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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 4
TO
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934)
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ALLIED DIGITAL TECHNOLOGIES CORP.
(NAME OF ISSUER)
ALLIED DIGITAL TECHNOLOGIES CORP.
CITICORP VENTURE CAPITAL, LTD.
399 VENTURE PARTNERS, INC.
ANALOG ACQUISITION CORP.
DONALD L. OLESEN
(NAME OF PERSON FILING STATEMENT)
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COMMON STOCK, PAR VALUE $0.01 PER SHARE 38-3191597
(TITLE OF CLASS OF SECURITIES) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
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CHIEF EXECUTIVE OFFICER
ALLIED DIGITAL TECHNOLOGIES CORP.
140 FELL COURT
HAUPPAUGE, NEW YORK 11788
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF PERSON FILING STATEMENT)
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with copies to:
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FREDERICK R. CUMMINGS, JR., ESQ. PHILIP H. WERNER, ESQ.
WARSHAW BURSTEIN COHEN SCHLESINGER & KUH, LLP MORGAN, LEWIS & BOCKIUS LLP
555 FIFTH AVENUE 101 PARK AVENUE
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10178
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This statement is filed in connection with (check the appropriate box):
(a) /x/ The filing of solicitation materials or an information statement to
Regulation 14A [17 CFR 240.14a-1 to 240.14a-103] Regulation 14C [17 CFR
240.14c-1 to 240.14c-101] or Rule 13e-3(c) [240.13e-3(c)] under the
Securities Exchange Act of 1934.
(b) / / The filing of a registration statement under the Securities Act of 1933.
(c) / / A tender offer.
(d) / / None of the above.
Check the following box if soliciting materials or information statement
referred to in checking box (a) are preliminary copies. / /
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CALCULATION OF REGISTRATION FEE
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TRANSACTION VALUATION AMOUNT OF FILING FEE
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$ *63,777 $12,755.42
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Allied Digital Technologies Corp., a Delaware corporation (referred to
herein as "Allied" or the "Company"), hereby submits its Rule 13e-3 Transaction
Statement on Schedule 13E-3 (the "Schedule 13E-3"). The Schedule 13E-3 relates
to a
(Continued on next page)
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(Continued from previoius page)
Agreement and Plan of Merger, dated as of May 5, 1998 (the "Merger Agreement"),
by and between the Company and Analog Acquisition Corp. ("AAC"), a Delaware
corporation, pursuant to which AAC was merged with and into the Company (the
"Merger") with Allied as the surviving corporation (the "Surviving
Corporation"). Under the terms of the Merger Agreement, each share of Allied
common stock ("Allied Common Stock") (or fraction thereof) issued and
outstanding immediately prior to the Effective Time (as defined below) (other
than any shares to be canceled (as described below), any shares to remain
outstanding (as described below) and any Dissenting Shares (as defined in the
Merger Agreement)), was canceled and converted automatically into the right to
receive an amount equal to $5.00 in cash payable, without interest, to the
holder of such share, upon surrender of the certificate that formerly evidenced
such share. 74,998 shares held by and registered in the names of certain Allied
stockholders immediately prior to the Effective Time who are members of
management of the Company were canceled but remain outstanding and became
shares of Class A Common Stock, $.01 par value per share, of the Surviving
Corporation ("Class A Common Stock"). In addition, all of (a) the issued and
outstanding shares of common stock, par value $.01 per share, of AAC, (b) the
issued and outstanding shares of preferred stock, par value $.01 per share, of
AAC, and (c) 1,100,110 shares of Allied Common Stock held by and registered in
the name of 399, were converted into 74,000 shares of Class A Common Stock,
351,000 shares of Class B Common Stock, $.01 par value per share, of the
Surviving Corporation and 165,000 shares of Series A Preferred Stock, par value
$.01 per share, of the Surviving Corporation. The Merger became effective at the
time the certificate of merger was duly filed with the Secretary of State of the
State of Delaware on September 24, 1998 (the "Effective Time"). From and after
the Effective Time, the Surviving Corporation will possess all the rights,
privileges, powers and franchises and be subject to all of the restrictions,
disabilities and duties of Allied and AAC, all as provided under Delaware law.
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* For purposes of calculation of fee only, this amount is based on (i)
13,623,394 (the number of shares of Allied Common Stock outstanding as of May
28, 1998) minus 1,175,108 (the number of shares of Allied Common Stock to be
exchanged for Surviving Corporation common stock) multiplied by $5.00 (the
cash consideration per share), plus (ii) $1,535,631 (the cash consideration to
be paid for the options being surrendered in connection with the transaction),
which sum has been multiplied by 1/50 of one percent. As permitted by Rule
0-11(a) under the Securities Exchange Act of 1934, the amount previously paid
by Allied indicated below has been subtracted, leaving a balance of $0.
/x/ Check box if any part of the fee is offset by Rule 0-11(a)(2) and identify
the filing with which the offsetting fee was previously paid. Identify the
previous filing by registration statement number, or the form or schedule
and the date of its filing.
Amount Previously Paid: $12,755.42.
Form or Registration No.: Definitive Proxy Statement on Schedule 14A.
Filing Party: Allied Digital Technologies Corp.
Date Filed: September 2, 1998
This Schedule 13E-3 is intended to satisfy the reporting requirements of
Section 13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Proxy Statement (File No. 1-13580) was filed by the Company with the
Securities and Exchange Commission (the "Commission") immediately prior to the
filing of this Schedule 13E-3.
The filing of this Schedule 13E-3 shall not be construed as an admission by
Allied, Citicorp Venture Capital, Ltd. ("CVC"), 399 Venture Partners, Inc.
("399"), AAC or Mr. Olesen that the Company is "controlled" by CVC, 399 or AAC
or that any of CVC, 399 or AAC is an "affiliate" of the Company within the
meaning of Rule 13e-3 under Section 13(c) of the Securities Exchange Act of
1934, as amended.
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The cross reference sheet below is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the Proxy Statement,
filed by the Company with the Securities and Exchange Commission on the date
hereof, of the information required to be included in response to the items of
this Schedule 13E-3. The information in the Proxy Statement, including all
exhibits thereto, is hereby expressly incorporated herein by reference and the
responses to each item in this Schedule 13E-3 are qualified in their entirety by
the provisions of the Proxy Statement.
