and (b) Article VI hereof, this Agreement shall terminate
immediately prior to the consummation of the first firm commitment underwritten
public offering pursuant to an effective registration statement on Form S-1 (or
its then equivalent) under the Securities Act, which offering has been approved
by a majority of the Board (including the approval of at least 66 2/3% of the
directors nominated by the holders of the Preferred Shares and the Nominating
Group, considered as a group).
SECTION 7.02. Failure to Deliver Shares. If a Stockholder becomes
-------------------------
obligated to sell any Shares to an Investor or the Company under this Agreement
and fails to deliver such Shares in accordance with the terms of this Agreement,
such Investor or the Company, as the case may be, at its option, in addition to
all other remedies such person may have, shall send to the Stockholder the
purchase price for such Shares as is herein specified. Thereupon, the Company
upon written notice to the Stockholder, (a) shall cancel on its books the
certificate or certificates representing the Shares to be sold and (b) shall
issue, in lieu thereof, in the name of such Investor or the Company, as the case
may be, a new certificate or certificates representing such Shares, and
thereupon all of the Stockholder's rights in and to such Shares shall terminate.
SECTION 7.03. Specific Enforcement. The Stockholders expressly agree
--------------------
that the Investors and the Company will be irreparably damaged if this Agreement
is not specifically enforced. Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement by a Stockholder, the Investors
and the Company shall, in addition to all other remedies, each be entitled to a
temporary or permanent injunction, without showing any actual damage, and/or a
decree for specific performance, in accordance with the provisions hereof
SECTION 7.04. Legend. In addition to any other legends provided for
------
herein, each certificate evidencing any of the Shares or Preferred Shares shall
bear a legend substantially as follows:
"The shares represented by this certificate are subject to all the
terms and conditions of a certain Amended and Restated Stockholders
Agreement dated as of August 14, 1997, a copy of which the Company
will furnish to the holder of this certificate upon request and
without charge. Such terms and conditions include restrictions on
transfer and these shares may not be
42
sold, exchanged, transferred, pledged, hypothecated or otherwise
disposed of except in accordance with and subject to the terms of the
Agreement."
SECTION 7.05. Notices. Notices given hereunder shall be deemed to
-------
have been duly given on the date of personal delivery, on the date of postmark
if mailed by certified or registered mail, return receipt requested, or on the
date sent by telecopier or telex to the party being notified at his/her or its
address specified below or such other address as the addressee may subsequently
notify the other parties of in writing. The addresses of the Company, the
Stockholders and the Investors are as follows:
If to the Company: Castle Tower Holding Corp.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Attn: President
with a copy to: ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Attn: E. ▇▇▇▇▇ ▇▇▇▇, Esq.
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
If to the Crowns: ▇▇▇▇▇▇ ▇. Crown
▇▇▇▇▇▇▇ Crown
c/o Crown Communications
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
If to the Initial
Stockholders: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
43
▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Investor: At the address of such Investor
listed on Schedule I
with a copy to: ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III, Esq.
SECTION 7.06. Entire Agreement and Amendments. This Agreement
-------------------------------
constitutes the entire agreement of the parties with respect to the subject
matter hereof and neither this Agreement nor any provision hereof may be waived,
modified, amended or terminated except by a written agreement signed by the
parties hereto (other than as provided in Section 3.03); provided, however, that
-------- -------
(a) the Investment Parties owning at least 66 2/3% of the Shares owned by all
Investment Parties and (b) Initial Stockholders owning at least 66 2/3% of the
Shares owned by all Initial Stockholders may effect any such waiver,
modification, amendment or termination on behalf of all of the Investment
Parties or all of the Initial Stockholders, respectively, and provided further,
----------------
that, without the consent of all parties to this Agreement who own Shares, no
amendment or addition to this Agreement may be made which (i) modifies this
Section 7.06 or (ii) would affect the holders of Shares in a disproportionate
manner (other than any disproportionate results which are due to a difference in
the relative stock ownership in the Company or due to provisions set forth in
the terms of the Preferred Stock set forth in the Company's Charter). To the
extent any term or other provision of any other indenture, agreement or
instrument by which any party hereto is bound conflicts with this Agreement,
this Agreement shall have precedence over such conflicting term or provision.
Notwithstanding anything to the contrary set forth herein, it is acknowledged
and agreed that the separate consent of the Initial Stockholders shall not be
required in connection with any amendment, modification or waiver of the
provisions of this Agreement which affects the holders of Preferred Shares,
Class B Common Stock and Class A Common Stock in a proportionate and similar
manner (except for disproportionate results which are due to differences in
relative stock or debt ownership of the Company or due to differences set forth
in the Company's Charter). Prompt notice of any such amendment or waiver shall
be given to any person who did not consent thereto.
SECTION 7.07. Governing Law; Successors and Assigns. This Agreement
-------------------------------------
shall be governed by the laws of the State of Delaware and shall be binding upon
the heirs, personal representatives, executors, administrators, successors and
assigns of the parties.
SECtION 7.08. Waivers. No waiver of any breach or default hereunder
-------
shall be considered valid unless in writing, and no such waiver shall be deemed
a waiver of any subsequent breach or default of the same or similar nature.
44
SECTION 7.09. Severability. If any provision of this Agreement shall
------------
be held to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
SECTION 7.10. Captions. Captions are for convenience only and are not
--------
deemed to be part of this Agreement.
SECTION 7.11. Continuation of Employment. Nothing in this Agreement
--------------------------
shall create an obligation on the Company or the Investors to continue the
Stockholders' employment with the Company (including an Affiliate or
Subsidiary).
SECTION 7.12. 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. One or more counterparts
of this Agreement may be delivered via telecopier with the intention that they
shall have the same effect as an original counterpart hereof
SECTION 7.13. Parties in Interest. All representations, covenants and
-------------------
agreements contained in this Agreement by or on behalf of the Crowns shall bind
and inure to the benefit of any Crown Related Transferees whether so expressed
or not.
SECTION 7.14. Shares Owned by Affiliates. For the purpose of applying
--------------------------
all provisions of this Agreement which condition the receipt of information or
access to information or exercise of any rights upon ownership of a specified
number or percentage of shares, the shares owned of record by any Affiliate of a
Stockholder shall be deemed to be owned by such Stockholder.
SECTION 7.15. Effect on Prior Agreements. The Company and each of
--------------------------
the "Purchasers" (as defined in Article V of the Securities Purchase Agreement
dated February 14, 1997, relating to the purchase of the Series C Stock) by
their execution hereof has acknowledged his or its: (a) waiver of all notices
and rights of first refusal in connection with the issuance to the Crowns of the
Class B Stock of the Company pursuant to the Crown Purchase Agreement and the
issuance of the Senior Preferred Stock and Warrants pursuant to the Senior
Preferred Agreement; (b) consent to the transactions contemplated by the Crown
Purchase Agreement, the Senior Preferred Agreement and this Agreement; and (c)
agree that the covenants set forth in Article V hereof, the registration rights
as set forth in Article VI hereof and the provisions of Section 7.06 hereof
supersede and replace, in their entirety, the similar provisions set forth in
the Securities Purchase Agreements. All other terms and provisions of the
Securities Purchase Agreements not superseded and replaced hereby shall remain
in full force and effect in accordance with the terms and provisions thereof,
SECTION 7.16. Exculpation; Rights of Investors. Each holder of any
--------------------------------
issued or issuable Shares or any Preferred Shares shall have the absolute right
to exercise or refrain from exercising any rights that such holder may have by
reason of this Agreement, the Crown Purchase Agreement, the Senior Preferred
Agreement or the Charter (including, without limitation, the right to consent to
the waiver of any obligation of the Company under this Agreement, the Crown
Purchase Agreement, the Senior
45
Preferred Agreement or the Charter and to enter into an agreement with the
Company for the purpose of amending or supplementing, in accordance with their
respective terms, this Agreement, the Crown Purchase Agreement, the Senior
Preferred Agreement or the Charter), and neither any such holder nor any of its
controlling persons, officers, directors, partners, agents, or employees shall
incur any liability to any other holder of Shares as a result of such holder's
exercising or refraining from exercising any such right. Each Investor
acknowledges to each other Investor that it is not relying upon any person, firm
or corporation, other than the Company and its officers and directors, in making
its investment or decision to invest in the Company.
[Signature Pages Follow Immediately]
[Signature Page to Stockholders Agreement]
IN WITNESS WHEREOF, this Agreement has been executed as of the date
and year first above written.
COMPANY:
CASTLE TOWER HOLDING CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
--------------------------------
Print: ▇▇▇▇▇ ▇. ▇▇▇
-----------------------------
Title: President
-----------------------------
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
INVESTORS:
CENTENNIAL FUND IV, L.P.
