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Page 1 of 12 Pages
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Amendment No 1. to
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Allied Digital Technologies Corp.
(Name of Issuer)
Common Stock
$.01 par value
(Title of Class of Securities)
01912P109
(CUSIP Number)
399 Venture Partners, Inc.
(Name of Person Filing Statement)
Philip H. Werner, Esq.
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Tel. No.: 212- 309-6000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 24, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following: / /
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CUSIP No. 01912P109 13D Page 2 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
399 Venture Partners, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / X /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DE
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SOLE VOTING POWER
NUMBER OF 74,000
SHARES ---------------------------------------------------------------
BENEFICIALLY SHARED VOTING POWER
OWNED BY 0
EACH ---------------------------------------------------------------
REPORTING SOLE DISPOSITIVE POWER
PERSON WITH 74,000
---------------------------------------------------------------
SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
74,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
---
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.7%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
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CUSIP No. 01912P109 13D Page 3 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Citicorp
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / X /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DE
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SOLE VOTING POWER
NUMBER OF 74,000
SHARES ---------------------------------------------------------------
BENEFICIALLY SHARED VOTING POWER
OWNED BY 0
EACH ---------------------------------------------------------------
REPORTING SOLE DISPOSITIVE POWER
PERSON WITH 74,000
---------------------------------------------------------------
SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
74,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
---
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.7%
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14 TYPE OF REPORTING PERSON*
HC
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
3
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CUSIP No. 01912P109 13D Page 4 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John K. Mangini
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / X /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
US
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SOLE VOTING POWER
NUMBER OF 26,250
SHARES ---------------------------------------------------------------
BENEFICIALLY SHARED VOTING POWER
OWNED BY 0
EACH ---------------------------------------------------------------
REPORTING SOLE DISPOSITIVE POWER
PERSON WITH 26,250
---------------------------------------------------------------
SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,250
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
---
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.6%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
4
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CUSIP No. 01912P109 13D Page 5 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Donald L. Olesen
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / X /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
US
- --------------------------------------------------------------------------------
SOLE VOTING POWER
NUMBER OF 26,250
SHARES ---------------------------------------------------------------
BENEFICIALLY SHARED VOTING POWER
OWNED BY 0
EACH ---------------------------------------------------------------
REPORTING SOLE DISPOSITIVE POWER
PERSON WITH 26,250
---------------------------------------------------------------
SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,250
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
---
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.6%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
5
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Item 1. Security and Issuer.
The class of equity securities to which this statement relates is the common
stock (the "Common Stock"), $0.01 par value per share (each, a "Share"), of
Allied Digital Technologies Corp., a Delaware corporation (the "Company" or
"Allied"). The principal executive offices of Allied Digital Technologies Corp.
are located at 140 Fell Street, Hauppauge, New York 11788.
Item 2. Identity and Background.
This Schedule 13D is being filed on behalf of 399 Venture Partners, Inc., a
Delaware corporation ("399"), Citicorp, John K. Mangini and Donald L. Olesen.
399, a Delaware corporation, is a venture capital firm that makes long-term
investments. 399 is a wholly-owned subsidiary of Citibank Delaware, which in
turn is a wholly-owned subsidiary of Citicorp Holdings, Inc., a wholly-owned
subsidiary of Citicorp.
Citicorp is a U.S. bank holding company and is the sole shareholder of
Citibank, N.A., its major subsidiary. Citicorp, with its subsidiaries and
affiliates, is a global financial services organization.
The name, business address, citizenship, present principal occupation or
employment and the name and business address of any corporation or organization
in which each such employment is conducted of each executive officer or member
of the Board of Directors of 399 are set forth on Schedules A and B attached
hereto. John K. Mangini's business address is c/o Allied Digital Technologies
Corp., 140 Fell Street, Hauppauge, New York 11788. Prior to the Effective Time
(as defined below), he was principally employed by Allied as its Chief Operating
Officer. Since the Effective Time, Mr. Mangini has been employed by Allied as
its President and Chief Executive Officer. Donald L. Olesen's business address
is c/o Allied Digital Technologies Corp., 140 Fell Street, Hauppauge, New York
11788. He is principally employed by Allied as its President--National Sales and
Marketing.
During the past five (5) years, neither the Reporting Persons, nor, to the
best knowledge of the Reporting Persons, any of the other persons listed on
Schedules A and B, attached hereto, has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) except for John K.
Mangini who plead guilty in 1995 to an information alleging tax evasion, paid a
$7,500 fine and was placed on probation for a period of five years.
During the past five (5) years, neither the Reporting Persons, nor, to the
best knowledge of the Reporting Persons, any of the other persons listed on
Schedules A and B, attached hereto, has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final
6
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order enjoining future violations of, or prohibiting or mandating activities
subject to United States federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On April 21, 1998, 399 delivered to Analog Acquisition Corp. ("AAC"), a
Delaware transitory merger subsidiary formed at the direction of 399 for the
purpose of the transaction described below in Item 4, an equity commitment
letter (the "Equity Commitment Letter") (a copy of which was previously filed
with the Securities and Exchange Commission ("SEC") as Exhibit 2 to this
Schedule 13D on May 14, 1998 and is incorporated herein by reference), to have
available in cash $13,124,445.00.
Because Allied and JP Morgan & Co. could not agree on certain conditions
related to the contemplated financing, Allied explored certain other financing
alternatives and elected to finance the Merger (as defined below) from loans
arranged through a syndicate of banks led by Fleet National Bank ("Fleet") and
Citicorp Mezzanine Partners, L.P. ("CMP"). The transactions contemplated by the
Merger Agreement (as defined below) were funded in part from (a) a $75 million
senior secured credit facility and a $25 million secured revolving credit
facility led by Fleet and (b) a $20 million unsecured senior subordinated credit
facility led by CMP.
See Item 4 below for a description of the merger of AAC with and into
Allied.
Item 4. Purpose of Transaction.
On May 5, 1998, Allied and AAC entered into the Agreement and Plan of Merger
(the "Merger Agreement," a copy of which was previously filed with the SEC as
Exhibit 4 to this Schedule 13D on May 14, 1998, and is incorporated herein by
reference). The Merger Agreement provided, among other things, for the merger of
AAC with and into Allied (the "Merger"), with Allied as the surviving
corporation (the "Surviving Corporation"). The transactions contemplated by the
Merger Agreement were approved by the stockholders of Allied on September 23,
1998 and were consummated on September 24, 1998 (the "Effective Time").
On September 24, 1998, Allied, 399, CMP and certain members of Allied's
management who will retain shares of the Company following the Merger entered
into an Investors Agreement (the "Investors Agreement," a copy of which is
attached hereto, and made a part hereof as Exhibit 6) and a Registration Rights
Agreement (the "Registration Rights Agreement," a copy of which is attached
hereto, and made a part hereof as Exhibit 7), which together contain certain
agreements with respect to corporate governance after the Merger and provide for
certain tag-along rights, drag-along rights, rights of first refusal and demand
registration rights.
Further details regarding the above-referenced transactions is set forth in
Allied's Proxy Statement, as filed with the SEC on September 2, 1998.
7
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Item 5. Interest in Securities of the Issuer.
The information set forth in Items 7-13 of each of the cover sheets filed
herewith is incorporated by reference in response to this Item.
Pursuant to the terms of the Merger Agreement, on September 24, 1998, Allied
filed a Certificate of Merger with the Secretary of State of the State of
Delaware, and the Merger was effective as of the filing of such certificate.
Immediately prior to the Effective Time, 399 purchased one share of Common
Stock of AAC at a price of $5.00 per share for a total purchase price of $5.00
and 131,244.45 shares of Series A Preferred Stock of AAC at a price of $100.00
per share for a total purchase price of $13,124,450.00. By virtue of the Merger
on September 24, 1998, 399 beneficially owned 74,000 Class A Common Shares,
representing approximately 49.7% of the voting securities of the Surviving
Corporation, at the Effective Time.
Subject to the terms and provisions of the Merger Agreement, in connection
with the Merger, each of Donald L. Olesen (and various parties related to Donald
L. Olesen) and John K. Mangini (the "Rollover Stockholders") entered into a
Rollover Agreement (collectively, the "Rollover Agreements") with AAC dated as
of May 5, 1998 (copies of which were previously filed with the SEC as Exhibits 7
and 9, respectively, to the Schedule 13D on May 14, 1998, and are incorporated
herein by reference) whereby each of Donald L. Olesen and John K. Mangini,
respectively, agreed to elect to retain 26,250 and 26,248 shares of Surviving
Corporation Common Stock upon conversion of, and with respect to, 26,250 and
26,248 shares owned by Donald L. Olesen and John K. Mangini, respectively,
immediately prior to the Effective Time. In addition, John K. Mangini purchased
two shares of Common Stock of AAC at a price of $5.00 per share for a total
purchase price of $10.00. By virtue of the Merger on September 24, 1998, each of
the Rollover Stockholders beneficially owned 26,250 shares of Surviving
Corporation Common Stock, representing approximately 17.6% of the voting
securities of the Surviving Corporation, at the Effective Time.
Effective as of September 25, 1998, Allied Common Stock ceased trading on
the American Stock Exchange and trading information with regard to Allied Common
Stock is no longer available to the public. On September 24, 1998, Allied filed
a certification of termination of registration of Allied Common Stock on Form 15
pursuant to Rule 12g-4(a)(1)(i) under the Securities Exchange Act of 1934, as
amended. From and after the time that Allied's Form 15 is declared effective,
none of AAC, 399, Citibank, N.A., Citicorp, John K. Mangini and Donald L. Olesen
will be Reporting Persons.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
See responses to Items 3, 4 and 5.
8
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The Equity Commitment Letter, Merger Agreement and Rollover Agreements,
which were previously filed with the SEC as Exhibit 4 to this Schedule 13D on
May 14, 1998, are incorporated herein by reference.
Except for the agreements described in the responses to Items 3, 4 and 5,
and except as disclosed previously in the original Schedule 13D, as filed by
AAC, 399, Citibank, N.A., Citicorp and John K. Mangini, to the best knowledge of
the Reporting Persons, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) between the persons enumerated in Item 2, and
any other person, with respect to any securities of Allied, including, but not
limited to, transfer or voting arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Joint Filing Agreement among the Reporting Persons
Exhibit 2: Equity Commitment Letter, dated April 21, 1998, issued by 399 to
AAC (incorporated by reference to Schedule 13D as filed with the SEC on May 14,
1998).
Exhibit 3: Agreement and Plan of Merger, dated as of May 5, 1998, by and
between AAC and Allied (incorporated by reference to Schedule 13D as filed with
the SEC on May 14, 1998).
Exhibit 4: Stockholder Voting and Rollover Agreement, dated as of May 5,
1998, by and between Analog Acquisition Corp. and Donald L. Olesen and various
parties related to Donald L. Olesen (incorporated by reference to Schedule 13D
as filed with the SEC on May 14, 1998).
Exhibit 5: Rollover Agreement, dated as of May 5, 1998, by and between
Analog Acquisition Corp. and John K. Mangini (incorporated by reference to
Schedule 13D as filed with the SEC on May 14, 1998).
Exhibit 6: Investors Agreement, dated as of September 24, 1998, by and among
Allied, 399, CMP, Fleet Corporate Finance, Inc. and certain Allied stockholders.
Exhibit 7: Registration Rights Agreement, dated as of September 24, 1998, by
and among Allied, 399, CMP, Fleet Corporate Finance, Inc. and certain Allied
stockholders.
9
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SIGNATURE PAGE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: September 30, 1998
399 VENTURE PARTNERS, INC.
By: /s/ Ian Highet
--------------------------------
Name: Ian Highet
Title: Vice President
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: September 30, 1998
CITICORP
By: /s/ George E. Seegers
--------------------------------
Name: George E. Seegers
Title: Vice President and Secretary
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: September 30, 1998
/s/ John K. Mangini
-----------------------------------
John K. Mangini
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: September 30, 1998
/s/ Donald L. Olesen
-----------------------------------
Donald L. Olesen
10
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Schedule A
Executive Officers and Directors
of
399 Venture Partners, Inc.
The names of the Directors and the names and titles of the Executive
Officers of 399 Venture Partners, Inc. ("399") and their business addresses and
principal occupations are set forth below. If no address is given, the
Director's or Executive Officer's business address is that of 399 at 399 Park
Avenue, New York, NY 10043. Unless otherwise indicated, each occupation set
forth opposite an individual's name refers to 399 and each individual is a
United States citizen.
<TABLE>
<CAPTION>
Name, Business Address Present Principal Occupation
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<S> <C>
William T. Comfort* Chairman
David F. Thomas President
Richard M. Cashin, Jr. Vice President
Charles E. Corpening Vice President
Michael A. Delaney Vice President
Ian D. Highet Vice President
David Y. Howe Vice President
Byron L. Knief Vice President
Richard E. Mayberry Vice President
Thomas F. McWilliams Vice President
M. Saleem Muqaddam Vice President
Paul C. Schorr Vice President
Joseph M. Silvestri Vice President
James A. Urry Vice President
John D. Weber Vice President
Thomas H. Sanders Vice President
Lauren M. Connelly Vice President & Secretary
Helene B. Shavin Vice President & Asst. Secretary
Ann Goodbody Director
Thomas E. Jones Director
Frederick Roesch Director
</TABLE>
- ----------
* Also a Director
11
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Schedule B
Executive Officers and Directors
of
Citicorp
The names of the Directors and the names and titles of the Executive
Officers of Citicorp and their business addresses and principal occupations are
set forth below. If no address is given, the Director's or Executive Officer's
business address is that of Citicorp at 399 Park Avenue, New York, NY 10043.
Unless otherwise indicated, each occupation set forth opposite an individual's
name refers to Citicorp and each individual is a United States citizen.
<TABLE>
<CAPTION>
Name, Business Address Present Principal Occupation
- ------------------------- ----------------------------
<S> <C>
John S. Reed* Chairman
Paul J. Collins* Vice Chairman
William R. Rhodes* Vice Chairman
H. Onno Ruding* Vice Chairman
Charles E. Long Vice Chairman and Secretary
Thomas E. Jones Executive Vice President
John J. Roche Executive Vice President
Victor J. Menezes Corporate Executive Vice President
Mary Alice Taylor Corporate Executive Vice President
Robert A. McCormack Corporate Executive Vice President
Dionisio R. Martin Corporate Executive Vice President
William I. Campbell Corporate Executive Vice President
Edward Horowitz Corporate Executive Vice President
Lawrence R. Phillips Corporate Executive Vice President
Alain J. P. Belda Director
Kenneth T. Derr Director
Edgar S. Woolard, Jr. Director
D. Wayne Calloway Director
Franklin A. Thomas Director
Robert B. Shapiro Director
John M. Deutch Director
Rozanne L. Ridgway Director
Frank A. Shrontz Director
Richard D. Parsons Director
Reuben Mark Director
</TABLE>
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* Also a Director
12
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Exhibit 1
Joint Filing Agreement
In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934,
as amended, each of the persons named below agrees to the joint filing of a
Statement on Schedule 13D (including amendments thereto) with respect to the
common stock, par value $0.01, of Allied Digital Technologies Corp., a Delaware
corporation, and further agrees that this Joint Filing Agreement be included as
an exhibit to such filings provided that, as contemplated by Section
13d-1(f)(1)(ii), no person shall be responsible for the completeness or accuracy
of the information concerning the other persons making the filing, unless such
person knows or has reason to believe that such information is inaccurate. This
Joint Filing may be executed in any number of counterparts, all of which
together shall constitute one and the same instrument.
399 Venture Partners, Inc.
By: /s/ Ian Highet
-----------------------------------
Name: Ian Highet
Title: Vice President
Citicorp
By: /s/ George E. Seegers
-----------------------------------
Name: George E. Seegers
Title: Vice President and Secretary
/s/ John K. Mangini
- --------------------------------------
John K. Mangini
/s/ Donald L. Olesen
- --------------------------------------
Donald L. Olesen
13
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EXHIBIT 6
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INVESTORS' AGREEMENT
by and among
Allied Digital Technologies Corp.
and
Its Stockholders
Named Therein
As of September 24, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
CERTAIN DEFINITIONS........................................................1
1.1 Defined Terms.....................................................1
ARTICLE II
TRANSFERS OF RESTRICTED SECURITIES........................................11
2.1 Transfer Restrictions Generally; Securities Act..................11
2.2 Legends..........................................................11
2.3 Limitations on Repurchases, Dividends, Etc.......................12
2.4 Transfers by Stockholders........................................12
2.5 Right of First Refusal...........................................13
2.6 Involuntary Transfers............................................15
2.7 Sale of the Company..............................................17
ARTICLE III
RIGHTS OF INCLUSION.......................................................18
3.1 Rights of Inclusion..............................................18
3.2 Article III Sales................................................19
ARTICLE IV
REPURCHASE OF RESTRICTED SECURITIES.......................................20
4.1 Sale Event.......................................................20
4.2 Purchase Price...................................................21
4.3 Closing..........................................................21
4.4 Postponement.....................................................22
ARTICLE V
CORPORATE GOVERNANCE......................................................23
5.1 Board of Directors...............................................23
5.2 Removal..........................................................24
5.3 Vacancies........................................................24
5.4 Special Approval Rights..........................................25
5.5 Committees of the Board; Subsidiary Boards.......................25
5.6 Observer's Rights................................................25
5.7 Action by Written Consent of Stockholders........................26
5.8 Designation of Proxy.............................................26
5.9 Regulatory Right.................................................26
</TABLE>
i
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<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VI
CERTAIN COVENANTS OF THE PARTIES..........................................27
6.1 Registration of Common Stock.....................................27
6.2 Management Stockholders; Additional Stockholders.................27
6.3 Stockholder List; Certain Notices................................27
6.4 Regulatory Compliance Cooperation................................28
6.5 Purchaser Representative.........................................29
ARTICLE VII
MISCELLANEOUS.............................................................29
7.1 Governing Law....................................................29
7.2 Entire Agreement; Amendments.....................................29
7.3 Term.............................................................30
7.4 Certain Actions..................................................30
7.5 Inspection.......................................................31
7.6 Recapitalization, Exchanges, Etc., Affecting Restricted
Securities......................................................31
7.7 Compliance with Regulations......................................31
7.8 Waiver...........................................................32
7.9 Successors and Assigns...........................................32
7.10 Remedies.........................................................32
7.12 Invalid Provisions...............................................33
7.13 Headings.........................................................33
7.14 Further Assurances...............................................33
7.15 Gender...........................................................33
7.16 Counterparts.....................................................33
7.17 Notices..........................................................33
7.18 Limited Preemptive Rights........................................33
</TABLE>
Annex I - Equity Ownership Chart
Exhibit A - Joinder Agreement
Exhibit B - Board and Nominating Committee Composition
ii
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INVESTORS' AGREEMENT (this "Agreement"), dated as of September 24, 1998, by
and among Allied Digital Technologies Corp., a Delaware corporation (the
"Company"), 399 Venture Partners, Inc., a Delaware corporation ("399"), Citicorp
Mezzanine Partners, L.P. ("CMP"), a Delaware limited partnership, Fleet
Corporate Finance, Inc. ("FCF"), a Massachusetts corporation, and each of the
individuals named on the signature pages hereto under the heading "Management
Members" (the "Management Members"). Capitalized terms used and not otherwise
defined herein have the respective meanings ascribed thereto in Article I.
RECITALS
WHEREAS, pursuant to the terms of the Merger Agreement (as defined below),
AAC, a Delaware corporation ("AAC"), will be merged with and into the Company,
with the Company as the surviving corporation (the "Merger");
WHEREAS, at the Effective Time (as defined in the Merger Agreement) the
parties hereto will hold new securities of the Company as set forth on Annex I;
WHEREAS, in connection with the Merger Agreement and pursuant to a certain
Warrant Agreement dated as of the date hereof, the Company will issue to CMP and
FCF Warrants (as defined herein), representing the right to purchase from the
Company up to 43,479 shares of the Company's Class B Common Stock (as adjusted
from time to time pursuant to the provisions of the Warrants) in the aggregate
on the terms and conditions set forth in the Warrants; and
WHEREAS, the parties hereto desire to enter into this Agreement to govern
certain of their rights, duties and obligations after consummation of the
transactions contemplated by the Merger Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Defined Terms. (a) The following defined terms, when used in
this Agreement, have the respective meanings set forth below (such definitions
to be equally applicable to both singular and plural forms of the terms
defined):
"Additional Management Stockholder" means an Additional Stockholder who
is an employee, officer or director of the Company or any of its
Subsidiaries.
<PAGE>
"Additional Stockholder" means any Person (other than any 399
Stockholder, CMP Stockholder or Management Stockholder), to whom the Company
issues Restricted Securities or Preferred (or to whom these have been
transferred in such transferee's capacity as a Company Designee under
Section 4.1) after the date hereof other than pursuant to a public offering
registered under the Securities Act, and who has executed a Joinder
Agreement as an Additional Stockholder pursuant to Section 6.2, and
Permitted Transferees of such Person, so long as any such Person or
Permitted Transferees of such Person shall hold Restricted Securities or
Preferred.
"Affiliate" means, with respect to any Person, any other Person that
controls, is controlled by or is under common control with such Person. For
the purposes of this definition, "controls" (including, with its correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of securities, by
contract or otherwise. For purposes of this Agreement, employees, officers
and directors of 399 and its Affiliates shall be "Affiliates" of 399.
"Affirmative Board Vote" means the affirmative vote of at least a
majority of the members of the Board (assuming no vacancies), which majority
shall include, unless the 399 Stockholders have elected in writing not to
designate 399 Directors, one director who is a 399 Director.
"Associate" means, with respect to any Person, (i) any corporation or
organization of which such Person is an officer or partner or is, directly
or indirectly, the beneficial owner of 10% or more of any class of equity
securities; (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee
or in a similar fiduciary capacity; and (iii) any relative or spouse of such
Person, or any relative of such spouse, who has the same home as such
Person.
"Board" means the Board of Directors of the Company.
"Cause" means, with respect to a Management Stockholder or an
Additional Management Stockholder, (i) a material breach by such Management
Stockholder or Additional Management Stockholder of this Agreement, any
management subscription agreement with the Company or any employment,
non-compete or confidentiality agreement with the Company or any of its
Subsidiaries to which such person is a party which such Management
Stockholder or Additional Management Stockholder fails to cure within a
thirty (30) day period following the giving of notice by the Company to such
Person or (ii) the commission by such person of a felony, a crime involving
moral turpitude or any other willful act causing material harm to the
business, financial condition, standing or reputation of the Company or any
of its Subsidiaries.
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<PAGE>
"Charter" means the Restated Certificate of Incorporation of the
Company, as the same may be amended or restated from time to time.
"Class A Common" means the Company's Class A Common Stock, par value
$.01 per share, and any securities into which such Class A Common shall have
been changed or any securities resulting from any reclassification or
recapitalization of such Class A Common.
"Class B Common" means the Company's Class B Common Stock, par value
$.01 per share, and any securities into which such Class B Common shall have
been changed or any securities resulting from any reclassification or
recapitalization of such Class B Common.
"Closing Date" has the meaning ascribed thereto in the Merger
Agreement.
"Commission" means the Securities and Exchange Commission and any other
similar or successor agency of the federal government administering the
Securities Act or the Exchange Act.
"Common Stock" means the Class A Common, the Class B Common and all
other securities of any class or classes (however designated) of the
Company, the holders of which have the right, without limitation as to
amount, after payment on any securities entitled to a preference on
dividends or other distributions upon any dissolution, liquidation or
winding-up, either to all or to a share of the balance of payments upon such
dissolution, liquidation or winding-up.
"CMP Stockholders" means CMP, FCF and each of their respective
Permitted Transferees (other than any 399 Stockholder), so long as any such
Person shall hold Restricted Securities.
"399 Stockholders" means 399 and its Permitted Transferees (other than
any CMP Stockholder), so long as any such Person shall hold Restricted
Securities or Preferred.
"Diluted Basis" means, with respect to the calculation of the number of
shares of Common Stock, (i) all shares of Common Stock outstanding at the
time of determination and (ii) all shares of Common Stock issuable upon the
exercise, conversion or exchange or any Equity Equivalents; provided,
however, that with respect to any options, shares of Common Stock shall only
be included in the determination of Diluted Basis to the extent such options
are vested.
"Equity Equivalent" means any option, warrant or other security
exercisable, convertible or exchangeable for or into Common Stock,
including, without limitation, the Warrants.
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<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the Commission
thereunder.
"Fair Market Value" means (i) with respect to the Preferred, the fair
value thereof, as determined by Affirmative Board Vote and (ii) with respect
to each share of Common Stock as of a particular date, the average of the
closing prices of such Common Stock (A) on the New York Stock Exchange, Inc.
on each of the 30 trading days next preceding such date or, (B) if such
Common Stock is not then listed or admitted to trading on such exchange, on
the principal national securities exchange on which such Common Stock is
listed or admitted to trading or, (C) if not listed or admitted to trading
on any national securities exchange, on the Nasdaq National Market, or (D)
if such Common Stock is not then listed or admitted to trading on a national
securities exchange or quoted on the Nasdaq National Market, the average of
the closing bid and asked prices in the over-the-counter market as furnished
by any New York Stock Exchange member firm selected by Affirmative Board
Vote or, (E) if no such prices are available, the fair market value per
share as determined in good faith by Affirmative Board Vote.
"Funded Debt" means, without duplication, with respect to any Person
(i) all indebtedness for borrowed money or for the deferred purchase price
of property, (ii) the face amount of all letters of credit, banker's
acceptances and other credit facilities issued for the account of such
Person and, without duplication, all drafts drawn thereunder, (iii) all
liabilities secured by any lien on any property owned by such Person, to the
extent attributable to such Person's interest in such property, even though
such Person has not assumed or become liable for the payment thereof, (iv)
lease obligations of such Person which, in accordance with generally
accepted accounting principles ("GAAP"), should be capitalized, (v)
obligations with respect to any conditional sale agreement or title
retention agreement and (vi) guarantees by such Person of the Funded Debt of
another Person; but excluding in each case trade and other accounts payable
in the ordinary course of business.
"Involuntary Transfer" means, with respect to Restricted Securities of
any Management Stockholder or Additional Stockholder, any involuntary
Transfer or Transfer by operation of law of such Restricted Securities
(other than to a Permitted Transferee of such Stockholder) by or in which
such Stockholder shall be deprived or divested of any right, title or
interest in or to such Restricted Securities, including, without limitation,
by seizure under levy of attachment or execution, by foreclosure upon a
pledge, in connection with any voluntary or involuntary bankruptcy or other
court proceeding to a debtor in possession, trustee in bankruptcy or
receiver or other officer or agency, pursuant to any statute pertaining to
escheat or abandoned property, pursuant to a divorce or separation agreement
or a final decree of a court in a divorce action, upon or occasioned by the
incompetence of any such Stockholder and a transfer in such event to a legal
representative of any such Stockholder; provided, that "Involuntary
Transfer" shall not include any Transfer effected pursuant to the exercise
by 399 Stockholders of Sale of
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<PAGE>
the Company Rights under Section 2.7 hereof, any Transfer effected pursuant
to Article IV hereof, any Transfer to the Company solely resulting from a
reclassification of the capital stock of the Company or a recapitalization
of the Company and any Transfer effected as a result of a merger of the
Company with or into any other Person.
"Joinder Agreement" means a Joinder Agreement substantially in the form
attached hereto as Exhibit A.
"Lien" means any lien, claim, option, charge, encumbrance, security
interest or other adverse claim of any kind.
"Loan Documents" means (a) with respect to the senior credit financing,
the Credit Agreement, dated as of September 24, 1998, by and among Allied
Digital, Inc., the guarantors and lenders party thereto and Fleet National
Bank, as administrative agent (the "Credit Agreement") and the other Loan
Documents (as defined in the Credit Agreement) and (b) with respect to the
subordinated credit financing, the Subordinated Debt Documents and the
Warrant Agreement (each as defined in the Credit Agreement) and the Warrants
issued or to be issued pursuant to the Warrant Agreement.
"Management Securities" means all shares of Restricted Securities
issued to or acquired by Management Stockholders and Additional Management
Stockholders, unless otherwise agreed between the Company and any Management
Stockholder or Additional Management Stockholder.
"Management Stockholders" means the Management Members and their
respective Permitted Transferees, so long as any such Person shall hold
Restricted Securities.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
May 5, 1998, between the Company and AAC.
"Original Cost" means, (i) as to each share of Common Stock purchased
or otherwise acquired from the Company (A) on the Closing Date, $5.00, and
(B) after the Closing Date, the price paid (including the price at which
options were exercised) to the Company therefor, in each case appropriately
adjusted to reflect all stock splits, stock dividends, reclassifications,
recapitalizations or similar events affecting the Common Stock subsequent to
the date of purchase thereof.
"Ownership Ratio" means, as to any CMP Stockholder at the time of
determination, the percentage obtained by dividing the amount of shares of
Common Stock held by such CMP Stockholder on a Diluted Basis at such time by
the aggregate amount of shares of Common Stock held by the 399 Stockholders
on a Diluted Basis at such time.
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<PAGE>
"Permitted Transferee" means:
(i) with respect to any Stockholder who is a natural person, (A)
the spouse of such Stockholder, (B) any lineal ancestor or descendant
(including by adoption and stepchildren) of such Stockholder, (C) any
trust of which one or more Stockholders are the controlling trustees
and which is established solely for the benefit of any of the foregoing
individuals with respect to such Stockholders and whose terms are not
inconsistent with the terms of this Agreement, (D) the estate of such
Stockholder established by reason of such Stockholder's death, or (E)
any corporation, limited liability company or partnership, all of the
interests of which are (or is) owned by one or more of the Persons
identified in this clause (i);
(ii) with respect to the estate of any Stockholder or any trust to
which such Stockholder has transferred Restricted Securities that meets
the criteria set forth in clause (C) of subparagraph (i) above with
respect to such Stockholder, any person having the relationship with
respect to such Stockholder described in clause (A) or (B) of such
subparagraph (i);
(iii) as to any 399 Stockholder, (A) any other 399 Stockholder;
(B) any director, officer, employee, representative, general partner,
limited partner, Associate or Affiliate of 399; (C) any director,
officer, employee, representative, general partner or limited partner
of any Associate or Affiliate of 399; (D) any trust, a majority in
interest of the beneficiaries of which, or corporation, limited
liability company or partnership, a majority in interest of the
stockholder, members or limited partners of which, or partnership or
limited liability company, the managing general partner or managing
member of which, are (or is) one or more of the Persons identified in
this clause (ii), the spouse of any such Person or such Person's lineal
ancestor or descendants (including by adoption and stepchildren); or
(E) any other Person in order to avoid a Regulatory Problem; and
(iv) as to any CMP Stockholder, any other CMP Stockholder, any
director, officer, employee, representative, partner or Affiliate of
CMP and any director, officer, employee, representative, or partner of
any such Affiliate; and
(v) as to any Additional Stockholder that is not a natural Person,
any Affiliate of such Stockholder.
"Person" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, joint venture,
government (or agency or political subdivision thereof) or any other entity
of any kind.
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<PAGE>
"Preferred" means the Series A Preferred Stock, par value $.01 per
share, of the Company, and any securities into which such Preferred shall
have been changed or any securities resulting from any reclassification or
recapitalization of such Preferred.
"Pro Rata" means, with respect to one or more Stockholders, as it
relates to the Common Stock, in proportion to the number of shares of Common
Stock on a Diluted Basis owned by such Stockholders or which may be acquired
by any Stockholders.
"Qualifying Offering" means the consummation by the Company of an
underwritten primary or secondary public offering of Common Stock pursuant
to an effective registration statement under the Securities Act, covering
the distribution of the Common Stock which (taken together with all similar
previous public offerings) raises at least $15 million of aggregate net
proceeds to the Company (after underwriters' fees, commissions and discounts
and offering expenses).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among the parties hereto, as the
same may be amended, modified or supplemented from time to time.
"Restricted Securities" means the Common Stock, the Equity Equivalents
and any securities issued with respect thereto as a result of any stock
dividend, stock split, reclassification, recapitalization, reorganization,
merger, consolidation or similar event or upon the conversion, exchange or
exercise thereof.
"Rule 144 Transaction" means a transfer of Common Stock (A) complying
with Rule 144 under the Securities Act as such Rule is in effect on the date
of such transfer (but not including a sale other than pursuant to a "brokers
transaction" as defined in clauses (1) and (2) of paragraph (g) of such Rule
as in effect on the date hereof) and (B) occurring at a time when shares of
such Common Stock are registered pursuant to Section 12 of the Exchange Act
(or any successor to such Section).
"Sale of the Company" means the sale of the Company (whether by merger,
consolidation, recapitalization, reorganization, sale of securities, sale of
assets or otherwise) in one transaction or series of related transactions to
a Person or Persons not an Affiliate of 399 pursuant to which such Person or
Persons (together with its Affiliates) acquires (i) securities representing
at least a majority of the voting power of all securities of the Company,
assuming the conversion, exchange or exercise of all securities convertible,
exchangeable or exercisable for or into voting securities, or (ii) all or
substantially all of the Company's assets on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and the rules and regulations of the Commission thereunder.
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<PAGE>
"Significant Subsidiaries" means those Subsidiaries of the Company
which constitute a "Significant Subsidiary" as defined in Regulation S-X
promulgated by the Commission under the Securities Act, as such Regulation
is in effect on the date hereof.
"Significant Transaction" means:
(i) any merger, consolidation or other business combination of the
Company or any of its Significant Subsidiaries with or into any Person
or any formation by the Company or any of its Significant Subsidiaries
of any subsidiary which would, upon such formation, be a Significant
Subsidiary;
(ii) any sale, lease, exchange or other disposition by the Company
or any of its Subsidiaries of assets having a book value in excess of
$1,000,000, in a single transaction or a series of related
transactions, to or with any Person, other than sales of inventory in
the ordinary course of business;
(iii) any amendment to or modification or repeal of any provision
of the Charter or the By-Laws of the Company;
(iv) any acquisition by the Company or any of its Subsidiaries of
securities or assets, in a single transaction or a series of related
transactions for consideration in excess of $1,000,000, other than (A)
purchases of inventory in the ordinary course of business, (B) capital
expenditures made in accordance with an annual budget approved by the
Board or (C) investments in commercial paper having, at the date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's; investments in certificates of deposit, banker's acceptances,
money market deposit accounts and time deposits (maturing within one
year from the date of acquisition) issued by any commercial bank
organized under the laws of the United States of America or any state
thereof that has a combined capital and surplus profits of not less
than $1,000,000,000; investments in securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed
by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or "A-1" by Moody's; or investments in
money market funds complying with the risk limiting conditions of Rule
2a-7 (or any successor rule) of the Commission under the Investment
Company Act of 1940, as amended;
(v) any increase or reduction of the capital of the Company or any
of its Subsidiaries or the creation of any additional class of capital
stock of the Company or any of its Subsidiaries, or the issuance by the
Company or any of its Subsidiaries of Equity Equivalents on a basis
other than pro rata to the holders of capital stock other than (A) the
issuance of Common Stock upon the exercise or conversion of Equity
Equivalents where the issuance of such Equity Equivalents has been
approved by the Board and (B) the
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<PAGE>
issuance of Common Stock upon the conversion of any outstanding class
of Common Stock;
(vi) the incurrence or guaranty after the Closing Date by the
Company or any of its Subsidiaries of any material Funded Debt or any
modification or amendment to any agreement governing the extension or
guaranty thereof (but excluding any incurrence under the terms of any
agreement or instrument previously approved by the Board, including,
without limitation, drawdowns on any previously approved revolving
credit facility);
(vii) the dissolution of the Company or any of its Subsidiaries,
the adoption of a plan of liquidation by the Company or any of its
Subsidiaries, any action by the Company or any of its Subsidiaries to
commence any suit, case, proceeding or other action (A) under any
existing or future law of any jurisdiction relating to bankruptcy,
insolvency, reorganization or relief of debtors seeking to have an
order for relief of debtors entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it, or (B) seeking
appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or making a
general assignment for the benefit of its creditors;
(viii) any increase, decrease or change in the compensation or
benefits of the senior management of the Company or any of its
Subsidiaries; and
(ix) any transaction or dealing between the Company or any of its
Subsidiaries, on the one hand, and one or more of its Stockholders (or
any Affiliate of any Stockholder), on the other hand, not entered into
in the ordinary course of business or on an arm's-length basis or which
is material to the Company or any of its Subsidiaries, other than
transactions undertaken by the Company in compliance with the
provisions of this Agreement, the Registration Rights Agreement and the
Loan Documents.
"Stockholders" means each of the 399 Stockholders, the CMP
Stockholders, the Management Stockholders and the Additional Stockholders.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity
of which (i) if a corporation, a majority of the total voting power of
shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a partnership, limited liability company,
association or other business entity, a majority of the partnership or other
similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
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<PAGE>
Person or a combination thereof. For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a partnership,
limited liability company, association or other business entity if such
Person or Persons shall be allocated a majority of partnership, limited
liability company, association or other business entity gains or losses or
shall be or control the managing director or general partner of such
partnership, limited liability company, association or other business
entity.
"Transfer" means, any direct or indirect, sale, transfer, assignment,
grant of a participation in, gift, hypothecation, pledge or other
disposition of any securities or any interests therein or, as the context
may require, to sell, transfer, assign, grant a participation in, give as a
gift, hypothecate, pledge or otherwise dispose of any securities or any
interests therein; provided, that the exercise of any conversion or exchange
right provided for in the terms of any Equity Equivalent shall not be deemed
a "Transfer."
"Unvested Shares" shall mean, with respect to each Management
Stockholder or Additional Management Stockholder, all Management Securities
other than Vested Shares.
"Vested Shares" means, unless otherwise provided in a separate
agreement between the Company and a Management Stockholder or Additional
Management Stockholder, with respect to each Management Stockholder or
Additional Management Stockholder, that portion of Management Securities
held by such Person and by such Person's Permitted Transferees who hold such
Management Securities which are attributable to such Person which is the
product of: (x) the number of Management Securities acquired by such
Management Stockholder or Additional Management Stockholder on or after the
Closing Date, and (y) the fraction in which the numerator is the number of
anniversaries that have elapsed after the Closing Date and the denominator
is 5; provided, however, that in the event such fraction is greater than one
it shall be deemed to equal one; provided, further, that simultaneously with
a Sale of the Company, all Unvested Shares shall become Vested Shares;
provided, further, that in the event that a Sale Event occurs pursuant to
Section 4.1 as a result of the death of a Management Stockholder or an
Additional Management Stockholder, any Unvested Shares of such Management
Stockholder or Additional Management Stockholder shall be deemed to be
Vested Shares.
"Warrants" means the Stock Purchase Warrants, dated the date hereof,
issued by the Company to CMP and FCF, which grants to CMP and FCF
collectively the right to purchase from the Company a total of 43,479 shares
of Class B Common in the aggregate at an initial price per share of $.01, as
adjusted under the terms of the Warrants, together with any Warrants issued
in replacement thereof.
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(b) Unless otherwise provided herein, all accounting terms used in
this Agreement shall be interpreted in accordance with GAAP as in effect from
time to time, applied on a consistent basis.
(c) The following terms, when used in this Agreement, shall have
the meanings defined for such terms in the Section set forth below (such
definitions to be equally applicable to both singular and plural forms of the
terms defined):
<TABLE>
<CAPTION>
Term Section
------- ----------
<S> <C>
"Acquiror" 2.7
"Agreement" Preamble
"Article III Offer" 3.1(a)
"Buyer" 3.1(a)
"Company" Preamble
"Company Designee" 4.1
"Company Notice of Purchase Intention" 2.5(c)
"CMP" Preamble
"Disinterested Director" 5.1(a)
"Election Notice" 7.18
"Inclusion Notice" 3.1(a)
"Inclusion Right" 3.1(b)
"Inclusion Shares" 3.1(b)
"Issuance Notice" 7.18
"Management Members" Preamble
"Management Director" 5.1(a)
"Management Representative" 5.8
"Management Stockholders Cumulative
Designating Group" 7.4(b)
"Management Stockholders Designating Group" 7.4(b)
"Mangini" 5.1(a)
"Nominating Committee" 5.1(a)
"Notice of Transfer Intention" 2.5(a)
"Observer" 5.6
"Offered Securities" 2.5(a)
"Offerees" 3.1(a)
"Offer Price" 2.5(a)
"Olesen" 5.1(a)
"Preemptive Offered Shares" 7.18
"Prospective Buyers" 2.5(a)
"Prospective Buyer Notice" 2.5(b)
"Purchase Notice" 4.1
"Regulatory Problem" 6.4(c)
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
"Regulatory Right" 5.9
"Sale Event" 4.1
"Sale of the Company Rights" 2.7
"Sellers" 4.1
"Selling Stockholder" 2.5(a)
"Subject Securities" 2.6(b)
"Third Party" 7.9
"399" Preamble
"399 Director" 5.1(a)
"399 Stockholders Cumulative Designating Group" 7.4(a)
"399 Stockholders Designating Group" 7.4(a)
"Transferor" 3.1(a)
"Transferor Shares" 3.1(a)
"Triggering Issuance" 7.18
</TABLE>
ARTICLE II
TRANSFERS OF RESTRICTED SECURITIES
2.1 Transfer Restrictions Generally; Securities Act. (a) Each
Stockholder agrees that it will not, directly or indirectly, Transfer any
Restricted Securities except in accordance with the terms of this Agreement. Any
attempt to Transfer or any purported Transfer of any Restricted Securities not
in accordance with the terms of this Agreement shall be null and void and
neither the Company, as the issuer of such securities, nor any transfer agent of
such securities shall give any effect to such attempted Transfer in its stock
records.
(b) Each Stockholder agrees that, in addition to the other
requirements set forth in this Agreement, the Registration Rights Agreement and
in each Stockholder's respective subscription agreement with the Company, it
will not Transfer any Restricted Securities except (i) pursuant to an effective
registration statement under the Securities Act, or (ii) unless such requirement
is waived by the Company, upon receipt by the Company of (A) an opinion of
counsel to the Stockholder (which counsel and opinion are reasonably
satisfactory to the Company), or (B) an opinion of counsel to the Company, in
each case to the effect that no registration statement is required in connection
with such Transfer because of the availability of an exemption from registration
under the Securities Act.
2.2 Legends. (a) Each certificate representing Restricted
Securities held by any Stockholder shall be endorsed with the following legends
and such other legends as may be required by applicable state securities laws:
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<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS, RIGHTS TO REPURCHASE AND TO REQUIRE TRANSFERS
CONTAINED IN AN INVESTORS' AGREEMENT, DATED AS OF SEPTEMBER 24,
1998, AS SUCH AGREEMENT MAY BE AMENDED, MODIFIED OR RESTATED FROM
TIME TO TIME (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
ISSUER HEREOF)."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR (ii) AN APPLICABLE EXEMPTION
FROM REGISTRATION THEREUNDER OR UNDER APPLICABLE STATE SECURITIES
LAWS."
(b) Any certificate issued at any time in exchange or substitution
for any certificate bearing such legends (except a new certificate issued upon
the completion of a Transfer pursuant to a registered public offering under the
Securities Act and made in accordance with the Securities Act) shall also bear
such legends, unless in the opinion of counsel for the Company, the Restricted
Securities represented thereby are no longer subject to the provisions of this
Agreement or, in the opinion of the Company (with advice from counsel to the
Company, as the Company may deem appropriate), the restrictions imposed under
the Securities Act or state securities laws, in which case the applicable legend
(or legends) may be removed.
2.3 Limitations on Repurchases, Dividends, Etc. Each Stockholder
understands that the Company is entering, or may from time to time enter, into
financing agreements which may contain prohibitions, restrictions and
limitations, among other things, on the ability of the Company to purchase any
Restricted Securities (whether pursuant to this Agreement or otherwise), to pay
dividends and to waive, modify or discharge any rights or obligations under this
Agreement.
2.4 Transfers by Stockholders. (a) Each of the CMP Stockholders,
Management Stockholders, Additional Management Stockholders and Additional
Stockholders severally agrees not to Transfer any Restricted Securities, except
(i) to a Permitted Transferee who shall have executed and delivered to the
Company a Joinder Agreement and thereby becomes a party to this Agreement; (ii)
with the approval of the Board acting by Affirmative Board Vote, including,
without limitation, pursuant to a merger or consolidation of the Company; (iii)
in a registered public offering, including pursuant to the exercise of rights,
if any, of such Stockholder under the Registration Rights Agreement or in a Rule
144 Transaction; (iv) to any 399 Stockholder; (v) pursuant to Section 2.5 (Right
of First Refusal), (vi) pursuant to
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<PAGE>
Section 2.6 (Involuntary Transfers), (vii) pursuant to Section 2.7 (Sale of the
Company), (viii) in accordance with the terms of Article III (Rights of
Inclusion) in the capacity of an Offeree or (ix) pursuant to Article IV
(Repurchase of Restricted Securities); provided, however, that no Management
Stockholder or Additional Management Stockholder shall Transfer any Restricted
Securities pursuant to Section 2.5 for a period of five years following the
Closing Date; and provided, further, that no Management Stockholder or
Additional Management Stockholder shall transfer any Unvested Shares except (x)
to a Permitted Transferee who shall have executed and delivered to the Company a
Joinder Agreement and thereby becomes a party to this Agreement or (y) pursuant
to Section 2.6, Section 2.7 or Article IV.
(b) Each of the 399 Stockholders severally agrees that it will not
Transfer any Restricted Securities, except (i) to a Permitted Transferee, who
shall have executed and delivered to the Company a Joinder Agreement and thereby
becomes a party to this Agreement; (ii) pursuant to Section 2.7; (iii) to any
Person subject to compliance with the terms of Article III in the capacity of a
Transferor; (iv) in a registered public offering, including pursuant to the
exercise of rights, if any, of such Stockholder under the Registration Rights
Agreement or in a Rule 144 Transaction; and (v) to John K. Percival who shall
execute a Joinder Agreement, and become a party hereto, as an Additional
Stockholder.
2.5 Right of First Refusal. (a) Except for Transfers otherwise
permitted pursuant to Section 2.4(a), if, pursuant to a written bona fide
third-party offer, any CMP Stockholder, Management Stockholder or Additional
Stockholder desires to Transfer any Restricted Securities (such Transferring CMP
Stockholder, Management Stockholder or Additional Stockholder, a "Selling
Stockholder," and the Restricted Securities proposed to be so transferred, the
"Offered Securities"), prior to any such Transfer it shall give written notice
of the proposed Transfer (the "Notice of Transfer Intention") to the Company and
each of the remaining Stockholders (such parties other than the Company to whom
such Notice of Transfer Intention is given, but excluding the Selling
Stockholder, the "Prospective Buyers"), specifying the types and amounts of
Offered Securities which such Selling Stockholder wishes to transfer, the
proposed purchase price (the "Offer Price") therefor and all other material
terms and conditions of the proposed Transfer, including the identity of the
third party making such offer.
(b) For a period of 60 days following its receipt of the Notice of
Transfer Intention, each of the Prospective Buyers shall have an irrevocable
right and option to purchase, at the Offer Price and on the other terms
specified in the Notice of Transfer Intention, all or any portion of the Offered
Securities up to such Prospective Buyer's Pro Rata portion thereof as determined
by reference to all Stockholders; provided, however, that in the event that any
Stockholder does not purchase any or all of its Pro Rata portion of the Offered
Securities, the other Stockholders shall have the right to purchase such
portion, on a Pro Rata basis as among themselves, until all of such Offered
Securities are purchased or until such other Stockholders do not desire to
purchase any more Offered Securities. The rights pursuant to this Section 2.5(b)
shall be exercisable by delivery of a notice (the "Prospective Buyer Notice")
setting forth the maximum amount of Offered Securities that the relevant
Stockholder wishes to purchase,
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including any amount which would be allocated to such Stockholder in the event
that any other Stockholder does not purchase all or any of its Pro Rata portion,
to the Selling Stockholder, the Company and the other Prospective Buyers and
shall expire if unexercised within such 60-day period, as applicable.
(c) For a period of 30 days following its receipt of the final
Prospective Buyer Notice or, if no Prospective Buyer Notice is so received, for
a period of 90 days following its receipt of the Notice of Transfer Intention,
the Company shall have an irrevocable right and option to purchase, at the Offer
Price and on the other terms specified in the Notice of Transfer Intention, any
or all of the Offered Securities issued by the Company which the Prospective
Buyers have elected not to purchase. The rights of the Company pursuant to this
Section 2.5(c) shall be exercisable by delivery of a notice (the "Company Notice
of Purchase Intention") setting forth the amount of Offered Securities that the
Company wishes to purchase, to the Selling Stockholder and the Prospective
Buyers and shall expire if unexercised within such 60-day or 90-day period, as
applicable.
(d) Notwithstanding the foregoing provisions of this Section 2.5,
unless the Selling Stockholder shall have consented to the purchase of less than
all of the Offered Securities, neither the Company nor the Prospective Buyers
may purchase any Offered Securities pursuant to such foregoing provisions,
unless all of the Offered Securities are to be so purchased by any combination
of Prospective Buyers and the Company.
(e) If all notices required to be given pursuant to the foregoing
provisions of this Section 2.5 have been duly given, and the Prospective Buyers
and the Company determine not to exercise their respective options to purchase
the Offered Securities at the Offer Price and on the other terms specified in
the Notice of Transfer Intention or determine, with the consent of the Selling
Stockholder, to exercise their options to purchase less than all of the Offered
Securities, then the Selling Stockholder shall have the right, for a period of
90 days from the earlier of (i) the expiration of the last applicable exercise
period pursuant to this Section 2.5 and (ii) the date on which such Selling
Stockholder receives notice from the Prospective Buyers and the Company that
none of them will exercise in whole or in part the purchase rights granted
pursuant to this Section 2.5, to sell to the purchaser identified in the Notice
of Transfer Intention the Offered Securities remaining unsold under this Section
2.5 at a price not less than the Offer Price and on the other terms set forth in
the Notice of Transfer Intention; provided, however, that prior to any such
Transfer to such purchaser, such purchaser shall have executed and delivered to
the Company a Joinder Agreement and thereby become a party to this Agreement.
(f) The closing of any purchase by and sale to any Prospective
Buyer or Company pursuant to this Section 2.5 shall take place on such date, not
later than 105 days after the Company's receipt of the Notice of Transfer
Intention with respect to the proposed Transfer, as the parties to such purchase
and sale shall select. At the closing of such purchase and sale, the Selling
Stockholder shall deliver, against delivery of the Offer Price therefor, the
certificates or other instruments evidencing the Offered Securities being sold
accompanied by duly endorsed in
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blank stock powers or duly executed written instruments of Transfer in form
satisfactory to the purchaser thereof , by the Selling Stockholder, free and
clear of any Liens.
2.6 Involuntary Transfers. (a) Upon the occurrence of any event
which would cause any Restricted Securities owned by a Management Stockholder or
an Additional Stockholder to be Transferred by Involuntary Transfer, such
Stockholder (or his legal representative or successor) shall give the Company
written notice thereof stating the terms of such Involuntary Transfer, the
identity of the transferee or proposed transferee, the price or other
consideration, if readily determinable, for which the securities are proposed to
be or have been Transferred and the number and type of securities which are the
subject of such Transfer. After receipt of such notice or, failing such receipt,
after the Company otherwise obtains actual knowledge of such a proposed or
completed Involuntary Transfer, the Company shall have the right and option to
purchase (or to have any designee purchase) all or any portion of such
Restricted Securities, which right shall be exercised by written notice given by
the Company to the transferor (or transferee following the occurrence of any
Involuntary Transfer) within 60 days following the later of (i) the Company's
receipt of such notice or, failing such receipt, the Company's obtaining actual
knowledge of such proposed or completed Transfer and (ii) the date of such
Involuntary Transfer.
(b) In the event that the Company elects not to purchase all of
such Restricted Securities, then the Company shall on or prior to the end of
such 60 day period, notify the 399 Stockholders thereof, such notice to identify
the Securities not purchased by the Company (the "Subject Securities"). For a
period of 30 days after receipt of such notice from the Company, the 399
Stockholders shall have the irrevocable right to purchase any or all of the
Subject Securities, pro rata; provided, however, that in the event any 399
Stockholder does not purchase any or all of its pro rata portion of the Subject
Securities, the remaining 399 Stockholders shall have the right to purchase such
portion pro rata as among themselves until all of the Subject Securities are
purchased or until such persons do not desire to purchase any more Subject
Securities. The right of the 399 Stockholders to purchase Subject Securities
pursuant to this Section 2.6 shall be exercisable by delivery of a notice to the
transferor (or transferee following the occurrence of any Involuntary Transfer)
setting forth the maximum number of Subject Securities that such person wishes
to purchase including any number which would be allocated in the event that any
399 Stockholder does not purchase all or any portion of its pro rata portion.
(c) Any purchase pursuant to this Section 2.6 shall be at the
price and on the terms applicable to such Involuntary Transfer. If the nature of
the event giving rise to such Involuntary Transfer is such that no readily
determinable consideration is to be paid for or assigned to the Transfer of the
Restricted Securities, the price to be paid by the Company (i) for each share of
Restricted Securities (other than Equity Equivalents) shall be the Fair Market
Value thereof as of the date of Transfer and (ii) for each Equity Equivalent
shall be equal to (x) the Fair Market Value of the Common Stock with respect to
which such Equity Equivalent may then be exercised minus (y) the exercise price
then applicable under the terms of such Equity Equivalent. The closing of the
purchase and sale of such Restricted Securities pursuant to this Section 2.6
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shall be held at the place and on the date established by the Company or the 399
Stockholders, as the case may be, which in no event shall be less than 10 nor
more than 45 days from the date on which the Company or the 399 Stockholders, as
the case may be, gives notice of the election to purchase such securities. At
such closing, the Management Stockholder or Additional Stockholder (or, in each
case, his legal representative or successor) shall deliver the certificates
evidencing the Restricted Securities to be purchased by the Company or the 399
Stockholders, as the case may be, accompanied by duly endorsed in blank stock
powers or duly executed instruments of transfer, and any other documents that
are necessary to Transfer to the Company or the 399 Stockholders, as the case
may be, good title to such securities free and clear of all Liens and,
concurrently with such delivery, the Company or the 399 Stockholders, as the
case may be, shall deliver to the transferor thereof the full amount of the
purchase price therefor.
(d) Notwithstanding anything to the contrary contained herein, in
the event a purchase (or the payment of the purchase price) by the Company
pursuant to this Section 2.6 would violate or conflict with any statute, rule,
injunction, regulation, order, judgment or decree applicable to the Company or
any of its Subsidiaries or by which any of them or their respective properties
is bound or affected or would result in any breach of, or constitute a change of
control or a default (or an event which with notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any of the property or assets of the Company or any of its Subsidiaries
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, franchise or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which any of their respective properties is
bound or affected, with the prior written consent of the 399 Stockholders, the
rights of the Company to purchase (or to have any designee purchase) the
Restricted Securities of any Management Stockholder or Additional Stockholder
shall be suspended until the date which falls 60 days following such time as
such prohibition first lapses or is waived and no such default would be caused.
For the purposes of this Section 2.6 only, the date of such lapse or waiver
shall be deemed the date of the Involuntary Transfer for purposes of the
purchase and sale of Restricted Securities pursuant to this Section 2.6. The
Company shall use its reasonable efforts to obtain a waiver of any such
prohibition, but shall not be obligated to incur any additional interest or
other costs or charges or to make any prepayment with respect to any
indebtedness in connection with such efforts.
(e) Notwithstanding anything to the contrary contained in this
Section 2.6, any event giving rise to an Involuntary Transfer which is also
subject to the provisions of Article IV shall be governed by the provisions of
Article IV.
(f) All unvested options, if any, shall automatically terminate
upon an Involuntary Transfer unless otherwise provided in the applicable option
grant.
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2.7 Sale of the Company. (a) If, in order to effect a Sale of the
Company, the 399 Stockholders (i) propose to Transfer to a third party (which is
not an Affiliate of any of the 399 Stockholders) (the "Acquiror") Restricted
Securities that include 50% or more of the shares of Common Stock owned by them
in the aggregate on a Diluted Basis, the 399 Stockholders shall have the right
to require the other Stockholders to Transfer a corresponding percentage of
their Restricted Securities (determined on a class-by-class basis) to such third
party on the same terms, or (ii) propose the Transfer of 50% or more of the
assets (whether by merger, sale or otherwise) of the Company to any such third
party, the 399 Stockholders shall in each case have the right (a "Sale of the
Company Right") to require (x) the Stockholders to take all action necessary or
appropriate (including replacement of the directors or management committee
members designated by such Stockholders) in order to cause the Company to take
all action necessary or appropriate to give effect to such transaction and (y)
the Stockholders to approve such transaction in their capacity as stockholders
of the Company (a transaction described in clause (i) or (ii), a "Sale of the
Company Sale"); provided, that upon the consummation of any transaction
resulting in a sale or transfer of all or substantially all of the assets of the
Company (whether by merger, sale or otherwise), the Company will immediately
distribute all of the net proceeds of such transaction to the Stockholders in
accordance with their respective rights and privileges.
(b) In order to exercise a Sale of the Company Right, the 399
Stockholders shall notify each other Stockholder, such notice to set forth the
terms and conditions of the proposed Sale of the Company Sale. Each such
Stockholder will take all actions reasonably requested by the 399 Stockholders
in connection with the consummation of such Sale of the Company Sale, and within
10 business days of the receipt of such notice (or such longer period of time as
the Stockholders shall designate in such notice), if such transaction is
structured as a sale of assets or a merger, such Stockholders shall approve the
transaction in their capacities as stockholders of the Company, and if such
transaction is a sale of Restricted Securities, such Stockholders shall cause
the applicable percentage of each class of their respective Restricted
Securities to be sold to the Acquiror on the same terms and conditions and for
the same per share or per unit consideration as the Restricted Securities being
sold by the 399 Stockholders; provided, however, that the consideration to be
paid for each Equity Equivalent shall be equal to the price that would be paid
for the shares of Common Stock issuable upon the exercise thereof minus the
exercise price then applicable under the terms of such Equity Equivalent. In
furtherance of, and not in limitation of the foregoing, in connection with a
Sale of the Company Sale, subject to Section 2.7(c), each Stockholder will (i)
raise no objections against the Sale of the Company Sale or the process pursuant
to which it was arranged, (ii) waive any appraisal, dissenter or similar rights
under applicable law, and (iii) execute all documents containing such terms and
conditions as those executed by other Stockholders as directed by the 399
Stockholders.
(c) Unless otherwise agreed in writing by any 399 Stockholder with
respect to the obligations of any other Stockholder, such other Stockholder
shall be severally obligated to join on a Pro Rata basis (based on such
Stockholder's share of the aggregate proceeds paid in
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such Sale of the Company Sale) in any indemnification or other obligations that
the 399 Stockholders agree to in connection with such Sale of the Company Sale,
other than any such obligations that relate specifically to a particular
Stockholder, such as indemnification with respect to representations and
warranties given by a Stockholder regarding such Stockholder's title to and
ownership of Restricted Securities or valid authorization by such Stockholder
with respect to such Sale of the Company Sale; provided that no Stockholder
shall be obligated in connection with such Sale of the Company Sale to agree to
indemnify or hold harmless the prospective transferee(s) with respect to an
amount in excess of the net cash proceeds paid to such Stockholder in connection
with such Sale of the Company Sale. All Stockholders will bear their Pro-Rata
share of the costs and expenses incurred in connection with a Sale of the
Company Sale to the extent such costs are incurred for the benefit of all
Stockholders and are not otherwise paid by the Company or the Acquiror. Costs
incurred by any Stockholder on its own behalf will not be shared by any other
Stockholder.
ARTICLE III
RIGHTS OF INCLUSION
3.1 Rights of Inclusion. (a) Except for any Transfer of Restricted
Securities pursuant to clauses (i), (ii), (iii), (iv) and (v) of Section 2.4(b),
if the 399 Stockholders propose to Transfer, in one or more transactions,
Restricted Securities representing more than 10% of the Restricted Securities
held by all 399 Stockholders as of the date hereof (appropriately adjusted for
any stock dividends, splits, reverse splits, combinations, reclassifications and
the like); provided, that this clause shall apply only to the extent such
Transfers otherwise subject to the Inclusion Right in the aggregate exceed such
10% threshold; to any Person (the "Buyer") (the transferor being referred to
herein is the "Transferor" and the securities proposed to be so transferred, the
"Transferor Shares"), then, as a condition to such Transfer, the Transferor
shall cause the Buyer to include an offer (the "Article III Offer") to each of
the Stockholders holding shares of the same class (and series) as the Transferor
Shares who are not Transferors (collectively, the "Offerees"), to sell to the
Buyer, at the option of each Offeree, that number of shares of the same class of
Restricted Securities as the Transferor, determined in accordance with Section
3.1(b), on the same terms and conditions as are applicable to the Transferor
Shares. (For purposes of this Section 3.1, except as set forth in Section
3.1(b), shares of all classes of Common Stock together with Equity Equivalents
(on an as-if-converted basis), shall be deemed one and the same class and series
of Common Stock.) The Transferor shall provide a written notice (the "Inclusion
Notice") of the Article III Offer to each Offeree, which may accept the Article
III Offer by providing a written notice of acceptance of the Article III Offer
to the Transferor within 30 days after delivery of the Inclusion Notice.
(b) Each Offeree shall have the right (an "Inclusion Right") to
sell pursuant to the Article III Offer a Pro Rata number of its shares of
Restricted Securities (the "Inclusion Shares") as is sold by the Transferor (to
the extent the Transferor's securities are subject to the Inclusion Right);
provided, however, that each Offeree's Inclusion Shares shall include: (i)
first,
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that portion of such Offeree's Vested Shares subject to such Offeree's Inclusion
Right, and (ii) that portion of such Offeree's remaining shares of Restricted
Securities subject to such Offeree's Inclusion Right. Any Offeree which owns
Equity Equivalents may sell pursuant to the Article III Offer, in lieu of shares
of Common Stock, Equity Equivalents representing that number of shares of Common
Stock which it could sell pursuant to its Inclusion Right and the purchase price
therefor shall equal the aggregate price that would be paid for the shares of
Common Stock issuable upon the exercise, exchange or conversion thereof minus
the aggregate exercise, exchange or conversion price under such Equity
Equivalent for such shares of Common Stock.
