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EXHIBIT 10.24
SECURITIES RESTRICTION AGREEMENT
SECURITIES RESTRICTION AGREEMENT ("Agreement") dated as of November 13,
1996, by and among PARK 'N VIEW, INC. a Delaware corporation (the "Company"),
the Existing Investors set forth on Exhibit A attached hereto and made a part
hereof (the "Existing Investors") and the Investors set forth on Exhibit B
attached hereto and made a part hereof (the "Investors"). The Existing Investors
and the Investors are referred to herein collectively as the "Securityholders"
and each individually as a "Securityholder."
Definitions. Terms initially capitalized but not otherwise defined
herein shall have the meanings given such terms in the Securities Purchase
Agreement (as hereinafter defined), except for the following:
"Qualified Sale" means a Sale or exchange of the Securities for cash or
other securities which is (a) approved by at least (x) 70% of the directors and
(y) two of the directors designated by the holders of the Preferred Stock and
(b) the stated consideration is at least equal to an amount which (i) would
represent, on an as converted basis, a compound annual rate of return of 35% to
the Investors based upon the original issuance price of the Series B Stock, or
(ii) is 200% of the then conversion price of the Series B Stock.
"Original Investors" shall mean ▇▇▇ ▇▇▇▇▇▇▇▇, Nelgo Investments, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, MPN Partners, Ltd. and Park 'N View General Partner, Inc.
"Patricof Investors" shall mean the Existing Investors other than the
Original Investors.
"Prospective Purchase" shall mean any person to whom a holder shall
desire to sell shares of Common Stock and who shall be identified by such
Securityholder to the Company and the Holders of Securities under the terms of
Section 1 hereof.
"Sale" means (a) the consolidation or merger of the Company into or
with any corporation or corporations (other than a merger with another
corporation in which the Company is the surviving corporation and which does not
result in any reclassification or change of outstanding shares of the Company's
Stock of any class or series, whether now or hereafter authorized, other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), (b) the sale, lease
or transfer by the Company of all or substantially all of its assets, (c) the
capital reorganization of the Company or (d) a reclassification or change of
outstanding shares of the Company's Common Stock.
"Securities" shall mean at any time, the shares of then outstanding
Common Stock and Series B Stock; provided, however, that Securities shall not be
deemed to include any shares of Common Stock sold pursuant to an effective
registration or any shares sold without registration
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under the Securities Act in compliance with Rule 144, or pursuant to any other
exemption from registration under the Securities Act to a person who is free to
resell such shares without registration under the Securities Act, and provided,
further, that at any time subsequent to the closing of an initial public
offering, Securities shall not include any shares which are eligible to be sold
without registration under the Securities Act in compliance with subsection (k)
of Rule 144.
"Securities Purchase Agreement" shall mean that certain Stock Purchase
Agreement, dated as of the date hereof, by and between the Company and each of
the Investors.
1. Right of Co-Sale
(A) Right of Co-Sale. (1) Prior to a Qualifying Offering
and for so long as the Investors and their Affiliates own 50% or more of the
Securities purchased pursuant to the Securities Purchase Agreement, in the event
that an Existing Investor desires to sell any or all of the shares of Common
Stock (excluding shares of Common Stock issuable upon conversion of Series B
Stock) owned by such Securityholder and receives a bona fide offer therefor (the
"Selling Securityholder"), such Selling Securityholder shall so notify the
Investors in writing. The notice to the Investors shall be delivered by hand, or
by first-class, certified or overnight mail or courier, postage prepaid, or by
telecopier (with telephonic confirmation of receipt), to their respective
addresses as shown on the books of the Company, which addresses shall be
provided to the Selling Securityholder by the Company. Each notice shall set
forth the identity and mailing address of the prospective purchaser
("Prospective Purchaser"), the quantity and description of the Common Stock
proposed to be sold, the price per share to be received therefor, the number of
shares which may be sold by each Investor as determined in accordance herewith
and the address of the Selling Securityholder to which the Investors may send
notices to such Selling Securityholder required hereunder.
Such notice shall state the maximum number of shares of Common Stock
which may be sold to the Prospective Purchaser by each Investor as determined in
accordance herewith. Each Investor shall thereupon be entitled for a period of
20 days after the date of such notice to offer to sell to the Prospective
Purchaser, for such price and upon such terms, the proportion (rounded to the
nearest whole share) of the number of shares of Common Stock proposed to be sold
as such Holder's aggregate holding of Securities then bears to the aggregate
amount of Securities then held by all Investors exercising their rights of
co-sale under this subsection (A). The rights granted to the Investors in this
subsection (A) may be exercised in whole or in part and shall be exercised by
the tender, conditioned upon receipt of the consideration for the Common Stock
sold hereunder of the maximum number of shares of Common Stock (or Series B
Stock convertible into such number of shares of Common Stock) the Holder thereof
desires to sell, endorsed and in transferable form, free and clear of liens,
claims, security interests and other encumbrances, to the Company, which shall
act as agent for purposes of such sale. On the first business day following the
date 20 days following the date of the first notice given to the Investors, the
Company shall notify the Selling Securityholder, the Investors, and the
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Prospective Purchaser of the amount of Securities to be sold under this
subsection (A), the price to be paid for any shares of Common Stock and the
price therefor. In such notice to the Prospective Purchaser, the Company shall
direct the Prospective Purchaser to furnish to the Company, as agent, within 10
days of the date of such notice, the price of such tendered shares of Common
Stock in the form of an official bank or certified check or checks in specified
amounts. Promptly upon receipt of such check or checks, the Company shall (i)
transmit each check (duly endorsed, if necessary) to the respective tendering
Holder or Holder of Securities (ii) transfer the shares so purchased on the
books of the Company into the name of the purchaser thereof, (iii) transmit
certificates for such shares to the Prospective Purchaser thereof by first class
or certified mail, (iv) transmit tendered shares not so purchased to the Holder
thereof by first class or certified mail, (v) notify the Investors in writing,
delivered by hand or by first-class, certified or overnight mail, postage
prepaid, or by telecopier, of such sale within 5 days following the completion
thereof. In the event that, as to any shares of Common Stock duly tendered and
eligible for sale under this subsection (A) is not received from the Prospective
Purchaser within the aforesaid 10-day period, the Company shall promptly (i)
return to the Investors all the shares of Common Stock tendered by such
Investors, delivered by hand or by first class, certified or overnight mail,
postage prepaid, and (ii) notifying the Selling Securityholder of the return of
such shares of Common Stock. Any shares of Common Stock tendered by an Investor
as aforesaid received by the Company more than 20 days following the date of the
first notice given to the Investors pursuant to this subsection (A) shall be
ineligible for sale in accordance with such notice and the Company shall
promptly return such shares of Common Stock to the tendering Holder, delivered
by hand or by first class, certified or overnight mail. The balance of the
number of shares of Common Stock to be sold to the Prospective Purchaser, after
deduction of the number of shares of Common Stock properly tendered, if any, by
one or more Investors in accordance herewith, except in the event of a public
offering, merger, consolidation, or exchange of securities of the Company
approved by the stockholders of the Company, may be sold by the Selling
Securityholder to the Prospective Purchaser, at a price and upon the terms set
forth in the first notice given to the Investors pursuant to this subsection
(A), not less than 20 days nor more than 60 days following the expiration of the
20-day period during which Investors have timely paid the purchase price for all
shares properly tendered by such Holders and eligible for sale under this
subsection (A).
(B) Transfers to Affiliates. Notwithstanding anything in
this Section 1 to the contrary, each of the Patricof Investors may from time to
time transfer all or part of such record owner's Common Stock (i) to a nominee
identified in writing to the Company as being the nominee of or for such record
owner, and any nominee of or for a beneficial owner of Common Stock identified
in writing to the Company as being the nominee of or for such beneficial owner
may from time to time transfer all or part of the Common Stock held in the name
of such nominee but held as nominee on behalf of such Securityholder, to such
Securityholder, (ii) to an Affiliate of such Securityholder, or (iii) if such
Securityholder is a partnership or the nominee of a partnership, to a partner,
retired partner, or estate of a partner or retired partner, of such partnership,
so long as such transfer is in accordance with the
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transferee's interest in such partnership and is without consideration;
provided, however, that each such transferee shall remain subject to all
restrictions on the transfer of Securities herein contained.
(C) De Minimis Transfers. Notwithstanding anything in
this Section 1 to the contrary, each of the Original Investors may transfer in
the aggregate up to 50,000 shares of Common Stock owned by him or it free of the
restrictions set forth in subsection (A) of this Section 1.
(D) Termination of Provisions of this Section 1. The
rights granted and obligations imposed in this Section 1 shall terminate on the
first date on which shares of Common Stock are sold in a Qualifying Offering or
the date of consummation of Sale.
(E) Remedies. In the event that any Existing Investor
should sell any Securities in contravention of the participation rights of the
Investors under this Section 1 (a "Prohibited Transfer"), the Investors may,
upon the determination of holders of 66 2/3% in interest of the Securities held
by such Investors, proceed to protect and enforce their rights by suit in equity
or by action at law, whether for the specific performance of any term contained
in this Agreement or for an injunction against the breach of any such term or in
furtherance of the exercise of any power granted in this Section 1, or to
enforce any other legal or equitable right of the Investor or to take one or
more of such actions. In addition to any other remedy at law or in equity
available to the Investors, the Investors shall have the option to sell to such
Existing Investor a number of shares of Securities equal to the number of shares
of Securities sold by the Existing Investor in contravention of such rights on
the following terms and conditions:
(a) The price per share at which the shares are
to be sold to such Existing Investor shall be equal to the price per share paid
to such Existing Investor by the third party purchaser or purchasers of such
Existing Investor's Securities;
(b) The Investors shall deliver to such Existing
Investor, within ninety (90) days after it has received notice from such
Existing Investor or otherwise became aware of the Prohibited Transfer, the
certificate or certificates representing shares to be sold, each certificate to
be properly endorsed for transfer; and
(c) Such Existing Investor shall, upon receipt
of the certificates for the repurchased shares, pay the aggregate purchase price
therefor, by certified check or bank draft made payable to the order of the
Investor and shall reimburse the investor for any additional expenses, including
legal fees and expenses, incurred in effecting such purchase and resale.
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2. Sale of the Company-Obligation to Sell. Upon a Qualified Sale,
each Securityholder shall sell, exchange or otherwise transfer his, her of its
Securities in accordance with the terms and conditions of the Qualified Sale.
Each Securityholder shall execute such documents and perform such acts,
including, without limitation, voting his, her or its Securities, as may be
reasonably necessary to consummate the Qualified Sale including a transfer of
his, her or its Securities; provided, however, that no Securityholder who is not
an officer or director of the Company shall be required to make any
representations or warranties in any such document, other than with respect to
the status of such Securityholder's title to his, her or its shares of Common
Stock and whether or not he, she or it is an accredited investor (as that term
is defined in Rule 501 promulgated by the Securities and Exchange Commission
under the Securities Act).
3. Legend. All certificates representing shares of Common Stock
of the Company which are subject to Section 1(A) hereof shall bear a legend in
substantially the following form:
"This certificate and the shares represented hereby may not be
sold, assigned, bequeathed, transferred (including by will or pursuant to the
laws of descent and distribution or otherwise), pledged, encumbered or otherwise
disposed of or be made the subject of a security interest except as provided in
that certain Securities Restriction Agreement dated as of November 13, 1996."
4. Miscellaneous.
(A) Amendments. This Agreement may not be altered,
amended or supplemented except in a written instrument executed by (i) the
Company, (ii) Securityholders owning a majority of the Common Stock, (iii)
Securityholders owning a majority of the Series A Stock and (iv) Securityholders
owning 66_% of the Series B Stock.
(B) Successors and Assigns. The rights and benefits of
this Agreement shall inure to the benefit of, and be enforceable by, the
successors and assigns of the Company and the Investors. The rights and
obligations of the Securityholders under this Agreement may only be assigned
with the prior written consent of the Company and the Holders of at least a
majority of each class of the then outstanding Securities, other than an
assignment permitted under Section 1(B) which shall not require any consent
hereunder. This Agreement shall be binding upon the Company and its successors
and assigns and each Securityholder and his heirs, personal representatives,
successors and permitted assigns.
(C) Further Execution. The parties hereto agree to
execute any additional documents or instruments necessary to carry out the
purposes of this Agreement.
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(D) Governing Law. The validity, meaning and effect of
this Agreement shall be determined in accordance with the domestic laws of the
State of New York applicable to contracts made and to be performed in that state
without giving any effect to any choice or conflict of law provision or rule
(whether in 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.
(E) Headings. The headings herein are solely for the
convenience of the parties and shall not serve to modify or interpret the text
of the Sections at the beginning of which they appear.
(F) Severability. In the event that any court or any
governmental authority or agency declares all or any part of any Section of this
Agreement to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any other Section of this Agreement, and in the event that
only a portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
(G) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original but all of which shall
together constitute one and the same document.
(H) Entire Agreement. This Agreement constitutes the
entire agreement by and among the parties hereto with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first set forth above.
ATTEST: PARK 'N VIEW, INC.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
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Existing Investors whose signatures appear on
Exhibit A hereto, and the Investors whose signatures appear on Exhibit B hereto
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EXHIBIT A
Park 'N View General Partner, Inc.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
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Name:
Title:
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇
/s /▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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MPN Partners
Nelgo Investments
By: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇
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Name:
Title:
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EXHIBIT A
(continued)
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
Title:
▇▇▇▇▇▇ & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/ OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
Title:
THE PA FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
Title:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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EXHIBIT B
STATE OF MICHIGAN RETIREMENT SYSTEM
By: /s/ ▇▇▇▇ ▇▇▇▇
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Name:
Title:
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No. VCA-GA-5298
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
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Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK -1(A) Investment Fund
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name:
Title:
CREDIT SUISSE (GUERNSEY) LIMITED as Trustee
of Dynamic Growth Fund II
By: /s/ ▇ ▇ ▇▇▇▇▇▇▇▇▇▇
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Name:
Title:
By: /s/ ▇ ▇ ▇▇▇▇▇▇▇
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Name:
Title:
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APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.(Its General Partner)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
Title:
▇▇▇▇▇▇ & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
Title:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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