By: Centennial Holdings IV,
L.P., its General
Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇.
--------------------------------
Print: ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇.
-----------------------------
General Partner
CENTENNIAL FUND IV, L.P.
By: Centennial Holdings IV,
L.P., its General
Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇.
--------------------------------
Print: ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇.
-----------------------------
General Partner
BERKSHIRE FUND III, a Limited Partnership
By: Third Berkshire Associates LP, its
Sole General Partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
General Partner
BERKSHIRE FUND IV, a Limited Partnership
By: Fourth Berkshire Associates, LLC, its
Sole General Partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
BERKSHIRE INVESTORS LLC.,
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
PNC VENTURE CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Print: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
Title: Executive Vice President
-------------------------
NASSAU CAPITAL PARTNERS II L.P.
By: NASSAU CAPITAL L.L.C.
-----------------------------
Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. Hack
-----------------------------
Print: ▇▇▇▇▇▇▇ ▇. HACK
--------------------------
Title: MEMBER
--------------------------
NAS PARTNERS I L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. Hack
-----------------------------
Print: ▇▇▇▇▇▇▇ ▇. HACK
--------------------------
Title: MEMBER
--------------------------
▇▇▇, RICHWHITE COMMUNICATIONS
LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Print: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------
Title: PRINCIPAL
------------------------------
NEW YORK LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Print: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
Title: INVESTMENT MANAGER
-----------------------------
AMERICAN HOME ASSURANCE
COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Print: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Title: Vice President
-------------------------------
NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ A. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Print: A. ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Title: VICE PRESIDENT
-------------------------------
By virture of his signature below, each of the undersigned hereby
enters into this Agreement on the same terms and subject to the same conditions
as the other Investors listed in Schedule I hereto; provided, however, that
-------- -------
none of the undersigned shall be subject to, and each of the undersigned hereby
acknowledges that he shall not enjoy the benefits of, Article V hereof.
/s/ Win ▇. ▇▇▇▇▇▇
------------------------
Win ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
STOCKHOLDERS:
/s/ ▇▇▇▇▇▇ ▇. Crown
-------------------------------------
▇▇▇▇▇▇ ▇. Crown
/s/ ▇▇▇▇▇▇▇ Crown
-------------------------------------
▇▇▇▇▇▇▇ Crown
_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
_____________________________________
▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
STOCKHOLDERS:
_____________________________________
▇▇▇▇▇▇ ▇. Crown
_____________________________________
▇▇▇▇▇▇▇ Crown
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STOCKHOLDERS:
_____________________________________
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SCHEDULE I
TO THE AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
Investors
---------
Centennial Fund IV, L.P.
Centennial Fund V, L.P.
Centennial Entrepreneurs Fund V, L.P.
c/o Centennial Fund IV, L.P.
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Berkshire Fund III, a Limited Partnership
Berkshire Fund IV, a Limited Partnership
Berkshire Investors LLC
c/o Berkshire Partners
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PNC Venture Corp.
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Nassau Capital Partners II L.P.
NAS Partners I L.L.C.
c/o Nassau Capital LLC
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▇▇▇, Richwhite Communications Limited
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P.O. Box 1650
Auckland
NEW ZEALAND
New York Life Insurance Company
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Attention: Investment Department
Private Fiance Group
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy of any notices regarding defaults or Events of
Default under the operative documents to:
Attention: Office of General Counsel
Investment Section Room 1104
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
American Home Assurance Company
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
2
Northwestern Mutual Life Insurance Company
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Attention: Securities Department
Win J. Neugar *
AIG Global Investment Corp.
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▇▇▇▇▇ ▇. ▇▇▇▇▇ *
AIG Global Investment Corp.
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ *
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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____________________
* Investor is not subject to, and is not entitled to the benefits of,
Article V of the Agreement; provided, however, that such Investor shall be
-------- -------
included as a Purchaser for purposes of the definition of Restricted Stock and
shall be subject to, and is entitled to the benefits of, Article VI of the
Agreement.
SCHEDULE II
TO THE AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
None
SCHEDULE III
TO THE AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
Castle Tower Corporation TEA Group Incorporated
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▇▇▇▇▇ ▇.▇▇▇▇, ▇▇
▇▇▇▇▇▇▇ ▇. Hack
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TeleStructures, Inc. TeleShare, Inc.
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Spectrum Site Management Corporation Castle Tower Corporation (PR)
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Crown Communications Inc.
------------------------
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