Exhibit 4.9
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STOCKHOLDERS AGREEMENT
Dated as of March 2, 1999
Among
XXXXXXXXX X. XXXXXX
AND
XXXXXX X. XXXXXXX, III
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TABLE OF CONTENTS
PAGE
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Section 1. Definitions.....................................................................................1
Section 2. Voting Arrangements.............................................................................5
(a) ELECTION OF DIRECTORS...........................................................................5
(b) REMOVAL OF DIRECTORS............................................................................6
(c) VACANCIES.......................................................................................6
(d) RIGHTS UNIMPAIRED...............................................................................6
(e) APPOINTMENT OF PROXY............................................................................6
(f) OTHER VOTING RIGHTS.............................................................................7
(g) REGULATORY SAVINGS PROVISION....................................................................7
Section 3. Disposition of Incapacitated Principal Stockholder's Shares.....................................7
Section 4. Restrictions on Transfer........................................................................7
(a) RESTRICTIONS ON TRANSFER........................................................................7
(b) CERTAIN PERMITTED TRANSFERS.....................................................................8
(c) RIGHT OF FIRST REFUSAL..........................................................................8
(d) OPINION OF COUNSEL..............................................................................9
Section 5. Legends.........................................................................................9
(a) STOCKHOLDERS AGREEMENT LEGEND...................................................................9
Section 6. Sale of the Company.............................................................................9
Section 7. Participation Rights...........................................................................10
Section 8. Deadlocks......................................................................................10
(a) DEFINITION.....................................................................................10
(b) INITIATION OF AUCTION..........................................................................10
(c) AUCTION PROCEDURE..............................................................................11
(d) DETERMINATION OF FINAL PURCHASE PRICE..........................................................11
(e) CONSUMMATION OF SALE AND TRANSFER..............................................................11
Section 9. Transfers in Violation of Agreement............................................................11
Section 10. Amendment and Waiver...........................................................................11
Section 11. Severability...................................................................................11
Section 12. Entire Agreement...............................................................................12
Section 13. Successors and Assigns; Third Party Beneficiary................................................12
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Section 14. Counterparts...................................................................................12
Section 15. Remedies.......................................................................................12
Section 16. Notices........................................................................................12
Section 17. Governing Law..................................................................................12
Section 18. Descriptive Headings...........................................................................12
Section 19. Termination....................................................................................12
EXHIBIT A
FORM OF JOINDER
TO
STOCKHOLDERS AGREEMENT.........................................................................14
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STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "AGREEMENT") is dated as of
March 2, 1999 among XXXXXXXXX X. XXXXXX, an individual whose business address is
0000 Xxxxxxxx Xxxxxx Xxxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxx 00000 ("XXXXXX" or a
"PRINCIPAL STOCKHOLDER"), XXXXXX X. XXXXXXX, III, an individual whose business
address is 0000 Xxxxxxxx Xxxxxx Xxxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxx 00000
("XXXXXXX" or a "PRINCIPAL STOCKHOLDER"), and each other person or entity who
hereafter executes a counterpart of this Agreement (or otherwise agrees to be
bound by the provisions hereof) (the Principal Stockholders and each such other
person or entity are sometimes referred to herein individually as a
"STOCKHOLDER" and collectively as the "STOCKHOLDERS").
The parties hereby agree as follows:
SECTION 1 DEFINITIONS. For purposes of this Agreement, the
following terms have the indicated meanings:
"APPROVED SALE" is defined in Section 6.
"AUTHORIZATION DATE" is defined in Section 4(c).
"BENEFICIAL OWNERSHIP" means possession of the power and
authority, either singly or jointly with another, to vote or dispose of or to
direct the voting or disposition of shares of Common Stock.
"BENEFICIAL OWNER" in respect of shares of Common Stock shall
mean the person or persons who possess Beneficial Ownership of such Common
Stock.
"BOARD" means the Company's Board of Directors.
"CLASS A COMMON STOCK" means the Company's Class A common
stock, par value $.01 per share.
"CLASS B COMMON STOCK" means the Company's Class B common
stock, par value $.01 per share.
"CLASS C COMMON STOCK" means the Company's Class C common
stock, par value $.01 per share.
"CLASS B DIRECTORS" means those members of the Board as to the
election or removal of which holders of the Class B Common Stock may exercise
voting rights.