3.2 Article III Sales. (a) Upon acceptance of the Buyer's Article
III Offer, each Offeree shall, within a reasonable period prior to the closing
of such Article III Sale, deliver to the Transferor a certificate or
certificates representing the shares of Restricted Securities to be sold or
otherwise disposed of pursuant to the Article III Offer by such Offeree, free
and clear of all Liens, and a limited power-of-attorney authorizing the
Transferor to sell or otherwise dispose of such shares pursuant to the terms of
the Article III Offer; provided, however, that in the event that the purchase
and sale of Restricted Securities contemplated by the Article III Offer is not
completed, such certificate(s) and power of attorney shall be returned to the
Offeree promptly upon request by the Offeree.
(b) The Transferor shall have 120 days, commencing on the day the
Inclusion Notice is mailed, in which to sell to the Buyer or otherwise dispose
of, on behalf of itself and the Offerees, up to the number of shares of
Restricted Securities covered by the Article III Offer (and the number of
Transferor Shares). If all such shares are not sold to the Buyer, the
Transferor, at its option, may elect to sell on behalf of itself and the
Offerees such number of shares as the Buyer will purchase, Pro Rata among the
Transferor and the Offerees, as nearly as practicable. The material terms of
such sale, including, without limitation, price and form of consideration, shall
be as set forth in the Inclusion Notice. If at the end of such 120-day period
the Transferor has not completed the sale or other disposition of all the
Transferor Shares and all the Offerees' shares of Restricted Securities proposed
to be sold, the Transferor shall return to each of the Offerees its respective
certificates, if any, representing shares of Restricted Securities which the
Offerees delivered for sale or other disposition pursuant to this Article III
and which were not sold pursuant thereto and the provisions of this Article III
shall continue to be in effect.
(c) Promptly after the consummation of the sale or other
disposition of the Transferor Shares and shares of Restricted Securities of the
Offerees to the Buyer pursuant to the Article III Offer, the Transferor shall
notify the Offerees thereof, and the Buyer shall pay to the Transferor and each
of the Offerees their respective portions of the sales price of the shares sold
or otherwise disposed of pursuant thereto, and shall furnish such other evidence
of the completion of such sale or other disposition and the terms thereof as may
be reasonably requested by the Offerees.
(d) Notwithstanding anything to the contrary contained in this
Article III, except for the Transferor's obligation to return to each Offeree
any certificates representing the
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Offerees' shares of Restricted Securities there shall be no liability on the
part of the Transferor to any Stockholder in the event that the proposed sale
pursuant to this Article III is not consummated for whatever reason. Whether a
sale of any shares is effected pursuant to this Article III by the Transferor is
in the sole and absolute discretion of the Transferor.
ARTICLE IV
REPURCHASE OF RESTRICTED SECURITIES
4.1 Sale Event. (a) In the event that any Management Stockholder
or Additional Management Stockholder shall cease to be employed by (or in the
case of any non-employee ceases to be a director of) the Company or any of its
Subsidiaries for any reason, including death, permanent disability, termination
for Cause or without Cause, voluntary termination, retirement or otherwise (such
cessation of employment or directorship being referred to herein as a "Sale
Event"), but in each case subject to Section 4.4, such Management Stockholder
(or his personal representative) or such Additional Management Stockholder (or
his personal representative) shall promptly notify the Company and the 399
Stockholders of the applicable Sale Event and, within 90 days after the
Company's receipt of such notice, the Company or, at the option of the Company,
any present or future employee or director of the Company or any of its
Subsidiaries who shall have been designated by the Board acting by an
Affirmative Board Vote (a "Company Designee") may, at its option, elect to
purchase the Securities described in the next sentence of this Section 4.1(a),
exercisable by written notice (a "Purchase Notice") delivered to such Management
Stockholder (or his personal representative) or such Additional Management
Stockholder (or his personal representative) (with copies thereof to the 399
Stockholders and, in each case, his respective Permitted Transferees who hold
Management Securities which Management Securities are attributable to the
Management Stockholder or Additional Management Stockholder whose employment or
directorship has ceased (collectively, the "Sellers"). Upon the giving of such
notice, the Sellers shall be obligated to sell to the Company or the Company
Designee those Management Securities (whether Vested Shares or Unvested Shares)
of the Sellers which are designated in the Purchase Notice; provided, however,
that in the event notice of a Sale Event is not given, a Purchase Notice (or
notice from the 399 Stockholders) as described in Section 4.1(b)) may in any
event be given at any time following a Sale Event. The time periods set forth
herein and in Section 4.1(b) below shall be tolled for the duration of any
suspension period under Section 4.4 hereof and the remaining balance of any such
time period shall re-commence as of the end of any such suspension period.
(b) To the extent the Company or any Company Designee fails to
deliver a Purchase Notice or otherwise does not purchase all of the Management
Securities then owned by the Sellers, the 399 Stockholders may, at their option,
exercisable by written notice delivered to the Sellers within 15 days after
delivery of the Purchase Notice (or 100 days after written notice from the
Sellers (or any legal representative) to the Company of the applicable Sale
Event, if no Purchase Notice is given by the Company or any Company Designee),
on a Pro Rata basis (and including on such Pro Rata basis with respect to the
number of Vested Shares or Unvested Shares
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purchasable by each such Person) purchase the Management Securities not so
purchased by the Company which are designated in such written notice from the
399 Stockholders.
4.2 Purchase Price. The purchase price for each share of
Management Securities to be purchased pursuant to Section 4.1 shall be as set
forth below (and such purchase price shall be paid in cash:
(a) as to each Vested Share (provided, that the Sale Event did not
occur as a result of a voluntary termination or a termination for Cause), the
Fair Market Value thereof as of the date of the Sale Event; and
(b) as to each Unvested Share, and each Vested Share (if the Sale
Event occurred as a result of a voluntary termination or a termination for
Cause), the lower of (x) the Fair Market Value thereof as of the date of the
Sale Event or (y) the Original Cost thereof.
4.3 Closing. (a) Subject to Section 4.4, the closing for all
purchases and sales of Management Securities provided for in this Article IV
shall be held at the principal executive offices of the Company at 10:00 a.m.,
local time, on the 30th day after the determination of the purchase price in
respect thereof determined in accordance with Section 4.2 or at such other date
and time as shall have been designated by the Board (acting by Affirmative Board
Vote) and the Seller; provided, however, that if any Seller who has become
obligated to sell Management Securities is deceased on such 30th day as
aforesaid and such deceased person's personal representative shall not have been
appointed and qualified by such date, then unless otherwise agreed to as
provided above, the closing shall be postponed until either of (i) the 10th day
after the appointment and qualification of such personal representative and (ii)
the expiration of 90 days following the death of such Seller.
(b) All Management Securities to be sold pursuant to this Article
IV shall be delivered to the purchaser at the aforesaid closing free and clear
of all Liens. The purchaser will be entitled to receive customary
representations as to title, authority and capacity to sell and to require a
guaranteed signature of the Seller, as applicable. Each Seller hereby appoints
the Company as attorney-in-fact to transfer such shares on the books of the
Company in the event of a sale pursuant to this Article IV. Such Sellers shall
take all such actions as the Company or any other purchaser shall request as
necessary to vest in the Company or any other purchaser at such closing good
title to such shares, free and clear of all Liens.
4.4 Postponement. Notwithstanding anything to the contrary
contained herein, in the event a purchase (or the payment of the purchase price)
by the Company pursuant to this Article IV would:
(a) violate or conflict with any statute, rule, injunction,
regulation, order, judgment or decree applicable to the Company or any of its
Subsidiaries or by which any of them or their respective properties is bound or
affected,
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(b) result in a change of control under, any breach of, or
constitute a default (or an event which with notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any of the property or assets of the Company or any of its Subsidiaries
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, franchise or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which any of their respective properties is
bound or affected, or
(c) in the judgment of the Board, materially jeopardize the
financial condition of the Company or otherwise have a material adverse effect
on the business, condition (financial or otherwise), results of operations or
assets or properties of the Company, then, upon the delivery by the Company of
notice of suspension under this Section 4.4 to each of the Sellers, the rights
of the Company to purchase the Management Securities of the Sellers with respect
to whom the Sale Event has occurred pursuant to this Article IV shall be
suspended until, in the case of clauses (a) or (b) above, the date which falls
30 days following such time as such prohibition first lapses or is waived and no
such default would be caused and, in the case of clause (c) above, the date
which falls 30 days following such time as the Board determines that such
purchase (or payment of the purchase price) would no longer jeopardize the
financial condition of the Company or otherwise have a material adverse effect
on the business, condition (financial or otherwise), results of operations or
assets or properties of the Company. For the purposes of this Section 4.4 only,
the dates determined under the preceding sentence shall be deemed to be the date
of the relevant Sale Event for purposes of the purchase and sale of Management
Securities pursuant to this Article IV.
ARTICLE V
CORPORATE GOVERNANCE
5.1 Board of Directors. (a) From and after the date hereof, each
of the Stockholders shall vote or cause to be voted all of its or his shares of
Class A Common Stock (as described below), at any regular or special meeting of
stockholders called for the purpose of filling positions on the Board, or shall
execute a written consent in lieu of such a meeting of stockholders for the
purpose of filling positions on the Board, and shall take all actions necessary,
to ensure that the Board consists of five members as follows:
(i) up to two individuals (individually, a "399 Director," and
collectively, the "399 Directors") to be designated by the 399
Stockholders; provided, that, at any time, and from time to time, the
399 Stockholders, in their sole discretion, may determine not to
designate one or both of the 399 Directors, in which case such 399
Directors shall be designated by the Nominating Committee;
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(ii) up to two individuals (the "Management Directors") to be
designated by the Management Stockholders who initially shall be Donald
L. Olesen ("Olesen") (but only for so long as he remains
President-National Sales of the Company) and John K. Mangini
("Mangini") (but only for so long as he remains Chief Executive Officer
of the Company); provided, that if either Olesen or Mangini ceases to
serve as a director at any time, the Board shall consist of one
Management Director thereafter (either Olesen or Mangini, as the case
may be, or in the event both such Persons cease to be a director, an
individual to be designated by the Management Stockholders); and
(iii) one individual (a "Disinterested Director") who is not (A)
an Affiliate of any 399 Stockholder or an employee, director or agent
of such 399 Stockholder or Affiliate, (B) employed by the Company or
any Subsidiary of the Company or (C) a stockholder or an Affiliate of
any Stockholder; provided, however, that any of the requirements
contained in (A), (B) or (C) above may be waived by the 399
Stockholders, subject to applicable law. The initial Disinterested
Director shall be Lawrence R. Glenn and thereafter shall be, and any
additional Disinterested Directors (if applicable) shall be, designated
by the Nominating Committee;
provided, however, that (x) effective at the Closing, the Board shall consist of
the individuals set forth on Exhibit B hereto in the categories shown thereon,
(y) the Stockholders shall cause the 399 Directors, the Management Directors and
the Disinterested Director named thereon to be designated and elected as
director and (z) upon the written request of the 399 Stockholders, the
Stockholders shall promptly take all action necessary or appropriate (1) to
increase the composition of the Board by adding a Disinterested Director,
representing a Board of up to six members and (2) to increase the composition of
the Nominating Committee to three members (collectively, the "Nominating
Committee") by adding a second Disinterested Director, representing a Nominating
Committee of up to three members. The Nominating Committee shall initially
consist of one 399 Director and one Disinterested Director, and upon the
Closing, the Nominating Committee shall consist of the individuals set forth on
the aforementioned exhibit in the categories shown thereon. The Nominating
Committee shall act by majority vote; provided, that, if there are less than
three directors on the Nominating Committee, it shall act by the unanimous vote
of such director(s) on the Nominating Committee.
(b) If, prior to his election to the Board pursuant to Section
5.1(a), any person shall be unable or unwilling to serve as a director of the
Company, the group of Stockholders or Nominating Committee who designated such
person shall be entitled to designate a replacement.
(c) If at any time any Person designated as a 399 Director,
Management Director or any Disinterested Director is not then serving as a
director of the Company, upon the written request of the 399 Stockholders or the
Management Stockholders (as the case may be), the Stockholders shall promptly
take all action necessary or appropriate to elect individuals designated by the
399 Stockholders (in the case of any 399 Director) by the Management
Stockholders (in the case of any Management Director), and by the Nominating
Committee (in
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the case of any Disinterested Director) to serve as directors from and after the
time of such request.
5.2 Removal. If:
(a) the 399 Stockholders request that a 399 Director elected as a
director be removed (with or without Cause), by written notice to the other
Stockholders; or
(b) the Management Stockholders request that a Management Director
elected as a director be removed (with or without Cause), by written notice to
the other Stockholders; or
(c) the Nominating Committee requests that a Disinterested
Director (or a 399 Director, if the 399 Stockholders have determined not to
designate a 399 Director, and the Nominating Committee has designated such 399
Director) elected as a director be removed (with or without Cause) by written
notice to other Stockholders, or such director ceases to qualify as a
Disinterested Director; or
(d) a Management Director ceases to qualify as a Management
Director;
then in each such case, such director shall be removed and each Stockholder
agrees to vote all shares of Common Stock owned by such Stockholder and other
securities over which such Stockholder has voting control to effect such removal
or to consent in writing to effect such removal upon such request; provided,
however, that so long as the Company shall be subject to cumulative voting
requirements in accordance with the Charter, no 399 Director or Management
Director may be removed without cause if the votes cast against such director's
removal would be sufficient to cause the election of that director pursuant to
the terms of Section 7.4.
5.3 Vacancies. In the event that a vacancy is created on the Board
at any time by the death, disability, retirement, resignation or removal (with
or without cause) of a director, each Stockholder agrees to vote all shares of
Common Stock owned by such Stockholder and other securities over which such
Stockholder has voting control for the individual designated to fill such
vacancy by whichever of the Stockholders or Nominating Committee designated
and/or approved (pursuant to Section 5.1 hereof) the director whose death,
disability, retirement, resignation or removal (with or without cause) resulted
in such vacancy on the Board in the manner set forth in Section 5.1 hereof;
provided, however, that such other individual so designated may not previously
have been a director of the Company who was removed for cause from the Board.
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5.4 Special Approval Rights. In addition to any other action
requiring an Affirmative Board Vote, so long as the 399 Stockholders have the
right to designate directors under Section 5.1(a), an Affirmative Board Vote
shall be required prior to the Company or any of its Subsidiaries entering into
a Significant Transaction.
5.5 Committees of the Board; Subsidiary Boards. For so long as the
Board shall be comprised of the individuals contemplated by Section 5.1, unless
otherwise agreed to in writing by the 399 Stockholders, the Stockholders shall
take all action necessary or appropriate to cause the Company to have a
compensation and an audit committee each consisting of up to two 399 Directors
and one Disinterested Director. Unless otherwise agreed to by 399, the
Stockholders shall take all action necessary or appropriate to cause each
additional committee of the Board to have the same number of directors and the
same composition as the audit committee. For so long as the 399 Stockholders
shall have the right to designate any directors under Section 5.1(a), at the
request of the 399 Stockholders, the Stockholders shall take all action
necessary or appropriate to cause one director designated by the 399
Stockholders to be elected to the board of directors of each Subsidiary. The
Stockholders agree that they shall take all actions necessary or appropriate to
cause (i) such persons so designated to be directors on each such Subsidiary's
board of directors and (ii) at the direction of the parties so designating each
such director, the removal or replacement of such director from any such board.
The composition of the boards of directors of such Subsidiaries of the Company
shall otherwise be as determined by the Board (acting by Affirmative Board
Vote).
5.6 Observer's Rights. (a) In the event (i) the 399 Stockholders
elect not to exercise, or are prohibited by applicable law from exercising,
their rights to designate either or both of the 399 Directors, or once
appointed, the 399 Stockholders desire to remove one or both of the 399
Directors, the 399 Stockholders shall have the right to have one individual (an
"Observer") attend any meeting of the Board or any committee thereof. The 399
Stockholders shall have the right to appoint an Observer to the board of
directors of any Subsidiary in lieu of designating a director thereto as
provided by Section 5.5. In addition, the CMP Stockholders shall have the right
to appoint an Observer to attend any meeting of the Board or any committee
thereof, such Observer to have all rights and obligations set forth in this
Section 5.6.
(b) An Observer shall not have the right to vote on any matter
presented to the Board or the board of directors of any Subsidiary or any
committee thereof. The Company shall give each Observer written notice of each
meeting thereof at the same time and in the same manner as the members of the
Board or board of directors of any Subsidiary or any committee thereof receive
notice of such meetings, and the Company shall permit each Observer to attend as
an observer all meetings thereof; provided, that in the case of telephonic
meetings, such Observer need receive only actual notice thereof at the same time
and in the same manner as notice is given to the directors.
(c) Each Observer shall be entitled to receive all written
materials and other information given to directors in connection with such
meetings at the same time such materials
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and information are given to directors, and each Observer shall keep such
materials and information confidential. If the Company (or any Significant
Subsidiary) proposes to take any action by written consent in lieu of a meeting
of its board of directors, the Company (or such Significant Subsidiary) shall
give written notice thereof to each Observer prior to the effective date of such
consent describing the nature and substance of such action.
5.7 Action by Written Consent of Stockholders. The parties hereto
agree that whenever any action is proposed to be taken by Stockholders without a
meeting, the Stockholders proposing to act by such consent shall, or shall cause
the Company to, give the 399 Stockholders at least 7 days' prior written notice
(or such shorter notice period as is agreed to in writing) of such proposed
action specifying the action to be taken and the purpose thereof (such notice
requirement shall be deemed satisfied and waived by execution of such consent by
399 Stockholders which hold in the aggregate more than 50% of the shares of
Common Stock on a Diluted Basis held by all 399 Stockholders).
5.8 Designation of Proxy. In order to secure the performance of
the agreements set forth in the provisions of this Article V and in addition to
and not in lieu of Sections 5.1 through 5.3 hereof, each of the Management
Stockholders and Additional Management Stockholders hereby grants to the Chief
Executive Officer of the Company, or any successor Chief Executive Officer of
the Company (the "Management Representative"), an irrevocable proxy (which proxy
is coupled with an interest) to vote at any annual or special meeting of
stockholders, or to take action by written consent in lieu of such meeting with
respect to, all of the shares of Common Stock owned or held of record by the
Management Stockholders and Additional Management Stockholders solely for (a)
the election of directors designated in accordance with Section 5.1, (b) the
removal of directors in accordance with Section 5.2, (c) the election of a
director to fill any vacancy on the Board in accordance with Section 5.3 or (d)
to take the actions specified in this Agreement required in order to cause the
Company to fulfill its obligations under this Agreement. Such proxy shall be in
effect with respect to each share of Common Stock owned or held of record by a
Management Stockholder or Additional Management Stockholder until such time as
such Management Stockholder or Additional Management Stockholder no longer owns
or is the record holder of such share.
5.9 Regulatory Right. If (a) so long as the 399 Stockholders hold
at least 25% of the Common Stock on a Diluted Basis, the 399 Stockholders
determine in their sole discretion that applicable law would not prohibit the
399 Stockholders from exercising the right (the "Regulatory Right") to designate
a majority of the directors of the Board by contract or otherwise, or (b) the
399 Stockholders hold more than 50% of the Class A Common Stock, then
notwithstanding the provisions of Section 5.1 the 399 Stockholders may, upon the
giving of notice thereof to the Company, designate each of the Disinterested
Directors instead of the Nominating Committee and take any and all other actions
otherwise permitted or required to be taken by the Nominating Committee in this
Agreement or otherwise; provided, that from and after the date such notice is
given, the qualifications of a Disinterested Director set forth in clauses (A) -
(C) of Section 5.1(a)(iii) shall no longer be required.
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ARTICLE VI
CERTAIN COVENANTS OF THE PARTIES
6.1 Registration of Common Stock. In the event of a registration
by the Company of Common Stock under the Securities Act, each Stockholder shall,
if requested by the 399 Stockholders, at a meeting convened for the purpose of
amending the Charter, vote: (a) to remove from the Charter requirements, if any
such requirements are at such time imposed thereby, that the Board act by
Affirmative Board Vote, except as otherwise required by law; (b) to remove from
the Charter requirements, if any such requirements are at such time imposed
thereby, relating to preemptive rights with respect to Common Stock; and (c) to
change the number of authorized shares of Common Stock and, if necessary, change
the number of issued and outstanding shares of Common Stock, whether by stock
split, stock dividend or otherwise, or change its par value or effect any other
reclassification, recapitalization or similar event; in the case of each of
clauses (a), (b) and (c) above, as recommended by a majority of the members of
the Board in order to facilitate such registration.
6.2 Management Stockholders; Additional Stockholders. Unless
otherwise consented to by the 399 Stockholders, the parties hereto agree that as
a condition precedent to the issuance by the Company (or transfer to a Company
Designee pursuant to Section 4.1) of shares of Common Stock or of Equity
Equivalents (a) to any employee or director of the Company or its Subsidiaries
or (b) any Person other than any such employee or director, any 399 Stockholder,
any CMP Stockholder, or any Management Stockholder, the Company shall require
such employee or director or other Person to execute and deliver to the Company
a Joinder Agreement and thereby enter into and become a party to this Agreement.
Nothing contained herein nor the ownership of any Restricted Securities shall
confer upon any Management Stockholder or Additional Management Stockholder the
right to employment or to remain in the employ of the Company or any of its
Subsidiaries. Notwithstanding the foregoing, to the extent approved by
Affirmative Board Vote and specified in any Joinder Agreement (or amendment
thereto) pursuant to which any employee or director or other Person who is
deemed to be a Management Stockholder or Additional Stockholder may become a
party hereto, the provisions of this Agreement may be varied to be more or less
restrictive with respect to any such employee or other Person who is deemed to
be a Management Stockholder or Additional Stockholder.
6.3 Stockholder List; Certain Notices. Upon the request of any 399
Stockholder, the Company promptly shall deliver to the requesting Stockholder a
list setting forth the names of all Stockholders and the number of shares of
each class of capital stock owned by each Stockholder. In addition, the Company
shall give the 399 Stockholders prior written notice of (a) the conversion of
any shares of any class of Common Stock and (b) any record transfer of
Restricted Securities, setting forth the name of the transferee and the number
and type of Restricted Securities being so transferred, including without
limitation, any such transfer after which the number of record holders of the
Company's voting stock would be increased from fewer than 50 to 50 or more.
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6.4 Regulatory Compliance Cooperation. (a) Before the Company
redeems, purchases or otherwise acquires, directly or indirectly, or converts or
takes any action with respect to the voting rights of, any shares of any class
of its capital stock or any securities convertible, exchangeable or exercisable
for or into any shares of any class of its capital stock, the Company will give
written notice of such pending action to the 399 Stockholders. Upon the written
request of any 399 Stockholder made within 20 days after its receipt of any such
notice, stating that after giving effect to such action such 399 Stockholder
would have a Regulatory Problem (as defined below), the Company will defer
taking such action for such period (not to extend beyond 45 days after such 399
Stockholder's receipt of the Company's original notice) as such 399 Stockholder
requests to permit it and its Affiliates to reduce the quantity of securities
owned by them in order to avoid the Regulatory Problem. In the event the Company
or any 399 Stockholder is precluded from taking any action under this Agreement
within any allotted period of time as a consequence of this Section, such period
of time shall be extended by the number of days during which the Company or such
399 Stockholder is precluded from acting.
(b) In the event that 399 determines that it has a Regulatory
Problem (as defined below), the Company agrees to take all such actions as are
reasonably requested by 399 in order to (i) effectuate and facilitate any
transfer by the 399 Stockholders or any of 399's Affiliates of any securities of
the Company then held by the 399 Stockholders or such Affiliates to any Person
designated by 399, (ii) permit the 399 Stockholders (or any of their affiliates)
to exchange all or a portion of any voting security then held by them on a
share-for-share basis for shares of a nonvoting security of the Company, which
nonvoting security shall be identical in all respects to the voting security
exchanged for it, except that it shall be nonvoting and shall be convertible
into a voting security on such terms as are requested by the 399 Stockholders in
light of regulatory considerations then prevailing, and (iii) continue and
preserve the respective allocation of the voting interests with respect to the
Company provided for herein, and with respect to 399's and its Affiliates'
ownership of the Company's securities. Such actions may include, but shall not
necessarily be limited to, entering into such additional agreements, adopting
such amendments to the Charter and by-laws of the Company and taking such
additional actions as are reasonably requested by 399 in order to effectuate the
intent of the foregoing.
(c) The Company will not be a party to any merger, consolidation,
recapitalization or other transaction pursuant to which 399 or any of its
Affiliates would be required to take any voting securities, or any securities
convertible, exchangeable or exercisable for or into voting securities, which
might reasonably be expected to cause 399 to have a Regulatory Problem. For
purposes of this Agreement, "Regulatory Problem" means any set of facts or
circumstances wherein it has been asserted by any governmental agency or other
authority, or 399 reasonably believes that, such Person and such Person's
Affiliates own, control or have power over a greater quantity of securities of
any kind issued by the Company than are permitted under any requirement of any
governmental authority.
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6.5 Purchaser Representative. If the Company enters into any
negotiation or transaction involving the issuance of securities of another party
to the Stockholders for which Rule 506 (or any similar rule then in effect)
promulgated under the Securities Act by the Commission may be available with
respect to such negotiation or transaction (including a merger, consolidation or
other reorganization) each Management Stockholder and Additional Stockholder (if
an individual) will, at the request of the Company, appoint a purchaser
representative (as such term is defined in Rule 501 under the Securities Act)
reasonably acceptable to the Company. If any such Management Stockholder or
Additional Stockholder appoints the purchaser representative designated by the
Company, the Company will pay the fees of such purchaser representative, but if
any such Management Stockholder or Additional Stockholder declines to appoint
the purchaser representative designated by the Company, such Management
Stockholder or Additional Stockholder will appoint, at his own expense, another
purchaser representative reasonably acceptable to the Company.
ARTICLE VII
MISCELLANEOUS
7.1 Governing Law. The corporate laws of the State of Delaware
will govern all questions concerning the relative rights of the Company and its
stockholders hereunder. All other questions concerning the construction,
validity and interpretation of this Agreement shall be governed and construed in
accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
7.2 Entire Agreement; Amendments. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
may be amended, modified or supplemented only by a written instrument duly
executed by the Company and the 399 Stockholders, except that (a) any amendment,
modification or supplement that materially, adversely and disproportionately
affects the 399 Stockholders, the CMP Stockholders, the Management Stockholders
or the Additional Stockholders (other than the Additional Management
Stockholders), as the case may be, shall require the consent of the CMP
Stockholders, the Management Stockholders or Additional Stockholders (other than
the Additional Management Stockholders), respectively, and (b) any amendment,
modification or supplement that materially, adversely and disproportionately
affects less than all of the 399 Stockholders, the CMP Stockholders, the
Management Stockholders or Additional Stockholders (other than the Additional
Management Stockholders), as the case may be, shall require the consent of the
399 Stockholders, the CMP Stockholders, the Management Stockholders or the
Additional Stockholders (other than the Additional Management Stockholders) so
affected. In the event of an amendment, modification or supplement of this
Agreement in accordance with its terms, the Stockholders shall cause the Board
to meet within 30 calendar days following such amendment, modification or
supplement, or as soon thereafter as is practicable for the purpose of
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adopting any amendment to the Charter and by-laws of the Company that may be
required as a result of such amendment, modification or supplement to this
Agreement, and, if required, proposing such amendments to the stockholders
entitled to vote thereon. The Stockholders hereby agree to vote their shares to
approve such amendments to the Charter and by-laws of the Company.
7.3 Term. Except as provided below in this Section 7.3, this
Agreement shall automatically and without further action terminate upon the
earliest to occur of (a) a Qualifying Offering or (b) a Sale of the Company;
provided, that upon the occurrence of a Qualifying Offering and prior to the
occurrence of a Sale of the Company, the provisions of Article IV and Article
VII and the prohibition on transfer by any Management Stockholder of any
Unvested Shares set forth in a proviso to Section 2.4(a) shall continue in full
force and effect (together with related definitions).
7.4 Certain Actions. Unless otherwise expressly provided herein,
whenever any action is required under this Agreement by:
(a) the 399 Stockholders (as a group, as opposed to the exercise
by a 399 Stockholder of its individual rights hereunder), it shall be by the
affirmative vote of the holders representing more than 50% of the total number
of votes of Restricted Securities on a Diluted Basis then held by the 399
Stockholders as a group, or as otherwise agreed in writing by the 399
Stockholders as a group; provided, however, that as long as the Company shall be
subject to cumulative voting requirements in accordance with the Charter, the
right of the 399 Stockholders to designate directors for election pursuant to
Section 5.1(a)(i) (when acting pursuant to such right, the "399 Stockholder
Designating Group") shall be exercised in a manner consistent with such
cumulative voting requirement so that any group of 399 Stockholders within the
399 Stockholder Designating Group (a "399 Stockholders Cumulative Designating
Group") shall be entitled to designate one (1) of the 399 Directors to the
extent that (absent provisions in Section 5 regarding designation of directors)
any such 399 Stockholder Cumulative Designating Group would have sufficient
votes to cause the election of at least one (1) director; provided, however,
that for purposes of determining whether or not any such 399 Stockholders
Cumulative Designating Group could cause such election (i) each share of Common
Stock owned by each member of any such 399 Stockholders Cumulative Designating
Group shall be treated as if it were a share of Class A Common, (ii) the number
of shares of Common Stock owned by such 399 Stockholders Cumulative Designating
Group shall be calculated after assuming that each Equity Equivalent owned by
each member of such 399 Stockholders Cumulative Designating Group has been
exercised, converted or exchanged and (iii) it shall be assumed that each of the
members of the 399 Stockholders Cumulative Designating Group will vote each of
their shares of Common Stock on a cumulative basis for a single director;
(b) the CMP Stockholders (as a group, as opposed to the exercise
by a CMP Stockholder of its individual rights hereunder), it shall be by the
affirmative vote of the holders
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of Restricted Securities representing more than 50% of the Restricted Securities
on a Diluted Basis then held by the CMP Stockholders as a group;
(c) the Management Stockholders (as a group, as opposed to the
exercise by a Management Stockholder of its individual rights hereunder), it
shall be by the Management Representative; provided, however, that as long as
the Company shall be subject to cumulative voting requirements in accordance
with the Charter, the right of the Management Stockholders to designate
directors for election pursuant to Section 5.1(a)(ii) (when acting pursuant to
such right, the "Management Stockholders Designating Group") shall be exercised
in a manner consistent with such cumulative voting requirement so that any group
of Management Stockholders within the Management Stockholders Designating Group
(a "Management Stockholders Cumulative Designating Group") shall be entitled to
designate one (1) of the Management Directors to the extent that (absent
provisions in Section 5 regarding designation of directors) any such Management
Stockholders Cumulative Designating Group would have sufficient votes to cause
the election of at least one (1) director; provided, however, that for purposes
of determining whether or not any such Management Stockholders Cumulative
Designating Group could cause such election (i) each share of Common Stock owned
by each member of any such Management Stockholders Cumulative Designating Group
shall be treated as if it were a share of Class A Common, (ii) the number of
shares of Common Stock owned by such Management Stockholders Cumulative
Designating Group shall be calculated after assuming that each Equity Equivalent
owned by each member of such Management Stockholders Cumulative Designating
Group has been exercised, converted or exchanged and (iii) it shall be assumed
that each of the members of the Management Stockholders Cumulative Designating
Group will vote each of their shares of Common Stock on a cumulative basis for a
single director; or
(d) the Additional Stockholders (as a group, as opposed to the
exercise by a Additional Stockholder of its individual rights hereunder), it
shall be by the affirmative vote of the holders of Restricted Securities
representing more than 50% of the Restricted Securities on a Diluted Basis then
held by the Additional Stockholders as a group.
7.5 Inspection. For so long as this Agreement shall remain in
effect, this Agreement shall be made available for inspection by any Stockholder
at the principal executive offices of the Company.
7.6 Recapitalization, Exchanges, Etc., Affecting Restricted
Securities. The provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Restricted Securities or Preferred, to any and
all shares of the Company capital stock or any successor or assign of the
Company (whether by merger, consolidation, sale of assets, or otherwise,
including shares issued by a parent corporation in connection with a triangular
merger) which may be issued in respect of, in exchange for, or in substitution
of, the Restricted Securities and the Preferred, and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
reclassifications and the like occurring after the date hereof.
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7.7 Compliance with Regulations. Whenever a Stockholder is
entitled to purchase Restricted Securities pursuant to the provisions of this
Agreement, any closing time period specified in such provision shall be tolled
until any necessary governmental approval is received including without
limitation, approval under the Hart-Scott-Rodino Antitrust Improvements Act of
1976; provided, that such tolling period shall not exceed 60 days.
7.8 Waiver. No waiver by any party of any term or condition of
this Agreement, in one or more instances, shall be valid unless in writing, and
no such waiver shall be deemed to be construed as a waiver of any subsequent
breach or default of the same or similar nature.
7.9 Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors
and assigns (including, without limitation, transferees of Restricted
Securities); provided, however, that (a) nothing contained herein shall be
construed as granting any CMP Stockholder, Management Stockholder or Additional
Stockholder the right to Transfer any Restricted Securities except in accordance
with this Agreement, (b) any person not a party hereto ("Third Party") which
acquires Restricted Securities in accordance with Section 2.5 and Article III
shall be bound by the provisions of this Agreement as an Additional Stockholder
with respect to such Restricted Securities whether or not such Third Party
acquired such Restricted Securities from a CMP Stockholder, Management
Stockholder or Additional Management Stockholder, except that the provisions of
Article IV shall not apply to the Restricted Securities of such Third Party
(unless such Third Party is also an employee of the Company or any of its
Subsidiaries), (c) none of the provisions of this Agreement shall apply to any
Transfer of Restricted Securities subsequent to a Transfer pursuant to a
registered public offering under the Securities Act made in accordance with the
Securities Act or in a Rule 144 Transaction, and (d) notwithstanding any
Transfer of Restricted Securities by any Stockholder to a 399 Stockholder, CMP
Stockholder, Management Stockholder or Additional Stockholder, only the
provisions of this Agreement which are expressly applicable to such transferee
Stockholder of such Restricted Securities shall be applicable to the Restricted
Securities in the hands of such transferee Stockholder.
7.10 Remedies. In the event of a breach by any party to this
Agreement of its obligations under this Agreement, any party injured by such
breach, in addition to being entitled to exercise all rights granted by law,
including recovery of damages and costs (including reasonable attorneys' fees),
will be entitled to specific performance of its rights under this Agreement. The
parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived.
7.11 Income Tax Withholding. Each Management Stockholder and
Additional Stockholder authorizes the Company to make any required withholding
from such Management
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Stockholder's compensation for the payment of any and all income taxes and other
sums that may be due any governmental authority as a result of the receipt by
the Management Stockholders of compensation income under Section 83 of the
Internal Revenue Code of 1986, as amended, or similar provisions of state or
local law, if required by applicable law, and agrees, if requested by the
Company, and in lieu of all or a portion of such withholding, to pay the Company
in a lump sum such amounts as the Company may be required to remit to any
governmental authority on behalf of the Management Stockholder in respect of any
such taxes and other sums.
7.12 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
7.13 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
7.14 Further Assurances. Each party hereto shall cooperate and
shall take such further action including, but not limited to, any action
specified in this Agreement to cause the Company to fulfill its obligations
under this Agreement, and shall execute and deliver such further documents as
may be reasonably requested by any other party in order to carry out the
provisions and purposes of this Agreement.
7.15 Gender. Whenever the pronouns "he" or "his" are used herein
they shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be construed as though in the singular in
all cases where they would so apply.
7.16 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
7.17 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission or
mailed by prepaid first class mail, return receipt requested, or mailed by
overnight courier prepaid to the parties at the following addresses or facsimile
numbers:
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(i) If to any 399 Stockholder, to:
399 Venture Partners, Inc.
399 Park Avenue - 14th Floor
New York, NY 10043
Facsimile No.: (212) 888-2940
Attn: Michael A. Delaney
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Facsimile No.: (212) 309-6273
Attn: Philip H. Werner, Esq.
(ii) If to the Company, to:
Allied Digital Technologies Corp.
140 Fell Court
Hauppauge, NY 11788
Facsimile No.: (516) 232-5370
Attn: Chief Executive Officer
with a copy to:
399 Venture Partners, Inc.
399 Park Avenue - 14th Floor
New York, NY 10043
Facsimile No.: (212) 888-2940
Attn: Michael A. Delaney
and
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Facsimile No.: (212) 309-6273
Attn: Philip H. Werner, Esq.
35
<PAGE>
(iii) If to any CMP Stockholder, to:
Citicorp Mezzanine Partners, L.P.
399 Park Avenue
New York, New York 10043
Facsimile No.: 212-888-2940
Attn: Richard E. Mayberry, Jr.
and
Fleet Corporate Finance, Inc.
c/o Mainsail Capital
One Federal Street
Mail Stop MA OF D03L
Boston, Massachusetts 02110
Attn: Robert Ziemer
with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Facsimile No.: 212-446-4900
Attn: Eunu Chun, Esq.
(iv) If to a Stockholder other than a 399 Stockholder or
CMP Stockholder, to the address of such Person set
forth in the stock records of the Company.
All such notices, requests and other communications will (w) if delivered
personally to the address as provided in this Section 7.17 be deemed given upon
delivery, (x) if delivered by facsimile transmission to the facsimile number as
provided in this Section 7.17 be deemed given upon receipt, and (y) if delivered
by mail in the manner described above to the address as provided in this Section
7.17 upon the earlier of the third business day following mailing or upon
receipt and (z) if delivered by overnight courier to the address as provided in
this Section 7.17, be deemed given on the earlier of the first business day
following the date sent by such overnight courier or upon receipt (in each case
regardless of whether such notice, request or other communication is received by
any other Person to whom a copy of such notice is to be delivered pursuant to
this Section 7.17). Any party from time to time may change its address,
facsimile number or other information for the purpose of notices to that party
by giving notice specifying such change to the other parties hereto.
7.18 Limited Preemptive Rights. (a) If the Company issues to the
399 Stockholders any shares of Common Stock or any securities containing options
or rights to
36
<PAGE>
acquire any shares of Common Stock or any securities convertible or exchangeable
for Common Stock (a "Triggering Issuance"), in each case, after the date hereof,
other than pursuant to a Permitted Issuance (as defined in the Warrants), other
than pursuant to Purchase Rights (as defined in the Warrants) and other than
pursuant to any transaction or event in which the provisions of Sections 2C, 2D
or 2E of the Warrants would be operative, the Company will offer to sell to each
of the CMP Stockholders, if any, a number of such securities ("Preemptive
Offered Shares") so that the Ownership Ratio of each such CMP Stockholder
immediately after such Triggering Issuance of such securities to the 399
Stockholders would be equal to the Ownership Ratio of each such CMP Stockholder
immediately prior to such Triggering Issuance of securities to the 399
Stockholders. The Company shall give at least 30 days' prior written notice to
each CMP Stockholder (as of the date such notice is sent) of any proposed
Triggering Issuance to the 399 Stockholders, which notice shall disclose in
reasonable detail the proposed terms and conditions of such Triggering Issuance,
including a proposed closing date (the "Issuance Notice"). Each CMP Stockholder
will be entitled to purchase the Preemptive Offered Shares at the same price, on
the same terms, and at the same time as the securities are issued to the 399
Stockholders pursuant to such Triggering Issuance by delivery of written notice
to the Company of such election within 15 days after delivery of the Issuance
Notice (the "Election Notice"); provided, that if more than one type of security
(including any debt or hybrid security) was issued to the 399 Stockholders
pursuant to such Triggering Issuance, each CMP Stockholder shall, if it
exercises its rights pursuant to this Section 7.18, purchase such securities in
the same ratio as issued to the 399 Stockholders pursuant to such Triggering
Issuance. If any CMP Stockholder has elected to purchase any Preemptive Offered
Shares, the sale of such shares shall be consummated on the proposed closing
date set forth in the Issuance Notice or as soon as practical thereafter, but in
any event within 10 days after such proposed closing date. In the event that any
CMP Stockholder elects to purchase Preemptive Offered Shares, at the request of
the CMP Stockholders (which request shall be included in the Election Notice),
the Company shall issue to the CMP Stockholders which have elected to purchase
Preemptive Offered Shares, in lieu of the securities constituting Preemptive
Offered Shares, (a) a warrant substantially in the form of the Warrant for an
issuance price per underlying share of Common Stock equal to the per share
consideration paid by the 399 Stockholder in such Triggering Issuance or (b)
nonvoting securities which shall otherwise be identical in all respects to such
securities constituting Preemptive Offered Shares, except that it (i) shall be
nonvoting and (ii) shall be convertible into the voting security constituting
Preemptive Offered Shares on such terms as are required by the CMP Stockholders
in light of the applicable regulatory considerations then prevailing. In the
event any CMP Stockholder elects not to exercise its rights pursuant to this
Section 7.18, fails to timely give an Election Notice or fails to purchase the
securities allocated to it at the closing designated therefor by the Company,
such CMP Stockholder shall cease to have any rights hereunder with respect to
such Triggering Issuance and no other CMP Stockholder shall have the right to
purchase the securities offered to such CMP Stockholder. This Section 7.18 will
terminate automatically and be of no further force and effect, upon the
consummation of an underwritten public offering registered under the Securities
Act of the Common Stock.
37
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
ALLIED DIGITAL TECHNOLOGIES CORP.
By: /s/ John K. Mangini
--------------------------------------------
Name: John K. Mangini
Title: President and Chief Executive Officer
399 VENTURE PARTNERS, INC.
By: /s/ Ian D. Highet
--------------------------------------------
Name: Ian D. Highet
Title: Vice President
MANAGEMENT MEMBERS
/s/ John Kenneth Mangini
-----------------------------------------------
John Kenneth Mangini
/s/ Donald L. Olesen
-----------------------------------------------
Donald L. Olesen
/s/ Steven D. Granat
-----------------------------------------------
Steven D. Granat
/s/ Brian Wilson
-----------------------------------------------
Brian Wilson
[Signature Page to Investors' Agreement]
<PAGE>
/s/ Emily M. Hill
-----------------------------------------------
Emily M. Hill
/s/ David R. Conrad
-----------------------------------------------
David R. Conrad
/s/ Charles A. Mantione
-----------------------------------------------
Charles A. Mantione
/s/ John J. Mangini
-----------------------------------------------
John J. Mangini
/s/ Edward Simek
-----------------------------------------------
Edward Simek
[Signature Page to Investors' Agreement]
<PAGE>
CITICORP MEZZANINE PARTNERS, L.P.
By: Citicorp Capital Investors, Ltd.
Its: General Partner
By: /s/ Richard E. Mayberry, Jr.
--------------------------------------------
Name: Richard E. Mayberry, Jr.
Title: Vice President
FLEET CORPORATE FINANCE, INC.
By: /s/ Robert Ziemer
-------------------------------------------
Name: Robert Ziemer
Title: Director of Mainsail Capital
[Signature Page to Investors' Agreement]
<PAGE>
Annex I - Equity Ownership Chart
Allied Digital Technologies Corp.
Equity Ownership Chart
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Name Class A Common Class B Common Series A Preferred Warrant Initial Paid-
Total Total Total Total in Capital
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John Kenneth Mangini 26,250 ($131,250) 0 0 0 $131,250
- ------------------------------------------------------------------------------------------------------------------
Donald L. Olesen 26,250 ($131,250) 0 0 0 $131,250
- ------------------------------------------------------------------------------------------------------------------
Steven D. Granat 2,500 ($12,500) 0 0 0 $12,500
- ------------------------------------------------------------------------------------------------------------------
Brian Wilson 5,000 ($25,000) 0 0 0 $25,000
- ------------------------------------------------------------------------------------------------------------------
Emily Moore Hill 3,750 ($18,750) 0 0 0 $18,750
- ------------------------------------------------------------------------------------------------------------------
David Ray Conrad 3,750 ($18,750) 0 0 0 $18,750
- ------------------------------------------------------------------------------------------------------------------
Charles A. Mantione 2,500 ($12,500) 0 0 0 $12,500
- ------------------------------------------------------------------------------------------------------------------
John James Mangini 2,500 ($12,500) 0 0 0 $12,500
- ------------------------------------------------------------------------------------------------------------------
Edward Simek 2,500 ($12,500) 0 0 0 $12,500
- ------------------------------------------------------------------------------------------------------------------
Subtotal Management 75,000 ($375,000) 0 0 0 $375,000
- ------------------------------------------------------------------------------------------------------------------
399 74,000 ($370,000) 351,000 165,000 0 $18,625,000
($1,755,000) ($16,500,000)
- ------------------------------------------------------------------------------------------------------------------
CMP 0 0 0 43,479 0
- ------------------------------------------------------------------------------------------------------------------
Total 149,000 ($745,000) 351,000 165,000 43,479 $19,000,000
($1,755,000) ($16,500,000)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit A
Form of Joinder Agreement
Allied Digital Technologies Corp.
140 Fell Court
Hauppauge, New York 11788
Attention: President
Gentlemen:
In consideration of the [transfer] [issuance] to the undersigned of
_____ shares of Class A Common Stock, par value $.01 per share, [Describe any
other security being transferred or issued] of Allied Digital Technologies
Corp., a Delaware corporation (the "Company"), the undersigned [represents that
it is a Permitted Transferee of [Insert name of transferor] and]* agrees that,
as of the date written below, [he] [she] [it] shall become a party to [, and a
Permitted Transferee as defined in,]* that certain Investors' Agreement dated as
of _____ __, 1998, as such agreement may have been or may be amended from time
to time (the "Agreement"), among the Company and the persons named therein, and
[as a Permitted Transferee shall be fully bound by, and subject to, all of the
covenants, terms and conditions of the Agreement that were applicable to the
undersigned's transferor,]* [shall be fully bound by, and subject to, the
provisions of the Agreement that are applicable to the Management Stockholders
(other than Article IV [include parenthetical if transferee is not an employee
and is not to be an employee of the Company or any of its Subsidiaries]),]**
[shall be fully bound by, and subject to, all of the covenants, terms and
conditions of the Agreement--list exceptions, if applicable,]***as though an
original party thereto and shall be deemed a [CMP Stockholder] [Management
Stockholder] [Additional Management Stockholder] [Additional Stockholder] [399
Stockholder] for purposes thereof.
Executed as of the day of , .
TRANSFEREE:
------------------------
Address:
------------------------
------------------------
- ----------
* Include if transferee is a Permitted Transferee
** Include if transferee is a Third Party
*** Include if transferee is an Additional Stockholder
<PAGE>
Exhibit B
Board of Directors
399 Directors
-------------------
Michael Delaney
Ian D. Highet
Management Directors
---------------------
John K. Mangini
Donald L. Olesen
Disinterested Director
----------------------
Lawrence R. Glenn
Nominating Committee
1. Lawrence R. Glenn
2. Ian D. Highet
<PAGE>
EXHIBIT 7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALLIED DIGITAL TECHNOLOGIES CORP.
REGISTRATION RIGHTS AGREEMENT
by and among
Allied Digital Technologies Corp.
and
Its Stockholders
dated as of
September 24, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Registration Rights Agreement
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS ................................................................................1
ARTICLE I
DEFINITIONS.....................................................................1
1.1 Defined Terms in the Investors' Agreement..............................1
1.2 Definitions............................................................1
ARTICLE II
DEMAND REGISTRATIONS............................................................3
2.1 Requests for Registration..............................................3
2.2 Long-Form Registrations................................................4
2.3 Short-Form Registrations...............................................4
2.4 Effective Registration Statement.......................................4
2.5 Priority on Demand Registrations.......................................5
2.6 Selection of Underwriters..............................................7
2.7 Black-Out Rights and Postponement......................................7
ARTICLE III
PIGGYBACK REGISTRATIONS.........................................................7
3.1 Right to Piggyback.....................................................7
3.2 Piggyback Expenses.....................................................8
3.3 Priority on Primary Registrations......................................8
3.4 Priority on Secondary Registrations....................................8
ARTICLE IV...............................................................................9
HOLDBACK AGREEMENTS.............................................................9
4.1 Holdback...............................................................9
4.2 Company Holdback.......................................................9
ARTICLE V...............................................................................10
REGISTRATION PROCEDURES........................................................10
ARTICLE VI..............................................................................14
REGISTRATION EXPENSES..........................................................14
6.1 Fees Generally........................................................14
6.2 Counsel Fees..........................................................15
</TABLE>
-i-
<PAGE>
Registration Rights Agreement
<TABLE>
<S> <C>
ARTICLE VII.............................................................................15
UNDERWRITTEN OFFERINGS.........................................................15
7.1 Demand Underwritten Offerings.........................................15
7.2 Incidental Underwritten Offerings.....................................16
ARTICLE VIII............................................................................16
INDEMNIFICATION................................................................16
8.1 Indemnification by the Company........................................16
8.2 Indemnification by a Selling Stockholder..............................18
8.3 Indemnification Procedure.............................................18
8.4 Underwriting Agreement................................................19
8.5 Contribution..........................................................20
8.6 Periodic Payments.....................................................21
ARTICLE IX..............................................................................21
RULE 144 ......................................................................21
ARTICLE X...............................................................................21
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS....................................21
ARTICLE XI..............................................................................22
MISCELLANEOUS..................................................................22
11.1 No Inconsistent Agreements............................................22
11.2 Adjustments Affecting Registrable Securities..........................22
11.3 Specific Performance..................................................22
11.4 Actions Taken; Amendments and Waivers.................................22
11.5 Successors and Assigns................................................23
11.6 Notices...............................................................23
11.7 Headings; Certain Conventions.........................................24
11.8 Gender................................................................24
11.9 Invalid Provisions....................................................25
11.10 Governing Law.........................................................25
11.11 Consent to Jurisdiction and Service of Process........................25
11.12 Waiver of Jury Trial..................................................26
11.13 Counterparts..........................................................26
</TABLE>
<TABLE>
<S> <C>
Exhibit A-1 -- Form of Registration Rights Joinder Agreement for Permitted Transferees
Exhibit A-2 -- Form of Registration Rights Joinder Agreement for Additional Stockholders
Exhibit A-3 -- Form of Registration Rights Joinder Agreement for Transferees under
Section 2.4 of the Investors' Agreement
</TABLE>
ii
<PAGE>
Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of September
24, 1998, among Allied Digital Technologies Corp., a Delaware corporation (the
"Company"), 399 Venture Partners, Inc., a Delaware corporation ("399"), Citicorp
Mezzanine Partners, L.P. ("CMP"), a Delaware limited partnership, Fleet
Corporate Finance, Inc. ("FCF"), a Massachusetts corporation, and each
individual whose name appears on the signature pages hereto under the heading
"Management Member" (individually, a "Management Member" and collectively, the
"Management Members") and any other Person who executes a Joinder Agreement and
thereby becomes a party to this Agreement. Certain capitalized terms used herein
are defined in Article I hereto.
RECITALS
WHEREAS, the Company and Analog Acquisition Corp. ("AAC") have entered
into that certain Agreement and Plan of Merger, dated May 5, 1998 (as the same
may be amended, supplemented or otherwise modified from time to time, the
"Merger Agreement"), pursuant to which, among other things, AAC is being merged
with and into the Company with the Company continuing as the surviving
corporation;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering an Investors'
Agreement among the parties hereto and dated the date hereof (as the same may be
amended, supplemented or otherwise modified from time to time, the "Investors'
Agreement").
NOW, THEREFORE, in connection with the Merger Agreement, the Investors'
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms in the Investors' Agreement. Unless otherwise defined
herein, capitalized terms used in this Agreement shall have the respective
meanings assigned to them in the Investors' Agreement.
1.2 Definitions.
The following defined terms, when used in this Agreement, shall have
the respective meanings set forth below (such definitions to be equally
applicable to both singular and plural forms of the terms defined):
"Additional Stockholder" has the meaning assigned to such term in the
Investors' Agreement, but only to the extent that (a) the Company has granted
the relevant Person registration rights as a Stockholder hereunder and (b) such
Person has executed a Registration Rights Joinder Agreement.
<PAGE>
Registration Rights Agreement
"Black-Out Notice" has the meaning assigned to it in Section 2.7(b).
"Commission" means Securities and Exchange Commission.
"Demand Registration" means (a) any Qualifying Offering requested in
accordance with Section 2.1(a), (b) any Long-Form Registration, Short-Form
Registration or 415 Registration requested in accordance with Section 2.1(b).
"Demand Registration Request" has the meaning assigned to it in Section
2.1(b).
"415 Registration" has the meaning assigned to it in Section 2.1(b).
"Initial Public Offering" or "IPO" means the first time a registration
statement filed under the Securities Act with the Commission respecting an
offering, whether primary or secondary, of Common Stock (or securities
convertible, exercisable or exchangeable for or into Common Stock or rights to
acquire Common Stock or such securities), which is underwritten on a firmly
committed basis, is declared effective and the securities so registered are
issued and sold.
"Long-Form Registration" has the meaning assigned to it in Section
2.1(b).
"Merger Agreement" has the meaning assigned to it in the recitals
hereto.
"Piggyback Holders" has the meaning assigned to it in Section 3.1.
"Piggyback Registration" has the meaning assigned to it in Section 3.l.
"Registration Expenses" has the meaning assigned to it in Section 6.l.
"Registrable Securities" means, at any time, (a) the shares of Common
Stock then issued and outstanding or which are issuable upon the conversion,
exercise or exchange of any Equity Equivalents or capital stock (b) any then
outstanding securities into which shares of Common Stock shall have been changed
and (c) any then outstanding securities resulting from any reclassification or
recapitalization of Common Stock; provided, however, that "Registrable
Securities" shall not include any shares of Common Stock or other securities
obtained or transferred pursuant to an effective registration statement under
the Securities Act or in a Rule 144 Transaction; and provided further, however,
that "Registrable Securities" shall not include any shares of Common Stock or
other securities which are held by a Person who is not a Stockholder.
2
<PAGE>
Registration Rights Agreement
"Registration Rights Joinder Agreement" means a Registration Rights
Joinder Agreement in the form attached hereto as Exhibits A-1 to A-3.
"Required 399 Stockholders" means, as of the date of any determination
thereof, 399 Stockholders which then hold Registrable Securities representing at
least a majority (by number of shares) of the Registrable Securities, on a
Diluted Basis, then held by all 399 Stockholders.
"Required CMP Stockholders" means, as of the date of any determination
thereof, CMP Stockholders which then hold Registrable Securities representing at
least a majority (by number of shares) of the Registrable Securities, on a
Diluted Basis, then held by all CMP Stockholders.
"Short-Form Registration" has the meaning assigned to it in Section
2.1(b).
"Takedown" has the meaning assigned to it in Section 2.8.
ARTICLE II
DEMAND REGISTRATIONS
2.1 Requests for Registration.
(a) If the Company has not theretofore effected an Initial Public
Offering, then, at any time from and after the date hereof the Required 399
Stockholders shall have the right to require that the Company effect a
Qualifying Offering by delivery of a written request therefor to the Company.
Such a request shall specify the number of Registrable Securities proposed to
be sold by the Required 399 Stockholders. The Company shall use its best
efforts to effect the Qualifying Offering within 120 days after its receipt
of such request. Within 10 days after its receipt of such request, the
Company will give written notice of such request to all other holders of
Registrable Securities. Subject to the provisions of Section 2.5, the Company
will use all reasonable efforts to include in the Qualifying Offering (i) all
Registrable Securities which the Required 399 Stockholders have requested to
be included therein and (ii) all other Registrable Securities which the
Stockholders have requested in writing, within 20 days after receipt of the
Company's notice, to be included therein. The Company will pay all
Registration Expenses in connection with a Qualifying Offering requested in
accordance with this Section.
(b) Subject to Sections 2.2, 2.3 and 2.7, at any time from and after the
date which is 120 days after the closing of an Initial Public Offering, the
Required 399 Stockholders shall have the right to require the Company to file
a registration statement (a "Demand Registration") under the Securities Act
of all or part of their Registrable Securities (i) on Form S-1 or S-2 or any
similar
3
<PAGE>
Registration Rights Agreement
long-form registration statement (any such registration, a "Long-Form
Registration"), or (ii) on Form S-3 or any similar short-form registration
statement (any such registration, a "Short-Form Registration"), if the
Company qualifies to use such short form, or (iii) on any applicable form
pursuant to Rule 415 of the Securities Act (a "415 Registration") by delivery
of a written request therefor to the Company (a "Demand Registration
Request"). Subject to Sections 2.2 and 2.3, at any time from and after the
earlier of (x) the fifth anniversary of the date hereof and (y) the date
which is 120 days after the closing of an Initial Public Offering, the
Required CMP Stockholders shall have the right to require the Company to file
(i) one Long-Form Registration and (ii) Short-Form Registrations, if the
Company qualifies to use such short form; provided, that, for purposes of the
rights afforded under this sentence, Required CMP Stockholders shall not be
deemed to include FCF and its Permitted Transferees. Each request for a
Demand Registration shall specify the number of Registrable Securities
proposed to be sold by the Required 399 Stockholders or the Required CMP
Stockholders, as the case may be, and shall specify the intended method of
disposition thereof. Within 10 days after its receipt of any such request,
the Company will give written notice of such request to all other holders of
Registrable Securities. Subject to the provisions of Section 2.5, the Company
will use its best efforts to effect the registration under the Securities Act
on the form requested by the Required 399 Stockholders or the Required CMP
Stockholders, as the case may be, and to include in such registration, (i)
all Registrable Securities which the Required 399 Stockholders or the
Required CMP Stockholders, as the case may be, have so requested to be
included therein and (ii) all other Registrable Securities which the
Stockholders have requested in writing, within 30 days after receipt of the
Company's notice, to be included therein.
(c) If the Required 399 Stockholders request a Demand Registration
pursuant to Section 2.1(a) or 2.1(b) or if the Required CMP Stockholders
request a Demand Registration pursuant to Section 2.1(b), they may, at any
time prior to the effective date of the registration statement relating to
such Demand Registration, revoke such request by providing written notice to
the Company.
(d) The Company shall, as expeditiously as possible following a Demand
Registration Request, use its best efforts to (i) effect such registration
under the Securities Act of the Registrable Securities which the Company has
been so requested to register, for distribution in accordance with the
intended method of distribution, and (ii) if requested by the Required 399
Stockholders, obtain acceleration of the effective date of the registration
statement relating to such registration.
2.2 Long-Form Registrations. In addition to their right to request a
Qualifying Offering, the Required 399 Stockholders will be entitled to request
up to three Long-Form Registrations pursuant to Section 2.1(b). The Company will
pay all Registration Expenses in connection with any such Long-Form
Registration. All Long-Form Registrations (unless otherwise
4
<PAGE>
Registration Rights Agreement
requested by the Required 399 Stockholders or the Required CMP Stockholders, as
the case may be) shall be underwritten registrations.
2.3 Short-Form Registrations. In addition to their right to request
Long-Form Registrations, the Required 399 Stockholders and the Required CMP
Stockholders will be entitled to request an unlimited number of Short-Form
Registrations. The Company will pay all Registration Expenses in connection with
any such Short-Form Registration. Demand Registrations will be Short-Form
Registrations whenever the Company is qualified to use Form S-3 or any similar
short-form registration statement. Once the Company has become subject to the
reporting requirements of the Exchange Act, the Company will use its reasonable
best efforts to make Short-Form Registrations available for the sale of
Registrable Securities.
2.4 Effective Registration Statement. No Demand Registration shall be
deemed to have been requested or effected for purposes of Sections 2.1(a) and
2.2:
(a) unless a registration statement with respect thereto has become
effective;
(b) if, after it has become effective, any stop order, injunction or other
order or requirement of the Commission or any other governmental agency
or court for any reason, affecting any of the Registrable Securities
covered by such registration statement, is threatened in writing or
issued by the Commission or other governmental agency or court;
(c) if the Company declines to effect such Demand Registration pursuant to
Section 2.7(a) or delivers a Black-Out Notice with respect to such
requested Demand Registration;
(d) if the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such requested
Demand Registration are not satisfied by reason of a failure by or
inability of the Company to satisfy any of such conditions, or the
occurrence of an event outside the reasonable control of the Required
399 Stockholders or Required CMP Stockholders, as the case may be;
(e) if the Required 399 Stockholders or Required CMP Stockholders, as the
case may be, have delivered to the
5
<PAGE>
Registration Rights Agreement
Company the revocation notice contemplated by Section 2.1(c); or
(f) other than in the case of a Qualifying Offering, if the Required 399
Stockholders or Required CMP Stockholders, as the case may be, are not
able to register and sell at least 70% of the amount of Registrable
Securities requested to be included in the Demand Registration;
provided, that the Company will pay all Registration Expenses in connection with
any Demand Registration if pursuant to this Section 2.4 the registration is
deemed not to have been requested or effected.
2.5 Priority on Demand Registrations.
(a) Without the written consent of the Required 399 Stockholders, the
Company (i) will not include in any Long-Form Registrations, Short-Form
Registrations and 415 Registrations requested pursuant to Section 2.1(b), any
securities which are not Registrable Securities and (ii) will not include in
any Qualifying Offering any securities, other than Registrable Securities or
shares of Common Stock to be sold by the Company.
(b) If the Required 399 Stockholders and other Stockholders request
Registrable Securities to be included in a Demand Registration which is an
underwritten offering and the managing underwriter advises the Company in
writing that in its opinion the number of Registrable Securities requested to
be included exceeds the number of Registrable Securities which can be sold in
such offering within a price range acceptable to the Required 399
Stockholders or the Required CMP Stockholders, as the case may be, the
Company will include any securities to be sold in such Demand Registration in
the following order:
(i) in the case of a Qualifying Offering, (x) first, subject to
Section 2.5(a), the securities the Company proposes to sell; (y)
second, the Registrable Securities requested to be included in
such registration by the Stockholders, provided, that if the
managing underwriter determines in good faith that a lower number
of Registrable Securities requested to be included by the
Stockholders should be included, then only that lower number of
Registrable Securities requested to be included by the
Stockholders shall be included in such registration, and the
Stockholders shall participate in the registration on a pro rata
basis in accordance with the number of Registrable Securities
requested to be included in such registration by each such
Stockholder, provided, further, that if the managing underwriter
determines in good faith that a lower number of Registrable
Securities held by Management Stockholders and
6
<PAGE>
Registration Rights Agreement
Additional Management Stockholders than such pro rata portion
should be included, then such lower number shall be included and,
as a result thereof, a greater number of Registrable Securities
owned by the other Stockholders may be sold; and (z) third, any
securities other than Registrable Securities to be sold by persons
other than the Company included pursuant to Section 2.5(a) hereof.
(ii) in the case of any Demand Registration other than a Qualifying
Offering, (w) first, the Registrable Securities owned by the
Stockholders and (x) second, any securities other than Registrable
Securities to be sold by persons other than the Company included
pursuant to Section 2.5(a) hereof, provided, that, if the managing
underwriter determines in good faith that a lower number of
Registrable Securities held by Management Stockholders and
Additional Management Stockholders then such pro rata portion
should be included, then such lower number shall be included and,
as a result thereof, a greater number of Registrable Securities
owned by the other Stockholders may be sold; (y) third, subject to
Section 2.5(a), the securities the Company proposes to sell; and
(z) fourth, any securities other than Registrable Securities to be
sold by persons other than the Company included pursuant to
Section 2.5(a) hereof.
(c) Any Person other than Stockholders including any securities in such
registration pursuant to Article II hereof must pay its share of the
Registration Expenses as provided in Article VI hereof.
2.6 Selection of Underwriters. The Required 399 Stockholders will have
the right to select the underwriters and the managing underwriter to administer
any Demand Registration (which underwriters and managing underwriter shall be
reasonably acceptable to the Company).
2.7 Black-Out Rights and Postponement.
(a) The Company shall not be required to effect a Demand Registration if
the Company, within the 90-day period preceding the date of a request for a
Demand Registration, has effected a registration of securities in which the
Required 399 Stockholders were entitled to participate to the fullest extent
pursuant to Demand Registration rights under Article II or Piggyback
Registration rights under Article III.
(b) The Company may, upon written notice (a "Black-Out Notice") to the
Required 399 Stockholders or Required CMP Stockholders, as the case may be,
requesting a Demand Registration, require the Required 399 Stockholders or
Required CMP Stockholders, as the case may be, to withdraw such Demand
Registration upon the good faith determination by the Company that such
postponement is necessary (i) to avoid disclosure of material non-public
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Registration Rights Agreement
information or (ii) as a result of a pending material financing or
acquisition transaction, and, in each case, the Required 399 Stockholders or
Required CMP Stockholders, as the case may be, may not request another Demand
Registration for a period of up to 60 days, as specified by the Company in
such Black-Out Notice. The Company may only give a Black-Out Notice where the
giving of such notice has been specifically approved by the Board which for
so long as the 399 Stockholders shall exercise their right to designate
directors, shall require Affirmative Board Vote. Upon receipt of a Black-Out
Notice, the related Demand Registration shall be deemed to be rescinded and
retracted and shall not be counted as a Demand Registration for any purpose.
The Company may not deliver more than two Black-Out Notices in any 12-month
period.
2.8 415 Registrations.
(a) The Required 399 Stockholders will be entitled to request one (1)
415 Registration in which the Company will pay all Registration Expenses.
Subject to the availability of required financial information, within 45 days
after the Company receives written notice of a request for a 415
Registration, the Company shall file with the SEC a registration statement
under the Securities Act for the 415 Registration. The Company shall use its
best efforts to cause the 415 Registration to be declared effective under the
Securities Act as soon as practical after filing, and once effective, the
Company shall (subject to the provisions of clause (ii) below) cause such 415
Registration to remain effective for such time period as is specified in such
request, but for no time period longer than the period ending on the earlier
of (i) the third anniversary of the date of filing of the 415 Registration,
(ii) the date on which all Registrable Securities requested to be included in
any Takedown (as defined below) have been sold pursuant to the 415
Registration or (iii) the date as of which there are no longer any
Registrable Securities requested to be included in any Takedown (as defined
below) in existence.
(b) If the Required 399 Stockholders notify the Company in writing that
they intend to effect the sale of all or substantially all of the Registrable
Securities held by such holders pursuant to a single integrated offering
pursuant to a then effective registration statement for a 415 Registration (a
"Takedown"), the Company and each holder of Registrable Securities shall not
effect any public sale or distribution (including sales pursuant to Rule 144)
of any of the Company's equity securities, or any securities convertible into
or exchangeable or exercisable for any such equity securities, during the
90-day period beginning on the date such notice of a Takedown is received.
(c) If in connection with any Takedown the managing underwriters
(selected in accordance with clause (d) below) advise the Company that, in
their opinion, the number of Registrable Securities and, if permitted
hereunder, other securities (if any) requested to be included in such
Takedown exceeds the number of Registrable Securities and other securities,
if any, which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such Takedown (i)
first, the number of Registrable Securities requested
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Registration Rights Agreement
to be included in such Takedown by all holders thereof, pro rata, if
necessary, among such holders of Registrable Securities based on the number
of shares of Registrable Securities owned by each such holder and requested
to be included in such Takedown, and (ii) second, any other securities of the
Company requested to be included in such Takedown by all holders thereof, pro
rata, if necessary, on the basis of the number of shares of such other
securities owned by each such holder.
(d) The Required 399 Stockholders shall have the right to retain and
select an investment banker and manager to administer the 415 Registration
and any Takedown pursuant thereto.
(e) The Company will pay all Registration Expenses in connection with
any such 415 Registration (including, without limitation, all fees and
expenses of the investment banker and manager) (excluding discounts and
commissions).
ARTICLE III
PIGGYBACK REGISTRATIONS
3.1 Right to Piggyback. Whenever the Company proposes (other than
pursuant to a Demand Registration or an Initial Public Offering (unless
otherwise agreed by the Company)) to register (whether for the Company's own
account or for the account of any other Person) any of its equity securities
under the Securities Act (other than on Forms S-4 or S-8 or any successor forms)
(a "Piggyback Registration"), the Company will give prompt written notice to all
399 Stockholders, CMP Stockholders, Management Stockholders and Additional
Stockholders (the "Piggyback Holders") of its intention to effect such a
registration. Such notice shall offer each Piggyback Holder the opportunity to
register, on the same terms and conditions available to the Company, such number
of such Piggyback Holder's Registrable Securities as such Piggyback Holder may
request. The Company will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein by the Piggyback Holders within 30 days after their receipt of
the Company's notice, subject to the provisions of Sections 3.3 and 3.4.
3.2 Piggyback Expenses. The Registration Expenses of the holders of
Registrable Securities will be paid by the Company in all Piggyback
Registrations.
3.3 Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriter advises the Company in writing that in its opinion the number of
securities requested to be included in such registration is such that the
success of the offering would be materially and adversely affected, the Company
will include any securities to be sold in such Piggyback Registration in the
following order: (a) first, the securities which the Company proposes to sell;
(b) second, the Registrable
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Registration Rights Agreement
Securities requested to be included in such registration by the Piggyback
Holders, provided that if the managing underwriter determines in good faith that
a lower number of Registrable Securities should be included, then the Company
shall be required to include in such registration only that lower number of
Registrable Securities, and the Piggyback Holders shall participate in such
registration on a pro rata basis in accordance with the number of Registrable
Securities requested to be included in such registration by each Piggyback
Holder, provided, further, that if the managing underwriter determines in good
faith that a lower number of Registrable Securities held by Management
Stockholders and Additional Management Stockholders than such pro rata portion
should be included, then such lower number shall be included and, as a result
thereof, a greater number of Registrable Securities owned by the other
Stockholders may be sold; and (c) third, any other securities proposed to be
included in such registration.
3.4 Priority on Secondary Registrations. If a Piggyback Registration is
an underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriter advises the Company in writing that in
their opinion the number of Registrable Securities requested to be included
exceeds the number of Registrable Securities which can be included in such
registration within a price range acceptable to the holders of the Company's
securities on whose behalf the registration is being effected, the Company will
include any securities to be sold in such registration in the following order:
(a) first, the securities which such holders propose to sell; (b) second, the
Registrable Securities requested to be included in such registration by the
Piggyback Holders, provided that if the managing underwriter determines in good
faith that a lower number of Registrable Securities should be included, then the
Company shall be required to include in such registration only that lower number
of Registrable Securities, and the Piggyback Holders shall participate in such
registration on a pro rata basis in accordance with the number of Registrable
Securities requested to be included in such registration by each Piggyback
Holder, provided, further, that if the managing underwriter determines in good
faith that a lower number of Registrable Securities held by Management
Stockholders and Additional Management Stockholders than such pro rata portion
should be included, then such lower number shall be included and, as a result
thereof, a greater number of Registrable Securities owned by the other
Stockholders may be sold; and (c) third, any other securities proposed to be
included in such registration.
ARTICLE IV
HOLDBACK AGREEMENTS
4.1 Holdback. Each holder of Registrable Securities agrees not to
effect any public sale or distribution of Registrable Securities, or any
securities convertible, exchangeable or exercisable for or into Registrable
Securities, during the seven days prior to, and the time period reasonably
requested by the managing underwriter (not to exceed 180 days) beginning on, the
effective date of (a) an Initial Public Offering, (b) any underwritten Demand
Registration or (c) any
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Registration Rights Agreement
underwritten Piggyback Registration in which such holder had an opportunity to
participate without cutback under Article III hereof (in each case except as
part of such Initial Public Offering or underwritten registration), unless the
managing underwriter of such Initial Public Offering or underwritten
registration otherwise agrees.
4.2 Company Holdback. The Company agrees (a) not to effect any public
sale or distribution of its equity securities, or any securities convertible,
exchangeable or exercisable for or into such securities, during the 14 days
prior to, and during the 180-day period beginning on, the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration in
which holders of Registrable Securities are selling stockholders (except as part
of such underwritten registration or pursuant to registration on Form S-4 or S-8
or any similar successor form), unless the managing underwriter of such
underwritten Demand Registration or underwritten Piggyback Registration
otherwise agrees, and (b) to use all reasonable efforts to cause each holder of
at least 5% (on a Diluted Basis) of its equity securities to agree not to effect
any public sale or distribution of any such equity securities or any securities
convertible, exchangeable or exercisable for or into such equity securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the managing underwriter of such underwritten
Demand Registration or underwritten Piggyback Registration otherwise agrees.
ARTICLE V
REGISTRATION PROCEDURES
5.1 Procedures. Whenever the Stockholders have requested that any
Registrable Securities be registered in accordance with Article II or III, the
Company will use all reasonable efforts to effect the registration and the sale
of such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company as expeditiously as
possible will (or, in the case of clause (p) below, will not):
(a) prepare and file with the Commission a registration statement with
respect to such Qualifying Offering or such Registrable Securities, as the
case may be (such registration statement to include in each case all
information which the holders of the Registrable Securities to be registered
thereby, if any, shall reasonably request) and use all reasonable efforts to
cause such registration statement to become effective, provided that as
promptly as practicable before filing a registration statement or prospectus
or any amendments or supplements thereto, the Company will (i) furnish copies
of all such documents proposed to be filed to one counsel selected by the
Required 399 Stockholders, and the Company shall not file any such documents
to which any such relevant counsel shall have reasonably objected on the
grounds that such document does not comply in all material respects with the
requirements of the Securities Act, and (ii) notify each 399 Stockholder, in
the case of a Qualifying Offering requested pursuant Section 2.1(a), and each
holder of
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Registration Rights Agreement
Registrable Securities covered by such registration statement, in all other
cases, of (x) any request by the Commission to amend such registration
statement or amend or supplement any prospectus, or (y) any stop order issued
or threatened by the Commission, and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered;
(b) (i) 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 at all times during the period commencing on the effective date of
such registration statement and ending on the first date as of which all
Registrable Securities (and all shares of Common Stock to be sold by the
Company, in the case of a Qualifying Offering requested pursuant to Section
2.1(a)) covered by such registration statement are sold in accordance with
the intended plan of distribution set forth in such registration statement
and (ii) comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(c) furnish, without charge, (i) in the case of a Qualifying Offering
requested pursuant to Section 2.1(a), to each 399 Stockholder, five conformed
copies of such registration statement, each amendment and supplement thereto
and the prospectus included in such registration statement (including each
preliminary prospectus and, in the case of two of such copies, including all
exhibits thereto and documents incorporated by reference therein), and (ii)
in all other cases, to each seller of Registrable Securities covered by such
registration statement, such number of conformed copies of such registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus and, in
each case, including all exhibits thereto and documents incorporated by
reference therein) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify the Registrable
Securities, if any, covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as any seller thereof shall
reasonably request, to keep such registration or qualification in effect for
so long as such registration statement remains in effect and to do any and
all other acts and things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of any
such Registrable Securities owned by such seller; provided, however, that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
clause (d), (ii) subject itself to taxation in any such jurisdiction or (iii)
consent to general service of process in any such jurisdiction;
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Registration Rights Agreement
(e) furnish to each seller of the Registrable Securities, if any,
covered by such registration statement a signed copy, addressed to such
seller (and the underwriters, if any) of an opinion of counsel for the
Company or special counsel to the selling stockholders, dated the effective
date of such registration statement (and, if such registration statement
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), reasonably satisfactory in form and substance to
such seller, covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) as are
customarily covered in opinions of issuer's counsel delivered to the
underwriters in underwritten public offerings, and such other legal matters
as the seller (or the underwriters, if any) may reasonably request;
(f) notify each 399 Stockholder (in the case of a Qualifying Offering
requested pursuant to Section 2.1(a)) and each seller of Registrable
Securities covered by such registration statement (in all other cases), at a
time when a prospectus relating to such Qualifying Offering or Registrable
Securities (as the case may be) is required to be delivered under the
Securities Act, of the occurrence of any event known to the Company as a
result of which the prospectus included in such registration statement, as
then in effect, contains an untrue statement of a material fact or omits to
state any fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made; and, at the request of any seller of Registrable Securities
covered by such registration statement, (i) the Company will prepare and
furnish such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made and (ii) the Company shall extend the period during
which such registration statement shall be maintained effective by the number
of days during the period from and including the date of the giving of such
notice to such seller to the date when the Company made available to such
seller an appropriately amended or supplemented prospectus;
(g) cause the Registrable Securities, if any, covered by such
registration statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed and to enter into
such customary agreements as may be required in furtherance thereof,
including without limitation listing applications and indemnification
agreements in customary form;
(h) provide a transfer agent and registrar for the Registrable
Securities, if any, covered by such registration statement not later than the
effective date of such registration statement;
(i) enter into such customary arrangements and take all such other
actions as the holders of a majority (by number of shares) of the Registrable
Securities, if any, covered by such registration statement or the
underwriters, if any, reasonably request in order to expedite or facilitate
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Registration Rights Agreement
the Qualifying Offering or the disposition of such Registrable Securities
(including using its best efforts to effect a stock split or a combination of
shares);
(j) make available for inspection by any seller of Registrable
Securities covered by such registration statement, any underwriter
participating in any disposition of securities pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company and all correspondence between the
Commission and the Company, its counsel or auditors and all memoranda
relating to discussions with the Commission or its staff in connection with
such registration statement, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement;
(k) subject to the other provisions hereof, use all reasonable efforts
to cause the Registrable Securities, if any, covered by such registration
statement to be registered with or approved by such governmental agencies or
authorities or self-regulatory organizations as may be necessary to enable
the sellers thereof to consummate the disposition of such Registrable
Securities;
(l) use all reasonable efforts to obtain a "cold comfort" letter, dated
the effective date of such registration statement (and, if such registration
includes an underwritten offering, dated the date of the closing under the
underwriting agreement), signed by the independent public accountants who
have certified the Company's financial statements included in such
registration statement, addressed to the Company, to each seller of the
Registrable Securities (if any) covered by such registration statement, and
to the underwriters, if any, covering substantially the same matters with
respect to such registration statement (and the prospectus included therein)
and with respect to events subsequent to the date of such financial
statements, as are customarily covered in accountants' letters delivered to
the underwriters in underwritten public offerings of securities and such
other financial matters as any such seller or the underwriters, if any, may
reasonably request;
(m) otherwise use all reasonable efforts to comply with all applicable
rules and regulations of the Commission and make available to its security
holders, in each case as soon as practicable, an earnings statement covering
a period of at least twelve months, beginning with the first month after the
effective date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;
(n) permit any holder of Registrable Securities covered by such
registration statement, which holder, in the sole judgment, exercised in good
faith, of such holder might be deemed to be a controlling person of the
Company (within the meaning of the Securities Act or the Exchange Act) to
participate in the preparation of such registration statement and to include
therein
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Registration Rights Agreement
material, furnished to the Company in writing, which in the reasonable
judgment of such holder should be included and which is reasonably acceptable
to the Company;
(o) use all reasonable efforts to obtain the lifting at the earliest
possible time of any stop order suspending the effectiveness of such
registration statement or of any order preventing or suspending the use of
any preliminary prospectus included therein;
(p) at any time file or make any amendment to such registration
statement, or any amendment of or supplement to the prospectus included
therein (including amendments of the documents incorporated by reference into
the prospectus), (i) of which each 399 Stockholder and the managing
underwriters (in the case of a Qualifying Offering requested pursuant to
Section 2.1(a)) or each seller of Registrable Securities covered by such
registration statement or the managing underwriters, if any (in all other
cases), shall not have previously been advised and furnished a copy or (ii)
to which the Required 399 Stockholders, the managing underwriters or counsel
for the Required 399 Stockholders or the managing underwriters (in the case
of a Qualifying Offering requested pursuant to Section 2.1(a)), or the
sellers of a majority (by number of shares) of the Registrable Securities
covered by such registration statement, the managing underwriters (if any) or
counsel for such sellers or any such managing underwriters (in all other
cases), shall reasonably object;
(q) make such representations and warranties (subject to appropriate
disclosure schedule exceptions) to the sellers of the Registrable Securities,
if any, covered by such registration statement and the underwriters, if any,
in form, substance and scope as are customarily made by issuers to
underwriters and selling holders, as the case may be, in underwritten public
offerings of substantially the same type; and
(r) if such registration statement refers to any seller of Registrable
Securities covered thereby by name or otherwise as the holder of any
securities of the Company then (whether or not such seller is or might be
deemed to be a controlling person of the Company), (i) at the request of such
seller, insert therein language, in form and substance reasonably
satisfactory to such seller, the Company and the managing underwriters, if
any, to the effect that the holding by such seller of such securities is not
to be construed as a recommendation by such seller of the investment quality
of the Registrable Securities or the Company's other securities covered
thereby and that such holding does not imply that such seller will assist in
meeting any future financial requirements of the Company, or (ii) in the
event that such reference to such seller by name or otherwise is not required
by the Securities Act, any similar Federal or state statute, or any rule or
regulation of any regulatory body having jurisdiction over the offering, at
the request of such seller, delete the reference to such seller.
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Registration Rights Agreement
ARTICLE VI
REGISTRATION EXPENSES
6.1 Fees Generally. All expenses incident to the Company's performance
of or compliance with this Agreement, including, without limitation, internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any liability insurance,
the expenses and fees for listing securities on one or more securities exchanges
in connection with a Qualifying Offering or pursuant to clause (g) of Article V,
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding underwriting fees, discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses") shall be borne by the Company, except
that each Stockholder shall pay any underwriting fees, discounts or commissions
attributable to the sale of its Registrable Securities.
6.2 Counsel Fees. In connection with each Demand Registration, the
Company will reimburse the 399 Stockholders for the reasonable fees and
disbursements of one counsel selected by the Required 399 Stockholders.
ARTICLE VII
UNDERWRITTEN OFFERINGS
7.1 Demand Underwritten Offerings. If requested by the underwriters for
any underwritten offering of Registrable Securities pursuant to a Demand
Registration, the Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be satisfactory in substance
and form to the Required 399 Stockholders or the Required CMP Stockholders, as
the case may be, requesting such Demand Registration (or, in the case of a
Qualifying Offering requested pursuant to Section 2.1(a), the holders of a
majority (by number of shares) of the Registrable Securities included in such
Demand Registration) and the underwriters, to contain such representations and
warranties by the Company and such other terms as are generally included in
agreements of this type, including indemnities customarily included in such
agreements, and to be otherwise reasonably satisfactory in form and substance to
the Company. The holders of the Registrable Securities to be distributed by such
underwriters will cooperate in good faith with the Company in the negotiation of
the underwriting agreement. The holders of the Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that any or all of the representations and
warranties by, and the other
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Registration Rights Agreement
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement also be
conditions precedent to the obligations of such holders of Registrable
Securities. The Company shall cooperate with any such holder of Registrable
Securities in order to limit any representations or warranties to, or agreements
with, the Company or the underwriters to be made by such holder only to
representations, warranties or agreements regarding such holder, such holder's
Registrable Securities, such holder's intended method of distribution and any
other representation required by applicable law.
7.2 Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its equity securities under the Securities Act as
contemplated by Article III and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Piggyback Holder as provided in Article III, arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such Piggyback
Holder, subject to the limitations set forth in Article III, among the
securities to be distributed by such underwriters. The holders of the
Registrable Securities to be distributed by such underwriters may be parties to
the underwriting agreement between the Company and such underwriters, and may,
at their option, require that any or all of the representations and warranties
by, and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of such holders
of Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement also be
conditions precedent to the obligations of such holders of Registrable
Securities. The Company shall cooperate with any such holder of Registrable
Securities in order to limit any representations or warranties to, or agreements
with, the Company or the underwriters to be made by such holder only to
representations, warranties or agreements regarding such holder, such holder's
Registrable Securities, such holder's intended method of distribution and any
other representation required by applicable law.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the fullest extent permitted by law, each of the holders of
any Registrable Securities covered by a registration statement that has been
filed with the Commission pursuant to this Agreement, and each underwriter for
such holder, each other Person, if any, who controls such holder or underwriter
within the meaning of the Securities Act or the Exchange Act, and each of their
respective directors, general partners and officers, as follows:
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Registration Rights Agreement
(a) against any and all loss, liability, claim, damage or expense (other
than amounts paid in settlement) incurred by such Person arising out of
or based upon an untrue statement or alleged untrue statement of a
material fact contained in such registration statement (or any
amendment or supplement thereto), including all documents incorporated
therein by reference, or in any preliminary prospectus or prospectus
included therein (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(b) against any and all loss, liability, claim, damage and expense incurred
by such Person to the extent of the aggregate amount paid in settlement
of any litigation, or any investigation or proceeding by any
governmental agency or body, in each case whether commenced or
threatened, or of any claim whatsoever, that is based upon any such
untrue statement or omission or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company (which consent shall not be unreasonably withheld or
delayed); and
(c) against any and all expense incurred by such Person in connection with
investigating, preparing or defending against any litigation or any
investigation or proceeding by any governmental agency or body, in each
case whether commenced or threatened in writing, or against any claim
whatsoever, that is based upon any such untrue statement or omission or
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under clause (a) or (b) above;
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of or based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such holder expressly for use in the preparation of
any registration statement (or any amendment or supplement thereto), including
all documents incorporated therein by reference, or in any preliminary
prospectus or prospectus included therein (or any amendment or supplement
thereto); and provided further, however, that the Company will not be liable to
any holder of Registrable Securities (or any other indemnified Person) under the
indemnity agreement in this Section 8.1, with respect to any preliminary
prospectus or the final prospectus or the final prospectus as amended or
supplemented, as the case may be, to the extent that
18
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Registration Rights Agreement
any such loss, liability, claim, damage or expense of such holder (or other
indemnified Person) results from the fact that such holder sold Registrable
Securities to a Person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final prospectus or of the
final prospectus as then amended or supplemented, whichever is most recent, if
the Company has previously and timely furnished copies thereof to such holder.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or any other Person eligible
for indemnification under this Section 8.1, and shall survive the transfer of
such securities by such seller.
8.2 Indemnification by a Selling Stockholder. In connection with any
registration statement in which a holder of Registrable Securities is
participating, each such holder agrees to severally and not jointly indemnify
and hold harmless (in the same manner and to the same extent as set forth in
Section 8.1 of this Agreement), to the extent permitted by law, the Company,
each underwriter for any such holder and their respective directors, officers
and controlling Persons, and their respective directors, officers and general
partners, with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary, final or
summary prospectus included therein, or any amendment or supplement thereto, or
to any such prospectus, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information that relates only to such holder or the plan of distribution that is
expressly furnished to the Company by or on behalf of such holder for use in the
preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or such underwriter or holder, as the case may be, or any of their respective
directors, officers, controlling Persons or general partners and shall survive
the transfer of Registrable Securities by such holder. With respect to each
claim pursuant to this Section 8.2, each holder's maximum liability under this
Section 8.2 shall be limited to an amount equal to the net proceeds actually
received by such holder (after deducting any underwriting fees, discount and
expenses) from the sale of Registrable Securities being sold pursuant to such
registration statement or prospectus by such holder.
8.3 Indemnification Procedure. Within 10 days after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding involving a claim referred to in Section 8.1 or Section 8.2, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under Section 8.1 or Section 8.2 except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action or proceeding is brought against an indemnified party, the
indemnifying party will be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to the
extent that it may wish, with counsel
19
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Registration Rights Agreement
reasonably satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party for any legal fees and expenses subsequently incurred by the latter in
connection with the defense thereof, unless in such indemnified party's
reasonable judgment an actual or potential conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, in
which case the indemnifying party shall not be liable for the fees and expenses
of (i) in the case of a claim referred to in Section 8.1, more than one counsel
(in addition to any local counsel) for all indemnified parties selected by the
holders of a majority (by number of shares) of the Registrable Securities held
by such indemnified parties, or (ii) in the case of a claim referred to in
Section 8.2, more than one counsel (in addition to any local counsel) for the
Company, in each case in connection with any one action or separate but similar
or related actions or proceedings. An indemnifying party who is not entitled to
(pursuant to the immediately preceding sentence), or elects not to, assume the
defense of a claim will not be obligated to pay the fees and expenses of more
than one counsel (in addition to any local counsel) for all parties indemnified
by such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party an actual or potential conflict of interest
may exist between such indemnified party and any other of such indemnified
parties with respect to such claim, in which event the indemnifying party shall
be obligated to pay the fees and expenses of such additional counsel or counsels
as may be reasonable in light of such conflict. The indemnifying party will not,
without the prior written consent of each indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit, investigation or proceeding in respect of which
indemnification may be sought hereunder (whether or not such indemnified party
or any Person who controls such indemnified party is a party to such claim,
action, suit, investigation or proceeding), unless such settlement, compromise
or consent includes an unconditional release of such indemnified party from all
liability arising out of such claim, action, suit, investigation or proceeding.
Notwithstanding anything to the contrary set forth herein, and without limiting
any of the rights set forth above, in any event any indemnified party will have
the right to retain, at its own expense, counsel with respect to the defense of
a claim.
8.4 Underwriting Agreement. The Company, and each holder of Registrable
Securities requesting registration of all or any part of such holder's
Registrable Securities pursuant to Article II or Article III, shall provide for
the foregoing indemnity (with appropriate modifications) in any underwriting
agreement entered into in connection with a Demand Registration or a Piggyback
Registration with respect to any required registration or other qualification of
Registrable Securities under any Federal or state law or regulation of any
governmental authority.
8.5 Contribution. If the indemnification provided for in Sections 8.1
and 8.2 of this Agreement is unavailable to hold harmless an indemnified party
under such Sections, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses, claims,
damages, liabilities or expenses referred to in Section 8.1 or Section 8.2
20
<PAGE>
Registration Rights Agreement
of this Agreement in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party, on the one hand, and the
indemnified party, on the other hand, from such offering of securities. If,
however, the allocation provided in the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the indemnifying party, on the one hand, and the indemnified party, on
the other hand, as well as any other relevant equitable considerations. Without
limiting the generality of the foregoing, the relative fault shall be determined
by reference to, among other things, the parties' relative knowledge and access
to information concerning the matter with respect to which the claim was
asserted and the opportunity to correct and prevent any statement or omission,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statements or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 8.5
were to be determined by pro rata or per capita allocation (even if the
underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the first and second sentences of this Section 8.5. The amount
paid by an indemnified party as a result of the losses, claims, damages,
liabilities or expenses referred to in the first sentence of this Section 8.5
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim (which shall be limited as provided in Section 8.3 of this Agreement if
the indemnifying party has assumed the defense of any such action in accordance
with the provisions thereof) which is the subject of this Section 8.5. Promptly
after receipt by an indemnified party under this Section 8.5 of notice of the
commencement of any action against such party in respect of which a claim for
contribution may be made against an indemnifying party under this Section 8.5,
such indemnified party shall notify the indemnifying party in writing of the
commencement thereof if the notice specified in Section 8.3 of this Agreement
has not been given with respect to such action; provided that the omission to so
notify the indemnifying party shall not relieve the indemnifying party from any
liability which it may otherwise have to any indemnified party under this
Section 8.5, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. The Company and each holder of
Registrable Securities agrees with each other and the underwriters of the
Registrable Securities, if requested by such underwriters, that (a) the
underwriters' portion of such contribution shall not exceed the underwriting
discount and (b) that the amount of any contribution shall not exceed an amount
equal to the net proceeds actually received by such indemnifying party from the
sale of Registrable Securities in the offering to which the losses, liabilities,
claims, damages or expenses of the indemnified parties relate. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
21
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Registration Rights Agreement
8.6 Periodic Payments. The indemnification required by this Article
VIII shall be made by periodic payments of the amount thereof during the course
of the relevant investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
ARTICLE IX
RULE 144
9.1 Compliance. If the Company shall have filed a registration
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Company covenants that it will file the reports required to be filed by it under
the Securities Act and the Exchange Act (or, if the Company is not required to
file such reports, it will, upon the request of any holder of Registrable
Securities, make publicly available other information), and it will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
shares of Registrable Securities without registration under the Securities Act
in compliance with (a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
ARTICLE X
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
10.1 Participation. No holder of Registrable Securities may participate
in any underwritten registration hereunder unless such holder (a) agrees to sell
such holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Person or Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements, escrow agreements and other
documents reasonably required under the terms of such underwriting arrangements
and consistent with the provisions of this Agreement.
22
<PAGE>
Registration Rights Agreement
ARTICLE XI
MISCELLANEOUS
11.1 No Inconsistent Agreements. The Company represents and warrants
that it does not currently have, and covenants that it will not hereafter enter
into, any agreement which is inconsistent with, or would otherwise restrict the
performance by the Company of, its obligations hereunder.
11.2 Adjustments Affecting Registrable Securities. The Company will use
all reasonable efforts not to take any action, and not to fail to take any
action which it may properly take, with respect to its securities if such action
or failure to act would adversely affect (a) the ability of the holders of
Registrable Securities to include Registrable Securities in a registration
undertaken pursuant to this Agreement or (b) to the extent within the Company's
control, would adversely affect the marketability of such Registrable Securities
in any such registration (it being understood that the actions referred to in
this Section 11.2 include effecting a stock split or a combination of shares).
11.3 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy that may be available to any of them at law or equity; provided, however,
that each of the parties hereto agrees to provide the other parties with written
notice at least two business days prior to filing any motion or other pleading
seeking a temporary restraining order, a temporary or permanent injunction,
specific performance, or any other equitable remedy and to give the other
parties and their counsel a reasonable opportunity to attend and participate in
any judicial or administrative hearing or other proceeding held to adjudicate or
rule upon any such motion or pleading.
11.4 Actions Taken; Amendments and Waivers. Except as otherwise
provided herein, no modification, amendment or waiver of any provision of this
Agreement will be effective against the Company or any holder of Registrable
Securities, unless such modification, amendment or waiver is approved in writing
by the Company, the Required 399 Stockholders and Stockholders (other than the
399 Stockholders) which then hold in the aggregate more than 50% of the
Registrable Securities held by such Stockholders on a Diluted Basis; provided,
that, no such modification, amendment or waiver may eliminate the right of the
CMP Stockholders to request a Demand Registration or modify or adjust any
provisions governing the priorities set forth in Sections 2.5, 3.3 or 3.4 of
this Agreement without the prior written consent of the Required CMP
Stockholders. Each of the Stockholders and the Company shall be bound by each
modification, amendment or waiver authorized in accordance with this Section
11.4, regardless of whether the certificates evidencing the Registrable
Securities shall have been marked to indicate such modification, amendment or
waiver. The failure of any party hereto to enforce any of the provisions of this
Agreement will in no way be
23
<PAGE>
Registration Rights Agreement
construed as a waiver of such provisions and will not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
11.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns. In addition, and whether or not any express
assignment has been made, the provisions of this Agreement which are for the
benefit of purchasers or holders of Registrable Securities are also for the
benefit of, and enforceable by, any subsequent holder of Registrable Securities,
except to the extent reserved to or by the transferor in connection with any
such transfer; provided, however, that the benefits of this Agreement shall
inure to and be enforceable by any transferee of Registrable Securities only if
such transferee shall have acquired such Registrable Securities in accordance
with the terms of the Investors' Agreement and shall have executed a
Registration Rights Joinder Agreement.
11.6 Notices.
(a) All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission or mailed (by
registered or certified mail, postage prepaid, return receipt requested) or
delivered by reputable overnight courier, fee prepaid, to the parties at the
following addresses or facsimile numbers:
If to any 399 Stockholder, to:
399 Venture Partners, Inc.
399 Park Avenue
New York, New York 10022
Facsimile No.: (212) 888-2940
Attn: Michael A. Delaney
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: 212-309-6273
Attn: Philip H. Werner, Esq.
24
<PAGE>
Registration Rights Agreement
If to the Company, to:
Allied Digital Technologies Corp.
140 Fell Court
Hauppauge, NY 11788
Facsimile No.: (516) 232-5370
Attn: Chief Executive Officer
with a copy to:
399 Venture Partners, Inc.
399 Park Avenue
New York, New York 10022
Facsimile No.: (212) 888-2940
Attn: Michael A. Delaney
If to any CMP Stockholder, to:
Citicorp Mezzanine Partners, L.P.
399 Park Avenue
New York, New York 10043
Facsimile No.: 212-888-2940
Attn: Richard E. Mayberry, Jr.
and
Fleet Corporate Finance, Inc.
c/o Mainsail Capital
One Federal Street
Mail Stop MA OF D03L
Boston, Massachusetts 02110
Attn: Robert Ziemer
with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Facsimile No.: 212-446-4900
Attn: Eunu Chun, Esq.
25
<PAGE>
Registration Rights Agreement
If to any Management Stockholder or Additional Stockholders, to the
address on file with the Company.
(b) All such notices, requests and other communications will be deemed
delivered upon receipt. Any party hereto may from time to time change its
address, facsimile number or other information for the purpose of notices to
such party by giving notice specifying such change to the other parties
hereto in accordance with Section 11.6(a).
11.7 Headings; Certain Conventions. The headings used in this Agreement
are for convenience of reference only and shall not define, limit or otherwise
affect any of the terms or provisions hereof. Unless the context otherwise
expressly requires, all references herein to Articles, Sections and Exhibits are
to Articles and Sections of, and Exhibits to, this Agreement. The words
"herein," "hereunder" and "hereof" and words of similar import refer to this
Agreement as a whole and not to any particular Section or provision. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation".
11.8 Gender. Whenever the pronouns "he" or "his" are used herein they
shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be construed as though in the singular in
all cases where they would so apply.
11.9 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance here from and (iv) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a part
of this Agreement a legal, valid and enforceable provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible.
11.10 Governing Law. The corporate laws of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders hereunder. All other questions concerning the construction,
validity and interpretation of this Agreement shall be governed and construed in
accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
26
<PAGE>
Registration Rights Agreement
11.11 Consent to Jurisdiction and Service of Process. EACH OF THE
PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES
THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT MAY BE LITIGATED IN
SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES HERETO FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PARTY AT THE ADDRESS
SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 15 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY
PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR
TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OF THE OTHER PARTIES HERETO
IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY
APPLICABLE LAW.
11.12 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT. EACH OF THE PARTIES HERETO ALSO WAIVES ANY
BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE
REQUIRED OF SUCH PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND REPRESENTS
THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
27
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Registration Rights Agreement
11.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
[Signature Page to Follow]
28
<PAGE>
Registration Rights Agreement
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
ALLIED DIGITAL TECHNOLOGIES CORP.
By: /s/ John K. Mangini
--------------------------------------------
Name: John K. Mangini
Title: President and Chief Executive Officer
399 VENTURE PARTNERS, INC.
By: /s/ Ian D. Highet
--------------------------------------------
Name: Ian D. Highet
Title: Vice President
MANAGEMENT MEMBERS
/s/ John Kennneth Mangini
--------------------------------------------
John Kenneth Mangini
/s/ Donald Olesen
--------------------------------------------
Donald Olesen
/s/ Steven D. Granat
--------------------------------------------
Steven D. Granat
/s/ Brian Wilson
--------------------------------------------
Brian Wilson
[Signature Page to Registration Rights Agreement]
NY02A/216154.9
<PAGE>
Registration Rights Agreement
/s/ Emily Moore Hill
--------------------------------------------
Emily Moore Hill
/s/ David Ray Conrad
--------------------------------------------
David Ray Conrad
/s/ Charles A. Mantione
--------------------------------------------
Charles A. Mantione
/s/ John James Mangini
--------------------------------------------
John James Mangini
/s/ Edward Simek
--------------------------------------------
Edward Simek
[Signature Page to Registration Rights Agreement]
<PAGE>
Registration Rights Agreement
CITICORP MEZZANINE PARTNERS, L.P.
By: Citicorp Capital Investors, Ltd.
Its: General Partner
By: /s/ Richard E. Mayberry, Jr.
--------------------------------------------
Name: Richard E. Mayberry, Jr.
Title: Vice President
FLEET CORPORATE FINANCE, INC.
By: /s/ Robert Ziemer
--------------------------------------------
Name: Robert Ziemer
Title: Director of Mainsail Capital
<PAGE>
Registration Rights Agreement
[Signature Page to Registration Rights Agreement]
<PAGE>
Registration Rights Agreement
Exhibit A-1
Form of Registration Rights Joinder Agreement
For Permitted Transferees
Allied Digital Technologies Corp.
140 Fell Court
Hauppauge, NY 11788
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of [describe
security being transferred] of Allied Digital Technologies Corp., a Delaware
corporation (the "Company"), the undersigned represents that it is a Permitted
Transferee of [insert name of transferor] and agrees that, as of the date
written below, [he] [she] [it] shall become a party to, and a Permitted
Transferee as defined in, that certain Registration Rights Agreement dated as of
______ __, 1998, as such agreement may have been amended from time to time (the
"Agreement"), among the Company and the persons named therein, and as a
Permitted Transferee shall be fully bound by, and subject to, all of the
covenants, terms and conditions of the Agreement that were applicable to the
undersigned's transferor, as though an original party thereto and shall be
deemed a [Management Stockholder and/or an Additional Stockholder 399
Stockholder] for all purposes thereof.
Executed as of the day of , .
SIGNATORY:
---------------------------------
Address:
---------------------------------
---------------------------------
ACKNOWLEDGED AND ACCEPTED:
ALLIED DIGITAL TECHNOLOGIES CORP.
By
------------------------------------
Name:
Title:
<PAGE>
Registration Rights Agreement
Exhibit A-2
Form of Registration Rights Joinder Agreement
For Additional Stockholders
(including Additional Management Stockholders)
Allied Digital Technologies Corp.
140 Fell Court
Hauppauge, NY 11788
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the issuance to the undersigned of [describe
security being issued] of Allied Digital Technologies Corp., a Delaware
corporation (the "Company"), the undersigned agrees that, as of the date written
below, [he] [she] [it] shall become a party to [and a Management Stockholder
under] that certain Registration Rights Agreement dated as of ______ __, 1998,
as such agreement may have been amended from time to time (the "Agreement"),
among the Company and the persons named therein, and shall be fully bound by,
and subject to, the covenants, terms and conditions of the Agreement as provided
under Section 11.5 of the Agreement as though an original party thereto.
Executed as of the day of , .
SIGNATORY:
---------------------------------
Address:
---------------------------------
---------------------------------
ACKNOWLEDGED AND ACCEPTED:
ALLIED DIGITAL TECHNOLOGIES CORP.
By
------------------------------------
Name:
Title:
<PAGE>
Registration Rights Agreement
Exhibit A-3
Form of Registration Rights Joinder Agreement
For Transferees under Section 2.4 of the Investors' Agreement
Allied Digital Technologies Corp.
140 Fell Court
Hauppauge, NY 11788
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of [describe
security being transferred] of Allied Digital Technologies Corp., a Delaware
corporation (the "Company"), the undersigned agrees that, as of the date written
below, [he] [she] [it] shall become a party to and an Additional Stockholder
under that certain Registration Rights Agreement dated as of _______ __, 1998,
as such agreement may have been amended from time to time (the "Agreement"),
among the Company and the persons named therein, and shall be fully bound by,
and subject to, the covenants, terms and conditions of the Agreement as provided
under Section 11.5 of the Agreement as though an original party thereto.
Executed as of the day of , .
SIGNATORY:
---------------------------------
Address:
---------------------------------
---------------------------------
ACKNOWLEDGED AND ACCEPTED:
ALLIED DIGITAL TECHNOLOGIES CORP.
By
------------------------------------
Name:
Title:
