Exhibit 10.30
STOCKHOLDERS AGREEMENT
BY AND AMONG
PROMOTIONS ACQUISITION, INC.,
AND CERTAIN STOCKHOLDERS
Dated as of December 3, 1999
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of December
__, 1999, by and among Promotions Acquisition, Inc., a Delaware corporation (the
"Company"), Xxx Target Media, Inc. ("Cox"), Sandler Capital Partners IV, L.P.
("SCP IV"), Sandler Capital Partners IV FTE, L.P. ("SCP IV FTE"), Sandler
Internet Partners, L.P. ("SIP"), The McClatchy Company, a Delaware corporation
("McClatchy"), Central Newspapers, Inc., a Arizona corporation ("Central") (Cox,
SCP IV, SCP IV FTE, SIP, McClatchy and Central collectively referred to herein,
together with their transferees, as the "Investors"), and those parties listed
on Schedule 1 attached hereto (the "Existing Stockholders").
WHEREAS, concurrently with the execution and delivery of this Agreement
and pursuant to a Stock Purchase Agreement, dated as of December __, 1999 (the
"Stock Purchase Agreement"), by and among the Company and the Investors, the
Company has agreed to issue and sell to the Investors, and the Investors have
severally agreed to purchase from the Company, certain shares of the Company's
Series A Convertible Preferred Stock, par value $0.001 per share (the "Series A
Preferred Stock"), subject to the terms and conditions set forth in the Stock
Purchase Agreement;
WHEREAS, the obligations of the Investors to enter into the Stock
Purchase Agreement and purchase the Series A Preferred Stock is conditioned upon
the execution and delivery by each of the parties hereto of this Agreement; and
WHEREAS, the parties hereto desire to set forth their mutual agreement
regarding various matters relating to the Company, including certain
restrictions with respect to the transfer and ownership of shares of the
Company's capital stock, corporate governance and certain other matters.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Affiliate" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or is under common control
with such first-named Person. For the purposes of this definition, "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether
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through the ownership of voting securities or by contract or otherwise. In
addition, the Company shall not be deemed to be an "Affiliate" of any Investor.
"Board" means the Board of Directors of the Company, as constituted
from time to time.
"Bylaws" means the Company's Bylaws, as the same may hereafter be
amended in accordance with applicable laws and the terms thereof and hereof.
"Commission" means the U.S. Securities and Exchange Commission.
"Common Stock" means the common stock, par value $0.001 per share, of
the Company.
"Competitor" means any of the following or their controlled Affiliates:
ClipperMagazine, Inc., XxxxxxXxxxxxx.xxx, Money Mailer LLC, H.O.T. Coupons LLC,
Advo, Inc., Xxxxx-Xxxxx, Inc.
"Co-Sale Shares" means the shares of capital stock of the Company
proposed to be Transferred to a Third Party subject to Section 2.2(a) of this
Agreement.
"Co-Seller" has the meaning set forth in Section 2.2(c) of this
Agreement.
"Election Notice" has the meaning set forth in Section 2.2(c) of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
including the rules and regulations of the Commission promulgated thereunder.
"Existing Stockholder Shares" means, collectively: (i) the Restricted
Shares and (ii) any other shares of Common Stock held by any Existing
Stockholder or any Permitted Transferee thereof, including shares of Common
Stock issuable upon conversion of any option, warrant or other convertible
security granted or issued by the Company, whether, in the case of each of the
foregoing clauses (i) and (ii), outstanding as of the date of this Agreement or
granted or issued thereafter.
"Fully-Diluted Basis" gives effect, without duplication, to (i) all
shares of Common Stock outstanding at the time of determination plus (ii) all
shares of Common Stock issuable upon conversion of the Series A Preferred Stock
or any other convertible securities of the Company or upon the exercise of any
option, warrant or similar right (whether or not presently exercisable) to
acquire shares of Common Stock, as if such Series A Preferred Stock or other
convertible securities had been so converted or such option, warrant or similar
right had been so exercised, including the effect of stock splits, stock
dividends, combinations, recapitalizations, reclassifications, mergers,
consolidations or other similar events previously occurring.
"Investor Group" means the Investors and their transferees who have
acquired Series A Preferred Stock in accordance with this Agreement, as a group.
"Issuance Notice" has the meaning set forth in Section 2.3(c) of this
Agreement.
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"Management Stockholders" means Xxxxx Xxxxx, Xxxx Xxxxxxx and those
Existing Stockholders who are designated on Schedule 1 attached hereto as
Management Stockholders.
"Notice of Transfer" has the meaning set forth in Section 2.2(b) of
this Agreement.
"Participation Notice" has the meaning set forth in Section 2.3(c) of
this Agreement.
"Permitted Transferee" has the meaning set forth in Section 2.4(b) of
this Agreement.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, trust, estate, limited liability
partnership, joint stock company, unincorporated organization or government or
any agency or political subdivision thereof.
"Purchase Offeror" has the meaning set forth in Section 2.2(b) of this
Agreement.
"Qualified Public Offering" means the closing of a firm commitment
underwritten public offering, pursuant to an effective registration statement
under the Securities Act, covering the offer and sale by the Company of Common
Stock to the public in which the initial public offering price per share of
Common Stock is at least equal to $[4.05] per share of Common Stock (subject to
appropriate adjustment for stock splits, stock dividends, stock combinations,
reclassifications, recapitalizations, mergers, consolidations or other similar
events) and which results in aggregate gross proceeds to the Company of at least
$20,000,000.
"Restricted Shares" means all shares of Common Stock held by the
Management Stockholders and any Permitted Transferees of the Management
Stockholders, including shares of Common Stock issuable upon conversion of any
option, warrant or other convertible security granted or issued by the Company,
whether outstanding as of the date of this Agreement or granted or issued
thereafter for any reason, including, without limitation, any shares of capital
stock subsequently issued to such Management Stockholder by reason of a stock
split, stock dividend, stock combination, recapitalization, reclassification,
merger, consolidation or other similar event.
"Securities Act" means the Securities Act of 1933, as amended,
including the rules and regulations of the Commission promulgated thereunder.
"Seller" has the meaning set forth in Section 2.2(b) of this Agreement.
"Series A Preferred Stock" means all authorized and issued shares of
the Company's Series A Convertible Preferred Stock, par value $0.001 per share.
"Stock Purchase Agreement" means that certain Stock Purchase Agreement,
dated as of December 3, 1999, by and among the Company and the Investors.
"Stockholders" means the Investors, the Existing Stockholders and such
other Persons that become parties to this Agreement pursuant to the terms of
this Agreement.
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"Subsidiary" means, with respect to the Company, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by the Company and/or one or
more Subsidiaries of the Company and (ii) any partnership, limited liability
company, association, joint venture or other entity (a) in which the Company
and/or one or more Subsidiaries of the Company has more than a 50% equity
interest at the time or (b) as to which the Company and/or one or more of its
Subsidiaries serves as general partner or manager or otherwise has the power to
direct or cause the direction of the management and policies of such entity by
contract or otherwise.
"Third Party" has the meaning set forth in Section 2.2(a) of this
Agreement.
"Transfer" (including with correlative meanings the terms
"Transferred", "Transferee" and "Transferor") means any transfer, sale,
assignment, pledge, encumbrance or other disposition of Existing Stockholder
Shares, or any portion of the ownership interest therein, irrespective of
whether any of the foregoing are effected voluntarily or involuntarily, by
operation of law or otherwise, or whether inter vivos or upon death.
ARTICLE 2
TRANSFERS OF STOCK
2.1 Transfer of Shares by Management Stockholders.
(a) No Management Stockholder shall be permitted to Transfer
any Restricted Shares at any time during the period between the date hereof and
the date that is three years from the date hereof (the "Lockup Period");
provided, however, that a Management Stockholder may Transfer Restricted Shares
during the Lockup Period in accordance with the provisions of Section 2.4(a).
After the expiration of the Lockup Period, a Management Stockholder shall be
permitted to transfer its shares of Common Stock subject to the provisions of
Section 2.2.
2.2 Tag-Along Rights.
(a) Each of XxxxxxXxxxxx.xxx, Inc., Net Value Holdings, Inc.
and, after expiration of the Lockup Period, Xxxxx Xxxxx, Xxxx Xxxxxxx and any
other Management Stockholder shall be permitted to Transfer shares of capital
stock of the Company (or any interest therein) to any other Person that is not a
Permitted Transferee of such Transferor Stockholder (a "Third Party") only if
such Transfer is made in accordance with this Section 2.2. Such shares of
capital stock being Transferred pursuant to this paragraph (a) are hereinafter
referred to as "Co- Sale Shares."
(b) The Transferor Stockholder(s) (the "Seller") seeking to
effect a Transfer of Co-Sale Shares to a Third Party shall deliver a written
notice (the "Notice of Transfer") to the Company prior to making any such
Transfer of Co-Sale Shares. The Notice of Transfer will
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contain a copy of the definitive documentation pursuant to which the Co-Sale
Shares will be Transferred and will state the following: (i) the Seller's bona
fide intention to Transfer the Co- Sale Shares; (ii) the name and address of the
prospective transferee (the "Purchase Offeror"); (iii) the number of Co-Sale
Shares to be Transferred; (iv) the expected closing date of the transaction; and
(v) confirmation that the Purchase Offeror has been informed of the provisions
of this Section 2.2 and has agreed to purchase any and all shares of Preferred
Stock and Common Stock proposed to be sold in accordance with the terms of this
Section 2.2, but no more than the number of shares of Preferred Stock and Common
Stock that the Purchase Offeror had originally offered to purchase. The Company
shall promptly, and in any event within five (5) days after receipt of such
Notice of Transfer, deliver a copy of such Notice of Transfer to the Investors.
(c) Any Investor may elect to participate in the Transfer
contemplated by paragraph (b) above by delivering a written notice (an "Election
Notice") to the Seller and the Company within ten (10) days after receipt by
such Stockholder of such Notice of Transfer, and each such Investor (each a
"Co-Seller") may elect to Transfer in such contemplated Transfer up to that
number of shares of Preferred Stock or Common Stock, as the case may be
(referred to herein as "Tag-Along Shares"), that represents on a Fully-Diluted
Basis, the number of shares of Common Stock equal to the product of (a) the
number of shares of Common Stock represented by the Co-Sale Shares proposed to
be sold by the Seller multiplied by (b) a fraction, the numerator of which is
the total number of shares of Common Stock issued and/or issuable to such
Co-Seller on a Fully-Diluted Basis and the denominator of which is the total
number of shares of Common Stock issued and/or issuable to the Seller and to all
Co-Sellers on a Fully- Diluted Basis. If any Investor fails to deliver an
Election Notice by the end of the tenth (10th) day after receipt of a Notice of
Transfer, such Investor shall be deemed to have elected not to participate in
the Transfer covered by such Election Notice.
(d) Each Co-Seller participating in a Transfer shall deliver
to the Purchase Offeror at a closing to be held at the offices of the Company
(or such other place as the parties agree), one or more certificates, properly
endorsed for Transfer, which represent the number of Tag-Along Shares which the
Co-Seller elects to Transfer pursuant to this Section 2.2. Such certificates
shall be transferred by the Seller to the Purchase Offeror simultaneously with
the consummation of the Transfer of the Co-Sale Shares pursuant to the terms and
conditions specified in the Notice of Transfer against receipt by the Co-Sellers
of the proceeds of the Transfer of their respective Tag-Along Shares. If there
is to be an agreement of sale or similar instrument with respect to the proposed
Transfer (a "Sale Agreement"), the Seller will furnish a copy of the Sale
Agreement in its then current form to the Company with the Notice of Transfer,
and the Company shall furnish a copy thereof to the other Stockholders. As
promptly as practicable after receipt of an Election Notice, if the Sale
Agreement has not previously been executed, the Seller shall furnish the
Co-Sellers with successive drafts of the Sale Agreement, if any, as available.
As a condition to making an Election Notice and being eligible to participate in
a Transfer, each Co-Seller shall represent and warrant to the Purchase Offeror
with respect to the Tag-Along Shares being disposed of by such Co-Seller that
the transferee of the Tag-Along Shares (or interests therein) is receiving good
and marketable title to such Tag-Along Shares (or interests therein), free and
clear of all pledges, security interests or other liens created by such
Co-Seller. Each Co-Seller shall accept a proportionate delegation of any duties
of the Seller under any Sale Agreement (including any indemnification
obligations); provided, however, that
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(a) no Co-Seller need accept joint liability with respect to representations,
warranties or covenants (including without limitation indemnification
obligations) of the Seller or any other Co-Sellers, it being agreed that such
Sale Agreement shall provide that the liability of such Co- Seller in connection
with the sale shall be several only and shall not in any event exceed such
Co-Seller's pro rata share of any liability and (b) each Co-Seller shall be
required only to make representations or warranties to, or enter into
indemnification or contribution arrangements with, the Purchase Offeror relating
to the Sale Agreement which are reasonable in the context of the proposed sale
including, without limitation, a representation and warranty with respect to the
shares or other equity interests being disposed of by such Co-Seller that the
Transferee of the shares or other equity interests evidenced thereby is
receiving good and marketable title to such shares or other equity interests,
free and clear of all pledges, security interests or other liens. The Seller
shall use its commercially reasonable efforts to limit the liability of each
Co-Seller participating in the sale to the proceeds received by such Co-Seller.
To the extent that any prospective Transferee or Transferees prohibit assignment
and delegation of such Sale Agreement or otherwise refuse to purchase any
Tag-Along Shares from a Co-Seller, the Seller shall not sell to such prospective
Transferee or Transferees any interest in the Company unless and until,
simultaneously with such sale, the Seller shall purchase from such Co-Seller the
Tag- Along Shares such Co-Seller would otherwise have been able to sell
hereunder for the same consideration and on the same terms and conditions as the
proposed transfer described in the Notice or Transfer.
(e) The exercise or non-exercise of the rights of the
Investors hereunder to participate in one or more Transfers of Co-Sale Shares
made by a Seller shall not adversely affect their rights to participate in
subsequent Transfers of Co-Sale Shares by Investors which meet the conditions
specified in this Section 2.2.
(f) Any Transfer made pursuant to paragraph(a) of this Section
2.2 shall be consummated on the terms set forth in the Notice of Transfer. The
Company shall use reasonable efforts to aid such closing, including, but not
limited to, exchanging a Co-Seller's certificates for new certificates in
requested denominations.
2.3 Preemptive Rights.
(a) The Company hereby grants to each Investor and to
XxxxxxXxxxxx.xxx, Inc. (each, a "Preemptive Right Holder") a preemptive right to
purchase such Preemptive Right Holder's pro rata share of all or any part of any
New Securities (as defined below) which the Company may, from time to time,
propose to issue and sell. Each Preemptive Right Holder's pro rata share, for
purposes of this repurchase right, is a fraction equal to the number of shares
of Common Stock issued or issuable to such Preemptive Right Holder on a
Fully-Diluted Basis divided by the total number of shares of Common Stock of the
Company on a Fully-Diluted Basis then outstanding.
(b) Except as set forth in the next sentence, "New Securities"
shall mean any and all shares of capital stock of the Company, including Common
Stock, whether now authorized or not, and any securities containing rights or
options to purchase any shares of Common Stock, and securities of any type
whatsoever that are, or may become, convertible into
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or exchangeable for any shares of Common Stock. Notwithstanding the foregoing,
"New Securities" does not include: (i) securities to be offered to the public
pursuant to a Qualified Public Offering; (ii) shares of Common Stock issued on
conversion of outstanding shares of Preferred Stock; (iii) stock issued pursuant
to any rights or agreements, including without limitation convertible
securities, options and warrants, provided that the preemptive rights
established by this Section 2.3 shall apply with respect to the initial
issuance, sale or grant by the Company of interests in its capital stock
pursuant to such rights or agreements; (iv) stock issued to management and
employees of the Company pursuant to the Company's 1999 Stock Option Plan and
any other employee benefit plans or agreements that may be approved after the
date hereof by the Board; (v) stock issued pursuant to credit or financing
arrangements that may be approved after the date hereof by the Board; (vi) stock
issued in connection with any stock split, stock dividend, recapitalization or
reclassification by the Company that has been approved by the Board; (vii)
Common Stock that is being issued concurrently with the execution of this
Agreement by the Company to XxxxxxXxxxxx.xxx, Inc. in connection with that
certain Agreement for Purchase and Sale of Assets, dated as of December 3, 1999,
among the Company, XxxxxxXxxxxx.xxx, Inc. and Net Value Holdings, Inc. or (viii)
the Series A Preferred Stock that is being issued to the Investors concurrently
with the execution of this Agreement by the Company in connection with the
transactions contemplated by the Stock Purchase Agreement.
(c) In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Preemptive Right Holder at least thirty
(30) days prior written notice of its intention, describing the type of New
Securities, and the price and terms upon which the Company proposes to issue the
same (each, an "Issuance Notice"). Each Preemptive Right Holder shall be
entitled to purchase up to its respective pro rata share of such New Securities
for the same price and upon the same terms specified in the Issuance Notice and
at the same time as the securities are issued by delivery of written notice to
the Company of such election within fifteen (15) days after receipt of the
Issuance Notice and stating therein the quantity of New Securities to be
purchased. (each, a "Participation Notice"). If a Preemptive Right Holder has
elected to purchase any New Securities pursuant to this paragraph (c), the sale
of such securities shall be consummated as soon as practicable (but in any event
within thirty (30) days) after the delivery of the Participation Notice.
(d) If a Preemptive Right Holder fails to exercise such
preemptive right within said fifteen (15) day period, the Company shall have
ninety (90) days thereafter to sell or enter into an agreement (pursuant to
which the sale of New Securities covered thereby shall be closed, if at all,
within sixty (60) days from the date of said agreement) to sell the New
Securities not elected to be purchased by such Preemptive Right Holder at the
price and upon the terms no more favorable to the purchasers of such securities
than specified in the Issuance Notice. In the event the Company has not sold the
New Securities or entered into an agreement to sell the New Securities within
said ninety (90) day period (or sold and issued New Securities in accordance
with the foregoing within sixty (60) days from the date of said agreement), the
Company shall not thereafter issue or sell any of such New Securities, without
first offering such securities in the manner provided above.
(e) The preemptive rights granted under this Section 2.3 shall
expire upon the closing of, and shall not apply to, a Qualified Public Offering.
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2.4 Permitted Transfers.
(a) The transfer restrictions provided for in this Article 2
with respect to any Stockholder will not apply to the following Transfers:
(i) Any Transfer of Restricted Shares by a Management
Stockholder to the spouse, child or heir, legatee or executor or administrator
of the estate of such Management Stockholder, or the trustee of a trust or a
family partnership created for the benefit of such Management Stockholder or any
such other Person, without consideration in money or money's worth, such as by
gift, bequest or devise; provided, however, that as a condition precedent to any
such Transfer, such Transferee (and, in the case of the death of a Management
Stockholder, the executor or administrator of his or her estate) shall have
agreed in writing that the transfer restrictions provided for in this Article 2
will thereafter be fully binding and enforceable against such Transferee and
such Transferred Restricted Shares and shall have executed and delivered to the
Company, as a condition to its acquisition of such Restricted Shares, an
instrument in form and substance reasonably satisfactory to the Company
confirming that such Transferee takes such Restricted Shares, or interest
therein, subject to, and agrees to be bound by, all the terms, conditions and
obligations of this Agreement.
(ii) Any Transfer of Restricted Shares by a Management
Stockholder to the Company pursuant to any agreements approved by the Board
relating to the repurchase of such Restricted Shares.
(iii) Any Transfer of Restricted Shares by Xxxxx Xxxxx or
Xxxx Xxxxxxx to the Company pursuant to an Indemnification and Stock Pledge
Agreement, dated as of December 3, 1999, by and between Xxxxx Xxxxx, Xxxx
Xxxxxxx, and the Company, or to Holdings pursuant to a Certificate and
Indemnification Agreement, dated as of December 3, 1999, by and between Xxxxx
Xxxxx, Xxxx Xxxxxxx and Holdings, and an Indemnification Agreement, dated as of
December 3, 1999, by and between Xxxxx Xxxxx, Xxxx Xxxxxxx and Holdings.
(iv) Any Transfer made by any Investor to any Person upon
or immediately following the sale of all or substantially all the assets of the
Company.
(v) Any Transfer made by any Investor to any other
Person; provided, however, that as a condition precedent to any such Transfer,
such Transferee shall have executed and delivered to the Company an instrument
in form and substance reasonably satisfactory to the Company confirming that
such Transferee agrees to be bound by, all the terms, conditions and obligations
of this Agreement applicable to the Transferor Investor.
(vi) Any Transfer by an Existing Stockholder, other than
a Management Stockholder, to any Affiliate; provided, however, that as a
condition precedent to any such Transfer, such Transferee shall have executed
and delivered to the Company an instrument in form and substance reasonably
satisfactory to the Company confirming that such Transferee agrees to be bound
by, all the terms, conditions and obligations of this Agreement applicable to
the Transferor Existing Stockholder.
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(b) All Transferees permitted under this Section 2.4 are
collectively referred to herein as "Permitted Transferees."
(c) Notwithstanding the foregoing provisions of this Section 2.4,
the restrictions imposed by Article 2 upon the Transfer by any Stockholder of
any part of, or interest in, the Company's capital stock shall terminate upon
the closing of, and shall not apply to, a Qualified Public Offering; provided,
however, that such termination shall not be deemed to affect any customary
lockup arrangements that any Stockholder may have entered into with the Company
or its underwriters in connection with a Qualified Public Offering. In
connection with the termination of restrictions on Transfer of the Company's
capital stock provided for hereunder, the holder of a certificate representing
such capital stock as to which such restrictions shall have terminated shall be
entitled to receive from the Company, without expense to such holder, one or
more new certificates for such capital stock not bearing the restrictive legend
set forth in Section 2.5.
2.5 Restrictive Legend. Each certificate for Common Stock issued to
each Stockholder other than the Investors (whose stock certificates shall be
legended as provided under the Stock Purchase Agreement), or to any subsequent
Permitted Transferee of such certificate, shall be stamped or otherwise
imprinted with the following restrictive legend:
"The securities represented by this certificate have been acquired for
investment and have not been registered pursuant to the Securities Act of 1933,
as amended (the "Act"), or any applicable state statutes. Such securities may
not be sold, transferred or otherwise disposed of unless (a) (i) a registration
statement under the Act or applicable state securities laws shall have become
effective with regard thereto, or (ii) an exemption from registration exists
under the Act (or the regulations promulgated thereunder) and applicable state
securities laws and such exemption is applicable thereto, and (b) such transfer
otherwise complies with that certain Stockholders Agreement, dated as of
December __, 1999, by and among Promotions Acquisition, Inc. and certain of its
stockholders."
Each such certificate also shall be stamped or imprinted with any
legend required by the State of California, including any legend required by the
California Department of Corporations and Sections 417 and 418 of the California
Corporations Code or any other state securities laws. Any legend endorsed on a
certificate as described herein and the stop transfer instructions with respect
to such legended shares shall be removed, and Company shall issue a certificate
without such legend to the holder of such shares if such shares are registered
and sold under the Securities Act of 1933 and a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933 is available or if such
holder satisfies the requirements of Rule 144 promulgated thereunder.
2.6 Right of First Offer. If the Company desires (i) to effect a
merger, consolidation or similar business combination with a Competitor as a
result of which the stockholders of the Company immediately prior to such
transaction would not continue to hold more than 50% of the total voting equity
of the surviving entity resulting from such transaction, or (ii) to effect a
sale of all or substantially all of the assets of the Company to any Competitor,
then the following procedures shall apply:
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(a) Prior to effecting any of the foregoing transactions, the
Company shall first submit to Cox a written offer to effect any such merger,
consolidation or other business combination transaction with Cox, or to sell
such assets to Cox, as the case may be, with such written offer by the Company
to specify the value of the capital stock and/or the assets of the Company, as
the case may be, upon which such a transaction would be based (the "ROFO
Valuation").
(b) Cox shall have the exclusive right (the "Right of First Offer")
to accept or reject such offer at any time during the thirty (30) day period
following delivery of written notice from the Company to Cox of such offer.
(c) In the event that Cox rejects such offer within said thirty
(30) day period, the Company shall have ninety (90) days thereafter to enter
into a binding agreement for a merger, consolidation or similar business
combination, or for a sale of all or substantially all of the assets of the
Company, at a price that does not reflect a value of the capital stock or assets
of the Company, as the case may be, that is lower than the ROFO Valuation. In
the event the Company has not entered into such a binding agreement within said
ninety (90) day period, the Company shall not thereafter enter into a binding
agreement for a merger, consolidation or similar business combination or a sale
of all or substantially all of the assets of the Company, without first
complying with the procedures set forth above in this Section 2.6.
(d) The Right of First Offer granted to Cox under this Section 2.6
shall expire upon the earlier to occur of (i) the date as of which Cox and its
Affiliates cease to hold, in the aggregate, at least 20% of the Common Stock
then outstanding, determined on a Fully-Diluted Basis, or (ii) the consummation
of a Qualified Public Offering.
2.7 Transfer of Rights. The rights granted to each Investor and to the
Existing Stockholders under this Article 2 shall inure to the benefit of any of
its respective Permitted Transferees as though such Permitted Transferee were
the same type of Stockholder as the Transferor; provided, however, that such
Permitted Transferee shall have complied with the terms and conditions of
Section 2.5 hereof to the extent applicable thereto.
ARTICLE 3
BOARD OF DIRECTORS
3.1 Composition of Board of Directors. Each of the parties hereto
agrees to vote all of the shares of capital stock of the Company now owned or
hereafter acquired by such party, and the Company agrees to take all actions
necessary, in order to cause and maintain the election of persons to the Board
in accordance with the following provisions:
(a) The Board shall consist of not more than seven (7) members. All
Stockholders shall comply with the provisions of this Article 3 to ensure that
nominees of the parties set forth in this Article 3 are elected to (or removed
from) the Board. The board of directors, if any, of any Subsidiary of the
Company (a "Sub Board") shall be the same as that of the Board.
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(b) The holders of a majority in interest of the outstanding shares
of Series A Preferred Stock shall have the right to elect four (4) persons to
the Board (the "Series A Designees"), which Series A Designees shall consist of:
(i) two (2) persons to be designated by Cox, which shall initially be Xxxxxxx
Xxxxxxx and M. Xxxx Xxxxx; (ii) one (1) person designated by Sandler, which
shall initially be Xxxxxxxx XxXxxx; and one (1) person designated by McClatchy,
which shall initially be Xxxxxxxxx X. Xxxxxxxxx.
(c) The holders of a majority in interest of the outstanding shares
of Common Stock held by the parties to this Agreement shall have the right to
elect the remaining three (3) persons to the Board (the "Common Stock
Designees"), which initially shall consist of the following persons: (i) Xxxxx
Xxxxx; (ii) Xxxx Xxxxxxx; and (iii) a third person who shall be a "strategic"
representative who is not an employee or affiliate of the Company (the
"Strategic Representative").
(d) Notwithstanding the foregoing provisions of this Section 3.1,
as long as Cox and its Affiliates hold, in the aggregate, at least 80% of the
Series A Preferred Stock then outstanding, then (i) three (3) of the four (4)
Series A Designees shall be designated by Cox, with the fourth Series A Designee
to be designated by a majority in interest of the remaining Investors, and (ii)
the Strategic Representative shall be jointly selected by Cox and the holders of
a majority in interest of the outstanding shares of Common Stock held by the
parties to this Agreement.
3.2 Removal. Except as provided for in Section 3.3, each director
designated as aforesaid by any Stockholder or group of Stockholders and duly
elected to the Board shall be subject to removal only at the request of the
Stockholder or group of Stockholders which designated such director.
3.3 Election of Directors. Each Stockholder shall vote all of its
shares of the capital stock of the Company for the election (or removal) of the
nominees designated as provided in Section 3.1 hereof and, in the event of a
vacancy in the Board created by the death, resignation or removal of a director,
shall vote its shares of the capital stock of the Company for the election of a
nominee to be designated by the Stockholder or group of Stockholders which
designated the director whose position has become vacant (unless such vacancy
has resulted from the termination of the power of such Stockholder or group of
Stockholders to nominate such director). If any Stockholder or group of
Stockholders, as the case may be, fails to designate a nominee to fill a
directorship pursuant to the terms of this Article 3, the election of an
individual to such directorship shall be accomplished in accordance with the
Company's Bylaws, the Amended and Restated Certificate of Incorporation of the
Company and applicable law; provided that such Stockholder or group of
Stockholders, as the case may be, may replace such individual as a director with
a nominee pursuant to this Article 3. In the event that any provision of the
Company's Bylaws or the Amended and Restated Certificate of Incorporation of the
Company is inconsistent with any provision of this Article 3, the Stockholders
and the Company shall take such action as may be necessary to amend such
provision to remedy such inconsistency. The Company shall take such lawful
action as shall be reasonably required in order to facilitate the designation,
removal and election of directors as contemplated by this Agreement.
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3.4 Committees. The Stockholders shall cause the Board and any Sub
Board to establish a Compensation Committee and an Audit Committee. Each such
committee will consist of directors designated by the vote of directors
designated by the holders of a majority of the Series A Preferred Stock. Any
committees of the Board or a Sub Board (other than the Compensation Committee
and the Audit Committee) shall be created only upon the approval of the holders
of a majority of the Series A Preferred Stock, and the composition of such
committee (if any) shall consist of not more than three Persons, at least one of
which will be a director that is a Series A Designee.
3.5 Expenses. The Company shall reimburse the directors designated by
the Investors for their reasonable out-of-pocket expenses incurred in attending
meetings of the Board or any committee thereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS AND THE COMPANY
The Company and each Stockholder (each, a "Representing Party") hereby
severally represents and warrants to each other Representing Party as follows:
4.1 Organization, Qualification and Power. Each Representing Party
(other than any Representing Party which is an individual) is a corporation or
limited partnership, as the case may be, duly organized, validly existing and in
good standing under the laws of the state of its organization, and it has the
requisite corporate or partnership power and authority, as the case may be, to
own and hold its properties, and to carry on its business in all material
respects as conducted or presently proposed to be conducted. Each Representing
Party (other than any Representing Party which is an individual) has requisite
corporate or partnership power and authority to execute, deliver and perform
this Agreement.
4.2 Authorization of Agreement; No Conflict. The execution, delivery
and performance by each Representing Party of this Agreement have been duly
authorized by all requisite corporate, partnership and individual action, as the
case may be, of the Representing Party, if any, and will not violate any
provision of law, any order of any court or other agency of government, any of
such Representing Party's organizational documents, if any, or any provision of
any indenture, agreement or other instrument to which such Representing Party or
any of such Representing Party's properties or assets is bound, or conflict,
result in a breach of, or constitute (with due notice or lapse of time or both)
a default under any such indenture, agreement or other instrument. Each
Stockholder (i) represents that such Stockholder has not granted and is not a
party to any proxy, voting trust or other agreement that is inconsistent with or
conflicts with the provisions of this Agreement, and (ii) agrees that (y) it
shall not grant any proxy or become party to any voting trust or other agreement
which is inconsistent with or conflicts with the provisions of this Agreement,
and (z) any such grant shall be void.
4.3 Validity. This Agreement has been duly executed and delivered by
each Representing Party and constitutes a legal, valid and binding obligation of
such Representing Party, enforceable against such Representing Party in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
moratorium, or other similar laws affecting the enforcement of
-12-
creditors' rights generally and except as to the extent the availability of
equitable remedies may be limited by general principles of equity.
ARTICLE 5
MISCELLANEOUS
5.1 Furnishing of Financial Statements and Information. The Company
will deliver to each Investor (or Permitted Transferee thereof) who holds or has
purchased at least 200,000 shares (subject to appropriate adjustment in the case
of stock splits, stock dividends, stock combinations, reclassifications and
recapitalizations) of Series A Preferred Stock, and to XxxxxxXxxxxx.xxx, Inc.:
(a) as soon as available, but in any event within thirty (30) days
after the end of each monthly accounting period in each fiscal year, unaudited
statements of income, operations and cash flows of the Company for such monthly
period and for the period from the beginning of the fiscal year to the end of
such month, and unaudited balance sheets of the Company as of the end of such
monthly period, setting forth in each case comparisons to the annual business
plan and operating budget for the Company and to the corresponding period in the
preceding fiscal year, and all such statements shall be prepared in accordance
with GAAP (provided, however, that such statements need not comply with the
footnote disclosure requirements of GAAP), along with monthly operating reports
containing such information as such holder of Series A Preferred Stock may
reasonably request;
(b) as soon as available, but in any event within forty-five (45)
days after the end of each quarterly accounting period in each fiscal year,
unaudited statements of income, operations and cash flows of the Company for
such quarterly period and for the period from the beginning of the fiscal year
to the end of such quarter, and unaudited balance sheets of the Company as of
the end of such monthly period, setting forth in each case comparisons to the
annual business plan and operating budget for the Company and to the
corresponding period in the preceding fiscal year, and all such statements shall
be prepared in accordance with GAAP (provided, however, that such statements
need not comply with the footnote disclosure requirements of GAAP);
(c) as soon as available, but in any event within ninety (90) days
after the end of each fiscal year, audited statements of income, operations,
retained earnings and cash flows of the Company for such fiscal year and balance
sheets of the Company as of the end of such fiscal year, setting forth in each
case comparisons to the annual business plan and operating budget of the
preceding fiscal year, all prepared in accordance with GAAP, all in reasonable
detail and duly certified by the Accountants, who shall have given the Company
an opinion, unqualified as to the scope of the audit, regarding such statements;
(d) annually, promptly after adoption thereof by the Company's
Board of Directors, a copy of the Company's annual financial or business plan
and operating budget for the following fiscal year;
(e) promptly after the Company learns of the commencement or
written threats of the commencement of any material lawsuit, legal or equitable,
or of any material administrative, arbitration or other proceeding against the
Company or its business, assets or properties, written notice of the nature and
extent of such suit or proceeding;
(f) promptly upon transmission thereof, copies of all reports,
proxy statements, registration statements and notifications filed by it with the
Securities and Exchange
-13-
Commission pursuant to any act administered by the Securities and Exchange
Commission or furnished to stockholders of the Company or to any national
securities exchange;
(g) with reasonable promptness, such other financial data relating
to the business, affairs and financial condition of the Company and such other
information as may be available to the Company and as from time to time such
holder of Series A Preferred Stock or XxxxxxXxxxxx.xxx, Inc. may reasonably
request. If the Company establishes or otherwise acquires any subsidiaries, all
references in this Section 5.1 to financial statements shall be deemed to refer
to consolidated and consolidating financial statements (except that the Company
need not provide separate annual audited consolidating financial statements).
5.2 Access to Company Records. Each Investor (or Permitted Transferee
thereof) who holds or has purchased at least 200,000 shares (subject to
appropriate adjustment in the case of stock splits, stock dividends, stock
combinations, reclassifications and recapitalizations) of Series A Preferred
Stock and XxxxxxXxxxxx.xxx, Inc. shall be entitled to review the financial and
corporate books and records of the Company and to meet with the executive
officers and independent accountants of the Company for purposes reasonably
related to such Stockholder's ownership of Common Stock or Preferred Stock,
which review and/or meetings shall take place at reasonable times during the
normal business hours of the Company and in such a manner as to not unduly
interfere with the conduct of the Company's business; provided, however, that
the Company may condition access to certain confidential or proprietary
information upon the execution of a confidentiality agreement by the Investor in
form and substance reasonably acceptable to the Company.
5.3 Entire Agreement; Amendment. This Agreement embodies the entire
agreement of the parties hereto with respect to the subject matter hereof. Any
provision of this Agreement may be amended, waived or modified, and this
Agreement may be terminated, if, but only if, such amendment, waiver or
modification or termination is in writing and is signed by: (i) the holders of a
majority of the Series A Preferred Stock; and (ii) the holders of a majority of
the shares held by the Existing Stockholders; whenever any provision of this
Agreement requires action or approval by the holders of a specified number of
Series A Preferred Stock or Existing Stockholder Shares, such action or approval
may be evidenced by a written consent executed by the requisite holders of
Series A Preferred Stock or Existing Stockholder Shares, without any requirement
of a meeting or prior notice to the other holders of such shares in accordance
with Section 141(f) of the Delaware General Corporation Law. The parties hereto
intend, agree and understand that this Agreement amends and supersedes and
replaces in its entirety any and all prior agreements pertaining to the subject
matter hereof.
5.4 Binding Effect; Benefits. This Agreement and all the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, legal representatives, successors and permitted assigns.
Except as expressly provided herein, nothing in this Agreement is intended to
confer on any Persons, other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
5.5 Recapitalization and Exchanges Affecting the Common Stock. All the
provisions of this Agreement shall apply, to the full extent set forth herein
with respect to the Existing Stockholder Shares, the Common Stock, the Series A
Preferred Stock and any and all other securities of the Company or any successor
or assign of the Company (whether by merger,
-14-
consolidation, sale of assets or otherwise) which may be issued in respect of,
in exchange for, or in substitution of the Existing Stockholder Shares, the
Common Stock, the Series A Preferred Stock, or such other securities or by
reason of any stock split, stock dividend, combination, recapitalization,
reclassification, merger, consolidation or other similar event.
5.6 Notices. All notices, requests, consents, and other communications
hereunder shall be in writing and shall be deemed effectively given and received
when delivered in person or by national overnight courier service or by
certified or registered mail, return receipt requested, or by telecopier,
addressed as follows:
(a) if to the Company, at
Promotions Acquisition, Inc.
000 Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: R. Xxxxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxx & Xxxxxxx, LLP
0000 Xxxx Xxxxxxxx Xxxx, Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
(b) if to Cox:
Xxx Target Media, Inc.
c/x Xxx Enterprises, Inc.
0000 Xxxx Xxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx
M. Xxxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Dow, Xxxxxx & Xxxxxxxxx, PLLC 0000 Xxx Xxxxxxxxx
Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. X'Xxxxxxx, Esq.
Facsimile: (000) 000-0000
-15-
(c) To any other Stockholder: The address reflected on the records
of the Company, or such other address or addresses as shall have been furnished
in writing by such party to the Company and to the other parties to this
Agreement.
5.7 Severability. The invalidity, illegality or unenforceability of one
or more of the provisions of this Agreement in any jurisdiction shall not affect
the validity, legality or enforceability of the remainders of this Agreement in
such jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
5.8 Headings. The headings of the sections of this Agreement are
inserted for convenience only and shall not constitute a part of this Agreement.
5.9 Counterparts. This Agreement may be in two or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same instrument.
5.10 APPLICABLE LAW. THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE
INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT,
REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF
LAW.
5.11 Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
5.12 Specific Performance. Each of the parties hereto acknowledges and
agrees that in the event of any breach of this Agreement, the non-breaching
party would be irreparably harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto will waive the defense
in any action for specific performance that a remedy at law would be adequate
and that the parties hereto, in addition to any other remedy to which they may
be entitled at law or in equity, shall be entitled to compel specific
performance of this Agreement in any arbitration of this Agreement or in any
action instituted in any court of the United States or any state thereof having
subject matter jurisdiction of such action.
5.13 Rights Cumulative; Waiver. The rights and remedies of the
Stockholders and the Company under this Agreement shall be cumulative and not
exclusive of any rights or remedies which any party hereto would otherwise have
hereunder or at law or in equity or by statute, and no failure or delay by any
such party in exercising any right or remedy shall impair any such right or
remedy or operate as a waiver of such right or remedy, nor shall any single or
partial exercise of any power or right preclude such party's other or further
exercise or the exercise of any other power or right. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach and no failure by
any party hereto to exercise any right or privilege hereunder shall be deemed a
-16-
waiver of such party's rights or privileges hereunder or shall be deemed a
waiver of such party's rights to exercise the same at any subsequent time or
times hereunder.
5.14 Construction. The use of the singular or plural or masculine,
feminine or neuter gender shall not be given an exclusionary meaning and, where
applicable, shall be intended to include the appropriate number or gender, as
the case may be.
5.15 Group Actions. For purposes of this Agreement, any action to be
taken by a group of Stockholders shall be determined by the vote of the holders
of a majority of such group, unless a greater percentage shall have been
expressly set forth in this Agreement with respect to such action.
5.16 Termination. This Agreement will automatically terminate and be of
no further force or effect immediately after the consummation of a Qualified
Public Offering.
[SIGNATURE PAGES FOLLOW]
-17-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective duly authorized officers or
representatives as of the date first written above.
PROMOTIONS ACQUISITION, INC.
By: /s/
----------------------------
Name:
Title:
XXX TARGET MEDIA, INC.
By: /s/
----------------------
Name:
Title:
SANDLER CAPITAL PARTNERS IV, L.P.
By: Sandler Investment Partners, L.P., General Partner
By: Sandler Capital Management, General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxxx
President
SANDLER CAPITAL PARTNERS IV FTE, L.P.
By: Sandler Investment Partners, L.P., General Partner
By: Sandler Capital Management, General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxxx
President
SANDLER INTERNET PARTNERS, L.P.
-18-
By: Sandler Investment Partners, L.P., General Partner
By: Sandler Capital Management, General Partner
By: MJDM Corp., General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
XXXXXXXXXXXX.XXX, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title:
THE MCCLATCHY COMPANY
By: /s/
------------------------------
Name:
Title:
CENTRAL NEWSPAPERS, INC.
By: /s/
------------------------------
Name:
Title:
-19-