"COMMON STOCK" means the Class A Common Stock, the Class B
Common Stock and the Class C Common Stock.
"COMPANY" means Radio One, Inc., a Delaware corporation.
"COMPANY SALE" means a transaction with one or more
independent third parties pursuant to which such party or parties (i) acquire
(whether by merger, consolidation or transfer or issuance of capital stock)
capital stock of the Company (or any surviving or resulting corporation)
possessing the voting power to elect a majority of the board of directors of the
Company (or such surviving or resulting corporation) or (ii) acquire all or
substantially all of the Company's assets determined on a consolidated basis.
"DEADLOCK" is defined in Section 8(a).
"FAIR MARKET VALUE" as of any date means (a) with respect to
publicly traded Common Stock, the average market trading price of such Common
Stock over the preceding twenty (20) trading days, and (b) with respect to
non-publicly traded Common Stock, the per share fair market value of such Common
Stock as of such date, as determined in good faith by the Board based on such
factors as the Board may deem appropriate; provided that a Principal Stockholder
may request, at his or her own expense, an independent appraisal of such Common
Stock by a nationally recognized investment banking firm acceptable to the other
Principal Stockholder, which such acceptance shall not be unreasonably withheld.
"FINAL AUCTION PRICE" is defined in Section 8(c).
"FINAL PURCHASE PRICE" is defined in Section 8(d).
"XXXXXX" is defined in the preface.
"INCAPACITATED" means, with respect to an individual, that (1)
such individual is under a legal disability (under the laws of such individual's
domicile), (2) such individual has been certified in writing to be unable to
manage his or her financial affairs by the principal physician attending to such
individual's care, and the Stockholders and the Company may rely upon written
notice of that determination without any duty to inquire into the authenticity
of the certification or any of the facts upon which it is based, or (3) such
individual's whereabouts are unknown and such individual has not been able to be
located by an officer of the Company or a member of the Board for at least
ninety (90) days.
"INITIAL AUCTION DATE" is defined in Section 8(b).
"INITIAL OFFER" is defined in Section 8(c).
"LAW" means all applicable statutes, laws, ordinances,
regulations, rules, guidelines, orders, writs, injunctions, or decrees of any
state, commonwealth, nation, territory, province, possession, township, county,
parish, municipality or Tribunal.
"XXXXXXX" is defined in the preface.
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"OPTION PLAN" means that certain Management Stock Option Plan
adopted by the Board as of March 2, 1999, as the same may be amended or
supplemented from time to time.
"OPTIONS" means options to purchase shares of Common Stock
granted by the Company pursuant to the Option Plan.
"OTHER STOCKHOLDERS" is defined in Section 6.
"PERMITTED TRANSFER" is defined in Section 4(b).
"PERMITTED TRANSFEREE" shall be, if the Stockholder is an
individual:
(A) the estate (or a revocable trust that is a substitute of an
estate) of the Stockholder or any legatee, heir or
distributees thereof;
(B) the spouse or former spouse of the Stockholder;
(C) any parent or grandparent and any lineal descendant (including
any adopted child) of any parent or grandparent of the
Stockholder or of the Stockholder's spouse or former spouse;
(D) any guardian or custodian (including a custodian for purposes
of the Uniform Gift to Minors Act or Uniform Transfers to
Minors Act) for, or any executor, administrator, conservator
and/or other legal representative of, the Stockholder and/or
any Permitted Transferee or Permitted Transferees thereof;
(E) a trust (including a voting trust), and any savings or
retirement account, such as an individual retirement account
for purposes of federal income tax laws, whether or not
involving a trust, principally for the benefit of such
Stockholder and/or any Permitted Transferee or Permitted
Transferees thereof, including any trust in respect of which
such Stockholder and/or any Permitted Transferee or Permitted
Transferees thereof has any general or special power of
appointment or general or special non-testamentary power or
special testamentary power of appointment limited to any
Permitted Transferee or Permitted Transferees;
(F) any corporation, partnership or other business entity if
Substantial Beneficial Ownership thereof is held by such
Stockholder and/or any Permitted Transferee or Permitted
Transferees thereof;
(G) any Principal Stockholder and/or any Permitted Transferee or
Permitted Transferees of a Principal Stockholder; and
(H) the Company.
A "Permitted Transferee" shall be, if the Stockholder is a
corporation, partnership or other business entity:
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(A) any employee benefit plan, or trust thereunder or therefor,
sponsored by the Stockholder;
(B) any trust (including any voting or liquidating trust)
principally for the benefit of the Stockholder and/or any
Permitted Transferee or Permitted Transferees thereof;
(C) any corporation, partnership or other business entity if
Substantial Beneficial Ownership thereof is held by such
Stockholder and/or any Permitted Transferee or Permitted
Transferees thereof;
(D) the stockholders of the corporation, partners of the
partnership or other owners of equity interests in any other
business entity, who receive such shares, by way of dividend
or distribution (upon dissolution, liquidation or otherwise),
provided that such transfer will not result in Beneficial
Ownership of any of such shares by any person who did not have
the power to control such corporation, partnership or business
entity at the time such corporation, partnership or business
entity first acquired Beneficial Ownership of such shares of
Class B Common (other than by any person who qualifies as a
Permitted Transferee pursuant to any other provision of this
paragraph);
(E) the Company; and
(F) any Principal Stockholder and/or any Permitted Transferee or
Permitted Transferees of a Principal Stockholder.
"PERSON" means any individual, corporation, partnership, firm,
joint venture, association, limited liability company, joint-stock company,
trust, unincorporated organization, governmental or regulatory body or other
legal entity.
"PRINCIPAL STOCKHOLDER" is defined in the preface.
"SALE NOTICE" is defined in Section 7.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING PRINCIPAL STOCKHOLDER" is defined in Section 7.
"STOCKHOLDER" is defined in the preface.
"STOCKHOLDER SHARES" means (i) all shares of Common Stock
acquired by the Stockholders, including all shares of Common Stock acquired
pursuant to the exercise of Options, and (ii) all shares of Common Stock or
other securities issued or issuable directly or indirectly with respect to the
securities referred to in clause (i) by way of stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. Stockholder Shares shall cease to be such
when they have been sold (x) pursuant to
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a registered public offering under the Securities Act or (y) to the public
pursuant to Rule 144 under the Securities Act, or any successor provision.
"SUBSTANTIAL BENEFICIAL OWNERSHIP" in respect of any
corporation, partnership or other business entity shall mean possession of the
power and authority, either singly or jointly with another, to vote or dispose
of or to direct the voting or disposition of at least 80% of each class of
equity ownership interest in such corporation, partnership or other business
entity.
"TRANSFER" means, with respect to any Stockholder Shares, the
gift, sale, assignment, transfer, pledge, hypothecation or other disposition
(whether for or without consideration and whether voluntary, involuntary or by
operation of law) of such Stockholder Shares or any interest therein; provided,
however, that "Transfer" does not include: (i) any pledge, assignment,
hypothecation, encumbrance or similar disposition of Stockholder Shares for
security as collateral security for obligations of the Company, either
Stockholder, or affiliates of the Company under or in connection with that
certain Amended and Restated Credit Agreement among the Company, the lenders
from time to time party thereto (the "Lenders"), NationsBank, N.A., as
Administrative Agent for the Lenders, First Union National Bank, as Syndication
Agent for the Lenders, and Credit Suisse First Boston, as Documentation Agent
for the Lenders, as such Credit Agreement may be amended, modified, restated,
supplemented, renewed, extended, increased, rearranged, and/or substituted from
time to time, or (ii) any sale or foreclosure of and such pledge, assignment,
hypothecation, encumbrance or similar disposition for security.
"TRANSFER NOTICE" is defined in Section 4(c).
"TRIBUNAL" means any court or governmental department,
commission, board, bureau, agency or instrumentality of the United States of
America or any state, commonwealth, nation, territory, province, possession,
township, county, parish or municipality, whether now or hereafter constituted
or existing.
"VESTED OPTIONS" means Options that are exercisable by the
holder thereof on the date of determination.
SECTION 2. VOTING ARRANGEMENTS.
(a) ELECTION OF DIRECTORS. Each Stockholder agrees that such
Person will vote, or cause to be voted, all voting securities of the Company
over which such Person has the power to vote or direct the voting, and will take
all other necessary or desirable action within such Person's control, to cause
the authorized number of directors for the Board to be at least five persons and
no more than seven persons, and to elect or cause to be elected to the Board and
cause to be continued in such office, Xxxxxx, Xxxxxxx and the individual or
individuals designated by mutual agreement of the Principal Stockholders to fill
the remainder of Board seats to be filled by Class B Directors, including the
seat that would otherwise be filled by a Principal Stockholder if such Principal
Stockholder is unwilling or unable to serve on the Board, or has been removed
from the Board as the result of such Principal Stockholder's being
Incapacitated; provided, however, that if either Principal Stockholder is
Incapacitated, the other Principal Stockholder shall have the sole power to
exercise the designation rights granted to the Principal Stockholders pursuant
to this paragraph.
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(b) REMOVAL OF DIRECTORS. If at any time the Principal
Stockholders shall notify the other Stockholders of their mutual desire to
remove, with or without cause, any Class B Director from the Board, all such
Persons so notified will vote, or cause to be voted, all voting securities of
the Company over which they have the power to vote or direct the voting, and
shall take all such other actions promptly as shall be necessary or desirable to
cause the removal of such Class B Director; provided, however, that if either
Principal Stockholder is Incapacitated, the other Principal Stockholder shall
have the sole power to exercise the removal rights granted to the Principal
Stockholders pursuant to this paragraph, including, without limitation,
requiring the removal of the Incapacitated Principal Stockholder.
(c) VACANCIES. If at any time any Class B Director ceases to
serve on the Board (whether due to resignation, removal or otherwise), then the
Principal Stockholders shall be entitled to designate a successor director to
fill the vacancy created thereby on the terms and subject to the conditions of
Section 2(a) above. Each Stockholder agrees that he, she or it will vote, or
cause to be voted, all voting securities of the Company over which such Person
has the power to vote or direct the voting, and shall take all such other
actions as shall be necessary or desirable to cause the successor designated by
the Principal Stockholders to be elected to fill such vacancy.
(d) RIGHTS UNIMPAIRED. Nothing in this Agreement shall be
construed to impair any rights that the stockholders of the Company may have to
remove any director. No removal for cause of an individual designated pursuant
to this Section 2 shall affect the right of the Principal Stockholders to
designate a different individual pursuant to Section 2 to fill the directorship
from which such individual was removed.
(e) APPOINTMENT OF PROXY. IN ORDER TO SECURE THE OBLIGATIONS
OF EACH AND EVERY STOCKHOLDER TO VOTE ALL COMMON SHARES HELD BY SUCH STOCKHOLDER
IN ACCORDANCE WITH ALL OF THE PROVISIONS OF THIS AGREEMENT, EACH STOCKHOLDER
HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS EACH OF XXXXXXXXX X. XXXXXX AND
XXXXXX X. XXXXXXX, III AS SUCH STOCKHOLDER'S TRUE AND LAWFUL ATTORNEY, AGENT AND
PROXY, WITH FULL POWER OF SUBSTITUTION, TO ATTEND MEETINGS OF STOCKHOLDERS OF
THE COMPANY HELD FROM TIME TO TIME, AND TO VOTE ON SUCH STOCKHOLDER'S BEHALF AND
IN SUCH STOCKHOLDER'S NAME, PLACE, AND STEAD, OR TO EXECUTE WRITTEN CONSENTS IN
LIEU OF SUCH MEETINGS, THE NUMBER OF VOTES THAT SUCH STOCKHOLDER WOULD BE
ENTITLED TO CAST IF ACTUALLY PRESENT OR WITH RESPECT TO WHICH SUCH STOCKHOLDER
WOULD BE ENTITLED TO EXECUTE A WRITTEN CONSENT, IN CONNECTION WITH ANY ELECTION
OF DIRECTORS (IN ACCORDANCE WITH THIS SECTION 2) OR ANY COMPANY SALE (IN
ACCORDANCE WITH SECTION 6). THE POWERS GRANTED HEREIN WILL BE DEEMED TO BE
COUPLED WITH AN INTEREST, WILL BE IRREVOCABLE AND WILL SURVIVE THE DEATH,
INCOMPETENCY, DISABILITY OR DISSOLUTION OF ANY STOCKHOLDER.
(f) OTHER VOTING RIGHTS. In the event that a Principal
Stockholder is Incapacitated, the other Principal Stockholder shall have the
right, in addition to the other rights granted pursuant to this Section 2, to
vote, or cause to be voted, all voting securities of the Company
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over which such Incapacitated Principal Stockholder would otherwise have the
power to vote or direct the voting, as to all matters presented for a vote of
the Company's stockholders.
(g) REGULATORY SAVINGS PROVISION. If at any time the
possession by a Principal Stockholder of the voting power represented by the
voting securities held by such Principal Stockholder, or over which such
Principal Stockholder has the power to vote or direct the voting, differs from
the voting power required or permitted to be held by such Principal Stockholder,
or requires a consent or waiver that at such time has not been obtained, under
any Law applicable to such Principal Stockholder or the Company, then (i) if
such voting power exceeds the amount permitted to be held by such Principal
Stockholder, or with respect to which such a consent or waiver has been
obtained, the other Principal Stockholder shall have the sole power to vote, or
cause to be voted, the number of voting securities of the Company representing
such excess voting power and over which the first Principal Stockholder would
otherwise have the power to vote or direct the voting, as to all matters
presented for a vote of the Company's stockholders, and (ii) if such voting
power is less than the amount required to be held by such Principal Stockholder,
such Principal Stockholder shall have the sole power to vote, or cause to be
voted, as to all matters presented for a vote of the Company's stockholders,
that number, and only that number of voting securities of the Company
representing sufficient voting power to eliminate such shortfall and over which
the other Principal Stockholder would otherwise have the power to vote or direct
the voting. In all cases, the provisions of this Section 4(g) shall be applied
only to the extent and for the period necessary to bring the Principal
Stockholders and the Company into compliance with applicable Law, and shall not
operate to cause either Principal Stockholder not to be in compliance with
applicable Law. In the exercise of voting rights provided by this Section 4(g),
each Principal Stockholder shall remain subject to the other provisions of this
Agreement.
SECTION 3 DISPOSITION OF INCAPACITATED PRINCIPAL STOCKHOLDER'S
SHARES.
In the event that a Principal Stockholder is Incapacitated,
the other Principal Stockholder shall have the right to direct the disposition
of all Stockholder Shares held by the Incapacitated Principal Stockholder,
including, without limitation, the right to purchase such Stockholder Shares;
provided, however, that any Transfer of any such Stockholder Shares shall be for
a consideration equal to the Fair Market Value of such Stockholder Shares.
SECTION 4 RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. No Stockholder may Transfer any
Stockholder Shares, except (i) in a Permitted Transfer or (ii) to any other
Person, subject to the provisions of Section 4(c), if applicable.
(b) CERTAIN PERMITTED TRANSFERS. Section 4(a) shall not apply
to Transfers ("PERMITTED TRANSFERS") of Stockholder Shares (i) to a Permitted
Transferee of a Principal Stockholder; provided that, in connection with any
such Transfer, each such Permitted Transferee not already a party to this
Agreement executes a Joinder Agreement substantially in the form attached hereto
as Exhibit A and thereby becomes a party to this Agreement, or (ii) pursuant to
Sections 3, 6, 7 or 8. Notwithstanding the provisions of clause (i) of the first
sentence of this Section 4(b), neither of the Principal Stockholders shall sell,
assign or otherwise transfer any interest in any
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shares of Class B Common Stock to the spouse or former spouse of such Principal
Stockholder, or to any parent or grandparent or any lineal descendant (including
any adopted child) of any parent or grandparent of such Principal Stockholder's
spouse or former spouse (unless such lineal descendant is also a lineal
descendant (including any adopted child) of such Principal Stockholder),
including by gift, will, intestate succession or other operation of law, unless,
as a condition of such transfer (a) such Principal Stockholder retains all
voting power with respect to such Class B Common Stock so long as such Principal
Stockholder is living, and (b) the estate of such Principal Stockholder, in the
case of the death of the Principal Stockholder, or the transferee of such
interest agrees (I) not to exercise any voting power with respect to such Class
B Common Stock and (II) to cause such Class B Common Stock to be converted into
shares of single vote or non-voting Common Stock of the Company upon the death
of such Principal Stockholder.
(c) RIGHT OF FIRST REFUSAL. Notwithstanding the provisions of
Section 4(a), a Stockholder may Transfer shares of Class C Common Stock so long
as at least ninety (90) days prior to making any such Transfer, such Stockholder
delivers a written notice (the "TRANSFER NOTICE") to each of the Principal
Stockholders. The Transfer Notice will disclose in reasonable detail the
identity of the prospective transferee(s) and the terms and conditions of the
proposed Transfer. Such Stockholder shall not consummate any such Transfer until
thirty (30) days after the Transfer Notice has been delivered to the Principal
Stockholders (the "AUTHORIZATION DATE"). The Principal Stockholders may elect to
purchase any or all of the shares of Class C Common Stock to be transferred upon
the same terms and conditions as those set forth in the Transfer Notice, by
delivering a written notice of such election to such Stockholder within thirty
(30) days after the receipt of the Transfer Notice by the Principal
Stockholders. If the aggregate number of shares of Class C Common Stock which
the Principal Stockholders have elected to purchase is greater than the number
of shares of Class C Common Stock specified in the Transfer Notice, then each
Principal Stockholder will be entitled to purchase the number of shares of Class
C Common Stock equal to the product of (i) the quotient determined by dividing
the number of shares of Class C Common Stock elected to be purchased by such
Principal Stockholder by the aggregate number of shares of Class C Common Stock
elected to be purchased by both Principal Stockholders, multiplied by (ii) the
number of shares of Class C Common Stock specified in the Transfer Notice. If
the Principal Stockholders have not elected to purchase all of the shares of
Class C Common Stock specified in the Transfer Notice, such Stockholder may
Transfer the remaining shares of Class C Common Stock to the prospective
transferee(s) as specified in the Transfer Notice, at a price and on terms no
more favorable to the transferee(s) thereof than specified in the Transfer
Notice, during the 90-day period immediately following the Authorization Date.
Any shares of Class C Common Stock not so transferred within such 90-day period
must be reoffered to the Principal Stockholders in accordance with the
provisions of this Section 4(c).
(d) OPINION OF COUNSEL. No holder of Stockholder Shares may
Transfer any such stock (other than pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company, if
the Company so requests, an opinion of counsel reasonably acceptable in form and
substance to the Company that registration under the Securities Act is not
required in connection with such transfer.
SECTION 5 LEGENDS.
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(a) STOCKHOLDERS AGREEMENT LEGEND. The certificates
representing Stockholder Shares shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED AS OF March 2, 1999 AMONG RADIO ONE, INC.
AND CERTAIN STOCKHOLDERS THEREOF, A COPY OF WHICH MAY BE OBTAINED
WITHOUT CHARGE BY THE HOLDER HEREOF AT THE PRINCIPAL PLACE OF BUSINESS
OF RADIO ONE, INC. DISPOSITION OF THIS CERTIFICATE OR THE SECURITIES
REPRESENTED HEREBY OR ANY RIGHTS OR INTERESTS THEREIN IN VIOLATION OF
SUCH STOCKHOLDERS AGREEMENT SHALL BE NULL AND VOID.
SECTION 6 SALE OF THE COMPANY. If the Principal Stockholders
mutually approve a Company Sale (an "APPROVED SALE"), the other holders of
Stockholder Shares (the "OTHER STOCKHOLDERS") shall consent to and raise no
objections against such Approved Sale (and shall waive any rights of appraisal
arising in connection therewith) and shall fully cooperate with and take all
necessary and desirable actions in connection with the consummation of such
Approved Sale, including without limitation (a) executing a purchase and sale
agreement and any other agreement reasonably necessary to effectuate such
Approved Sale in the form to be entered into by the Principal Stockholders, (b)
amending the Company's Certificate of Incorporation, (c) merging, combining or
consolidating the Company with any other Person, (d) reorganizing,
recapitalizing, liquidating, dissolving or winding-up the Company, (e)
exchanging or splitting stock of the Company or (f) selling, leasing or
exchanging all or substantially all of the property and assets of the Company
and its subsidiaries on a consolidated basis. If the Approved Sale is structured
as a sale of stock, the Other Stockholders shall agree to sell all of their
shares of Common Stock and rights to acquire shares of Common Stock on the terms
and conditions approved by the Board and the Principal Stockholders. The
obligations of the Other Stockholders with respect to any Approved Sale are
subject to the conditions that (a) upon the consummation of such Approved Sale,
all of the holders of Common Stock will receive the same form and amount of
consideration per share of Common Stock, or if any holders are given an option
as to the form and amount of consideration to be received, all holders will be
given the same option and (b) no stockholder shall be required to incur
indemnification obligations (whether several or joint and several) which are in
excess of the net proceeds received by such Stockholder in connection with such
Approved Sale. In the event that a Principal Stockholder is Incapacitated, any
Company Sale that is approved by the Principal Stockholder that is not
Incapacitated shall be deemed to be an Approved Sale for all purposes hereof,
and all references to the Principal Stockholders in this paragraph shall be
deemed to exclude the Incapacitated Principal Stockholder.
SECTION 7 PARTICIPATION RIGHTS. Not less than twenty (20) days
prior to any proposed Transfer of Stockholder Shares by a Principal Stockholder
(the "SELLING PRINCIPAL STOCKHOLDER"), the Selling Principal Stockholder shall
deliver to the other Principal Stockholder (so long as such other Principal
Stockholder is not Incapacitated) a written notice (the "SALE NOTICE")
specifying in reasonable detail the identity of the proposed transferee(s) and
the terms and conditions of the proposed Transfer. Provided that the other
Principal Stockholder is not Incapacitated and has not elected to exercise the
right of first refusal provided in Section 4(c) with respect to the Transfer
specified in the Sale Notice, such other Principal Stockholder may elect to
participate in the proposed
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Transfer by delivering to the Selling Principal Stockholder a written notice of
such election within the 10-day period following delivery of the Sale Notice. If
the other Principal Stockholder elects to participate in such Transfer, the
Selling Principal Stockholder and such other Principal Stockholder will be
entitled to sell in such proposed Transfer, at the same price and on the same
terms, a number of shares of each class of Common Stock specified in the Sale
Notice equal to the product of (i) the quotient determined by dividing the
number of shares of such class of Common Stock then held by the Selling
Principal Stockholder or such other Principal Stockholder, as the case may be,
by the aggregate number of shares of such class of Common Stock then held by the
Selling Principal Stockholder and such other Principal Stockholder, multiplied
by (ii) the number of shares of such class of Common Stock to be sold in such
proposed Transfer. For purposes of this Section 7, the amount of Common Stock
held by a Principal Stockholder shall be deemed to include all shares of Common
Stock acquirable pursuant to the exercise of Vested Options then held by such
Principal Stockholder. Notwithstanding the foregoing, this Section 7 shall not
apply to (i) Transfers pursuant to Rule 144 under the Securities Act (or any
successor provision), (ii) Transfers pursuant to Section 4, or (v) Transfers
pursuant to Section 6.
SECTION 8 DEADLOCKS.
(a) DEFINITION. For purposes hereof, a "DEADLOCK" shall be
deemed to have occurred if, after having tried on a good-faith basis to do so
for a period of at least ninety (90) days after delivery by one Principal
Stockholder to the other Principal Stockholder of a written notice requesting
the commencement of such good faith efforts, the Principal Stockholders are
unable to reach mutual agreement with respect to either (i) the individual or
individuals to fill one or more of the Board seats to be filled by Class B
Directors, other than Xxxxxx or Xxxxxxx, or (ii) a Company Sale proposed by one
of the Principal Stockholders.
(b) INITIATION OF AUCTION. Upon the occurrence of a Deadlock,
either Principal Stockholder may, by written notice delivered to the other
Principal Stockholder, initiate a bidding process to determine which Principal
Stockholder shall acquire all of the other Principal Stockholder's Stockholder
Shares. Such bidding process shall begin on the date (the "INITIAL AUCTION
DATE") mutually agreed to by the Principal Stockholders, which date shall be not
later than thirty (30) days after delivery of the notice referred to in the
preceding sentence. Such bidding process shall in all events proceed in two
stages: first, the Principal Stockholders shall determine a market valuation for
the corporation, taken as a whole, through the competitive bidding procedures
described in paragraph (c) below and second, the purchase price for the winning
bidder to purchase all of the losing bidder's Stockholder Shares shall be
determined based on the formula set forth in paragraph (d) below.
(c) AUCTION PROCEDURE. On the Initial Auction Date, each
Principal Stockholder shall initiate the bidding process by delivering
simultaneously to the other Principal Stockholder a written offer (the "INITIAL
OFFER") which sets forth its valuation of the outstanding Common Stock of the
Company, taken as a whole. The higher of the valuations shall constitute the
initial bid. Such initial bid and each subsequent valuation must be met in turn,
within forty-eight (48) hours following delivery thereof, by either acceptance
or delivery of a written counteroffer. Each counteroffer after the initial bid
must be in a minimum amount equal to the lesser of (a) the amount that is five
percent (5%) higher than the preceding bid (on a percentage basis) and (b) the
amount
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that is $10,000.00 higher than the preceding bid. Any failure to respond within
forty-eight (48) hours of delivery of a bid as provided above shall be deemed to
constitute an irrevocable and unconditional acceptance of that bid. This bidding
process shall continue until one Principal Stockholder accepts the other
Principal Stockholder's latest valuation, either affirmatively or by failing to
make a counteroffer (such final valuation, the "FINAL AUCTION PRICE").
(d) DETERMINATION OF FINAL PURCHASE PRICE. The final purchase
price (the "FINAL PURCHASE PRICE") payable by the winning bidder for all of the
losing bidder's Stockholder Shares shall be the amount equal to the product of
(x) the Final Auction Price and (y) the percentage of the outstanding Common
Stock of the Company represented by the Stockholder Shares held by the losing
bidder.
(e) CONSUMMATION OF SALE AND TRANSFER. The sale and transfer
of the losing bidder's Stockholder Shares to the winning bidder shall be
consummated as soon as practicable after the determination of the Final Auction
Price, subject to receipt of necessary governmental, regulatory and antitrust
approvals. Each Principal Stockholder shall cooperate with the other to take all
actions necessary to conclude the sale and transfer contemplated hereunder.
SECTION 9. TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer
or attempted Transfer of any Stockholder Shares in violation of this Agreement
shall be void, and the Company shall not be obligated to record such Transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
SECTION 10. AMENDMENT AND WAIVER. Except as otherwise provided
herein, no amendment or waiver of any provision of this Agreement shall be
effective against the Stockholders unless such amendment or waiver is approved
in writing by the Principal Stockholders other than any Incapacitated Principal
Stockholder. The failure of any party to enforce any provision of this Agreement
shall not be construed as a waiver of such provision and shall not affect the
right of such party thereafter to enforce each provision of this Agreement in
accordance with its terms.
SECTION 11. SEVERABILITY. If any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.
SECTION 12. ENTIRE AGREEMENT. Except as otherwise expressly
set forth herein, this document embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
SECTION 13. SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARY.
This Agreement shall bind and inure to the benefit of and be enforceable by the
Stockholders and their respective permitted
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successors and assigns so long as such Stockholders and their respective
permitted successors and assigns hold Stockholder Shares. The Company is and
shall be an intended third party beneficiary of this Agreement.
SECTION 14. COUNTERPARTS. This Agreement may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 15. REMEDIES. The Company and the Stockholders shall
be entitled to enforce their rights under this Agreement specifically to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in their favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that the Company or any Stockholder may in
its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
SECTION 16. NOTICES. Any notice provided for in this Agreement
shall be in writing and shall be either personally delivered, or sent via
facsimile, or mailed first class mail (postage prepaid) or sent by reputable
overnight courier service (charges prepaid) to the Principal Stockholders at
their respective addresses set forth in the preface to this Agreement, and to
any subsequent holder of Stockholder Shares subject to this Agreement at such
address as indicated by the Company's records, or at such address or to the
attention of such other Person as the recipient party has specified by prior
written notice to the sending party. Notices will be deemed to have been given
hereunder when delivered personally or sent via facsimile (against receipt
therefor), three days after deposit in the U.S. mail and one day after deposit
with a reputable overnight courier service.
SECTION 17. GOVERNING LAW. The corporate law of Delaware shall
govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal law, and not
the law of conflicts, of Maryland.
SECTION 18. DESCRIPTIVE HEADINGS. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
SECTION 19. TERMINATION. Notwithstanding anything herein to
the contrary, this Agreement shall terminate upon a Company Sale.
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IN WITNESS WHEREOF, the parties have executed this
Stockholders Agreement as of the date first above written.
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Xxxxxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxxx, III
EXHIBIT A
FORM OF JOINDER
TO
STOCKHOLDERS AGREEMENT
This Joinder (this "Agreement") is made as of the date written
below by the undersigned (the "Joining Party") in favor of and for the parties
to the Stockholders Agreement, dated as of March 2, 1999 (the "Stockholders
Agreement"). Capitalized terms used but not defined herein shall have the
meanings given such terms in the Stockholders Agreement.
The Joining Party hereby acknowledges, agrees and confirms
that, by his or her execution of this Joinder, the Joining Party will be deemed
to be a party to the Stockholders Agreement and shall have all of the
obligations of a Stockholder thereunder as if he or she had executed the
Stockholders Agreement. The Joining Party hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions
contained in the Stockholders Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Joinder
as of the date written below.
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Name:
Date:
