================================================================================
STOCKHOLDERS' AGREEMENT
AMONG
AMERICAN SKIING COMPANY,
OAK HILL CAPITAL PARTNERS, L.P.,
THE OTHER ENTITIES NAMED IN ANNEX A HERETO
AND
XXXXXX X. XXXXX
Dated as of August 6, 1999
================================================================================
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Definitions...........................................................1
ARTICLE II
GOVERNANCE
2.01. Board Representation..................................................6
2.02. Resignations and Replacements.........................................7
2.03. Rights of Estate of Xx. Xxxxx.........................................8
2.04. Committees Generally; Nominating Committee............................8
2.05. Meetings; Budget; Board Fees and Expenses.............................9
2.06. Termination of Executives............................................10
2.07. Employee Plans.......................................................10
2.08. Removal of Chief Executive Officer...................................10
ARTICLE III
VOTING RIGHTS
3.01. Voting Restrictions..................................................10
3.02. Special Board Rights.................................................10
ARTICLE IV
STANDSTILL PROVISIONS
4.01. Ownership of the Series B Preferred..................................13
4.02. Transfer Restrictions................................................13
4.03. Acquisition of Additional Shares; Other Restrictions.................14
4.04. Additional Shares....................................................16
4.05. Anti-Dilutive Rights.................................................16
ARTICLE V
REGISTRATION RIGHTS
5.01. Restrictive Legend...................................................18
5.02. Notice of Proposed Transfer..........................................18
5.03. Request for Registration.............................................19
5.04. Incidental Registration..............................................22
5.05. Shelf Registration...................................................23
5.06. Obligations of the Company...........................................24
5.07. Furnish Information..................................................26
5.08. Expenses of Registration.............................................26
5.09. Underwriting Requirements............................................27
5.10. Indemnification......................................................27
5.11. Lockup...............................................................30
5.12. Transfer of Registration Rights......................................30
5.13. Rule 144 Information.................................................30
ARTICLE VI
FURNISHING OF INFORMATION
6.01. Furnishing of Information............................................31
ARTICLE VII
GENERAL PROVISIONS
7.01. Waiver...............................................................32
7.02. Expenses; Attorneys' Fees............................................32
7.03. Notices..............................................................32
7.04. Headings.............................................................34
7.05. Severability.........................................................34
7.06. Entire Agreement.....................................................34
7.07. Assignment...........................................................35
7.08. No Third Party Beneficiaries.........................................35
7.09. Amendment............................................................35
7.10. Governing Law; Forum.................................................35
7.11. Effect of Delaware Reincorporation...................................36
7.12. Counterparts.........................................................36
7.13. Specific Performance.................................................36
Annex A Stockholders
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT dated August 6, 1999 (this "Agreement")
among OAK HILL CAPITAL PARTNERS, L.P., a Delaware limited partnership ("Oak
Hill") and the other entities identified in Annex A attached hereto (together
with Oak Hill, the "Stockholders"), XXXXXX X. XXXXX ("Xx. Xxxxx") and AMERICAN
SKIING COMPANY, a Maine corporation (the "Company").
WHEREAS, the execution and delivery of this Agreement is a condition
to the obligations of the Company and the Stockholders under the Preferred Stock
Subscription Agreement dated July 9, 1999 by and between the Company and the
Stockholders (the "Subscription Agreement"), pursuant to which the Company shall
sell to the Stockholders, and the Stockholders shall purchase from the Company,
the Company's 8.5% Series B Convertible Participating Preferred Stock, par value
$.01 per share (the "Series B Preferred"), upon the terms and subject to the
conditions set forth in the Subscription Agreement;
WHEREAS, upon consummation of the transaction contemplated by the
Subscription Agreement, the Stockholders will beneficially own an aggregate of
150,000 shares of Series B Preferred, each of which may be convertible into
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"); and
WHEREAS, the Company, Xx. Xxxxx and the Stockholders now wish to
enter into this Agreement to set forth their agreement as to the matters set
forth herein with respect to, among other things, representation on the
Company's Board of Directors (the "Board") and the Transfer (as defined below)
of the Restricted Securities (as defined below);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company, Xx. Xxxxx and the Stockholders hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. (a) Unless otherwise defined in this
Agreement, capitalized terms are used herein as defined in the Subscription
Agreement.
(b) As used in this Agreement, the following terms shall have the
following meanings:
2
"Affiliate" has the meaning set forth in Rule 12b-2, as in effect on
the date hereof, under the Exchange Act.
"Associate" has the meaning set forth in Rule 12b-2, as in effect on
the date hereof, under the Exchange Act.
"Beneficially Own" has the meaning set forth below:
A Person shall be deemed to "Beneficially Own" any securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3 of
the Exchange Act, as in effect on the date of this Agreement;
(ii) which are Beneficially Owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such other Person) with
which such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting or disposing of such
securities; or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time or upon
the satisfaction of conditions) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banks are required or authorized by law to be closed in The City of
New York or the State of Maine.
"By-laws" means the by-laws of the Company, as amended and restated
as of the date hereof and as may be amended from time to time.
"Change of Control" means any event that gives any Person or Group
other than holders of the Series B Preferred, the Stockholders, Xx. Xxxxx or
their Permitted Transferees the ability to control the Company (a) through the
acquisition of either (i) substantially all of the assets of the Company and its
Subsidiaries, taken as a whole, or (ii) a majority of the aggregate voting power
of the Company's capital stock or (b) by otherwise being able to elect or
designate a majority of the Board through a management contract or otherwise.
3
"Class A Common Stock" means the Company's Class A common stock, par
value $.01 per share.
"Class A Director" means a Director elected by holders of the Class
A Common Stock pursuant to the Articles of Incorporation.
"Common Stock Director" means a Director elected by the holders of
Common Stock pursuant to the Articles of Incorporation.
"Conversion Stock" means the Common Stock issued by the Company upon
conversion of the Series B Preferred.
"Director" means a member of the Board.
"Employee Plan" means any equity incentive plan, agreement, bonus,
award, stock purchase plan, stock option plan or other stock arrangement with
respect to any directors, officers or other employees of the Company.
"Executive Committee" means the executive committee of the Board
established in accordance with the By-laws.
"Fair Market Value" shall mean for any applicable measurement date
the closing price of the Common Stock on the NYSE or, in the event that trading
hours on the NYSE are extended past 4:00 p.m. (EST), the last sale price at 4:00
p.m. (EST).
"Fully Diluted Basis" means, in respect of the Common Stock, the
method of calculating the number of shares of Common Stock outstanding on an
applicable measurement date, pursuant to which the following shares shall be
deemed to be outstanding: (i) all shares of Common Stock outstanding on the date
hereof, (ii) all shares of Common Stock issuable upon conversion of outstanding
shares of the Class A Common Stock or the Series B Preferred, (iii) all shares
of Common Stock issued after the date hereof pursuant to the exercise of stock
options under Employee Plans or upon conversion of the Class A Common Stock, the
Series B Preferred or the Senior Preferred Stock, (iv) all shares of Common
Stock issuable pursuant to any securities or stock options of the Company
outstanding at any time which are convertible into or exercisable for shares of
Common Stock at a conversion or exercise price at or below the then current Fair
Market Value of the Common Stock, (v) any shares of Common Stock issued after
the date hereof, other than pursuant to clause (ii), (iii) or (iv) above, at a
price per share at or above $10.50 per share; provided that such issuance has
been approved by at least eight members of the Board and (vi) any shares of
Common Stock issued for any consideration other than cash as may be approved by
the Board.
4
"Group" has the meaning set forth in Rule 13d-5, as in effect on the
date hereof, under the Exchange Act.
"Holders" means the Stockholders, Xx. Xxxxx or any Permitted
Transferee to whom the rights under this Agreement are assigned in accordance
with the provisions of Section 5.12 hereof.
"Independent" means, in respect of a Director, an individual who
meets the following criteria: (i) is not, and has not previously been, within
the past three years, an employee of the Company, Xx. Xxxxx, the Stockholders or
any of their Affiliates; (ii) is not related by birth or marriage to Xx. Xxxxx
or any employee of the Company, the Stockholders, or their respective
Affiliates; and (iii) is otherwise independent of Xx. Xxxxx, the Stockholders
and their respective Affiliates.
"ING Registration Rights Agreement" means the Registration Rights
Agreement dated as of November 10, 1997 between the Company and ING.
"Maturity Date" means August 6, 2009.
"Nominating Committee" means the nominating committee of the Board
established in accordance with the By-laws that shall be responsible for, among
other things, identifying and nominating certain Independent individuals to be
elected as Directors of the Company.
"Xxxxx Director" means a Director elected by the holders of Class A
Common Stock or a Director designated by Xx. Xxxxx pursuant to the terms of this
Agreement.
"Person" means any individual, firm, corporation, partnership,
limited partnership, limited liability company, association, trust,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3), as in effect on the
date hereof, of the Exchange Act.
"Pledge Agreement" means that certain Pledge Agreement between Xx.
Xxxxx and ING dated as of November 10, 1997 pursuant to which all of the shares
of Class A Common Stock and Common Stock Beneficially Owned by Xx. Xxxxx are
pledged to ING.
"Register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document with the SEC in compliance with the Securities Act and the
declaration or ordering of effectiveness by the SEC of such registration
statement or document.
5
"Registrable Stock" shall mean (i) the Conversion Stock, (ii) the
Series B Preferred, (iii) any shares of Common Stock Beneficially Owned by Xx.
Xxxxx, the Stockholders or their Permitted Transferees or (iv) any Common Stock
issued as (or upon the conversion or exercise of any warrant, right, option or
other convertible security which is issued as) a dividend or other distribution
with respect to, or in exchange for, or in replacement of, the Series B
Preferred or the Conversion Stock. For purposes of this Agreement, any
Registrable Stock shall cease to be Registrable Stock when with respect to such
Registrable Stock (w) a registration statement covering such Registrable Stock
has been declared effective and such Registrable Stock has been disposed of
pursuant to such effective registration statement, (x) such Registrable Stock is
sold in a transaction in which the rights under the provisions of Article V are
not assigned in accordance with Section 5.12, (y) such Registrable Stock may be
sold pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144(A)) without registration under the Securities Act or (z) Xx. Xxxxx, on
the one hand, or the Stockholders, on the other hand, no longer Beneficially Own
at least 2% of the outstanding shares of Common Stock (on a Fully Diluted
Basis).
"Restricted Securities" means the Senior Preferred Stock, Series B
Preferred, the Conversion Stock, the Class A Common Stock and Common Stock,
including any of such stock issued as payment of a dividend.
"Standstill Period" shall mean any time during the period beginning
on the date hereof and ending on August 6, 2004 during which either (i) the
Stockholders Beneficially Own 15% or more of the outstanding shares of Common
Stock (on a Fully Diluted Basis) or (ii) the Stockholders and their Affiliates
or Associates Beneficially Own 33 1/3% or more of the outstanding shares of
Senior Preferred Stock.
"Stockholder Director" means a Director designated by the
Stockholders pursuant to this Agreement or elected by the holders of the Series
B Preferred pursuant to the Articles of Incorporation.
(c) The following terms have the meanings set forth in the Sections
set forth below:
Term Location
Agreement...................................................Preamble
Anti-Dilutive Rights........................................ss.4.05(a)
Board.......................................................Recitals
Budget......................................................ss.3.02(a)(i)
Common Stock................................................Recitals
Company.....................................................Preamble
Departing Xxxxx Director....................................ss.2.02(b)
6
Departing Stockholder Director..............................ss.2.02(a)
Executive...................................................ss.2.06
Initiating Holders..........................................ss.5.03(a)
Maintenance Securities......................................ss.4.05(a)
Material Subsidiaries.......................................ss.2.04(a)
Maximum Stockholder Stock Ownership Percentage..............ss.4.03(a)
Xx. Xxxxx...................................................Preamble
Oak Hill....................................................Preamble
Xxxxx Permitted Transferee..................................ss.4.02(a)
Permitted Transferees.......................................ss.4.02(a)
Series B Preferred..........................................Recitals
Shelf Registration..........................................ss.5.05(a)
Stockholder Permitted Transferee............................ss.4.02(a)
Stockholders................................................Preamble
Subscription Agreement......................................Recitals
Transfer....................................................ss.4.02(a)
(d) References in this Agreement to annexes, articles, sections,
paragraphs, clauses, schedules and exhibits are to annexes, articles, sections,
paragraphs, clauses, schedules and exhibits in or to this Agreement unless
otherwise indicated. Whenever the context may require, any pronoun includes the
corresponding masculine, feminine and neuter forms. Any term defined by
reference to any agreement, instrument or document has the meaning assigned to
it whether or not such agreement, instrument or document is in effect. The words
"include", "includes" and "including" are deemed to be followed by the phrase
"without limitation". Unless the context otherwise requires, any agreement,
instrument or other document defined or referred to herein refers to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified from time to time. Unless the context
otherwise requires, references herein to any Person or entity include its
successors and assigns. The words "shall" and "will" have the same meaning and
effect.
ARTICLE II
GOVERNANCE
SECTION 2.01. Board Representation. (a) In accordance with the
Certificate of Designation and subject to the rights of holders of the Company's
serial preferred stock, as of the date hereof and for so long as the
Stockholders shall be entitled to nominate at least one Director pursuant to
Section 2.01(b), the Board shall consist of 11 members, initially consisting of
(i) four Stockholder Directors, (ii) four Xxxxx Directors and (iii) three
Independent Common Stock Directors recommended by the Nominating Committee and
approved by the Board.
7
(b) Each of Xx. Xxxxx and the Stockholders shall vote all Restricted
Securities Beneficially Owned by him or it, as the case may be, to cause, and
the parties hereto each shall otherwise use its best efforts to cause, there to
be (i) four Stockholder Directors for so long as the Stockholders Beneficially
Own at least 25% of the outstanding shares of Common Stock (on a Fully Diluted
Basis), (ii) three Stockholder Directors for so long as the Stockholders
Beneficially Own at least 20% but less than 25% of the outstanding shares of
Common Stock (on a Fully Diluted Basis), (iii) two Stockholder Directors for so
long as the Stockholders Beneficially Own at least 15% but less than 20% of the
outstanding shares of Common Stock (on a Fully Diluted Basis), or (iv) one
Stockholder Director for so long as the Stockholders Beneficially Own at least
5% but less than 15% of the outstanding shares of Common Stock (on a Fully
Diluted Basis).
(c) Each of Xx. Xxxxx and the Stockholders shall vote all Restricted
Securities Beneficially Owned by him or it, as the case may be, to cause, and
the parties hereto each shall otherwise use its best efforts to cause, there to
be (i) four Xxxxx Directors for so long as Xx. Xxxxx Beneficially Owns at least
25% of the outstanding shares of Common Stock (on a Fully Diluted Basis), (ii)
three Xxxxx Directors for so long as Xx. Xxxxx Beneficially Owns at least 20%
but less than 25% of the outstanding shares of Common Stock (on a Fully Diluted
Basis), (iii) two Xxxxx Directors for so long as Xx. Xxxxx Beneficially Owns at
least 15% but less than 20% of the outstanding shares of Common Stock (on a
Fully Diluted Basis), or (iv) one Xxxxx Director for so long as Xx. Xxxxx
Beneficially Owns at least 5% but less than 15% of the outstanding shares of
Common Stock (on a Fully Diluted Basis).
(d) Xx. Xxxxx shall cause holders of Class A Common Stock to
exercise their rights to elect Class A Directors in order to effectuate, to the
extent necessary, the provisions contained in this Section 2.01; provided,
however, notwithstanding anything contained in this Section 2.01 to the
contrary, for so long as any shares of Class A Common Stock are outstanding and
entitled to elect Class A Directors, holders of shares of Class A Common Stock
shall have the sole right to elect Class A Directors.
SECTION 2.02. Resignations and Replacements. (a) If any Stockholder
Director is removed or otherwise ceases to serve as a Director for any reason
other than in accordance with the Certificate of Designation (a "Departing
Stockholder Director") or Section 2.01(b) or 2.02(c), the parties hereto each
shall use its best efforts to cause the vacancy created by such Director ceasing
to serve to be filled by a Stockholder Director who shall serve out the
remaining term of the Departing Stockholder Director, after which time, such
Stockholder Director position shall be filled according to Section 2.01(b).
(b) If any Xxxxx Director is removed or otherwise ceases to serve as
a Director for any reason (a "Departing Xxxxx Director") other than in
accordance with Section 2.01(c) or 2.02(d), the parties hereto each shall use
its best efforts to cause the vacancy created by such Director ceasing to serve
to be filled by an Xxxxx Director who shall serve out the remaining term
8
of the Departing Xxxxx Director, after which time, such Xxxxx Director position
shall be filled according to Section 2.01(c).
(c) In the event that at any time any Stockholder Director is
elected or appointed to the Board pursuant to Section 2.01(b) and the number of
Stockholder Directors is greater than the number of Directors that the
Stockholders have the right to designate by virtue of Section 2.01(b) of this
Agreement, then that excess number of Stockholder Directors (starting with any
Class A Director that is a Stockholder Director or, in the event that no
Stockholder Director is a Class A Director, starting with the Stockholder
Director with the longest remaining term of office) shall be deemed to have
resigned immediately upon the occurrence of such event such that the remaining
number of Stockholder Directors, if any, conform to the provisions of this
Agreement, and the Stockholders or Xx. Xxxxx, as the case may be, shall take all
action promptly to effect the resignation or removal of such Director. The
parties hereto each shall use its best efforts to cause the vacancy created by
such Stockholder Director ceasing to serve to be filled by an Independent
individual recommended by the Nominating Committee and approved by the Board or,
in the case of a Class A Director, to be filled by a designee of Xx. Xxxxx.
(d) In the event that at any time any Xxxxx Director is elected or
appointed to the Board pursuant to Section 2.01(c) and the number of Xxxxx
Directors is greater than the number of Directors that Xx. Xxxxx has the right
to designate by virtue of Section 2.01(c) of this Agreement, then that excess
number of Xxxxx Directors (starting with the Xxxxx Director with the longest
remaining term of office) shall be deemed to have resigned immediately upon the
occurrence of such event such that the remaining number of Xxxxx Directors, if
any, conform to the provisions of this Agreement, and the Stockholders or Xx.
Xxxxx, as the case may be, shall take all action promptly to effect the
resignation or removal of such Director. The parties hereto each shall use its
best efforts to cause the vacancy created by such Xxxxx Director ceasing to
serve to be filled by an Independent individual recommended by the Nominating
Committee and approved by the Board.
SECTION 2.03. Rights of Estate of Xx. Xxxxx. Xx. Xxxxx hereby agrees
and hereby directs his estate that in the event of his death, all of his shares
of Class A Common Stock shall be converted into Common Stock effective as the
date of such death.
SECTION 2.04. Committees Generally; Nominating Committee. (a) For so
long as the Stockholders Beneficially Own at least 20% of the outstanding shares
of Common Stock (on a Fully Diluted Basis), each of the parties hereto shall use
its best efforts to cause the Nominating Committee to have two members and to
cause one Stockholder Director (i) to serve as a member of each committee of the
Board, (ii) to serve as a member of the board of directors of each of ASC East,
Inc., ASC West, Inc., ASC Utah and American Skiing Company Resort Properties,
Inc. or any other board or comparable body necessary to manage any subsidiary of
the Company, whether existing now or created after the date hereof, that is
material to the Company and its subsidiaries, taken as a whole (together, the
"Material Subsidiaries") and (iii) to serve as a
9
member of each committee of the board of directors of the Material Subsidiaries;
provided, however, that if any applicable law or regulation of the NYSE (or
other exchange on which the Common Stock is listed) shall prohibit the Board
from appointing any of the Stockholder Directors to serve on any committee, this
Agreement shall not require any Stockholder Director to serve on such committee;
provided, further, however, that in such event, the Company and Xx. Xxxxx shall
consult with the Stockholders and each shall use its best efforts to ensure that
the Stockholders are able to achieve a level of participation in the operation
of the Board and the boards of each of the Material Subsidiaries that is
substantially similar to such committee representation and to otherwise preserve
the rights described in this Section 2.04.
(b) Each of the parties hereto shall use its best efforts to cause
the Board (i) to approve any Independent individual recommended by the
Nominating Committee for election to the Board and (ii) to recommend to the
stockholders of the Company that such nominee be elected to the Board.
(c) For so long as there shall be at least one Xxxxx Director and
Xx. Xxxxx is the Company's chief executive officer, each of the parties hereto
shall use its best efforts to cause at least one Xxxxx Director to be a member
of the Nominating Committee.
SECTION 2.05. Meetings; Budget; Board Fees and Expenses. (a) The
Board shall meet at least four times during each fiscal year, except that there
shall be at least six meetings of the Board during the first fiscal year
following the issuance of the Series B Preferred.
(b) Beginning January 1, 2000, proposals for the Budget (as
hereinafter defined) shall be presented to the Board by management of the
Company at least 60 days prior to the beginning of the Company's fiscal year.
The parties hereto each shall use its best efforts to cause the Board to approve
a Budget conforming to Section 3.02(a)(i) prior the beginning of each fiscal
year. At each meeting of the Board, the Budget approved for the current fiscal
year shall be reported on and updated and any additional "material" (as
"materiality" is described in Section 3.02(a)(i)(E)) changes to the Budget since
the previous Board meeting will be subject to Board approval.
(c) The Stockholder Directors shall be entitled to receive
compensation in the same amount as the Company's other non-employee Directors
and to be reimbursed for all reasonable expenses related to attending meetings
and performing other customary duties incident to their directorship. The Xxxxx
Directors shall be entitled to receive compensation in their capacity as
Directors in the same amount as the Company's other non-Stockholder Directors
receive in their capacity as Directors as set forth in the By-Laws and to be
reimbursed all reasonable expenses related to attending meetings and performing
other customary duties incident to their directorship.
10
SECTION 2.06. Termination of Executives. Any decision to terminate
the chief operating officer, president (other than Xx. Xxxxx), chief financial
officer or the general counsel of the Company or the chief operating officer (or
equivalent position) of American Skiing Company Resort Properties, Inc. (each,
an "Executive") will be made by Xx. Xxxxx for so long as he continues to serve
as the Company's chief executive officer; provided, however, that before
terminating any Executive, Xx. Xxxxx must (i) seek the approval of the Executive
Committee of such termination at a duly called meeting and (ii) in the event
that the Executive Committee does not approve such termination, seek the
approval of the Board of such termination at a duly called meeting, after which
time Xx. Xxxxx may terminate such Executive without any such approval.
SECTION 2.07. Employee Plans. No Employee Plan will be adopted or
amended in any material respect unless it has been approved by the compensation
and stock option committee of the Board, such approval to include the
affirmative vote of at least one Stockholder Director.
SECTION 2.08. Removal of Chief Executive Officer. Each of the
parties hereto shall use its best efforts to cause the Board to amend the
By-laws of the Company to require that the termination of the chief executive
officer of the Company will require either (i) the affirmative vote of at least
seven Directors, in the event that there are 11 Directors, (ii) the affirmative
vote of at least six Directors (including at least one Independent Director), in
the event that there are 10 Directors, (iii) the affirmative vote of at least
two-thirds of the Directors (including at least one Independent Director), in
the event that there are fewer than 10 Directors or (iv) the affirmative vote of
at least a majority of the Directors (including at least one Independent
Director), in the event that there are more than 11 Directors.
ARTICLE III
VOTING RIGHTS
SECTION 3.01. Voting Restrictions. (a) Xx. Xxxxx agrees to vote the
shares of Common Stock or Class A Common Stock Beneficially Owned by him to
effect the terms of Article II of this Agreement and on other matters to vote in
a manner consistent with the terms of this Agreement.
(b) The Stockholders agree to vote any shares of Common Stock or
Series B Preferred Beneficially Owned by the Stockholders to effect the terms of
Article II of this Agreement and on other matters to vote in a manner consistent
with the terms of this Agreement.
SECTION 3.02. Special Board Rights. (a) For so long as the
Stockholders Beneficially Own at least 20% of the outstanding shares of Common
Stock (on a Fully Diluted Basis), the Company shall not take the actions listed
in clauses (i) through (ix) below without the
11
affirmative vote of at least one Stockholder Director, either as part of the
vote of the full Board or the Executive Committee.
(i) Approval of an annual operating and capital budget, which shall
include operating plans, detailed capital expenditure plans and a business
plan (the "Budget"), which Budget will include, without limitation:
(A) detailed operating assumptions relating to, without
limitation, (1) pricing, (2) expected skier visits, (3) an
explanation of changes in operating cost from the prior year, (4)
head-count and expected seasonal head-count, (5) departmental
"sales, general and administrative" expenses, including marketing
plans and related budgets, and (6) a detailed analyses of all
required capital expenditures, including return on investment
analysis and a prioritization of both growth and maintenance capital
expenditures;
(B) planned material acquisitions, divestitures and other
development decisions (1) involving more than $2,000,000 in the
aggregate or (2) reasonably expected to have an impact of 5% or more
on the Company's consolidated revenues or earnings;
(C) overall corporate strategy, including actions that involve
repositioning the Company, commencing new lines of business or
significantly expanding lines of existing business (other than the
skiing business) or making material investments in joint ventures or
non-controlled operating companies;
(D) requirements for capital in accordance with the Budget,
including, without limitation, planned material financings (whether
in the form of debt or equity), including (1) issuance of debt or
equity securities, (2) entering into material new credit or
financing agreements, (3) materially increasing lines of credit or
making material changes in existing credit arrangements, (4)
pledging material assets, (5) the payment of dividends on
outstanding capital stock of the Company and (6) any redemption or
repurchase of capital stock of the Company, other than (x) the
redemption or repurchase of the Series B Preferred and (y)
redemptions in accordance with the terms of an Employee Plan; and
(E) a "materiality" standard for variations in the Budget
requiring Board approval.
(ii) Significant executive personnel decisions (other than
terminations), including, without limitation, hiring decisions or
decisions materially changing the compensation or responsibilities of any
Executive and the chief executive officer of the Company.
12
(iii) Material actions that are likely to affect the Company's
operating and strategic direction that are reasonably expected or likely
to have an impact of 5% or more on the Company's consolidated revenues or
earnings.
(iv) Any amendment to the Articles of Incorporation or By-laws.
(v) Any voluntary liquidation, dissolution, winding up,
recapitalization or reorganization of the Company.
(vi) Initiation of material litigation other than with respect to
any counterclaim made by the Company in response to any claim made by a
third party.
(vii) Any merger, consolidation or other business combination of the
Company with or into another Person or any sale of all or substantially
all the assets of the Company or any of its Material Subsidiaries.
(viii) Material changes to or reduction in insurance coverage.
(ix) Material financing or capital markets activity not expressly
provided in the Budget.
(b) The Stockholders shall use their best efforts to cause the
Stockholder Directors to abstain from voting on all matters in which the
Stockholders have an interest that differs from those of the Company's other
stockholders in accordance with applicable law and customary corporate practice,
including, without limitation, matters relating to any (i) dividend on the
Series B Preferred (other than as part of the Budget approval process provided
in Section 3.02(a)(i)), (ii) redemption of the Series B Preferred, (iii)
amendment of or waiver under any agreement to which any Stockholder or Affiliate
or Associate thereof is a party or (iv) any other transaction between the
Company and/or any of its Subsidiaries or other Affiliates and any Stockholder
and/or any Affiliate or Associate thereof.
(c) Xx. Xxxxx shall use his best efforts to cause the Xxxxx
Directors to abstain from voting on all matters in which such Directors have an
interest that differs from those of the Company's other stockholders in
accordance with applicable law and customary corporate practice, including,
without limitation, matters relating to (i) any amendment of or waiver under any
agreement to which any such Xxxxx Director or any Affiliate or Associate of such
Xxxxx Director is a party or (ii) any other transaction between the Company
and/or any of its Subsidiaries or other Affiliates and any such Xxxxx Director
and/or any Affiliate or Associate of such Director.
13
ARTICLE IV
STANDSTILL PROVISIONS
SECTION 4.01. Ownership of the Series B Preferred. The Stockholders
severally and not jointly, represent and warrant to all other parties hereto
that the Stockholders, together with their Affiliates and Associates,
Beneficially Own in the aggregate, as of the date hereof, 150,000 shares of
Series B Preferred and no other securities of the Company.
SECTION 4.02. Transfer Restrictions. (a) Until the earlier of (i)
August 6, 2000 or (ii) the occurrence of a Change of Control, the Stockholders
and Xx. Xxxxx shall not, and shall cause their Permitted Transferees not to,
directly or indirectly, sell, transfer, assign, pledge, hypothecate or otherwise
dispose of ("Transfer") any Restricted Securities, except (A) to an Affiliate
that expressly assumes all of such Stockholder's or Xx. Xxxxx'x, as the case may
be, obligations under this Agreement (with respect to any Stockholder, a
"Stockholder Permitted Transferee", with respect to Xx. Xxxxx, an "Xxxxx
Permitted Transferee", and together with the Stockholder Permitted Transferees,
"Permitted Transferees") following the delivery of written notice of such
Transfer to the Company, (B) any Transfer from Xx. Xxxxx or any Xxxxx Permitted
Transferee to ING (or its successor) pursuant to the terms of the Pledge
Agreement or any sale by Xx. Xxxxx or any Xxxxx Permitted Transferee to any
third party if all of the net after tax proceeds from such sale are used to
repay indebtedness under the Credit Agreement dated as of November 10, 1997
between Xx. Xxxxx and ING, including any amendment, replacement or refinancing
thereof, (C) any Transfer by the estate of Xx. Xxxxx or any Xxxxx Permitted
Transferee following Xx. Xxxxx'x death, (D) any Transfer by Xx. Xxxxx or any
Xxxxx Permitted Transferee, which together with all other Transfers by Xx. Xxxxx
or any Xxxxx Permitted Transferee during the immediately preceding 12 months
(other than pursuant to clause (B) above), does not exceed 10% of the number of
shares of Common Stock Beneficially Owned by Xx. Xxxxx and the Xxxxx Permitted
Transferees on the date hereof, (E) any Transfer by Xx. Xxxxx or any Xxxxx
Permitted Transferee at any time following the termination of Xx. Xxxxx'x
employment with the Company as chief executive officer, (F) in transactions
(including tender offers and exchange offers) either (1) approved by the Board
or (2) with respect to the Stockholders or any Stockholder Permitted Transferees
only, in which Xx. Xxxxx Transfers any Restricted Securities (other than
pursuant to clauses (B)-(E) above) and (G) any pledge of Restricted Securities;
provided, however, that in the event of a material breach or default under this
Agreement, the Voting Agreement or the Subscription Agreement (x) by Xx. Xxxxx
or the Company, then any Stockholder or any Stockholder Permitted Transferee may
Transfer Restricted Securities or (y) by any of the Stockholders, then Xx. Xxxxx
or any Xxxxx Permitted Transferee may Transfer Restricted Securities, in each
case, subject only to the restrictions contained in Section 4.02(b).
(b) Notwithstanding paragraph (a) above, the Stockholders, Xx. Xxxxx
and the Permitted Transferees shall not Transfer any Restricted Securities (i)
except through private or public sales that comply with applicable securities
laws, (ii) to Persons (or any other reasonably
14
foreseeable subsequent transferee) who, to the knowledge of any of the
Stockholders, Xx. Xxxxx or their Permitted Transferees, as the case may be,
following such Transfer would Beneficially Own 10% or more of the outstanding
shares of Common Stock (on a Fully Diluted Basis) or (iii) to a Person (A) that
is a direct competitor in any major line of business of the Company or its
Subsidiaries or (B) whose ownership of the Restricted Securities could
reasonably be expected, in the opinion of the Board, to materially disadvantage
the businesses of the Company and its Subsidiaries or could reasonably be
expected to have an adverse effect on the future profitability of the Company
and its Subsidiaries, taken as a whole.
(c) Each Stockholder agrees not to, directly or indirectly, Transfer
its interests in any Stockholder Permitted Transferee so that it ceases to be a
Stockholder Permitted Transferee unless prior thereto the Restricted Securities
held by such entity are transferred to any Stockholder or one or more
Stockholder Permitted Transferees.
(d) Xx. Xxxxx agrees not to, directly or indirectly, Transfer his
interests in any Xxxxx Permitted Transferee so that it ceases to be an Xxxxx
Permitted Transferee unless prior thereto the Restricted Securities held by such
entity are transferred to Xx. Xxxxx or one or more Xxxxx Permitted Transferees.
(e) No transferee (other than a Stockholder, Xx. Xxxxx or their
Permitted Transferees) of Restricted Securities shall be entitled to any of the
rights set forth under this Agreement by virtue of its ownership of such
Restricted Securities.
(f) Any attempted Transfer in violation of this Section 4.02 shall
be null, void and of no force and effect, and the Company shall not give effect
to any such attempted Transfer.
SECTION 4.03. Acquisition of Additional Shares; Other Restrictions.
During the Standstill Period, except with the prior approval of a majority of
the Directors who are not Stockholder Directors and except as expressly
permitted by this Agreement or any amendment hereto, the Stockholders shall not,
directly or indirectly, and shall cause the Stockholder Permitted Transferees
not to, directly or indirectly:
(a) acquire, announce an intention to acquire, offer to
acquire, or enter into any agreement, arrangement or undertaking of any
kind the purpose of which is to acquire, by purchase, exchange or
otherwise (i) Beneficial Ownership of any shares of Common Stock or any
other security convertible into, or any option, warrant or right to
acquire, Common Stock, if such acquisition would cause the Beneficial
Ownership of the Stockholders and the Stockholder Permitted Transferees to
be (A) more than 49.9% of the outstanding shares of Common Stock (on a
Fully Diluted Basis) if prior to such transaction the Stockholders and the
Stockholder Permitted Transferees Beneficially Own 40% or more of the
outstanding shares of Common Stock (on a Fully Diluted Basis) or (B) more
than 40% of the outstanding shares of Common Stock (on a Fully Diluted
15
Basis) if prior to such transaction the Stockholders and the Stockholder
Permitted Transferees Beneficially Own less than 40% of the outstanding
shares of Common Stock (on a Fully Diluted Basis) (each of the percentages
described in clauses (A) and (B) above being hereinafter referred to, as
applicable, as the "Maximum Stockholder Stock Ownership Percentage"), (ii)
one-third or more of the outstanding shares of Senior Preferred Stock or
(iii) a significant portion of the assets of the Company or any of its
Affiliates. With respect to clause (i) above, any increase in Beneficial
Ownership by the Stockholders and any Stockholder Permitted Transferees
resulting from any Accretion Amounts (as such term is defined in the
Certificate of Designation), from any dividend in the form of Common Stock
made with respect to the Conversion Stock, or from any repurchase of
Common Stock by the Company shall not be included in the Maximum Stock
Ownership Percentage; provided, however, that in all cases, the
Stockholders may acquire securities of the Company pursuant to Section
4.05 or pursuant to the issuance of any dividends on Common Stock.
(b) solicit, or participate in any solicitation of, proxies
with respect to any Common Stock or other voting securities of the
Company, or become a "participant" in a "solicitation" (as such terms are
defined in Rule 14A of the Exchange Act) in opposition to any matter that
has been recommended by a majority of the Directors or in favor of any
matter that has not been approved by a majority of the Directors unless
the Company or Xx. Xxxxx has breached any material provision of Article II
or Article III (which breach shall not have been cured within 10 Business
Days following receipt by the breaching party of written notice of such
breach);
(c) propose or otherwise solicit stockholders of the Company
for the approval of one or more stockholder proposals, seek or solicit
support for (whether publicly or privately) any written consent of
stockholders of the Company, attempt to call a special meeting of
stockholders, nominate or attempt to nominate any Person for election as a
Director (except in accordance with Article II), or seek the removal or
resignation of any Director (except in accordance with Article II), in
each case in opposition to any matter that has been recommended by a
majority of the Directors or in favor of any matter that has not been
approved by a majority of the Directors unless the Company or Xx. Xxxxx
has breached any material provision of Article II or Article III (which
breach shall not have been cured within 10 Business Days following receipt
by the breaching party of written notice of such breach);
(d) deposit any securities of the Company into a voting trust
or similar agreement or subject any securities of the Company to any
arrangement or agreement with respect to the voting of such Common Stock
other than an agreement or arrangement solely among the Stockholders and
the Stockholder Permitted Transferees;
16
(e) take any action to form, join or in any way participate in
any partnership, limited partnership, syndicate or other Group with
respect to Common Stock or otherwise act in concert with any Person for
the purpose of circumventing the provisions or purposes of this Agreement;
(f) unless the Company is the subject of a bona fide
unsolicited tender offer, exchange offer or other takeover attempt,
propose (or publicly announce or otherwise disclose an intention to
propose), any tender or exchange offer, merger, consolidation, share
exchange, business combination, restructuring, recapitalization or similar
transaction involving the Company;
(g) solicit, offer, seek to effect, negotiate with or provide
any confidential information relating to the Company or its business to
any other Person with respect to any tender or exchange offer, merger,
consolidation, share exchange, business combination, restructuring,
recapitalization or similar transaction involving the Company;
(h) make or in any way advance any request or proposal to
amend, modify or waive any provision of this Agreement in a manner that
requires public disclosure by any of the parties hereto; or
(i) announce an intention to do, or solicit, assist, prompt,
induce or attempt to induce any Person to do, any of the actions
restricted or prohibited under subparagraphs (a) through (h) above.
SECTION 4.04. Additional Shares. All shares of Restricted Securities
acquired by any of the parties hereto or the Permitted Transferees pursuant to
or in compliance with this Article IV or as a result of a recapitalization of
the Company, or any Accretion Amount (as such term is defined in the Certificate
of Designation) or stock dividends or any other action taken by the Company,
shall be subject to all of the terms, covenants and conditions of this
Agreement.
SECTION 4.05. Anti-Dilutive Rights. (a) Except as provided in
Section 4.05(c) below, the Company shall not issue, sell or transfer to any
Person any Common Stock or securities convertible into, or exercisable for,
Common Stock unless the Stockholders, Xx. Xxxxx and any Permitted Transferees
are offered in writing the right to purchase, at the same price and on the same
terms proposed to be issued and sold, an amount of such Common Stock or other
securities (the "Maintenance Securities") as is necessary for each of the
Stockholders, Xx. Xxxxx and any Permitted Transferees to maintain, individually,
the same level of its respective percentage Beneficial Ownership of Common Stock
(on a Fully Diluted Basis) as it owned immediately prior to such issuance
("Anti-Dilutive Rights"). In the case of a public offering, the Company shall,
as part of its offer, provide a copy of any preliminary prospectus containing
either the indicative price range of the offered securities or trading
information relating to the offered securities, as the case may be, and other
information concerning the offering reasonably
17
requested by the Stockholders, Xx. Xxxxx or any Permitted Transferee. The
Stockholders, Xx. Xxxxx and any Permitted Transferee shall have the right,
during the period specified in Section 4.05(b), to accept the offer for any or
all of the Maintenance Securities offered to each of them on their own behalf or
on behalf of any Affiliate (and, in the case of Oak Hill, on behalf of Oak Hill
Securities Fund, L.P.) not otherwise accepting such offer to acquire Maintenance
Securities under this Section 4.05.
(b) If any Stockholder, Xx. Xxxxx or any Permitted Transferee does
not deliver to the Company written notice of acceptance of any offer made
pursuant to Section 4.05(a) with respect to a public offering within five
Business Days after receipt by such Stockholder, Xx. Xxxxx, or any Permitted
Transferee, as the case may be, of a preliminary prospectus (filed with the SEC
as part of a registration statement) containing the pricing information
indicated in Section 4.05(a) above, or, with respect to any transaction other
than a public offering, within 15 Business Days after receipt of such offer by
such Stockholder, Xx. Xxxxx, or any Permitted Transferee, as the case may be,
such Stockholder, Xx. Xxxxx or Permitted Transferee shall be deemed to have
waived its or his, as the case may be, right to purchase all or any part of its
Maintenance Securities as set forth in such offer but such Stockholder, Xx.
Xxxxx or any such Permitted Transferee shall retain its or his, as the case may
be, rights under this Section 4.05 with respect to future offers.
(c) The Anti-Dilutive Rights set forth above shall not apply to (i)
the grant or exercise of options to purchase Common Stock or the issuance of
shares of Common Stock to employees or Directors of the Company or any of its
Subsidiaries or otherwise pursuant to an Employee Plan or similar plan whether
in existence on the date hereof or otherwise duly adopted by the Board hereafter
(whether or not such options were issued prior to the date hereof, or are
hereafter issued), (ii) the issuance of warrant shares, or of shares of Common
Stock issuable upon exercise of any option, warrant, convertible security or
other rights to purchase or subscribe for Common Stock which, in each case, had
been issued prior to the date hereof or in compliance with Section 4.05(a) or
Section 4.05(c)(i), (iii) securities issued pursuant to any stock split, stock
dividend or other similar stock recapitalization or (iv) securities issued by
the Company for any consideration other than cash as may be approved by the
Board.
(d) A closing for the purchase of such Maintenance Securities
pursuant to this Section 4.05(d) shall occur on the later of (i) the date on
which such public or private issuance occurs and (ii) such date as may be
mutually agreed to by the Company, Xx. Xxxxx, any Xxxxx Permitted Transferee and
Oak Hill on behalf of any Stockholder and any Stockholder Permitted Transferee,
as the case may be, and shall take place at the offices of the Company or at
such other reasonable location as the Company may otherwise notify any
Stockholder, Xx. Xxxxx and/or any Permitted Transferee, as the case may be, at
the time specified by the Company in such notice provided to any Stockholder,
Xx. Xxxxx or any Permitted Transferee, as the case may be, at least five days
prior to such closing date. In connection with such closing, the Company, Xx.
Xxxxx, any Stockholder or any Permitted Transferee, as the case may be, shall
provide such closing
18
certificates and other closing deliveries provided in the transaction giving
rise to the rights specified in Section 4.05.
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.01. Restrictive Legend. Each certificate representing the
Series B Preferred or Conversion Stock shall, except as otherwise provided in
this Article V, be stamped or otherwise imprinted with legends substantially in
the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS IT HAS BEEN REGISTERED UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THE SECURITY REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND CERTAIN RESTRICTIONS ON VOTING CONTAINED IN
THE STOCKHOLDERS' AGREEMENT, DATED AUGUST 6, 1999, AS THE SAME MAY BE
AMENDED, AMONG THE COMPANY AND CERTAIN STOCKHOLDERS LISTED ON THE
SIGNATURE PAGES THEREOF.
A certificate shall not bear the Securities Act legend or the legend regarding
this Agreement, as the case may be, if in the opinion of counsel satisfactory to
the Company (it being agreed that Shearman & Sterling shall be satisfactory) the
securities being sold thereby may be publicly sold without registration under
the Securities Act or may be sold without being subject to the restrictions on
sale specified in Article IV.
SECTION 5.02. Notice of Proposed Transfer. Prior to any proposed
Transfer of any shares of Registrable Stock (other than under the circumstances
described in Section 5.03, 5.04 or 5.05), permitted under Article IV, the holder
thereof shall give written notice to the Company of its intention to effect such
Transfer. Each such notice shall describe the manner of the proposed Transfer
and, if known, the identity of the proposed transferee and, if requested by the
Company, shall be accompanied by an opinion of counsel satisfactory to the
Company to the effect that the proposed Transfer may be effected without
registration under the Securities Act, whereupon the holder of such stock shall
be entitled to Transfer such stock in accordance with the terms of its notice,
subject in any event to the restrictions in Article IV; provided, however, that
no such opinion of counsel shall be required for a Transfer to one or more
Permitted Transferees subject in any event to the restrictions in Article IV.
Each certificate representing
19
Registrable Stock transferred as above provided shall bear the legends set forth
in Section 5.01, except that such certificate shall not bear such legends if (i)
such Transfer is in accordance with the provisions of Rule 144 of the Securities
Act (or any other rule permitting public sale without registration under the
Securities Act, but not Rule 144A) or (ii) the opinion of counsel referred to
above is to the further effect that the transferee and any subsequent transferee
(other than an Affiliate of the Company) would be entitled to Transfer such
securities in a public sale without registration under the Securities Act. The
restrictions provided for in this Section 5.02 shall not apply to securities
that are not required to bear the legends prescribed by Section 5.01 in
accordance with the provisions of Section 5.01.
SECTION 5.03. Request for Registration. (a) Subject to the
provisions of Article IV, at any time after August 6, 2000, one or more Holders
of Registrable Stock (the "Initiating Holders") may request in a written notice
(which notice shall state the number of shares of Registrable Stock to be so
registered and the intended method of distribution) that the Company file a
registration statement under the Securities Act (or a similar document pursuant
to any other statute then in effect corresponding to the Securities Act)
covering the registration of any or all Registrable Stock held by such
Initiating Holders in the manner specified in such notice; provided, however,
that there must be included in such registration at least 10% of the Registrable
Stock issued (or any lesser percentage if the anticipated aggregate offering
price would exceed $25 million). Following receipt of any notice under this
Section 5.03, the Company shall (x) within 30 days notify all other Holders of
such request in writing and (y) use its best efforts to cause to be registered
under the Securities Act all Registrable Stock that the Initiating Holders and
such other Holders have, within ten days after the Company has given such
notice, requested be registered in accordance with the manner of disposition
specified in such notice by the Initiating Holders.
(b) If the Initiating Holders intend to have the Registrable Stock
distributed by means of an underwritten offering, the Company shall include such
information in the written notice referred to in clause (x) of paragraph (a)
above. In such event, the right of any Holder to include its Registrable Stock
in such registration shall be conditioned upon such Holder's participation in
such underwritten offering and the inclusion of such Holder's Registrable Stock
in the underwritten offering (unless otherwise mutually agreed by a majority in
interest of the Initiating Holders and such Holder) to the extent provided
below. All Holders proposing to distribute Registrable Stock through such
underwritten offering shall enter into an underwriting agreement in customary
form with the underwriter or underwriters. Such underwriter or underwriters
shall be selected by a majority in interest of the Initiating Holders and shall
be approved by the Company, which approval shall not be unreasonably withheld.
(c) Notwithstanding any provision of this Agreement to the contrary,
(i) the Company shall not be required to effect a registration
pursuant to this Section 5.03 during the period starting with the date
which is 30 days prior to the date of
20
the initial public filing by the Company of, and ending on a date that is
120 days following the effective date of, a registration statement
pertaining to a public offering of securities for the account of the
Company or on behalf of the selling stockholders under any other
registration rights agreement that the Holders have been entitled to join
pursuant to Section 5.04; provided, however, that the Company shall
actively employ in good faith all reasonable efforts to cause such
registration statement to become effective as promptly as practicable;
(ii) if (A)(i) the Company is in possession of material nonpublic
information relating to the Company or any of its Subsidiaries and (ii)
the Company determines in good faith that public disclosure of such
material nonpublic information would not be in the best interests of the
Company and its stockholders, (B)(i) the Company has made a public
announcement relating to an acquisition or business combination
transaction that includes the Company and/or one or more of its
Subsidiaries that is material to the Company and its Subsidiaries taken as
a whole and (ii) the Company determines in good faith that (x) offers and
sales of Registrable Stock pursuant to any registration statement prior to
the consummation of such transaction (or such earlier date as the Company
shall determine) is not in the best interests of the Company and its
stockholders or (y) it would be impracticable at the time to obtain any
financial statements relating to such acquisition or business combination
transaction that would be required to be set forth in a registration
statement or (C) the Company shall furnish to such Holders a certificate
signed by the president of the Company stating that in the good faith
opinion of the Board such registration would interfere with any material
transaction or financing, confidential negotiations, including, without
limitation, negotiations relating to an acquisition or business
combination transaction, or business activities then being pursued by the
Company or any of its Subsidiaries, then, in any such case, the Company's
obligation to use all reasonable efforts to file a registration statement
shall be deferred, or the effectiveness of any registration statement may
be suspended, in each case for a period not to exceed 120 days; provided,
however, that the Company may not delay the filing or suspend the
effectiveness of any registration statement under this Section 5.03(ii) on
more than one occasion in any consecutive twelve-month period;
(iii) the Company shall not be required to effect a registration
pursuant to this Section 5.03 if the Registrable Stock requested by all
Holders to be registered pursuant to such registration are included in,
and eligible for sale under, a Shelf Registration (as defined below); and
(iv) the Company shall not be required to effect a registration
pursuant to this Section 5.03 more than one time in any consecutive
twelve-month period.
(d) With respect to any registration pursuant to this Section 5.03,
the Company may include in such registration any of its primary securities sold
on its own behalf or
21
securities being offered by ING pursuant to the ING Registration Rights
Agreement. If, in the opinion of the managing underwriter (or, in the case of a
non-underwritten offering, in the opinion of the Company), the total amount of
all securities to be registered, including Registrable Stock, will exceed the
maximum amount of the Company's securities which can be marketed (i) at a price
reasonably related to the then current market value of such securities, and (ii)
without otherwise materially and adversely affecting the entire offering, then
subject to the registration rights of the holders of the Senior Preferred Stock
and ING, the Company securities and Registrable Stock to be included in such
registration shall be included in the order as set forth in clauses (1) and (2)
below:
(1) In any registration pursuant to this Section 5.03 where the
Stockholders are the Initiating Holders:
(A) first, any securities of the Initiating Holders;
(B) second, any securities offered by the Company; and
(C) third, other Holders requesting registration of
Registrable Stock in proportion (as nearly as practicable) to
the amount of Registrable Stock requested to be included by
such Holder at the time of filing the registration statement.
(2) In any registration pursuant to this Section 5.03 where Xx.
Xxxxx is the Initiating Holder:
(A) first, any securities of the Company; and
(B) second, any securities of Holders requesting registration
of Registrable Stock, in proportion (as nearly as practicable)
to the amount of Registrable Stock requested to be included by
such Holder at the time of filing the registration;
Notwithstanding clause (2) above, but subject to the registration rights of the
holders of the Senior Preferred Stock and ING, Xx. Xxxxx, his estate or the
Xxxxx Permitted Transferees, as the case may be, shall have priority over the
Company and each other Holder in selling any and all of their shares of
Registrable Stock on one occasion within two years following Xx. Xxxxx'x (1)
termination or resignation from the office of chief executive officer of the
Company or (2) death.
(e) The Company shall not be obligated to effect and pay for more
than four registrations of the Stockholders (two of which may be Shelf
Registrations requested pursuant to Section 5.05) and three registrations of Xx.
Xxxxx (one of which may be a Shelf Registration requested pursuant to Section
5.05) pursuant to this Section 5.03; provided, however, that a
22
registration requested by any Holder pursuant to this Section 5.03 shall not be
deemed to have been effected for purposes of this Section 5.03(e) unless (i) it
has been declared effective by the SEC, (ii) it has remained effective for the
period set forth in Section 5.06(a), (iii) the offering of Registrable Stock
pursuant to such registration is not subject to any stop order, injunction or
other order or requirement of the SEC (other than any such stop order,
injunction, or other requirement of the SEC prompted by any act or omission of
Holders of Registrable Stock) and (iv) such Holder was permitted to include in
such registration at least one-half of the Registrable Stock requested by it or
him, as the case may be, to be included in such registration.
SECTION 5.04. Incidental Registration. (a) Subject to Section 5.09
and to the registration rights of the holders of the Senior Preferred Stock and
ING, if at any time the Company determines that it shall file a registration
statement under the Securities Act for the registration of Common Stock (other
than a registration statement on a Form S-4 or S-8 or an offering of securities
solely to the Company's existing stockholders) on any form that would also
permit the registration of the Registrable Stock and such filing is to be on its
behalf or on behalf of selling holders of its securities for the general
registration of Common Stock to be sold for cash, the Company shall each such
time promptly give the Holders written notice of such determination setting
forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than 15 days from the date of such
notice, and advising the Holders of their right to have Registrable Stock
included in such registration. In the case of a registration statement to be
filed on behalf of selling holders of its securities, the Company shall also
indicate in such notice whether it will be registering securities on its own
behalf as part of such registration statement. Upon the written request of any
Holder received by the Company not later than 15 days after the date of the
Company's notice (which request shall state the number of Registrable Shares to
be so registered and the intended method of distribution), the Company shall,
subject to Section 5.04(b) below, use all reasonable efforts to cause to be
registered under the Securities Act all of the Registrable Stock that each such
Holder has so requested to be registered; provided, however, that the Company
shall have the right to postpone or withdraw any registration effected pursuant
to this Section 5.04 without obligation or liability to such Holder.
(b) If, in the opinion of the managing underwriter (or, in the case
of a non-underwritten offering, in the opinion of the Company), the total amount
of such securities to be so registered, including such Registrable Stock, will
exceed the maximum amount of the Company's securities which can be marketed (i)
at a price reasonably related to the then current market value of such
securities and (ii) without otherwise materially and adversely affecting the
entire offering, then subject to the registration rights of the holders of the
Senior Preferred Stock and ING, the Company securities and Registrable Stock to
be included in such registration shall be included in the following order:
(A) first, any securities of the Company;
23
(B) second, any Registrable Stock of the Stockholders or the Stockholder
Permitted Transferees; and
(C) third, any Registrable Stock of Xx. Xxxxx or the Xxxxx Permitted
Transferees or any other stockholder hereafter granted incidental
registration rights in proportion (as nearly as practicable) to the amount
of Registrable Stock requested to be included by Xx. Xxxxx, the Xxxxx
Permitted Transferees or such stockholders at the time of the filing of
the registration statement.
SECTION 5.05. Shelf Registration. (a) An Initiating Holder may use
registration rights granted pursuant to Section 5.03, subject to the limitations
of paragraphs (d) and (e) of Section 5.03, to request that the Company file a
"shelf" registration statement pursuant to Rule 415 under the Securities Act or
any successor rule (the "Shelf Registration") with respect to the Registrable
Stock. The Company shall (i) use all reasonable efforts to have the Shelf
Registration filed within 30 days of such request and declared effective as soon
as reasonably practicable following such request and (ii) subject to Section
5.03(c)(iii), use all reasonable efforts to keep the Shelf Registration
continuously effective from the date that such Shelf Registration is declared
effective until at least the earlier of such time as (A) all such Registrable
Stock has been sold thereunder or (B) the second anniversary of such effective
date in order to permit the prospectus forming a part thereof to be usable by
Holders during such period.
(b) Subject to Section 5.03(c)(iii), the Company shall supplement or
amend the Shelf Registration, (i) as required by the registration form utilized
by the Company or by the instructions applicable to such registration form or by
the Securities Act, (ii) to include in such Shelf Registration any additional
securities that become Registrable Stock by operation of the definition thereof
and (iii) following the written request of an Initiating Holder pursuant to
Section 5.05(c), to cover offers and sales of all or a part of the Registrable
Stock by means of an underwriting. The Company shall furnish to the Holders of
the Registrable Stock to which the Shelf Registration relates copies of any such
supplement or amendment sufficiently in advance (but in no event less than five
Business Days in advance) of its use or filing with the SEC to allow the Holders
a meaningful opportunity to comment thereon.
(c) The Holders may, at their election and upon written notice by an
Initiating Holder to the Company, subject to the limitations set forth in
Section 5.03(c)(iii), effect offers and sales under the Shelf Registration by
means of one or more underwritten offerings, in which case the provisions of
Section 5.03(b) shall apply to any such underwritten distribution of securities
under the Shelf Registration and such underwriting shall, if sales of
Registrable Stock pursuant thereto shall have closed, be regarded as the
exercise of one of the registration rights contemplated by Section 5.03.
24
SECTION 5.06. Obligations of the Company. Whenever required under
Sections 5.03 and 5.05 to use all reasonable efforts to effect the registration
and sale of any Registrable Stock under the Securities Act, the Company shall:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Stock (which shall be filed in no event later
than 90 days after written notice requesting a registration statement
under Section 5.03 or 5.05 has been received) and use all reasonable
efforts to cause such registration statement to become and remain
effective for the period of the distribution contemplated thereby
determined as provided hereafter; provided, however, that the Company
shall not be required to keep any Registration Statement (other than the
Shelf Registration) effective more than 120 days;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Stock
covered by such registration statement;
(c) furnish to the Holders such reasonable numbers of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus and any amendments or supplements thereto) in
conformity with the requirements of the Securities Act, any exhibits filed
therewith and such other documents and information as they may reasonably
request;
(d) use all reasonable efforts to register or qualify the
Registrable Stock covered by such registration statement under such other
securities or "blue sky" laws of such jurisdiction within the United
States and Puerto Rico as shall be reasonably appropriate for the
distribution of the Registrable Stock covered by the registration
statement; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business
in or to file a general consent to service of process in any jurisdiction
wherein it would not, but for the requirements of this paragraph (except
that the Company will use all reasonable efforts to register or qualify
Registrable Stock in such additional jurisdictions as the Holder may
request subject to the foregoing proviso and at the Holder's own expense),
be obligated to do so; and provided further that the Company shall not be
required to qualify such Registrable Stock in any jurisdiction in which
the securities regulatory authority requires that any Holder submit any
shares of its Registrable Stock to the terms, provisions and restrictions
of any escrow, lockup or similar agreement(s) for consent to sell
Registrable Stock in such jurisdiction unless such Holder agrees to do so;
(e) promptly notify each Holder for whom such Registrable Stock is
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of
the happening of any event as a result of
25
which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state
any material 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 such Holder promptly
prepare and furnish to such Holder 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 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 light of the
circumstances under which they were made. In the event the Company shall
give such notice, the Company shall extend the period during which such
Registration Statement shall be maintained effective as provided in
Section 5.06(a) (or, in the case of the Shelf Registration, Section
5.05(a)) by the number of days during the period from and including the
date of the giving of such notice to the date when the Company shall make
available to the Holders such supplemented or amended prospectus;
(f) furnish, at the request of any Holder requesting registration of
Registrable Stock pursuant to Section 5.03 or 5.05, if the method of
distribution is by means of an underwriting, on the date that the Shares
of Registrable Stock are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Stock is not being sold
through underwriters, on the date that the registration statement with
respect to such shares of Registrable Stock becomes effective, (1) a
signed opinion, dated on or about such date, of the independent legal
counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and if such Registrable Stock is
not being sold through underwriters, then to the Holders making such
request, as to such matters as such underwriters or the Holders holding a
majority of the Registrable Stock included in such registration, as the
case may be, may reasonably request and as would be customary in such a
transaction, and (2) letters dated on or about such date and the date the
offering is priced from the independent certified public accountants of
the Company, addressed to the underwriters, if any, and if such
Registrable Stock is not being sold through underwriters, then to the
Holders making such request and, if such accountants refuse to deliver
such letters to such Holders, then to the Company (i) stating that they
are independent certified public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the financial
statements and other financial data of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereto, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and (ii) covering such other
financial matters (including information as to the period ending not more
than five Business Days prior to the date of such letters) with respect to
the registration in respect of which such letter is being given as such
underwriters or the Holders holding a majority of the Registrable Stock
included in such registration, as the case may be, may reasonably request
and as would be customary in such a transaction;
26
(g) enter into customary agreements (including if the method of
distribution is by means of an underwriting, an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Stock
to be so included in the registration statement;
(h) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
securityholders, as soon as reasonably practicable, but not later than 18
months after the effective date of the registration statement, an earnings
statement covering the period of at least 12 months beginning with the
first full month after the effective date of such registration statement,
which earnings statements shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder; and
(i) use all reasonable efforts to list the Registrable Stock covered
by such registration statement with any U.S. nationally recognized
securities exchange on which the Common Stock is then listed.
For purposes of Sections 5.06(a) and 5.06(b), the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby and six months after the effective
date thereof.
SECTION 5.07. Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to Article V of
this Agreement that the Holders shall furnish to the Company such information
regarding themselves, the Registrable Stock held by them, and the intended
method of disposition of such securities as the Company shall reasonably request
and as shall be required in connection with the action to be taken by the
Company.
SECTION 5.08. Expenses of Registration. All expenses incurred in
connection with each registration pursuant to Sections 5.03, 5.04 and 5.05 of
this Agreement, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incidental to such performance and compliance), fees of the National Association
of Securities Dealers, Inc. or listing fees, messenger and delivery expenses,
all fees and expenses of complying with state securities or "blue sky" laws, and
fees and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders (which counsel, subject to
the registration rights of holders of the Senior Preferred Stock and ING, shall
be selected by the Holders holding a majority in interest of the Registrable
Stock being registered), shall be paid by the Company; provided, however, that
if a registration request pursuant to Section 5.03 or
27
5.05 is subsequently withdrawn by the Holders the Company shall not be required
to pay any expenses of such registration proceeding, and such withdrawing
Holders shall bear such expenses. The Holders shall bear and pay the
underwriting commissions and discounts applicable to securities offered for
their account and the fees and disbursements of any additional counsel in
connection with any registrations, filings and qualifications made pursuant to
this Agreement.
SECTION 5.09. Underwriting Requirements. In connection with any
underwritten offering, the Company shall not be required under Section 5.04 to
include shares of Registrable Stock in such underwritten offering unless the
Holders of such shares of Registrable Stock accept the terms of the underwriting
of such offering that have been reasonably agreed upon between the Company and
the underwriters selected by the Stockholders.
SECTION 5.10. Indemnification. In the event any Registrable Stock is
included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Holder, such
Holder's directors and officers, agents of such Holder, each person who
participates in the offering of such Registrable Stock, including
underwriters (as defined in the Securities Act), and each Person, if any,
who controls such Holder or participating person within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which they may become subject under the Securities Act, the
Exchange Act, state securities or "blue sky" laws or otherwise, insofar as
such losses, claims, damages or liabilities (or proceedings in respect
thereof) arise out of or are based on any untrue or alleged untrue
statement of any material fact contained in such registration statement on
the effective date thereof (including any prospectus filed under Rule 424
under the Securities Act or any amendments or supplements thereto) or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse each such
Holder, such Holder's directors and officers, agents, such participating
person or controlling person for any legal or other expenses reasonably
incurred by them (but not in excess of expenses incurred in respect of one
counsel for Xx. Xxxxx and any Xxxxx Permitted Transferee and one counsel
for the Stockholders and any Stockholder Permitted Transferee, as the case
may be, all of them unless there is an actual conflict of interest between
any indemnified parties, which indemnified parties may be represented by
separate counsel) in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 5.10(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company;
provided further that the Company shall not be liable to any Holder, such
Holder's directors and officers, agents, participating person or
controlling person in any such case for any such loss, claim, damage,
liability or action to the extent that it arises
28
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in connection with such registration
statement, preliminary prospectus, final prospectus or amendments or
supplements thereto, in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by any such Holder, such Holder's directors and officers,
agents, participating person or controlling person. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of any such Holder, such Holder's directors and officers,
agents, participating person or controlling person, and shall survive the
Transfer of such securities by such Holder.
(b) Each Holder requesting or joining in a registration severally
and not jointly shall indemnify and hold harmless the Company, each of its
directors and officers, each Person, if any, who controls the Company
within the meaning of the Securities Act, and each agent and any
underwriter for the Company (within the meaning of the Securities Act)
against any losses, claims, damages or liabilities, joint or several, to
which the Company or any such director, officer, controlling person, agent
or underwriter may become subject, under the Securities Act, Exchange Act,
state securities or "blue sky" laws or otherwise, insofar as such losses,
claims, damages or liabilities (or proceedings in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such registration statement on the
effective date thereof (including any prospectus filed under Rule 424
under the Securities Act or any amendments or supplements thereto) or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in such registration statement,
preliminary or final prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished by or
on behalf of such Holder expressly for use in connection with such
registration; and each such Holder shall reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, agent or underwriter (but not in excess of expenses
incurred in respect of one counsel for all of them unless there is an
actual conflict of interest between any indemnified parties which
indemnified parties may be represented by separate counsel) in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 5.10(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of such Holder; and provided further that the
liability of each Holder hereunder shall be limited to the proportion of
any such loss, claim, damage, liability or expense which is equal to the
proportion that the net proceeds from the sale of the Shares sold by such
Holder under such registration statement bears to the total net proceeds
from the sale of all securities sold thereunder, but not in any event
29
to exceed the net proceeds received by such Holder from the sale of
Registrable Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party under this
Section 5.10 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5.10, notify the indemnifying party
in writing of the commencement thereof and the indemnifying party shall
have the right to participate in and assume the defense thereof with
counsel selected by the indemnifying party and reasonably satisfactory to
the indemnified party; provided, however, that an indemnified party shall
have the right to retain its own counsel, with all fees and expenses
thereof to be paid by such indemnified party, and to be apprised of all
progress in any proceeding the defense of which has been assumed by the
indemnifying party. The failure to notify an indemnifying party promptly
of the commencement of any such action shall not relieve the indemnifying
party from any liability in respect of such action which it may have to
such indemnified party on account of the indemnity contained in this
Section 5.10, unless (and only to the extent) the indemnifying party was
prejudiced by such failure, and in no event shall such failure relieve the
indemnifying party from any other liability which it may have to such
indemnified party. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any claim or
pending or threatened proceeding in respect of which the indemnified party
is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising
out of such claim or proceeding.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by applicable law, the indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and the indemnified
party in connection with the actions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether or not any action in question, including any untrue or alleged
untrue statement of material fact or omission or alleged omission to state
a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of
the losses, claims, damages or liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.
30
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.10(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
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.
SECTION 5.11. Lockup. Each Holder shall, in connection with any
registration of the Company's securities, upon the request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
agree in writing not to effect any sale, disposition or distribution of any
Registrable Stock (other than (i) the Registrable Stock included in such
registration or (ii) as permitted by clause (B) of Section 4.02(a)), without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time from 60 days prior to the effective date of such
registration to such time as the Company or the underwriters may specify;
provided, however, that (x) all Executives and Directors shall also have agreed
not to effect any sale, disposition or distribution of any Registrable Stock
under the circumstances and pursuant to the terms set forth in this Section 5.11
and (y) in no event shall the Holders be required to not effect any sale,
disposition or distribution for longer than 180 days after the Registration
Statement becomes effective pursuant to this Section 5.11.
SECTION 5.12. Transfer of Registration Rights. Subject to Article
IV, the registration rights of the Stockholders or Xx. Xxxxx under this
Agreement with respect to any Registrable Stock may be transferred to any
Permitted Transferee of such Registrable Stock; provided, however, that (i) the
Stockholders and Xx. Xxxxx shall give the Company written notice at or prior to
the time of such Transfer stating the name and address of the Permitted
Transferee and identifying the securities with respect to which the rights under
this Agreement are being transferred; (ii) such Permitted Transferee shall agree
in writing, in form and substance reasonable satisfactory to the Company, to be
bound as a Holder by the provisions of this Agreement; and (iii) immediately
following such Transfer, the further disposition of such securities by such
Permitted Transferee is restricted under the Securities Act. Except as set forth
in this Section 5.12, no Transfer of Registrable Stock shall cause such
Registrable Stock to lose such status.
SECTION 5.13. Rule 144 Information. Subject to Article IV, and with
a view to making available the benefits of certain rules and regulations of the
SEC which may at any time permit the sale of the Registrable Stock to the public
without registration, at all times after 90 days after any Shelf Registration
Statement covering a public offering of securities of the Company under the
Securities Act shall have become effective, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
31
(b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities
Act and the Exchange Act; and
(c) furnish to each Holder of Registrable Stock forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as
such Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing such Holder to sell any Registrable Stock
without registration.
ARTICLE VI
FURNISHING OF INFORMATION
SECTION 6.01. Furnishing of Information. For so long as the
Stockholders, on the one hand, and Xx. Xxxxx, on the other hand, Beneficially
Own at least 5% of the outstanding shares of Common Stock (on a Fully Diluted
Basis):
(a) The Company will furnish or make available to the Stockholders
and/or Xx. Xxxxx, as the case may be, its annual reports to stockholders
and any quarterly or other financial reports and information furnished by
it to stockholders pursuant to the requirements of the Exchange Act.
(b) If the Company is not required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, it shall furnish
to the Stockholders and/or Xx. Xxxxx, as the case may be, its financial
statements, including any notes thereto (and with respect to annual
reports, an auditors' report by a nationally recognized firm of
independent certified public accountants), a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and such other
information which the Company would otherwise be required to include in
annual and quarterly reports filed under the Exchange Act.
(c) The Company shall, at any reasonable time and from time to time,
permit the Stockholders and/or Xx. Xxxxx, as the case may be, or any agent
or representative thereof, to examine and make copies of and abstracts
from the records and books of account of the Company, and to discuss the
records, finances and accounts of the
32
Company with any of its officers, Directors and with their independent
certified public accountants.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. Waiver. The parties hereto may agree to (a) extend the
time for the performance of any of the obligations or other acts of other
parties, (b) waive any inaccuracies in the representations and warranties of
other parties contained herein or in any document delivered by other parties
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of other parties contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the parties to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights. Oak Hill shall have all authority to act on behalf of the
other Stockholders under this Section 7.01.
SECTION 7.02. Expenses; Attorneys' Fees. (a) Except as otherwise
specified in this Agreement, all costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
(b) A party in breach of this Agreement shall, on demand, indemnify
and hold harmless the other parties for and against all reasonable out-of-pocket
expenses, including legal fees, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement. The payment of
such expenses is in addition to any other relief to which such other party may
be entitled.
SECTION 7.03. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy, by e-mail or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 7.03):
33
(a) if to the Company or Xx. Xxxxx,
American Skiing Company
Sunday Xxxxx Xxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
Xxxxxxxxxxx X. Xxxxxx
with copies (which shall not constitute notice to the
Company or Xx. Xxxxx) to:
Xxxxxx Xxxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
(e-mail: xxxxxxxxx@xxxxxxxxxxxx.xxx)
and
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxx III, Esq.
(e-mail: xxxxxx@xxxxxxxx.xxx)
Xxxxx X. Xxxxx, Esq.
(e-mail: xxxxxx@xxxxxxxx.xxx)
34
(b) if to the Stockholders,
Oak Hill Capital Partners, L.P.
000 Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxx Xxxxxx
and
Oak Hill Capital Management, Inc.
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxxxxx
with a copy (which shall not constitute notice to the Stockholders)
to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
SECTION 7.04. Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. No party to this Agreement
shall be deemed to be the draftsman of this Agreement.
SECTION 7.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 7.06. Entire Agreement. This Agreement, together with the
Voting Agreement, constitutes the entire agreement of the parties hereto with
respect to the subject
35
matter hereof and supersedes all prior agreements and undertakings, both written
and oral, between the parties with respect to the subject matter hereof.
SECTION 7.07. Assignment. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, with respect to the Company, any successor corporation; provided,
however, other than as contemplated by the Delaware Reincorporation or any other
merger involving the Company, no party hereto shall assign or delegate any of
the rights or obligations created under this Agreement without the prior written
consent of the other parties, except to Affiliates of Oak Hill or to Oak Hill
Securities Fund, L.P.; provided, however, that no such assignment shall release
Oak Hill or any of the other Stockholders from any of their obligations
hereunder. Oak Hill shall have all authority to act on behalf of the other
Stockholders under this Section 7.07.
SECTION 7.08. No Third Party Beneficiaries. Except for the
provisions of Article V relating to indemnified parties, this Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 7.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
parties hereto or (b) by a waiver in accordance with Section 7.01. Oak Hill
shall have all authority to act on behalf of the other Stockholders under this
Section 7.09.
SECTION 7.10. Governing Law; Forum. (a) Prior to the Delaware
Reincorporation, this Agreement shall be governed by, and construed in
accordance with, the laws of the State of Maine and (b) on or after the
occurrence of the Delaware Reincorporation, this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, in each
case, as applicable to contracts executed in and to be performed entirely in
that state and without regard to any applicable conflicts of law principles. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any State or federal court in Maine (if such action or
proceeding is commenced prior to the Delaware Reincorporation) or in Delaware
(if such action or proceeding is commenced after the Delaware Reincorporation).
Each of the parties to this Agreement (a) consents to submit itself to the
personal jurisdiction of any Maine or Delaware State or federal court, as the
case may be, in the event that any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
in relation to this Agreement or any of the other transactions contemplated by
this Agreement in any court other than any Maine or Delaware State or federal
court, as the case may be.
36
SECTION 7.11. Effect of Delaware Reincorporation. This agreement
shall continue in full force and effect notwithstanding any actions taken in
connection with the Delaware Reincorporation.
SECTION 7.12. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 7.13. 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 at law or equity.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first above written.
AMERICAN SKIING COMPANY
By: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: As President
XXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxx
-------------------
CONSENTED TO AND ACKNOWLEDGED BY:
ING US CAPITAL LLC,
AS PLEDGEE OF SHARES
OF CLASS A COMMON
STOCK AND COMMON STOCK
BENEFICIALLY OWNED BY
XXXXXX X. XXXXX
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Director
OAK HILL CAPITAL PARTNERS, L.P.
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
OAK HILL CAPITAL MANAGEMENT
PARTNERS, L.P.
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.,
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By: /s/ Xxxxx X. August
-------------------
Name: Xxxxx X. August
Title: President
OHCP SKI, L.P.
By: Oak Hill Capital Partners, L.P.
its general partner
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
ANNEX A
STOCKHOLDERS
JURISDICTION AND
NAME TYPE OF ORGANIZATION
---- --------------------
Oak Hill Capital Partners, L.P. Delaware L.P.
Oak Hill Capital Management Delaware L.P.
Partners, L.P.
Oak Hill Securities Fund, L.P. Delaware L.P.
OHCP SKI, L.P. Delaware L.P.
-------------------------------------------------------------------------------