CROSS REFERENCE SHEET
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Item 1(a)........................... Cover Page; SUMMARY--Allied
Item 1(b)........................... QUESTIONS AND ANSWERS ABOUT THE MERGER--Why Should Allied Merge with
AAC?;--What Vote Is Required?;--What Will Happen to Options to Purchase
Allied Common Stock and Warrants To Purchase Allied Common Stock and are
Certain Option Holders Being Treated Differently from Other Option
Holders?; INFORMATION CONCERNING THE ALLIED SPECIAL MEETING; SUMMARY--
Record Date;--Options/Warrants;--Allied Common Stock Information; MARKET
PRICE AND DIVIDEND INFORMATION
Item 1(c)-(d)....................... MARKET PRICE AND DIVIDEND INFORMATION; SELECTED HISTORICAL CONSOLIDATED
FINANCIAL DATA; TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS--
Consolidated Statements of Stockholders' Equity for the Years Ended
July 31, 1997, 1996 and 1995
Item 1(e)........................... PRO FORMA UNAUDITED CONDENSED FINANCIAL DATA--Notes to Pro Forma Unaudited
Condensed Consolidated Statements of Earnings
Item 1(f)........................... CVC, 399, AAC, and Donald L. Olesen have not made any purchases of the
Company's securities since the commencement of the Company's second full
fiscal year preceding the date of this schedule.
Item 2(a)........................... This Schedule 13E-3 is being filed by Allied, CVC, 399, AAC and Donald L.
Olesen (the "Filing Persons")
Item 2(b)........................... Allied Digital Technologies Corp., 140 Fell Court, Hauppauge, NY 11788,
Citicorp Venture Capital, Ltd., 399 Park Avenue, 14th Floor, New York, N.Y.
10022; 399 Venture Partners, Inc., 399 Park Avenue, 14th floor, New York,
N.Y. 10022; Analog Acquisition Corp., c/o 399 Venture Partners, Inc., 399
Park Avenue, 14th floor, New York, N.Y. 10022; Donald L. Olesen, c/o Allied
Digital Technologies Corp., 140 Fell Court, Hauppauge, NY 11788
Item 2(c)-(d)....................... Donald L. Olesen is principally employed as President--National Sales and
Marketing Division of Allied Digital Technologies Corp. Mr. Olesen also has
been the President of HMG Digital Technologies Corp., a wholly-owned
subsidiary of the Company whose address is 140 Fell Court, Hauppauge, New
York 11788 ("HMG") since 1993 and President of Allied Digital, Inc.
(formerly known as Hauppauge Records Manufacturing Ltd.), a wholly-owned
subsidiary of the Company whose address is 140 Fell Court, Hauppauge, New
York 11788 ("ADI") since July 1991. He also was a director of HMG and ADI
until January 1995. Mr. Olesen has been ADI's primary sales executive since
1981.
Other Directors and Officers of Allied Digital Technologies Corp.:
William H. Smith has been Co-Chairman of the Board and a director of the
Company since January 1995, President of the Company since
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November 1995 and a director of HMG and ADI since January 1995. Mr. Smith
also was Co-Chief Executive Officer of the Company from November 1995 until
March 1996. Mr. Smith was President and a director of Allied Film
Laboratory, Inc., a Michigan corporation whose address was 7375 Woodward
Avenue, Detroit, Michigan 48202 from 1960 until 1993, and its Chairman of
the Board from 1990 until November 1996.
George N. Fishman has been Co-Chairman of the Board and a director of the
Company since January 1995 and Chief Executive Officer since March 1996.
Mr. Fishman also has been the Chairman of the Board, Chief Executive
Officer and a director of HMG since 1993, the Chairman of the Board and a
director of ADI since 1981 and the Chief Executive Officer of Allied since
1991.
John K. Mangini has been Chief Operating Officer of the Company since
January 15, 1996. Prior to his joining the Company, he spent five years
with PolyGram Group Distribution, Inc., 825 Eighth Avenue, New York, New
York 10019, as Senior Vice President of Operations.
Charles P. Kavanagh has been Executive Vice President of the Company since
June 1997 and Secretary of the Company since January 1995. Mr. Kavanagh
also has been the Chief Financial Officer of HMG since 1993 and the Vice
President--Finance and Administration of ADI since 1990. Mr. Kavanagh also
was a director of Allied until January 1995.
Charles A. Mantione has been Vice President--Finance of the Company since
June 1997. Mr. Mantione had been a financial consultant to the Company from
June 1996 to June 1997. From November 1989 until May 1997, Mr. Mantione was
self employed rendering accounting and management consulting services.
Eugene A. Gargaro, Jr. has been a director of the Company since January
1995. Mr. Gargaro has been Vice President and Secretary of Masco
Corporation ("Masco"), 21001 Van Born Road, Taylor, Michigan 48180, a
manufacturer of products for the home, since 1993. Mr. Gargaro is a
director and Secretary of MascoTech, Inc. ("Masco Tech"), 21001 Van Born
Road, Taylor, Michigan 48180, a transportation and automotive after-market
manufacturing firm, and TriMas Corporation ("TriMas"), an industrial
components manufacturing firm.
Werner H. Jean has been a director of the Company since January 1995.
Mr. Jean has been a consultant in operations management since 1983.
Mr. Jean was a director of AFL from 1983 until January 1995.
Seymour Leslie has been a director of the Company since January 1995.
Mr. Leslie has been Chairman of Leslie Group, Inc., a diversified
investment company, since 1977 and Co-Chairman of Leslie/Linton
Entertainment, Inc., 1370 Avenue of the Americas, New York, New York 10019,
a diversified investment company, since 1989. Mr. Leslie is a director of
Shorewood Packaging Corporation, 277 Park Avenue, New York, New York 10172,
a packaging company. He was a director of HMG from 1993 until January 1995.
H. Sean Mathis has been a director of the Company since January 1995.
Mr. Mathis is Chairman of the Board of Allis Chalmers, Inc., 1126 South
17th Street, Milwaukee, Wisconsin 53214, an industrial manufacturer, whose
main asset is a net operating loss tax carryforward.
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From July 1996 to September 1997, Mr. Mathis was Chairman of the Board of
Universal Gym Equipment Inc., 515 North Flagler Drive, West Palm Beach,
Florida 33401, a privately owned company. In July 1997, Universal filed for
protection under the Federal Bankruptcy Laws. In September 1997,
Mr. Mathis resigned as Chairman of the Board of Universal. From 1993 to
1995 Mr. Mathis was president and a director of RCL Capital Corporation,
245 Park Avenue, New York, New York 10167, which was merged into DISC
Graphics in November 1995.
John A. Morgan has been a director of the Company since November 1995.
Mr. Morgan has been a Managing Director of Morgan Lewis Githens and Ahn,
Inc., 767 Fifth Avenue, New York, New York 10153, an investment banking
firm, since 1982. Mr. Morgan is a director of Masco, MascoTech and TriMas.
Directors and Officers of Citicorp Venture Capital, Ltd., 399 Venture
Partners, Inc. and Analog Acquisition Corp. Except as set forth below, all
such persons have held the same principal employment positions for the last
five years:
William T. Comfort is principally employed as the Chairman and as a
Director of Citicorp Venture Capital, Ltd. and as the Chairman and as a
Director of 399 Venture Partners, Inc. Richard M. Cashin is principally
employed as President of Citicorp Venture Capital, Ltd. and as a Vice
President of 399 Venture Partners, Inc. Michael A. Delaney is principally
employed as a Vice President of Citicorp Venture Capital, Ltd. and as a
Vice President of 399 Venture Partners, Inc. David Y. Howe is principally
employed as a Vice President of Citicorp Venture Capital, Ltd. and as a
Vice President of 399 Venture Partners, Inc. Byron L. Knief is principally
employed as a Senior Vice President of Citicorp Venture Capital, Ltd. and
as a Vice President of 399 Venture Partners, Inc. Richard E. Mayberry is
principally employed as a Vice President of Citicorp Venture Capital, Ltd.
and as a Vice President of 399 Venture Partners, Inc. Thomas F. McWilliams
is principally employed as a Vice President of Citicorp Venture Capital,
Ltd. and as a Vice President of 399 Venture Partners, Inc. M. Saleem
Muquaddam is principally employed as a Vice President of Citicorp Venture
Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc. Joseph
M. Silvestri is principally employed as a Vice President of Citicorp
Venture Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc.
David F. Thomas is principally employed as a Vice President of Citicorp
Venture Capital, Ltd. and as President of 399 Venture Partners, Inc. James
A. Urry is principally employed as a Vice President of Citicorp Venture
Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc. Lauren
M. Connelly is principally employed as a Vice President and Secretary of
Citicorp Venture Capital, Ltd. and as a Vice President and Secretary of 399
Venture Partners, Inc. Helene B. Shavin is principally employed as a Vice
President and Assistant Secretary of Citicorp Venture Capital, Ltd. and as
a Vice President and Assistant Secretary of 399 Venture Partners, Inc.
Thomas H. Sanders is principally employed as a Vice President of Citicorp
Venture Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc.
Ann Goodbody is principally employed as Chairperson of Credit Policy at
Citibank, N.A. and as a director of both Citicorp Venture Capital, Ltd. and
399 Venture Partners, Inc. Thomas E. Jones is principally employed
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as an Executive Vice President of Citibank, N.A., located at 399 Park
Avenue, New York, New York 10043. Mr. Jones is also a director of both
Citicorp Venture Capital, Ltd. and 399 Venture Partners, Inc. Frederick
Roesch is principally employed as a Senior Vice President of Citibank, N.A.
and as a director of both Citicorp Venture Capital, Ltd. and 399 Venture
Partners, Inc.
Emily M. Hill, President, Secretary, Treasurer and a director of AAC, is
principally employed as Vice President--Budget and Development of Allied
Digital Technologies Corp.
Michael Bradley has been a Vice President at Citicorp Venture Capital, Ltd.
since July 1998. From June 1996 to June 1998, he was a consultant to CVC.
Mr. Bradley graduated Columbia Business School in 1996 and the University
of Virginia Law School in 1994.
Charles Corpening has been a Vice President at Citicorp Venture Capital,
Ltd. and 399 Venture Partners, Inc. since December 1993. From 1990 through
December 1993, he was a Vice President at Roundtree Capital.
Ian D. Highet has been a Vice President at Citicorp Venture Capital, Ltd.
and 399 Venture Partners, Inc. since March 1998. Mr. Highet has also served
as Vice President and director of AAC since May 1998. From August 1994 to
February 1998, he was Vice President, Development of Primedia (K-III
Communications). Mr. Highet graduated Harvard Business School in June 1994.
Paul C. Schorr has been a Vice President at Citicorp Venture Capital, Ltd.
and 399 Venture Partners, Inc. since June 1996. From September 1993 to June
1996, he was an Engagement Manager at McKinsey & Co.
John D. Weber has been a Vice President at Citicorp Venture Capital, Ltd.
and 399 Venture Partners, Inc. since December 1994. From 1992 to December
1994, Mr. Weber was a Vice President at Putnam Investments.
Item 2(e)........................... During the last five years, none of the Filing Persons (including (i) any
executive officers and directors of any Filing Persons; (ii) any person
controlling any Filing Persons and (iii) any director or officer of any
corporation ultimately in control of any Filing Persons) has been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors), except for John K. Mangini, Chief Operating Officer of
Allied Digital Technologies Corp., who plead guilty in 1995 to an
information alleging tax evasion in United States District Court, District
of New Jersey, paid a $7,500 fine and was placed on probation for a period
of five years.
Item 2(f)........................... During the last five years, none of the Filing Persons (including (i) any
executive officers and directors of any Filing Persons; (ii) any person
controlling any Filing Person and (iii) any director or officer of any
corporation ultimately in control of any Filing Persons) has been subject
to a judgment, decree or final order enjoining further violations of, or
prohibiting activities, subject to, federal or state securities laws or
finding any violation of such laws.
Item 2(g)........................... The Company, 399, and AAC are corporations organized under the laws of the
State of Delaware; Citicorp Venture Capital, Ltd. is a corporation
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organized under the laws of the State of New York; and the other
individuals named in Item 2 are U.S. citizens.
Item 3(a)-(b)....................... SUMMARY--Reasons for the Merger;--Recommendation to
Stockholders;--Conflicts of Interest; SPECIAL FACTORS--Background of the
Merger Transaction; and THE MERGER--Ownership of Capital Stock
Item 4(a)........................... Pages 1-2; SUMMARY; SPECIAL FACTORS; THE MERGER; THE MERGER AGREEMENT
Item 4(b)........................... SUMMARY--Options/Warrants;--Conflicts of Interest; INFORMATION CONCERNING
THE ALLIED SPECIAL MEETING--Record Date; Voting Rights; SPECIAL FACTORS--
Conflicts of Interest;--Certain Effects of The Merger; THE
MERGER--Ownership of Capital Stock; THE MERGER AGREEMENT--Consideration to
be Received in the Merger;--Stockholder Voting Agreements;--Rollover
Agreements; ANNEX E; ANNEX F
Item 5(a)-(g)....................... SUMMARY; SPECIAL FACTORS; THE MERGER; THE MERGER AGREEMENT
Item 6(a), (c)(1)-(2)............... SUMMARY--Reasons for the Merger;--Total Value of the Merger; THE
MERGER--Debt Financing; THE MERGER AGREEMENT--Consideration to be Received
in the Merger
Item 6(b)........................... THE MERGER--Debt Financing;--Expenses of the Transaction; THE MERGER
AGREEMENT--Termination Fees;--Expenses; PRO FORMA UNAUDITED CONDENSED
FINANCIAL DATA
Item 6(d)........................... THE MERGER--Debt Financing
Item 7(a)-(c)....................... QUESTIONS AND ANSWERS ABOUT THE MERGER; SUMMARY--AAC;--Reasons for the
Merger;--Recommendation to Stockholders;--Opinion of Furman Selz; SPECIAL
FACTORS--Background of the Merger Transaction;--Recommendation of the
Allied Board; Effects and Reasons for the Merger;--The Board's
Recommendation;--Purposes and Reasons of CVC, 399 and AAC for the
Merger;--Positions of CVC, 399 and AAC as to Fairness of the
Merger;--Purposes and Reasons of Mr. Olesen for the Merger;--Position of
Mr. Olesen as to Fairness of the Merger;--Fairness Opinion; THE MERGER
AGREEMENT--The Merger
Item 7(d)........................... QUESTIONS AND ANSWERS ABOUT THE MERGER; SUMMARY--Options/Warrants;--
Conflicts of Interest;--Federal Income Tax Consequences; INFORMATION
CONCERNING THE ALLIED SPECIAL MEETING--Record Date; Voting Rights;
SPECIAL FACTORS--Recommendation of the Allied Board; Effects and
Reasons for the Merger;--Fairness Opinion;--Conflicts of Interest;--
Certain Effects of the Merger;--Material Federal Income Tax
Consequences of the Merger; THE MERGER AGREEMENT--The Merger;--The
Surviving Corporation;--Directors and Officers of Allied Following the
Merger
Item 8(a-b)......................... QUESTIONS AND ANSWERS ABOUT THE MERGER; SUMMARY--Reasons for the
Merger;--Opinion of Furman Selz;--Recommendation to Stockholders; SPECIAL
FACTORS--Background of the Merger Transaction; Recommendation of the Allied
Board; Effects and Reasons for the Merger;--The Board's Recommendation;--
Fairness Opinion; ANNEX A; TABLE OF CONTENTS TO
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CONSOLIDATED FINANCIAL STATEMENTS--Notes to Consolidated Financial
Statements
Item 8(c)........................... QUESTIONS AND ANSWERS ABOUT THE MERGER; SUMMARY--Conditions to the Merger;
SPECIAL FACTORS--Recommendation of the Allied Board; Effects and Reasons
for the Merger
Item 8(d)........................... The majority of directors who are not employees of the Company have not
retained an unaffiliated representative to act solely on behalf of
unaffiliated security holders for the purposes of negotiating the terms of
the Rule 13E-3 transaction and/or preparing a report concerning the
fairness of the transaction.
Item 8(e)........................... SUMMARY--Reasons for the Merger; SPECIAL FACTORS--Background of the Merger
Transaction;--Recommendation of Allied's Board; Effects and Reasons for the
Merger;--The Board's Recommendation; INFORMATION CONCERNING THE ALLIED
SPECIAL MEETING--Record Date; Voting Rights
Item 8(f)........................... SPECIAL FACTORS--Background of the Merger Transaction
Item 9(a-c)......................... SUMMARY--Opinion of Furman Selz; SPECIAL FACTORS--Background of the Merger
Transaction;--Fairness Opinion; ANNEX A
Item 10(a).......................... SUMMARY; SPECIAL FACTORS--Conflicts of Interest; THE MERGER--Ownership of
Capital Stock; INFORMATION CONCERNING THE ALLIED SPECIAL MEETING;
Item 10(b).......................... There has been no transaction in the class of equity securities of the
Company which is the subject of the Rule 13e-3 transaction that was
effected during the past 60 days by the Company, CVC, 399, AAC or Donald L.
Olesen.
Item 11............................. SUMMARY; INFORMATION CONCERNING THE ALLIED SPECIAL MEETING; SPECIAL
FACTORS; THE MERGER AGREEMENT; ANNEX B; ANNEX C; ANNEX E, ANNEX F
Item 12(a-b)........................ SUMMARY; INFORMATION CONCERNING THE ALLIED SPECIAL MEETING--Record Date;
Voting Rights; SPECIAL FACTORS--Background of the Merger
Transaction;--Recommendation of the Allied Board; Effects and Reasons for
the Merger;--Purposes and Reasons of Mr. Olesen for the Merger; THE
MERGER--Ownership of Capital Stock; THE MERGER AGREEMENT--Stockholder
Voting Agreements;--Rollover Agreements; ANNEX B; ANNEX E; ANNEX F
Item 13(a).......................... SUMMARY; INFORMATION CONCERNING THE ALLIED SPECIAL MEETING;--Record Date;
Voting Rights; THE MERGER--Appraisal Rights; ANNEX C
Item 13(b).......................... No provision has been made by the Company, CVC, 399, AAC or Donald L.
Olesen in connection with the Rule 13e-3 transaction to allow unaffiliated
security holders to obtain access to the corporate files of the Company,
CVC, 399, AAC or Donald L. Olesen or to obtain counsel or appraisal
services at the expense of the Company, CVC, 399, AAC or Donald L. Olesen,
except as provided by the Delaware General Corporation Law.
Item 13(c).......................... The Rule 13e-3 transaction does not involve the exchange of debt securities
of the Company, CVC, 399, AAC or Donald L. Olesen for equity securities
held by security holders of the Company who are not affiliates.
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Item 14(a).......................... SUMMARY PRO FORMA UNAUDITED CONDENSED FINANCIAL DATA; SELECTED PRO FORMA
UNAUDITED CONDENSED FINANCIAL DATA; TABLE OF CONTENTS TO CONSOLIDATED
FINANCIAL STATEMENTS
Item 14(b).......................... SUMMARY PRO FORMA UNAUDITED CONDENSED FINANCIAL DATA; SELECTED PRO FORMA
UNAUDITED CONDENSED FINANCIAL DATA; TABLE OF CONTENTS TO CONSOLIDATED
FINANCIAL STATEMENTS
Item 15(a)-(b)...................... SPECIAL FACTORS; INFORMATION CONCERNING THE ALLIED SPECIAL MEETING--Record
Date; Voting Rights
Item 16............................. No additional information is necessary to make the required statements in
the light of the circumstances under which they are made, not materially
misleading.
Item 17(a).......................... No materials are required to be filed as exhibits pursuant to Item 17(a).
Item 17(b).......................... ANNEX A
Item 17(c).......................... ANNEX B; ANNEX E; ANNEX F; Investors' Agreement, dated as of September 24,
1998, by and among Allied Digital Technologies Corp., 399 Venture Partners,
Inc., Citicorp Mezzanine Partners, L.P., Fleet Corporate Finance, Inc. and certain
stockholders named therein; and Registration Rights Agreement, by and among
Allied Digital Technologies Corp., 399 Venture Partners, Inc., Citicorp Mezzanine
Partners, L.P., Fleet Corporate Finance, Inc. and certain stockholders named therein.
Item 17(d).......................... Proxy Statement and related Notice of Special Meeting and Proxy
Item 17(e).......................... ANNEX C
Item 17(f).......................... No materials are required to be filed as exhibits pursuant to Item 17(f).
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ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) The information set forth on the cover page of, and under
"SUMMARY--Allied" in the Proxy Statement is incorporated herein by reference.
(b) The information set forth under "QUESTIONS AND ANSWERS ABOUT THE
MERGER--Why Should Allied Merge with AAC?;--What Vote is Required?;--What Will
Happen To Options To Purchase Allied Common Stock And Warrants To Purchase
Allied Common Stock and are Certain Option Holders Being Treated Differently
From Other Option Holders?", "INFORMATION CONCERNING THE ALLIED SPECIAL MEETING;
SUMMARY--Record Date; Voting Requirements" and "SUMMARY--Record Date;--
Options/Warrants" is incorporated herein by reference.
(c)-(d) The information set forth under "MARKET PRICE AND DIVIDEND
INFORMATION", "SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA" and "TABLE OF
CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS--Consolidated Statements of
Stockholders' Equity for the Years Ended July 31, 1997, 1996 and 1995" is
incorporated herein by reference.
(e) The information set forth under "PRO FORMA UNAUDITED CONDENSED
FINANCIAL DATA--Notes to Pro Forma Unaudited Condensed Consolidated Statements
of Earnings" is incorporated herein by reference.
(f) CVC, 399, AAC and Donald L. Olesen have not made any purchases of the
Company's securities since the commencement of the Company's second full fiscal
year preceding the date of this schedule.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This Schedule 13E-3 is being filed by Allied, CVC, 399, AAC and Donald
L. Olesen (the "Filing Persons").
(b) The business address of the Company is 140 Fell Court, Hauppauge, New
York 11788; the business address of each of CVC and 399 is 399 Park Avenue, 14th
floor, New York, New York 10022; the business address of AAC is c/o 399 Venture
Partners, Inc., 399 Park Avenue, 14th floor, New York, New York 10022; the
business address of Donald L. Olesen is c/o Allied Digital Technologies Corp.,
140 Fell Court, Hauppauge, New York 11788.
(c)-(d) The principal occupation of Donald L. Olesen is President--National
Sales and Marketing Division of Allied Digital Technologies Corp. He has been
President--National Sales and Marketing Division and a director of the Company
since January 1995. Mr. Olesen also has been the President of HMG Digital
Technologies Corp., a wholly-owned subsidiary of the Company whose address is
140 Fell Court, Hauppauge, New York 11788 ("HMG") since 1993 and President of
Allied Digital, Inc. (formerly known as Hauppauge Records Manufacturing Ltd.), a
wholly-owned subsidiary of the Company whose address is 140 Fell Court,
Hauppauge, New York 11788 ("ADI") since July 1991. He also was a director of HMG
and ADI until January 1995. Mr. Olesen has been ADI's primary sales executive
since 1981.
Other Directors and Officers of Allied Digital Technologies Corp:
William H. Smith has been Co-Chairman of the Board and a director of the
Company since January 1995, President of the Company since November 1995 and a
director of HMG and ADI since January 1995. Mr. Smith also was Co-Chief
Executive Officer of the Company from November 1995 until March 1996. Mr. Smith
was President and a director of Allied Film Laboratory, Inc., a Michigan
corporation whose address was 7375 Woodward Avenue, Detroit, Michigan 48202 from
1960 until 1993, and its Chairman of the Board from 1990 until November 1996.
George N. Fishman has been Co-Chairman of the Board and a director of the
Company since January 1995 and Chief Executive Officer since March 1996.
Mr. Fishman also has been the Chairman of the Board, Chief Executive Officer and
a director of HMG since 1993, the Chairman of the Board and a director of ADI
since 1981 and the Chief Executive Officer of Allied since 1991.
10
<PAGE>
John K. Mangini has been Chief Operating Officer of the Company since
January 15, 1996. Prior to his joining the Company, he spent five years with
PolyGram Group Distribution, Inc., 825 Eighth Avenue, New York, New York 10019,
as Senior Vice President of Operations.
Charles P. Kavanagh has been Executive Vice President of the Company since
June 1997 and Secretary of the Company since January 1995. Mr. Kavanagh also has
been the Chief Financial Officer of HMG since 1993 and the Vice
President--Finance and Administration of ADI since 1990. Mr. Kavanagh also was a
director of Allied until January 1995.
Charles A. Mantione has been Vice President--Finance of the Company since
June 1997. Mr. Mantione had been a financial consultant to the Company from June
1996 to June 1997. From November 1989 until May 1997, Mr. Mantione was self
employed rendering accounting and management consulting services.
Eugene A. Gargaro, Jr. has been a director of the Company since January
1995. Mr. Gargaro has been Vice President and Secretary of Masco Corporation,
21001 Van Born Road, Taylor, Michigan 48180, a manufacturer of products for the
home ("Masco"), since 1993. Mr. Gargaro is a director and Secretary of
MascoTech, Inc., 21001 Van Born Road, Taylor, Michigan 48180, a transportation
and automotive after-market manufacturing firm ("MascoTech"), and TriMas
Corporation, an industrial components manufacturing firm ("TriMas").
Werner H. Jean has been a director of the Company since January 1995.
Mr. Jean has been a consultant in operations management since 1983. Mr. Jean was
a director of AFL from 1983 until January 1995.
Seymour Leslie has been a director of the Company since January 1995.
Mr. Leslie has been Chairman of Leslie Group, Inc., a diversified investment
company, since 1977 and Co-Chairman of Leslie/Linton Entertainment, Inc., 1370
Avenue of the Americas, New York, New York 10019, a diversified investment
company, since 1989. Mr. Leslie is a director of Shorewood Packaging
Corporation, 277 Park Avenue, New York, New York 10172, a packaging company. He
was a director of HMG from 1993 until January 1995.
H. Sean Mathis has been a director of the Company since January 1995.
Mr. Mathis is Chairman of the Board of Allis Chalmers, Inc., 1126 South 17th
Street, Milwaukee, Wisconsin 53214, an industrial manufacturer, whose main asset
is a net operating loss tax carryforward. From July 1996 to September 1997,
Mr. Mathis was Chairman of the Board of Universal Gym Equipment Inc., 515 North
Flagler Drive, West Palm Beach, Florida 33401, a privately owned company. In
July 1997, Universal filed for protection under the Federal Bankruptcy Laws. In
September 1997, Mr. Mathis resigned as Chairman of the Board of Universal. From
1993 to 1995 Mr. Mathis was president and a director of RCL Capital Corporation,
245 Park Avenue, New York, New York 10167, which was merged into DISC Graphics
in November 1995.
John A. Morgan has been a director of the Company since November 1995.
Mr. Morgan has been a Managing Director of Morgan Lewis Githens and Ahn, Inc.,
767 Fifth Avenue, New York, New York 10153, an investment banking firm, since
1982. Mr. Morgan is a director of Masco, MascoTech and TriMas.
Directors and Officers of Citicorp Venture Capital, Ltd., 399 Venture
Partners, Inc. and Analog Acquisition Corp. Except as set forth below, all such
persons have held the same principal employment positions for the last five
years:
William T. Comfort is principally employed as Chairman and as a Director of
Citicorp Venture Capital, Ltd. and as the Chairman and as a Director of 399
Venture Partners, Inc. Richard M. Cashin is principally employed as President of
Citicorp Venture Capital, Ltd. and as a Vice President of 399 Venture Partners,
Inc. Michael A. Delaney is principally employed as a Vice President of Citicorp
Venture Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc.
David Y. Howe is principally employed as a Vice President of Citicorp Venture
Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc. Byron L.
Knief is principally employed as a Senior Vice President of Citicorp Venture
Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc. Richard E.
Mayberry is principally employed as a Vice President of Citicorp Venture
Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc. Thomas F.
McWilliams is principally employed as a Vice President of Citicorp Venture
Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc. M. Saleem
Muquaddam is principally employed as a Vice President of Citicorp Venture
Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc. Joseph M.
Silvestri is principally employed as a Vice President of Citicorp Venture
Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc. David F.
Thomas is principally employed as a
11
<PAGE>
Vice President of Citicorp Venture Capital, Ltd. and as President of 399 Venture
Partners, Inc. James A. Urry is principally employed as a Vice President of
Citicorp Venture Capital, Ltd. and as a Vice President of 399 Venture Partners,
Inc. Lauren M. Connelly is principally employed as a Vice President and
Secretary of Citicorp Venture Capital, Ltd. and as a Vice President and
Secretary of 399 Venture Partners, Inc. Helene B. Shavin is principally employed
as a Vice President and Assistant Secretary of Citicorp Venture Capital, Ltd.
and as a Vice President and Assistant Secretary of 399 Venture Partners, Inc.
Thomas H. Sanders is principally employed as a Vice President of Citicorp
Venture Capital, Ltd. and as a Vice President of 399 Venture Partners, Inc. Ann
Goodbody is principally employed as Chairperson of Credit Policy at Citibank,
N.A. and as a director of both Citicorp Venture Capital, Ltd. and 399 Venture
Partners, Inc. Thomas E. Jones is principally employed as an Executive Vice
President of Citibank, N.A., located at 399 Park Avenue, New York, New York
10043. Mr. Jones is also a director of both Citicorp Venture Capital, Ltd. and
399 Venture Partners, Inc. Frederick Roesch is principally employed as a Senior
Vice President of Citibank, N.A. and as a director of both Citicorp Venture
Capital, Ltd. and 399 Venture Partners, Inc. Emily M. Hill, President,
Secretary, Treasurer and a director of AAC, is principally employed as a Vice
President--Budget and Development of Allied Digital Technologies Corp.
Except as set forth below, all executive officers and directors of AAC, 399
and CVC have been employed by AAC, 399 and CVC during the last five years:
Michael Bradley has been a Vice President at Citicorp Venture Capital, Ltd.
since July 1998. From June 1996 to June 1998, he was a consultant to CVC. Mr.
Bradley graduated Columbia Business School in 1996 and the University of
Virginia Law School in 1994.
Charles Corpening has been a Vice President at Citicorp Venture Capital,
Ltd. and 399 Venture Partners, Inc. since December 1993. From 1990 through
December 1993, he was a Vice President at Roundtree Capital.
Ian D. Highet has been a Vice President at Citicorp Venture Capital, Ltd.
and 399 Venture Partners, Inc. since March 1998. Mr. Highet has also served as
Vice President and director of AAC since May 1998. From August 1994 to February
1998, he was Vice President, Development of Primedia (K-III Communications). Mr.
Highet graduated Harvard Business School in June 1994.
Paul C. Schorr has been a Vice President at Citicorp Venture Capital, Ltd.
and 399 Venture Partners, Inc. since June 1996. From September 1993 to June
1996, he was an Engagement Manager at McKinsey & Co.
John D. Weber has been a Vice President at Citicorp Venture Capital, Ltd.
and 399 Venture Partners, Inc. since December 1994. From 1992 to December 1994,
Mr. Weber was a Vice President at Putnam Investments.
(e) During the last five years, none of the Filing Persons (including
(i) any executive officers and directors of any Filing Persons; (ii) any person
controlling any Filing Persons and (iii) any director or officer of any
corporation ultimately in control of any Filing Persons) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors),
except for John K. Mangini, Chief Operating Officer of Allied Digital
Technologies Corp., who plead guilty in 1995 to an information alleging tax
evasion in United States District Court, District of New Jersey, paid a $7,500
fine and was placed on probation for a period of five years.
(f) During the last five years, none of the Filing Persons (including
(i) any executive officers and directors of any Filing Person; (ii) any person
controlling any Filing Person and (iii) any director or officer of any
corporation ultimately in control of any Filing Persons) has been subject to a
judgment, decree or final order enjoining further violations of, or prohibiting
activities, subject to, federal or state securities laws or finding any
violation of such laws.
(g) Allied is a corporation organized under the laws of the State of
Delaware; CVC is a corporation organized under the laws of the State of New
York; 399 is a corporation organized under the laws of the State of Delaware;
AAC is a corporation organized under the laws of the State of Delaware; and
Donald L. Olesen and the other individuals listed in Item 2 are U.S. citizens.
12
<PAGE>
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a)-(b) The information set forth under "SUMMARY--Reasons for the
Merger;--Recommendation to Stockholders;--Conflicts of Interest; SPECIAL
FACTORS--Background of the Merger Transaction; and THE MERGER--Ownership of
Capital Stock" is incorporated by herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth on pages 1-2, "SUMMARY", "SPECIAL FACTORS"
and "THE MERGER AGREEMENT" is incorporated herein by reference.
(b) The information set forth under "SUMMARY--Options/Warrants;--Conflicts
of Interest", "INFORMATION CONCERNING THE ALLIED SPECIAL MEETING--Record Date;
Voting Rights", "SPECIAL FACTORS--Conflicts of Interest;--Certain Effects of The
Merger", "THE MERGER--Ownership of Capital Stock"; "THE MERGER
AGREEMENT--Consideration to be Received in the Merger;--Stockholder Voting
Agreements;--Rollover Agreements", "ANNEX E" and "ANNEX F" is incorporated
herein by reference.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a)-(g) The information set forth under "SUMMARY", "THE MERGER" and "THE
MERGER AGREEMENT" is incorporated herein by reference.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a), (c)(1)-(2) The information set forth under "SUMMARY--Reasons for the
Merger;--Total Value of the Merger", "THE MERGER --Debt Financing" and "THE
MERGER AGREEMENT--Consideration to be Received in the Merger" is incorporated
herein by reference.
(b) The information set forth under "THE MERGER--Debt Financing;--Expenses
of the Transaction", "THE MERGER AGREEMENT--Termination Fees;--Expenses" and
"PRO FORMA UNAUDITED CONDENSED FINANCIAL DATA" is incorporated herein by
reference.
(d) The information set forth under "THE MERGER--Debt Financing" is
incorporated herein by reference.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a)-(c) The information set forth under "QUESTIONS AND ANSWERS ABOUT THE
MERGER", "SUMMARY--AAC;--Reasons for the Merger;--Recommendation To
Stockholders;--Opinion of Furman Selz" and "SPECIAL FACTORS--Background of the
Merger Transaction;--Recommendation of the Allied Board; Effects and Reasons for
the Merger;--The Board's Recommendation;--Purposes and Reasons of CVC, 399 and
AAC for the Merger;--Positions of CVC, 399 and AAG as to Fairness of the
Merger;--Purposes and Reasons of Mr. Olesen for the Merger;--Position of Mr.
Olesen as to Fairness of the Merger;--Fairness Opinion; THE MERGER
AGREEMENT--The Merger" is incorporated herein by reference.
(d) The information set forth under "QUESTIONS AND ANSWERS ABOUT THE
MERGER", "SUMMARY--Options/Warrants;--Conflicts of Interest;--Federal Income Tax
Consequences", "INFORMATION CONCERNING THE ALLIED SPECIAL MEETING--Record Date;
Voting Rights", "SPECIAL FACTORS--Recommendation of the Allied Board; Effects
and Reasons for the Merger;--Fairness Opinion;--Conflicts of Interest;--Certain
Effects of the Merger;--Material Federal Income Tax Consequences of the Merger"
and "THE MERGER AGREEMENT--The Merger;--The Surviving Corporation;--Directors
and Officers of Allied Following the Merger" is incorporated herein by
reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a)-(b) The information set forth under "SUMMARY--Reasons for the
Merger;--Opinion of Furman Selz;--Recommendation to Stockholders", "SPECIAL
FACTORS--Background of the Merger Transaction; Recommendation of the Allied
Board; Effects and Reasons for the Merger;--The Board's Recommendation;--
13
<PAGE>
Fairness Opinion", "ANNEX A" and "TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL
STATEMENTS--Notes to Consolidated Financial Statements" is incorporated herein
by reference.
(c) The information set forth under "QUESTIONS AND ANSWERS ABOUT THE
MERGER," "SUMMARY--Conditions to the Merger" and "SPECIAL
FACTORS--Recommendation of the Allied Board; Effects and Reasons for the Merger"
is incorporated herein by reference.
(d) No representative was hired solely on behalf of unaffiliated security
holders.
(e) The information set forth under "SUMMARY--Reasons for the Merger",
"SPECIAL FACTORS--Background of the Merger Transaction;--Recommendation of
Allied's Board; Effects and Reasons for the Merger;--The Board's Recommendation"
and "INFORMATION CONCERNING THE ALLIED SPECIAL MEETING--Record Date; Voting
Rights" is incorporated herein by reference.
(f) The information forth under "SPECIAL FACTORS--Background of the Merger
Transaction" is incorporated herein by reference.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a)-(c) The information set forth under "SUMMARY--Opinion of Furman Selz",
"SPECIAL FACTORS--Background of the Merger Transaction;--Fairness Opinion" and
"ANNEX A" is incorporated herein by reference.
ITEM 10. INTERESTS IN SECURITIES OF THE ISSUER.
(a) The information set forth under "SUMMARY", "SPECIAL FACTORS--Conflicts
of Interest; THE MERGER--Ownership of Capital Stock" and "INFORMATION CONCERNING
THE ALLIED SPECIAL MEETING" is incorporated herein by reference.
(b) No transactions of the type required to be disclosed by Item 10(b) have
been effected in the past 60 days.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
The information set forth under "SUMMARY", "INFORMATION CONCERNING THE
ALLIED SPECIAL MEETING", "SPECIAL FACTORS", "THE MERGER AGREEMENT", "ANNEX B",
"ANNEX C", "ANNEX E" and "ANNEX F" is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a)-(b) The information set forth under "SUMMARY", "INFORMATION CONCERNING
THE ALLIED SPECIAL MEETING--Record Date; Voting Rights", "SPECIAL
FACTORS--Background of the Merger Transaction"; "--Recommendation of the Allied
Board; Effects and Reasons for the Merger"; "--Purposes and Reasons of Mr.
Olesen for the Merger"; "THE MERGER--Ownership of Capital Stock", "THE MERGER
AGREEMENT--Stockholder Voting Agreements;--Rollover Agreements", "ANNEX B",
"ANNEX E" and "ANNEX F" is incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The information set forth under "SUMMARY", "INFORMATION CONCERNING THE
ALLIED SPECIAL MEETING--Record Date", "THE MERGER--Appraisal Rights" and "ANNEX
C" is incorporated herein by reference.
(b) No provision has been made by the Company, CVC, 399, AAC or Donald L.
Olesen in connection with the Rule 13e-3 transaction to allow unaffiliated
security holders to obtain access to the corporate files of the Company, CVC,
399, AAC or Donald L. Olesen or to obtain counsel or appraisal services at the
expense of the Company, CVC, 399, AAC or Donald L. Olesen, except as provided by
the Delaware General Corporation Law.
(c) The Rule 13e-3 transaction does not involve the exchange of debt
securities of the Company, CVC, 339, AAC or Donald L. Olesen for equity
securities held by security holders of the Company who are not affiliates.
14
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ITEM 14. FINANCIAL INFORMATION.
(a) The information set forth under "SUMMARY PRO FORMA UNAUDITED CONDENSED
FINANCIAL DATA", "SELECTED PRO FORMA UNAUDITED CONDENSED FINANCIAL DATA", and
"TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS" is incorporated herein
by reference.
(b) The information set forth under "SUMMARY PRO FORMA UNAUDITED CONDENSED
FINANCIAL DATA", "SELECTED PRO FORMA UNAUDITED CONDENSED FINANCIAL DATA", and
"TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS" is incorporated herein
by reference.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a)-(b) The information set forth under "SPECIAL FACTORS" and "INFORMATION
CONCERNING THE ALLIED SPECIAL MEETING--Record Date" is incorporated herein by
reference.
ITEM 16. ADDITIONAL INFORMATION.
Reference is hereby made to the Proxy Statement and to each exhibit
attached thereto, each of which is incorporated by reference herein. No
additional information is necessary to make the required statements in the light
of the circumstances under which they are made, not materially misleading.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
(a) No materials are required to be filed as exhibits pursuant to
Item 17(a).
(b) Opinion of Furman Selz LLC (incorporated by reference to ANNEX A to the
Proxy Statement).
(c) Agreement and Plan of Merger, dated as of May 5, 1998, by and between
Allied Digital Technologies Corp. and Analog Acquisition Corp. (incorporated by
reference to ANNEX B to the Proxy Statement); Form of Certificate of
Incorporation of the Surviving Corporation (incorporated by reference to ANNEXES
D-1 and D-2 to the Proxy Statement); Form of Stockholder Voting Agreement
(incorporated by reference to ANNEX E to the Proxy Statement); Form of Rollover
Agreement (incorporated by reference to ANNEX F to the Proxy Statement);
Investors' Agreement, dated as of September 24, 1998, by and among Allied
Digital Technologies Corp., 399 Venture Partners, Inc., Citicorp Mezzanine
Partners, L.P., Fleet Corporate Finance, Inc. and certain stockholders named
therein, attached hereto as Exhibit A; and Registration Rights Agreement, by
and among Allied Digital Technologies Corp., 399 Venture Partners, Inc.,
Citicorp Mezzanine Partners, L.P., Fleet Corporate Finance, Inc. and certain
stockholders named therein, attached hereto as Exhibit B.
(d) Proxy Statement and related Notice of Special Meeting and Proxy
(incorporated by reference to the Proxy Statement filed on the date hereof).
(e) Section 262 of the General Corporation Law of the State of Delaware
(incorporated by reference to ANNEX C to the Proxy Statement).
(f) No materials are required to be filed as exhibits pursuant to
Item 17(f).
15
<PAGE>
SIGNATURE
AFTER DUE INQUIRY AND TO THE BEST OF ITS KNOWLEDGE AND BELIEF, EACH OF THE
UNDERSIGNED PARTIES CERTIFIES THAT THE INFORMATION SET FORTH IN THIS SCHEDULE
13E-3 IS TRUE, COMPLETE AND CORRECT.
Dated: September 24, 1998.
ALLIED DIGITAL TECHNOLOGIES CORP.
By: /s/ CHARLES MANTIONE
----------------------------------
Charles Mantione
Principal Financial Officer
CITICORP VENTURE CAPITAL, LTD.
By /s/ MICHAEL A. DELANEY
----------------------------------
Michael A. Delaney
Vice President
399 VENTURE PARTNERS, INC.
By: /s/ MICHAEL A. DELANEY
----------------------------------
Michael A. Delaney
Vice President
ANALOG ACQUISITION CORP.
By: /s/ EMILY M. HILL
----------------------------------
Emily M. Hill
Vice President, Secretary and
Treasurer
/s/ DONALD L. OLESEN
----------------------------------
Donald L. Olesen
16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DOCUMENT DESCRIPTION PAGE NO.
- -------- -------------------- ----------
<S> <C> <C>
A -- Investors' Agreement, dated September 24, 1998, by and among Allied Digital Technologies
Corp., 399 Venture Partners, Inc., Citicorp Mezzanine Partners, L.P., Fleet Corporate
Finance, Inc. and certain stockholders named therein.
B -- Registration Rights Agreement, dated September 24, 1998, by and among Allied Digital
Technologies Corp., 399 Venture Partners, Inc., Citicorp Mezzanine Partners, L.P., Fleet
Corporate Finance, Inc. and certain stockholders named therein.
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INVESTORS' AGREEMENT
by and among
Allied Digital Technologies Corp.
and
Its Stockholders
Named Therein
As of September 24, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
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>
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
<PAGE>
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.
"Additional Stockholder" means any Person (other than any 399
Stockholder, CMP Stockholder or Management Stockholder), to whom the Company
issues Restricted
<PAGE>
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.
"Charter" means the Restated Certificate of Incorporation of the
Company, as the same may be amended or restated from time to time.
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"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.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the Commission
thereunder.
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"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 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
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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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"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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"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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"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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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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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):
Term Section
---- -------
"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)
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"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
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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"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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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 Financial 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 Olesen
------------------------------------------------
Donald 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>
Class A Common Class B Common Series A Preferred Warrant Initial Paid-
Name 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>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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
Page
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
-i-
<PAGE>
Registration Rights Agreement
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
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
-ii-
<PAGE>
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.
"Registration Rights Joinder Agreement" means a Registration Rights
Joinder Agreement in the form attached hereto as Exhibits A-1 to A-3.
<PAGE>
Registration Rights Agreement
"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
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
<PAGE>
Registration Rights Agreement
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 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-
<PAGE>
Registration Rights Agreement
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 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;
<PAGE>
Registration Rights Agreement
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 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
<PAGE>
Registration Rights Agreement
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
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.
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Registration Rights Agreement
(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 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).
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Registration Rights Agreement
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 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
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Registration Rights Agreement
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 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.
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Registration Rights Agreement
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
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
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Registration Rights Agreement
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;
(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
<PAGE>
Registration Rights Agreement
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 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
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Registration Rights Agreement
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 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
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Registration Rights Agreement
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.
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
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Registration Rights Agreement
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 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
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Registration Rights Agreement
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:
(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
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Registration Rights Agreement
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 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
<PAGE>
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 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
<PAGE>
Registration Rights Agreement
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.
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.
<PAGE>
Registration Rights Agreement
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.
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
<PAGE>
Registration Rights Agreement
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 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.
<PAGE>
Registration Rights 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.
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.
<PAGE>
Registration Rights Agreement
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.
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
<PAGE>
Registration Rights Agreement
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.
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.
<PAGE>
Registration Rights Agreement
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.
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]
<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 Financial 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 Olesen
--------------------------------------------------
Donald Olesen
/s/ Steven D. Granat
--------------------------------------------------
Steven D. Granat
/s/ Brian Wilson
--------------------------------------------------
Brian Wilson
[Signature Page to Registration Rights Agreement]
<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
[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:
