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EXHIBIT 4.3
FORM OF
1997 LEEDS FAMILY STOCKHOLDERS' AGREEMENT
THIS AGREEMENT ("Agreement"), made and entered into as of the 30th day
of June, 1997, by and among CMP MEDIA INC., a Delaware corporation (hereinafter
referred to as the "Company"), with principal offices at 000 Xxxxxxxxx Xxxxx,
Xxxxxxxxx, Xxx Xxxx 00000; and XXXXXX X. XXXXX ("Xxxxx"), LILO J. LEEDS
("Lilo"), XXXXXXX X. XXXXX ("Xxxxxxx"), XXXXXXX X. LEEDS ("Xxxxxxx"), XXXXXX
X. XXXXX ("Xxx"), XXXX XXXXX- LEEDS ("Xxxx") and XXXXXXXX XXXXX ("Xxxxxxxx")
(sometimes hereinafter referred to individually as a "Stockholder" and
collectively as the "Stockholders", and Michael, Richard, Xxx, Xxxx and
Xxxxxxxx sometimes hereinafter referred to individually as a "Sibling
Stockholder" and collectively as the "Sibling Stockholders").
PREAMBLE
One of the guiding objectives of Xxxxx and Lilo, co-founders of the
Company, is to establish an arrangement which will xxxxxx harmony among the
Stockholders, permit them to realize their business and charitable objectives,
and ensure continuity of control and management of the Company in a manner
which permits the Company to grow and prosper, recognizing the obligations and
responsibilities of the Stockholders and the Company to the customers and
employees of the Company, the communities in which the Company operates, and
all its stockholders. It is the parties' hope and expectation that the voting
arrangements, the provisions affecting the nomination and selection of the
Company's Board of Directors (the "Board") and the provisions relating to the
transfer of the Company's Common Stock as set forth in this Agreement will
provide a framework which permits the realization of these objectives in a fair
and equitable manner and consistent with the historic values and principles of
the Company. There may well be situations which arise in the future, the
solution of which is not specifically detailed or provided for in this
Agreement. In these situations, it is the parties' hope and expectation that
these matters will be resolved with affection, goodwill, respect and
sensitivity, so as to achieve and secure to each of the parties hereto the
benefits contemplated by this Agreement.
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W I T N E S S E T H:
WHEREAS, the Company currently has three (3) classes of authorized
Common Stock (the "Common Stock") consisting of two (2) classes of voting
Common Stock, namely Class A Common Stock ("Class A Common Stock") and Class B
Common Stock ("Class B Common Stock"), and one (1) class of non-voting Common
Stock, namely Class C Common Stock ("Class C Common Stock"); and
WHEREAS, the rights of the holders of shares of Class A Common Stock
and the holders of shares of Class B Common Stock are identical, except that
the holders of the Class A Common Stock are entitled to one (1) vote per share
on all matters submitted to a vote of stockholders, the holders of the Class B
Common Stock are entitled to ten (10) votes per share on all matters submitted
to a vote of stockholders, and the Class B Common Stock, may in circumstances
set forth in the Company's Certificate of Incorporation, as amended, and/or
restated, or in this Agreement be converted into or exchanged for Class A
Common Stock on a share-for-share basis; and
WHEREAS, the holders of the Class C Common Stock are not entitled to
vote; and
WHEREAS, the Stockholders entered into a Shareholders' Agreement as of
the 30th day of June 1991 with respect to their shares of common stock of CMP
Publications, Inc. and affiliated entities, the predecessor-in-interest to the
Company (the "1991 Leeds Family Shareholders' Agreement"); and
WHEREAS, on February 28, 1997 each of the Stockholders received shares
of Class C Common Stock as a stock dividend on their shares of Class A Common
Stock and Class B Common Stock, which shares of Class C Common Stock (the
"Class C Shares") may, under certain circumstances, be exchanged for shares of
the class of Common Stock upon which they were declared as a dividend; and
WHEREAS, the Stockholders entered into a Stockholders' Agreement as of
the 28th day of February 1997 with respect to the Class C Shares and the shares
of Common Stock to be received upon the exchange of the Class C Shares (the
"1997 Stockholders' Agreement"); and
WHEREAS, the Company has determined to initiate a public offering of
certain shares of the Class A Common Stock (an "IPO") and, to that end, has
filed with the Securities and Exchange Commission (the "SEC") a Registration
Statement under the Securities Act of 1933 (the "1933 Act"); and
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WHEREAS, prior to the date on which the SEC declares the Company's
Registration Statement effective (the "Effective Date"), each Class C Share
which was received by a Stockholder as a stock dividend with respect to a share
of Class A Common Stock will be exchanged for a single share of Class A Common
Stock, and each Class C Share which was received by a Stockholder as a stock
dividend with respect to a share of Class B Common Stock will be exchanged for
a single share of Class B Common Stock; and
WHEREAS, the Stockholders and certain trusts for the benefit of
certain of their issue currently own all of the issued and outstanding shares
of the Class B Common Stock (the "Class B Shares") and substantially all of the
issued and outstanding shares of the Class A Common Stock and the Class C
Common Stock, as set forth in Exhibit A annexed hereto; and
WHEREAS, the parties deem it in the best interest of the Company and
each of them to agree to certain provisions governing the future transfer,
exchange and voting of shares of the Common Stock by the Stockholders and by
any and all other persons and entities which may hereafter hold any of the
Class B Shares from time to time (the Stockholders and such other persons and
entities, collectively, the "Class B Stockholders"); and
WHEREAS, the parties desire that, as of the Effective Date of the IPO,
the terms, provisions, conditions and restrictions set forth in the 1991 Leeds
Family Shareholders' Agreement and the 1997 Stockholders' Agreement be
superseded and replaced in their entirety by, and that all of the Class B
Shares be subject to, the terms, conditions, provisions and restrictions of
this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the
parties, the parties hereto do hereby covenant, agree, represent and warrant as
follows:
ARTICLE I
TRANSFER AND SALE OF CLASS B SHARES
TO PERMITTED TRANSFEREES AND QUALIFIED PRIVATE FOUNDATIONS
Section 1.1. General Restriction on Transfer. No Stockholder
shall, voluntarily or involuntarily, by operation of law or otherwise,
transfer, sell, mortgage, pledge, hypothecate, assign as security, grant or
permit to exist or continue a security interest in, or in any way transfer by
gift, will, trust or intestate succession, any of his or her Class B Shares or
any
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interest therein, or attempt or purport to do any of the aforementioned acts,
except to a Permitted Transferee or Qualified Private Foundation as defined in
Section 1.2, or except as otherwise specifically provided for in this
Agreement. Any attempt by a Stockholder to do any of the aforementioned acts
or otherwise to alienate or dispose of any Class B Shares, except as provided
for and in accordance with this Agreement, shall be null and void.
Section 1.2. Permitted Transferees and Qualified Private
Foundations.
(a) "Permitted Transferee" shall mean the spouse of any
Stockholder, any issue, parent or sibling of such Stockholder, any issue of
such sibling, any Stockholder's former spouse who is the parent of such
Stockholder's issue or any entity (e.g., a trust (including a charitable
trust), corporation or partnership) in which such Stockholder and/or any
Permitted Transferees either individually or collectively have the majority
voting interest and of which, in the case of a trust or similar entity,
substantially all the beneficiaries are any of the aforesaid persons, including
a charity; in the case of a corporation or similar entity, substantially all
the stockholders are any of the aforesaid persons, including a charity; and in
the case of a partnership or similar entity, substantially all the partners are
any of the aforesaid persons, including a charity.
(b) "Qualified Private Foundation" of any person shall mean and
include a duly organized charitable entity organized pursuant to Section
501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), provided that (i) such person has caused such entity to be
established, (ii) a majority of the initial and successor trustees, directors
or managers, as the case may be, of such entity are either Stockholders and/or
their Permitted Transferees, and (iii) any Class B Shares owned by such entity
are voted by or at the direction of such trustees, directors, or managers, as
the case may be.
(c) Before a Stockholder transfers any Class B Shares to a
Permitted Transferee or Qualified Private Foundation, and before any Permitted
Transferee or Qualified Private Foundation transfers any Class B Shares to a
Permitted Transferee or Qualified Private Foundation, such transferring
Stockholder, Permitted Transferee or Qualified Private Foundation, as the case
may be, shall give the Company written notice of such intended transfer. Any
receiving Permitted Transferee or Qualified Private Foundation, shall, to the
extent of the Class B Shares transferred, succeed to all the rights and
obligations of the transferor under this Agreement and shall receive and hold
the transferred Class B Shares subject to, and shall become bound by, all the
terms and conditions hereof; provided that, as a condition precedent to a
Permitted Transferee or Qualified Private Foundation exercising any rights
under this Agreement and to the Company's obligation to change its records to
reflect the record ownership of such Class B Shares in the name of such
Permitted Transferee
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or Qualified Private Foundation, such Permitted Transferee or Qualified Private
Foundation, if not already a party to this Agreement, shall agree in writing to
be bound by all the terms and conditions hereof and shall execute such
documents and instruments, including confidentiality and non-competition
agreements, as may reasonably be required by legal counsel to the Company.
Thereafter, there shall be no further transfer of such Class B Shares except by
such Permitted Transferee or Qualified Private Foundation to another Permitted
Transferee or Qualified Private Foundation, in accordance with the terms and
conditions of this Agreement.
(d) No Class B Stockholder may sell in a private transaction any of
his, her or its Class B Shares to any Class B Stockholder who is not a member
of the seller's Family (as hereinafter defined) without first offering to sell
such Class B Shares to all of the Class B Stockholders upon the same terms and
conditions. For the purpose of such offer, a Sibling Stockholder, each member
of his or her Family who is a Class B Stockholder and each Qualified Private
Foundation of such Sibling Stockholder and/or of any member of his or her
Family who is a Class B Stockholder (collectively, a "Sibling Stockholder's
Group") shall be aggregated, and each Sibling Stockholder's Group shall be
entitled, as a group, to purchase the same number of such Class B Shares as
each other Sibling Stockholder's Group, or as the purchasing parties may
otherwise unanimously agree; provided, however, that if a Sibling Stockholder's
Group has not purchased all of the Class B Shares to which it was entitled
under any prior offer or offers made by a Class B Stockholder pursuant to this
paragraph, or if a Sibling Stockholder's Group has previously sold or
transferred any of its Class B Shares to persons or entities that are not
members of such Sibling Stockholder's Group, then any such Sibling Stockholder
Groups shall be entitled in any subsequent offering by Class B Stockholders
hereunder to purchase all or such greater percentage of the offered Class B
Shares so as to permit such Sibling Stockholder's Group to achieve parity with
the other Sibling Stockholder's Group, based on the total number of Class B
Shares then held by each Sibling Stockholder's Group. For all purposes of this
Agreement, "Family" shall mean a Sibling Stockholder, the spouse and any issue
of such Sibling Stockholder and any entity in which such Sibling Stockholder
and/or his or her spouse and/or any of his or her issue, either individually or
collectively, have the majority voting interest and of which, in the case of a
trust or similar entity, substantially all the beneficiaries are any of the
aforesaid persons, including a charity; in the case of a corporation or similar
entity, substantially all the stockholders are any of the aforesaid persons,
including a charity; and in the case of a partnership or similar entity,
substantially all the partners are any of the aforesaid persons, including a
charity.
(e) The parties agree and understand that the provisions of
subparagraph (d) above do not require a Sibling Stockholder, his or her Family,
or Qualified Private Foundation to
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first offer for sale any of the Class B Shares which they then own to any other
Stockholder, his or her Family, or Qualified Private Foundation, if such
persons or entities determine to (i) convert their Class B Shares into shares
of Class A Common Stock and sell such shares to persons or entities through a
registration statement or customary brokerage transactions, or (ii) gift,
devise or bequeath their Class B Shares to a Permitted Transferee, Qualified
Private Foundation or (after conversion to shares of Class A Common Stock) a
public charity.
(f) Subject to the other provisions of this Agreement, Xxxxx and Lilo
shall be entitled to transfer their shares of the Common Stock to their
respective Qualified Private Foundations to the maximum extent permitted under
the Internal Revenue Code. To the extent that, after such transfers, other
Class B Stockholders may be permitted under the Internal Revenue Code to
transfer additional shares of the Common Stock to their Qualified Private
Foundations, each Sibling Stockholder's Family shall be entitled, as a group,
to transfer the same number of shares of the Common Stock to Qualified Private
Foundations as each other Sibling Stockholder's Family, unless the transferring
parties otherwise unanimously agree.
ARTICLE II
OTHER TRANSFERS AND SALES OF SHARES
IN PRIVATE TRANSACTIONS
Section 2.1. Right of First Offer.
(a) In the event that any Class B Stockholder wishes to sell,
transfer or dispose of shares of his, her or its Class B Shares in a private
transaction other than to a Permitted Transferee or Qualified Private
Foundation as provided in Article I, such Class B Stockholder (the "Selling
Stockholder") shall first give all the other Class B Stockholders other than
Xxxxx and Lilo (the "Remaining Stockholders") a notice setting forth an offer
to sell such Class B Shares to the Remaining Stockholders and specifying the
purchase price therefor and any other terms or conditions of such sale. As
among the Remaining Stockholders, each Sibling Stockholder's Group shall be
entitled, as a group, to purchase the same number of such Class B Shares as
each other Sibling Shareholder's Group or as the Remaining Stockholders may
otherwise unanimously agree. The Remaining Stockholders shall promptly
determine among themselves, in accordance with the preceding sentence, which of
them shall exercise their rights to purchase such shares and in what proportion
and, within forty-five (45) days after such notice from the Selling Stockholder
offering to sell them such shares is given, shall give the Selling Stockholder
notice of which of the
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Remaining Stockholders will purchase the offered shares, the number of shares
to be purchased by each and the place, date and time for the closing of the
purchase and sale of such shares, which date shall be not more than ninety (90)
days after the date the notice from the Selling Stockholder was duly given.
(b) If, within forty-five (45) days after such notice from the
Selling Stockholder is given, the Remaining Stockholders have not given the
Selling Stockholder notice that some or all of them will purchase all of the
Class B Shares offered by the Selling Stockholder, the Selling Stockholder
shall give the Company notice setting forth an offer to sell, at the same
purchase price and upon the same terms and conditions, such portion of the
Class B Shares as the Remaining Stockholders have not agreed to purchase. The
Board shall promptly consider such offer and, within fifteen (15) days after
such notice from the Selling Stockholder is given, shall give the Selling
Stockholder notice of the extent, if any, to which the Company shall accept
such offer and the place, date and time for the closing of the purchase and
sale of such Class B Shares, which date shall be not more than thirty (30) days
after the date the notice from the Selling Stockholder was duly given. If the
Selling Stockholder is then a member of the Board, the Selling Stockholder
shall not be entitled to vote on such matter.
(c) If the Remaining Stockholders and Company do not agree to
purchase any or all of the shares offered by the Selling Stockholder, then and
in that event the Selling Stockholder shall have ninety (90) days to effect a
bona fide sale of such shares to a third party purchaser (a "Third Party
Purchaser"), subject to the provisions of Section 2.3, Section 2.4, and Section
2.7 at a price and upon terms no more favorable to such Third Party Purchaser
than those offered to the Remaining Stockholders and Company. In the event
the Selling Stockholder fails to sell shares hereunder to a Third Party
Purchaser within such 90-day period, such shares shall again become subject to
the terms and conditions of this Section 2.1.
Section 2.2. Right of First Refusal. In the event that a Class B
Stockholder at any time receives a bona fide offer from a Third Party Purchaser
to purchase shares of the Common Stock, and desires to accept such offer, then
and in that event such Class B Stockholder shall promptly give the Remaining
Stockholders and Company a notice containing a true and complete copy of such
offer and detailing all the material terms thereof, written and unwritten,
including the identity of such Third Party Purchaser and the identity of all
persons who, to the best knowledge of such Class B Stockholder, directly or
indirectly control such Third Party Purchaser, together with any related
letters of intent, contracts for sale and exhibits thereto. If, within
forty-five (45) days after all such required documentation has been given to
the Remaining Stockholders and the Company, the Remaining
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Stockholders and Company have not given such Class B Stockholder notice that it
and/or they will purchase such shares upon substantially the same terms, then
and in that event such Class B Stockholder shall have ninety (90) days to
effect a bona fide sale of his, her or its shares to such Third Party Purchaser
in accordance with such offer. In connection with such third-party offer, the
Class B Stockholders shall have the first right to acquire the offered shares
in accordance with the procedures set forth in Section 2.1, with the Company
having the right to acquire any of such shares of Common Stock not purchased by
the Class B Stockholders. In the event such Class B Stockholder fails to sell
such shares to such Third Party Purchaser within such 90-day period, such
shares shall again become subject to the terms and conditions of this Section
2.2.
Section 2.3. Sales to Competitors. Notwithstanding anything to the
contrary herein contained, no Class B Stockholder shall sell, transfer or
convey any shares of the Common Stock to a competitor of the Company in a
private transaction without first obtaining the prior consent of Class B
Stockholders who then hold eighty percent (80%) or more of the voting power of
the Class B Shares (including for the purposes of such computation the Class B
Shares which the selling Class B Stockholder, his or her Family and their
Qualified Private Foundations are entitled to vote) and who include at least
one (1) Sibling Stockholder who is a full-time senior executive employee of the
Company (an "Employee Stockholder"), if there are at least two Employee
Stockholders serving in such capacity at such time.
Section 2.4. Sales to Non-Competitors. Notwithstanding anything to
the contrary herein contained, no Class B Stockholder shall sell, transfer or
convey shares of Common Stock to a non-competitor of the Company in a private
transaction without first obtaining the prior consent of Class B Stockholders
who then hold sixty-five percent (65%) or more of the voting power of the Class
B Shares (excluding for the purposes of such computation the Class B Shares
which the selling Class B Stockholder, his or her Family and their Qualified
Private Foundations are entitled to vote); provided, however, that even without
such consent (but subject to the provisions of Section 2.1, Section 2.2 and
Section 2.7) any Class B Stockholder, his or her Family and their Qualified
Private Foundations collectively may, during any twelve (12) month period, sell
to non-competitors of the Company in private transactions shares of Common
Stock having a fair market value, determined as of their date of sale, of up to
one million dollars ($1,000,000).
Section 2.5. Mergers and Other Reorganizations. In the event that
certain of the Class B Stockholders determine to dispose of all or a portion of
their shares of Common Stock in connection with a sale, tender, merger,
consolidation or similar type of transaction, with the result that all of the
Class B Stockholders as a group will no longer own securities representing more
than 50% of the voting power of either the Company or its successor in
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interest, then and in that event, each Class B Stockholder shall have the
right, but not the obligation, to dispose of a proportionate number of his, her
or its shares of Common Stock in any such transaction on the same terms and
conditions as the selling Class B Stockholders have determined to dispose of
their Common Stock.
Section 2.6. Conversion of Class B Shares to Class A Shares. If any
shares to be sold or transferred by a Class B Stockholder under this Article II
(other than to a Permitted Transferee or Qualified Private Foundation) are
Class B Shares, then prior to such sale or transfer such Class B Stockholder
shall take all such steps as may be necessary, appropriate or reasonably
required by legal counsel to the Company to convert such Class B Shares into,
and exchange them for, shares of Class A Common Stock ("Class A Shares"). In
addition, at such time as the total number of shares of Class A Common Stock
and Class B Common Stock owned by the Stockholders, their Permitted Transferees
and Qualified Private Foundations is less than twenty percent (20%) of the
aggregate number of shares of Class A Common Stock and Class B Common Stock
then outstanding, all of the outstanding shares of Class B Common Stock
automatically will be converted into shares of Class A Common Stock.
Section 2.7. Limitations on Number of Shares Sold Per Year.
Notwithstanding anything to the contrary herein contained, the right of any
Class B Stockholder to sell shares of Common Stock under this Article II shall
be subject to the following provisions:
(a) Xxxxx and Lilo shall have the right to sell or transfer at any
time as many of their shares of Common Stock as they may deem appropriate.
(b) Each Sibling Stockholder's Group shall collectively have the
right to sell or transfer in any calendar year such aggregate number of Class B
Shares (and/or Class A Shares converted from Class B Shares) as shall equal ten
percent (10%) of the number of Class B Shares owned by such Sibling
Stockholder's Group on the effective date of this Agreement. Such right shall
be cumulative, so that any of such Class B Shares and/or Class A Shares not
sold by a Sibling Stockholder's Group in one year may be sold in subsequent
years together with such number of Class B Shares and/or Class A Shares as such
Sibling Stockholder's Group would in any case be entitled to sell in such
subsequent years. Notwithstanding the foregoing, the total number of such
Class B Shares and/or Class A Shares that a Sibling Stockholder's Group may
sell in any single calendar year shall in no event exceed twenty percent (20%)
of the number of Class B Shares owned by such Sibling Stockholder's Group on
the effective date of this Agreement. The percentage limitations set forth in
this paragraph (b) shall not be waived or modified except with the prior
consent of Class B Stockholders then holding sixty-five percent (65%) or more
of the voting power of
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the Class B Shares (excluding for the purposes of such computation the Class B
Shares which such Sibling Stockholder's Group is entitled to vote).
ARTICLE III
TRANSFER AND SALE OF CLASS A SHARES
ON THE PUBLIC MARKET
Any Class B Stockholder who converts any of his, her or its Class B
Shares into Class A Shares as permitted by the Company's Certificate of
Incorporation, as amended or restated from time to time, may sell, transfer or
convey such Class A Shares on the NASDAQ National Market or any other national
exchange on which the Class A Common Stock is listed for trading, subject to
the terms, conditions, provisions and restrictions set forth in this Article
III.
Section 3.1. Limitations on Number of Shares Sold Per Year. All
sales on a public market of Class A Shares that have been converted from Class
B Shares shall be aggregated with sales of Class B Shares for each year, and
the limitations set forth in Section 2.7 shall apply to all such sales
collectively.
Section 3.2. Registration Rights. Commencing with the calendar year
1998, the Class B Stockholders shall have the right to require the Company to
register their Class A Shares (after conversion from Class B Shares) for sale
in a public offering under the 1933 Act (an "Offering"), subject to and in
accordance with the following provisions:
(a) Class B Stockholders, as provided in paragraph (c) below, may give
the Company a notice requesting that it register a specified number of their
converted Class A Shares, provided that (i) none of the Class B Stockholders
requesting such registration (the "Requesting Stockholders") or any member of
his or her Family is then engaged in competition with the Company as provided
in Section 6.1 and (ii) if a Requesting Stockholder is anyone other than Xxxxx
or Lilo, the Sibling Stockholder's Group of which such Requesting Stockholder
is a member owns directly or indirectly fifty percent (50%) or more of the
number of Class B Shares which such Sibling Stockholder's Group owned on the
effective date of this Agreement. The Company, upon receipt of such notice (a
"Requesting Notice"), shall promptly give all the other Class B Stockholders
notice thereof, which notice shall disclose the identity of the Requesting
Stockholders and the number of Class A Shares that they have requested the
Company to register. Such other Class B Stockholders shall have fifteen (15)
days after such notice is given by the Company in which to give the Company
notice that they wish to participate in such registration and to sell Class A
Shares in the Offering. Upon the expiration of such 15-day period, the Company
shall determine
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if (x) the total number of Class A Shares which the Class B Stockholders
collectively wish to sell in the Offering is equal to at least twenty-five
percent (25%) of the number of Class B Shares which a Sibling Stockholder's
Group owned on the date of this Agreement or (y) the fair market value of all
such Class A Shares was not less than twenty million dollars ($20,000,000.00)
on the date the Requesting Notice was given. If either of the preceding
conditions is satisfied, the Company shall promptly take such steps as may be
reasonable and necessary to proceed to a registration of such Class A Shares.
If neither of the preceding conditions is satisfied, the Company shall so
notify all Class B Stockholders and shall have no further obligation to proceed
with a registration of Class A Shares pursuant to such Requesting Notice.
(b) In connection with a registration of Class A Shares pursuant to
paragraph (a) above, the Company shall use commercially reasonable efforts (i)
to prepare and file with the SEC as soon as reasonably practicable a
registration statement with respect to such Class A Shares (a "Registration
Statement") and to cause such Registration Statement to promptly become and
remain effective for a period of at least one-hundred twenty (120) days (or
such shorter period during which the Class B Stockholders shall have sold all
the Class A Shares which were registered); (ii) to register and qualify such
Class A Shares under such applicable state securities laws as the selling Class
B Stockholders may reasonably request for the distribution of such Class A
Shares; and (iii) to take all such other actions as are reasonable and
necessary to comply with the requirements of the 1933 Act and the regulations
thereunder. The date on which such Registration Statement is to be filed and
the number of Class A Shares of each Class B Stockholder which are to be
included in such Registration Statement shall be determined by the Company
after consulting with such managing underwriter or underwriters of the Offering
as the Company selects. If the Company is advised in writing by the principal
managing underwriter(s) of the Offering that the number of Class A Shares to be
offered by the Class B Stockholders is greater than the number of Class A
Shares which can be offered without adversely affecting the Offering, then the
number of Class A Shares of each selling Class B Stockholder to be registered
and included in the Offering shall be reduced proportionately or in such other
manner as may be unanimously agreed upon by the selling Class B Stockholders.
If the Company is advised in writing by the principal managing underwriter(s)
of the Offering that the number of Class A Shares to be offered by the Class B
Stockholders is less than the number of Class A Shares which can be offered
without adversely affecting the Offering, then the Class B Stockholders shall
have the right to increase the number of Class A Shares to be included in such
Registration Statement proportionately or in such other manner as may be
unanimously agreed to by the selling Class B Stockholders, and if in the
opinion of such underwriter(s) additional Class A Shares may be offered, the
Company shall have the right to register and include in the Offering on its own
behalf such number of Class A Shares as such
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underwriters advise can be offered without adversely affecting the Offering of
the Class B Stockholders.
(c) The Company shall bear all the costs and expenses incurred in
connection with three (3) registrations and Offerings made under paragraph (a)
above within every consecutive ten (10) year period commencing with the
calendar year 1998 (including all registration, filing, qualification,
printer's, legal and accounting fees), except for underwriting commissions and
discounts relating to the Class A Shares sold by Class B Stockholders in such
Offerings, which commissions and discounts shall be the responsibility of such
Class B Stockholders. Xxxxx, Lilo and their respective Qualified Private
Foundations and Representatives shall be entitled collectively to initiate one
(1) of such three registrations; Xxxxxxx, Xxx and their respective Families,
Qualified Private Foundations and Representatives shall be entitled
collectively to initiate one (1) of such three registrations; and Richard,
Greg, Xxxxxxxx and their respective Families, Qualified Private Foundations and
Representatives shall be entitled collectively to initiate one (1) of such
three registrations. If Xxxxx, Lilo and their respective Qualified Private
Foundations and Representatives determine not to initiate one (1) of such three
(3) registrations, then and in that event such registration right shall first
be deemed assigned to Richard, Greg, Xxxxxxxx and their respective Families,
Qualified Private Foundations and Representatives, and if such persons and
entities determine not to exercise such registration right, such registration
right shall be deemed assigned to Xxxxxxx, Xxx and their respective Families,
Qualified Private Foundations and Representatives. Further, the Company shall,
subject to the conditions set forth in paragraphs (a) and (b) above, undertake
more than three (3) such registrations and offerings within any such ten (10)
year period, if Class B Stockholders then owning sixty-five percent (65%) or
more of the voting power of the Class B Shares request such registrations and
offerings, provided, however, that the Class B Stockholders making such request
and/or participating in any such registrations and offerings shall bear all the
costs and expenses incurred in connection with such additional registrations
and offerings of such shares, and such costs and expenses shall be borne by the
Class B Stockholders in proportion to the number of shares of Common Stock
being offered by each of them, or as they otherwise unanimously determine.
(d) Notwithstanding anything to the contrary contained herein, the
Company shall not be required to file a Registration Statement under paragraph
(a) above within twelve (12) months after the consummation of an Offering
initiated by the Company, nor more than one (1) Registration Statement within
any two-year period, unless the request for registration is made by a Deceased
Stockholder's Representative, in which case the Company shall use commercially
reasonable efforts to register a sufficient number of Class A Shares of such
Deceased Stockholder to (i) enable his or her estate to pay any and all federal
estate and state
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succession taxes, together with interest thereon, as well as any and all
administrative costs and expenses, resulting from the inclusion (directly or
indirectly) of shares of the Common Stock in such Deceased Stockholder's
estate, as reasonably estimated and certified to the Company in writing by such
Deceased Stockholder's Representative, and (ii) provide such Deceased
Stockholder's estate reasonable liquidity; provided, however, that the Company
shall not be required to register, or to use its commercially reasonable
efforts to register, such Class A Shares of such Deceased Stockholder if Class
B Stockholders then holding sixty-five percent (65%) or more of the voting
power of the Class B Shares (excluding for the purposes of such computation any
Class B Shares which such Deceased Stockholder's estate, Family and their
Qualified Private Foundations are entitled to vote) determine in good faith
that the Deceased Stockholder's estate has sufficient other marketable assets
to pay such estate and succession taxes, interest and administrative costs and
expenses, and provide reasonable liquidity for such Deceased Stockholder's
estate after payment of such aforementioned taxes and expenses, or that the
failure to effect such registration would not create an undue hardship on the
Deceased Stockholder's estate by reason of the estate's ability to avail itself
of the resale provisions of Rule 144 under the 1933 Act ("Rule 144") or
otherwise.
(e) In the event that the Company determines at any time while this
Agreement is in effect to register any Class A Shares for its own or others'
accounts in connection with an Offering (and not in connection with employee
benefit plans or a transaction under Rule 145 of the 1933 Act), the Company
shall promptly give the Class B Stockholders notice of such determination.
Upon written request of one or more of the Class B Stockholders made within
fifteen (15) days after such notice is given, the Company will use commercially
reasonable efforts to register and include in the Offering all of the Class A
Shares which such Class B Stockholders (the "Piggy-Back Stockholders") have
requested to be included. If the Company is advised in writing by the
principal managing underwriter(s) of the Offering that the number of Class A
Shares that the Piggy-Back Stockholders have requested to be included in the
Offering is greater than the number of Class A Shares that can be included
without adversely affecting the Offering, then the number of Class A Shares of
each Piggy-Back Stockholder to be registered and included in such Offering
shall be reduced proportionately or in such other manner as may be unanimously
agreed upon by all the Piggy-Back Stockholders. The Company shall bear all the
costs and expenses incurred in connection with any registrations and Offerings
made under this paragraph (e) (including all registration, filing,
qualification, printer's, legal and accounting fees), except for underwriting
commissions and discounts relating to the Class A Shares sold by the Piggy-Back
Stockholders in such Offerings, which commissions and discounts shall be the
responsibility of the Piggy-Back Stockholders.
(f) In connection with each Offering made pursuant to this Section,
the Company and
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the Class B Stockholders selling Class A Shares in such Offering shall enter
into written agreements with the managing underwriter(s) of such Offering in
such form and containing such provisions as are customary in the securities
business for such an arrangement between underwriters and companies of the size
and investment stature of the Company, including indemnification and
contribution provisions.
(g) The Company shall not be obligated to register Class A Shares
(after conversion from Class B Shares) held by Class B Stockholders at any time
when the resale provisions of Rule 144 are available to such Class B
Stockholders without limitation as to volume.
Section 3.3. Rule 144 Sales. Each of the Class B Stockholders shall
consult with each other and keep each other and the Company informed with
respect to any and all proposed sales and dispositions of his, her or its
Common Stock in order that each Class B Stockholder will be able to comply with
the provisions of Rule 144 and dispose of shares of Common Stock under the Rule
144 exemption in a fair and equitable manner to the effect that each such Class
B Stockholder will be able to sell from time to time in the public market a
portion of his, her or its Common Stock.
ARTICLE IV
ELECTION OF DIRECTORS; MATERIAL ACTIONS
Section 4.1. Election of Directors
(a) Each of the parties to this Agreement shall vote all of the
Class B Shares which such party is, or hereafter becomes, entitled to vote at
any meeting of the stockholders of the Company, or shall consent in writing to
action taken without a meeting of stockholders, so as to implement the
following provisions with respect to the election of the Company's Directors.
(i) Each of Xxxxx and Lilo, if he or she so desires,
shall be elected as a Director of the Company until the annual meeting of the
Company's stockholders held in the year 2002.
(ii) Each Employee Stockholder, if he or she so desires,
shall be elected as a Director of the Company for as long as he or she remains
an Employee Stockholder, subject to the provisions of paragraph (b) below.
(iii) Each Sibling Stockholder who is not a full-time
senior executive employee of the Company or any of its affiliates (a
"Non-Employee Stockholder") may, if he or she so desires, be elected a Director
of the Company commencing at the annual meeting of the Company's stockholders
held in the year 2002, subject to the provisions of paragraph (b) below. Until
such annual meeting of the Company's stockholders, the Xxx-
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Employee Stockholders shall be elected as Directors on a rotating basis in
accordance with the following schedule, except as provided below or as
otherwise determined by a vote of Class B Stockholders then holding sixty
percent (60%) or more of the voting power of the Class B Shares:
(A) Xxxxxxxx, if she so desires, shall be elected a
Director at the annual meeting of the Company's stockholders held in the year
1998;
(B) Xxxx, if he so desires, shall be elected to
succeed Xxxxxxxx as a Director at the annual meeting of the Company's
stockholders held in the year 1999;
(C) Xxxxxxx, if he so desires, shall be elected to
succeed Xxxx as a Director at the annual meeting of the Company's stockholders
held in the year 2000; and
(D) Xxxxxxxx, if she so desires, shall be elected to
succeed Xxxxxxx as a Director at the annual meeting of the Company's
stockholders held in the year 2001.
(iv) At the annual meeting of stockholders of the Company
held in the year 2002, Xxxxx and Lilo shall not be re-elected as Directors of
the Company, and each of the Non-Employee Stockholders shall be elected as a
Director, unless such Non-Employee Stockholder has given the other Stockholders
and the Company notice of his or her desire not to be elected as a Director at
such annual meeting of the Company's stockholders not less than ninety (90)
calendar days in advance of the date of the Company's proxy statement released
to stockholders in connection with the previous year's annual meeting of
stockholders.
(v) If any Stockholder does not desire to serve as a Director
for any year which, under this paragraph (a), he or she would otherwise be
elected a Director, such Stockholder shall give the Company and the other
Stockholders notice thereof not less than ninety (90) calendar days in advance
of the date of the Company's proxy statement released to stockholders in
connection with the previous year's annual meeting of stockholders.
(vi) Since the parties intend that commencing in the year
2002 all five (5) of the Sibling Stockholders will be eligible to serve as
Directors, if prior to the year 2002 a Sibling Stockholder ceases to be an
Employee Stockholder or Xxxxx or Lilo declines to serve as a Director, then and
in such circumstances more than one Non-Employee Stockholder shall be eligible
to serve as a Director in each such year prior to 2002. If a Sibling
Stockholder declines or is otherwise not eligible to serve as a Director for
any year of the rotation schedule set forth in subparagraph (iii) of this
paragraph (a), the Sibling Stockholder scheduled to succeed such declining or
ineligible Sibling Stockholder shall instead serve as a Director in such year,
and the rotation schedule shall advance by one (1) year for all Sibling
Stockholders. If an Employee Stockholder ceases to serve as a full-time senior
executive employee of the Company, such Employee Stockholder shall thereafter
participate as the last person in such rotation schedule of the Non-Employee
Stockholders.
(vii) Any Sibling Stockholder who is participating on a
rotation schedule may, if he or she desires, attend any and all meetings of the
Board and receive any and all material
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made available to the Board during a period when he or she is not serving as a
Director, unless such Sibling Stockholders' presence or receipt of material
would be violative of law or deemed by the Board to be inappropriate under the
circumstances.
(b) For a Sibling Stockholder to be eligible to serve as a
Director, each of the following conditions must be satisfied each time a
Sibling Stockholder is elected or reelected to such position, and as long as he
or she serves in such capacity.
(i) Such Sibling Stockholder's Group owns fifty percent
(50%) or more of the number of the Class B Shares which such Sibling
Stockholder's Group owned on the date of this Agreement, unless such condition
is waived by Class B Stockholders then holding sixty percent (60%) or more of
the voting power of the Class B Shares (excluding for the purposes of such
computation the shares of Class B Common Stock which such Sibling Stockholder's
Group are entitled to vote).
(ii) Neither such Sibling Stockholder nor his or her
spouse, nor any of his or her issue who share the same home as such Sibling
Stockholder, is engaged in competition with the Company within the meaning of
Section 6.1, unless such condition is waived as provided for in Section 6.2.
(iii) Such Sibling Stockholder is not otherwise legally
prohibited from serving in such capacity.
(c) If an eligible Sibling Stockholder decides not to serve as a
Director, or if a Sibling Stockholder dies or becomes incapacitated or is
otherwise unable to serve as a Director, then such Sibling Stockholder or his
or her Representative, as the case may be, may designate his or her spouse or
one of his or her surviving issue as a successor Director. If no such
designation is made, such Sibling Stockholder's spouse, if then qualified,
shall be entitled to serve as a Director, or if such spouse is not qualified,
or if qualified subsequently dies, resigns, or becomes incapacitated, then such
spouse shall be succeeded by such Sibling Stockholder's issue who are then age
twenty-seven (27) or older; and provided further that if more than one issue of
such Sibling Stockholder is then age twenty-seven (27) or older, or
subsequently becomes age twenty-seven (27), then each such issue shall be
entitled to serve as a Director on a rotating basis for terms of two (2)
consecutive years each, beginning with the eldest and continuing in descending
order of age. An above-described person shall be eligible to serve as a
successor Director in such Sibling Stockholder's place and stead, and each of
the Class B Stockholders shall vote all of his, her or its Class B Shares so as
to elect such person as a successor Director, provided that the following
conditions are satisfied each time such person is elected as a Director and as
long as such person serves in such capacity:
(i) such Sibling Stockholder's Group (and his or her
estate if such Sibling Stockholder is deceased) owns fifty percent (50%) or
more of the number of the Class B Shares which such Sibling Stockholder's Group
owned on the date of this Agreement, unless
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such condition is waived by Class B Stockholders then holding sixty percent
(60%) or more of the voting power of the Class B Shares, excluding for the
purposes of such computation the Class B Shares which such Sibling
Stockholder's Group (and his or her estate if such Sibling Stockholder is
deceased) is entitled to vote.
(ii) neither such successor Director nor his or her
spouse, nor any of his or her issue who share the same home as such successor
Director, is engaged in competition with the Company within the meaning of
Section 6.1, unless such condition is waived as provided for in Section 6.2.
(iii) such successor Director has attained age 27;
(iv) such successor Director is not otherwise legally
prohibited from serving in such capacity; and
(v) the election of such successor Director has received
the prior consent of Class B Stockholders then holding sixty percent (60%) or
more of the voting power of the Class B Shares, excluding for the purposes of
such computation the Class B Shares which such Sibling Stockholder's Group (and
his or her estate if such Sibling Stockholder is deceased) is entitled to vote.
(d) The Class B Stockholders may recommend candidates for
nomination as Directors who are neither Stockholders nor spouses or issue of
Stockholders ("Independent Directors") and, provided that the nomination of any
such candidate has received the prior consent of Class B Stockholders who then
hold sixty-six percent (66%) or more of the voting power of the Class B Shares
and who include at least one (1) Employee Stockholder, if there is an Employee
Stockholder at such time. Each Class B Stockholder shall use his or her best
efforts to cause the Board to nominate such candidate, and each of the Class B
Stockholders, their Families and Qualified Private Foundations shall vote all
of his, her or its Class B Shares so as to elect such candidate as a Director.
Each Class B Stockholder shall use his or her best efforts to cause the Board
to nominate such number of Independent Directors as is necessary to permit the
Class A Common Stock to comply with the requirements of the NASDAQ National
Market or such other national exchange as the Board may from time to time
determine, or as may otherwise be required by law. Nothing herein is intended
or shall be construed to limit or infringe upon the power of the Board or a
duly constituted committee thereof to nominate candidates for election as
Directors.
Section 4.2. Material Actions.
(a) A material action ("Material Action") shall mean and include
any action, matter or transaction which requires stockholder approval under the
laws of the state of incorporation of the Company and which is similar or
related to the following types of actions, matters and transactions:
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(i) a reorganization or recapitalization of the Company;
(ii) the sale, merger, or liquidation of the Company or
the sale of substantially all its assets;
(iii) the sale or issuance of securities (either debt or
equity) by the Company, either in a private placement or public offering;
(iv) the adoption of any Company compensation plan
required to be submitted to security holder action; and
(v) the amendment or the restatement of the Company's
Certificate of Incorporation.
(b) No Class B Stockholder shall vote any of his, her or its Class
B Shares in favor of a Material Action at any meeting of the stockholders of
the Company, or consent in writing to the taking of any Material Action without
a meeting of stockholders, unless Class B Stockholders who then hold sixty-five
percent (65%) or more of the voting power of the Class B Shares, and who
include at least one Employee Stockholder, if there are at least two Employee
Stockholders at such time, and one Non-Employee Stockholder (if there be such
Non-Employee Stockholder) who owns, or whose Sibling Stockholders' Group
collectively owns at least twenty-five percent (25%) of the number of Class B
Shares that such Sibling Stockholders' Group owned on the date of this
Agreement, shall have given their prior consent to such Material Action.
(c) With respect to non-material actions, matters or transactions
which require a vote of the stockholders of the Company, including the
selection of the Company's independent accountants, each person or entity
owning shares of Common Stock shall be free to vote his, her or its shares as
they deem appropriate in the circumstances.
ARTICLE V
INTRA-FAMILY VOTING OF SHARES
Section 5.1. Procedure for Family Voting.
With respect to any action, matter or transaction which, under this Agreement,
cannot be taken without the prior consent or determination of Class B
Stockholders then holding a specified percentage of the voting power of the
Class B Shares, such Class B Stockholders shall take a vote on such action,
matter or transaction (a "Family Vote") in accordance with the following
procedure, unless such Class B Stockholders unanimously otherwise agree:
(a) Any Class B Stockholder entitled to vote any Class B Shares may
initiate a Family Vote by giving a notice to each of the other Class B
Stockholders entitled to vote Class B Shares specifying the action, matter or
transaction desired to be taken, the provision of this
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Agreement pursuant to which the prior consent or determination of such Class B
Stockholders is sought and the date by which the Class B Stockholders shall
vote their shares (the "Response Date"). The Response Date shall not be less
than thirty (30) days or more than forty-five (45) days after the initiating
notice is given, unless a shorter time for response is reasonable under the
circumstances by virtue of the matter, action or transaction to be voted upon.
(b) Each of the Class B Stockholders entitled to vote may cast his,
her or its vote on such action by giving a notice to all the other Class B
Stockholders entitled to vote, indicating whether such Class B Stockholder
votes for or against such action or abstains from voting on such action. The
failure of a Class B Stockholder to give such a notice on or before the
Response Date shall be deemed an abstention by such Class B Stockholder from
voting on such action. If a Class B Stockholder timely votes on any action,
matter or transaction, such vote shall be counted even if, as a result of
faulty technical transmission or other cause beyond the reasonable control of
such Class B Stockholder, a minority of the other Class B Stockholders did not
duly receive notice of such vote.
(c) In computing whether the requisite percentage of the voting power
of the Class B Shares has been secured with respect to any action, matter or
transaction requiring the prior consent or determination of Class B
Stockholders then holding such percentage, only votes cast for or against such
action shall be counted. If a Class B Stockholder entitled to vote Class B
Shares abstains from voting or otherwise fails to vote them, such Class B
Shares shall be excluded from the computation of the requisite percentage as if
such Class B Shares were not issued and outstanding.
Section 5.2. Votes Per Share. For the purpose of all Family Votes,
each Class B Stockholder entitled to vote shall have ten (10) votes per Class B
Share except as follows:
(a) If and when the members of any Sibling Stockholder's Group
collectively acquire voting power over a greater number of Class B Shares than
the number of Class B Shares held by such Sibling Stockholder's Group on the
effective date of this Agreement, then such excess number of Class B Shares
shall be excluded from the computation of voting power in all Family Votes as
if such Class B Shares were not issued and outstanding, and the members of such
Sibling Stockholder's Group shall not vote such excess number of Class B Shares
at any meeting of the stockholders of the Company or in any written consent of
such stockholders. The intent of this provision is to preserve, on an
equitable basis, the equality of voting rights among the Sibling Stockholders,
and it shall apply to Class B Shares acquired by Class B Stockholders in the
future by any means whatsoever (whether by purchase, gift, inheritance or
otherwise). This limitation on voting rights shall not apply to
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Class B Shares acquired by a Sibling Stockholder's Group at a time when such
Sibling Stockholder's Group holds voting power over fewer shares than such
Sibling Stockholder's Group held on the effective date of this Agreement
(whether by reason of sale, gift, testamentary disposition or otherwise).
(b) The following provisions shall apply in the event a Stockholder
competes with the Company:
(i) In the event that a Stockholder, the spouse of such
Stockholder or any of their issue sharing the same home as such Stockholder
competes with the Company within the meaning of Section 6.1 and provided that
the exceptions set forth in Section 6.2 are not applicable to the person
competing (the "Competitor"), then and in that event none of such persons or
their Qualified Private Foundations shall be entitled to participate in any
Family Vote and any Class B Shares that they would otherwise be entitled to
vote shall be excluded from the computation of voting power in all Family Votes
as if such Class B Shares were not issued and outstanding, until such time as
none of such persons is any longer competing with the Company.
(ii) If the issue of a Stockholder does not share the same
home as a Stockholder, then such Stockholder, his or her spouse, their
non-competing issue and their Qualified Private Foundations shall not be
disqualified from participating in a Family Vote solely by reason of the fact
that such issue is a Competitor. If issue of a Stockholder would otherwise be
eligible to participate in a Family Vote and such issue are not competing with
the Company, such issue, their spouses, children and Qualified Private
Foundations shall not be disqualified from participating in such Family Vote
solely by reason of the fact that such issue's parents or siblings, or the
spouses or issue of such siblings, is a Competitor.
(iii) Even if one or more of the exceptions set forth in
Section 6.2 are applicable to a Competitor, such Competitor shall not be
entitled to participate in any Family Vote, and any Class B Shares that he or
she would otherwise be entitled to vote shall be excluded from the computation
of voting power in such Family Vote as if such Class B Shares were not issued
and outstanding, if Class B Stockholders then holding sixty-five percent (65%)
or more of the voting power of the Class B Shares (excluding for the purposes
of such computation the Class B Shares which such Competitor and the members of
his or her Family are entitled to vote) determine that it would be a conflict
of interest for such Competitor to participate in such Family Vote.
(iv) The provisions of subparagraphs (i) and (ii) of this
paragraph (b) limiting the right of any Class B Stockholder to vote Class B
Shares may be waived from time to time with the prior consent of Class B
Stockholders then holding eighty percent (80%) or more of the voting power of
the Class B Shares (excluding for the purposes of such computation the Class B
Shares which the Class B Stockholder whose right to vote is limited hereby, his
or her Family and their Qualified Private Foundations).
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(c) After February 28, 2002, any Class B Shares which Xxxxx, Lilo or
their Qualified Private Foundations are entitled to vote shall be excluded from
the computation of voting power in all Family Votes as if such Class B Shares
were not issued and outstanding.
(d) Except as expressly provided herein, nothing contained in this
Section shall be construed to exclude any Class B Stockholder entitled to vote
Class B Shares from (i) participating in any meeting of the stockholders of the
Company or consenting in writing to any action taken without a meeting of
stockholders or (ii) casting thereat or therein such number of votes per Class
B Share as the Company's Certificate of Incorporation, as amended or restated
from time to time, may provide, provided however, that no Common Stock owned by
a Class B Stockholder shall be voted in a manner inconsistent with the
decisions or determinations made by the Class B Stockholders in any Family
Votes taken pursuant to this Agreement.
Section 5.3. Voting by Persons Other than Record Owner of Class B
Shares.
(a) In the event of the incapacity of a Stockholder, the Class B
Shares which such Stockholder is entitled to vote shall be voted in all Family
Votes as follows, unless such Stockholder has otherwise provided in writing:
(i) In the event of the incapacity of either Xxxxx or Lilo
prior to March 1, 2002, their Class B Shares shall be voted by the
non-incapacitated spouse, if living. In the event of the incapacity of both
Xxxxx and Lilo prior to March 1, 2002, they shall be deemed to abstain from
voting any Class B Shares which they are entitled to vote.
(ii) In the event of the incapacity of a Sibling Stockholder,
the Class B Shares which such Sibling Stockholder is entitled to vote shall be
voted by such Sibling Stockholder's spouse, provided he or she is then
qualified to vote. If such spouse is not qualified, or if qualified
subsequently dies, resigns or becomes incapacitated, then such spouse shall be
succeeded by such Sibling Stockholder's issue who are then age twenty-seven
(27) or older, provided they are then qualified to vote; and provided further
that if more than one issue of such Sibling Stockholder is then age
twenty-seven (27) or older, or subsequently becomes age twenty-seven (27), then
each such issue (provided they are then qualified to vote) shall vote an equal
number of such Class B Shares. At a time when such Sibling Stockholder has no
surviving or qualified spouse or issue age twenty-seven (27) or older, such
Class B Shares shall be voted by each other Sibling Stockholder's Group in
proportion to its then respective voting power. To the extent determinable,
such Class B Shares shall be voted in the manner that such incapacitated
Sibling Stockholder would have voted such Class B Shares.
(b) In the event of the death of a Sibling Stockholder, the Class B
Shares of such
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Deceased Stockholder shall be voted in all Family Votes by the following
persons, provided they are otherwise qualified to vote, unless such Stockholder
has designated in writing that they be voted by another person otherwise
qualified to vote:
(i) to the extent that such Class B Shares are bequeathed to
the spouse of such Deceased Stockholder, such spouse shall be entitled to vote
such Class B Shares or direct their voting by the Deceased Stockholder's
Representative;
(ii) to the extent that such Class B Shares are bequeathed to
the issue of such Deceased Stockholder, each of such issue who is age
twenty-seven (27) or older shall be entitled to vote his or her Class B Shares
or direct their voting by the Sibling Stockholder's Representative; provided
that, until such issue has reached the age of twenty-seven (27), the spouse of
such Deceased Stockholder, if living, shall be entitled to vote such Class B
Shares or direct their voting by the Deceased Stockholder's Representative, or
if such spouse is not living, each of the other Sibling Stockholder's Groups in
proportion to its then respective voting power shall be entitled to vote such
Class B Shares or direct their voting by the Deceased Stockholder's
Representative;
(iii) to the extent that such Class B Shares are bequeathed
to a Permitted Transferee that is a trust, corporation or partnership or to a
Qualified Private Foundation, the trustees, directors or partners thereof, as
the case may be, shall be entitled to vote such Class B Shares or direct their
voting by the Deceased Stockholder's Representative, subject to the limitations
set forth in Section 5.2(a);
(iv) to the extent that such Class B Shares are bequeathed to
another Sibling Stockholder, his or her spouse or issue, each such persons, if
then qualified shall be entitled to vote such Class B Shares or direct their
voting by the Deceased Stockholder's Representative, subject to the limitations
set forth in Section 5.2(a); and
(v) to the extent that such Class B Shares are bequeathed to
the issue of a Sibling Stockholder, each of such issue who is age twenty-seven
(27) or older shall be entitled to vote his or her Class B Shares or direct
their voting by the Deceased Stockholder's Representative; provided that, until
such issue has reached the age of twenty-seven (27), each of the Sibling
Stockholder's Groups in proportion to its then respective voting power shall be
entitled to vote such Class B Shares or direct their voting by the Deceased
Stockholder's Representative.
(c) If, as a result of or following a legal separation or divorce,
the spouse or former spouse of a Sibling Stockholder holds an ownership
interest in any Class B Shares and/or the right to vote such Class B Shares,
then and in that event, unless such spouse or former spouse transfers the right
to vote such Class B Shares in all Family Votes to either Xxxxx or Lilo, such
Sibling Stockholder or such Sibling Stockholder's issue (who are then qualified
to vote Class B Shares) (hereinafter the "Designated Voting Group"), all voting
rights of such spouse or former spouse with respect to such Class B Shares
shall be suspended, and such Class B
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Shares shall neither participate nor be included for purposes of determining
the vote cast with respect to any action, matter or transaction requiring a
Family Vote, until such time as such Class B Shares are owned and/or voted
exclusively by one or more persons in the Designated Voting Group. If the
ownership of any such Class B Shares is transferred by a legally separated or
divorced spouse or former spouse to a third party who is neither a Permitted
Transferee nor Qualified Private Foundation and such Class B Shares are no
longer subject to reacquisition by any Stockholders or their Families or
Qualified Private Foundations, then and in that event such Class B Shares shall
be converted into Class A Shares effective as of the date of such transfer.
(d) If subsequent to the death of a Sibling Stockholder his or her
spouse remarries or becomes incapacitated, then and in that event the vote of
any Class B Shares which he or she then owns and/or has the right to vote in
any Family Vote shall be suspended, and such Class B Shares shall neither
participate nor be included for purposes of determining the vote cast with
respect to any action, matter or transaction requiring a Family Vote until such
time as such Class B Shares are either owned by and/or voted exclusively by one
or more persons in the Designated Voting Class. If the ownership of any such
Class B Shares are transferred by the incapacitated or remarried spouse to a
third party who is neither a Permitted Transferee nor a Qualified Private
Foundation and such Class B Shares are no longer subject to reacquisition by
any Stockholders or their Families or Qualified Private Foundations, then and
in that event such Class B Shares shall be converted into Class A Shares
effective as of the date of such transfer.
(e) With respect to a Qualified Private Foundation which a Sibling
Stockholder or a member of a Sibling Stockholder's Family has caused to be
established, the trustees, directors or managers, as the case may be, of such
Qualified Private Foundation shall cause the Class B Shares transferred thereto
by such Sibling Stockholder or Family to be voted in any Family Vote by either
the Sibling Stockholder, his or her spouse or issue, or Xxxxx or Lilo, and if
there be no such persons to each Sibling Stockholder's Group in proportion to
its then respective voting power , subject to the limitations set forth in
Section 5.2(a).
(f) With respect to a Qualified Private Foundation which Xxxxx or
Lilo has caused to be established, the trustees, directors or managers, as the
case may be, of such Qualified Private Foundation shall cause the Class B
Shares transferred thereto by either Xxxxx or Lilo to be voted in any Family
Vote by either Xxxxx or Lilo. Where neither Xxxxx nor Lilo is authorized to
vote Class B Shares transferred by either of them to such Qualified Private
Foundation, the trustees, directors or managers of such Qualified Private
Foundation shall cause such Class B Shares to be voted by the Sibling
Stockholders (or if a Sibling Stockholder is not then living or is
incapacitated, by such Sibling Stockholder's Family) in
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proportion to the respective voting power of the Class B Shares held by each
such Sibling Stockholder's Group.
ARTICLE VI
RIGHT AND OBLIGATIONS OF A CLASS B STOCKHOLDER
COMPETING WITH THE COMPANY
Section 6.1. Competition. In the event a Stockholder, his or her
spouse, or a child or grandchild who shares the same home as such Stockholder
engages directly or indirectly, whether as a proprietor, partner, stockholder,
director, officer, employee, consultant, lender, guarantor or otherwise, in any
activity or business which the Board, in its reasonable judgment determines to
be materially competitive with an activity or business in which the Company or
any of its affiliates is then engaged, then and in that event neither such
Stockholder (a "Competing Stockholder") nor his or her spouse nor any child or
grandchild who shares the same home as such Competing Stockholder shall be
eligible to serve either as an employee, officer or director of the Company or
any of its affiliates, and, in addition, neither such Competing Stockholder nor
his or her spouse nor any child or grandchild who shares the same home as such
Competing Stockholder nor any Qualified Private Foundation of any of them shall
be entitled to attend any meetings of the Board, or receive any information,
financial or otherwise, relating to or concerning the business and affairs of
the Company and/or of its affiliates, except as may be required by law.
Section 6.2. Exceptions. Notwithstanding the provisions of Section
6.1 above, no activity or business of a Stockholder or the spouse, child or
grandchild of such Stockholder who shares the same home as such Stockholder,
shall be deemed to be competitive hereunder if such person was engaged in such
activity or business prior to the commencement of such activity or business by
the Company or any affiliate thereof, provided however that such person may not
serve as a Director of the Company unless (i) persons and entities owning
eighty percent (80%) or more of the Class B Shares, excluding for purposes of
this computation, the Class B Shares owned by such Competing Stockholder, his
or her spouse or any child or grandchild who shares the same home of such
Competing Stockholder nor any Qualified Private Foundation of any one of them,
determine that such Competing Stockholder may serve as a Director and (ii) the
Board shall have received an opinion from legal counsel to the Company, in form
and substance satisfactory to the Board, that permitting such Competing
Stockholder to serve as a Director will not subject the Directors to any legal
liability. In the event such Competing Stockholder is permitted to serve as a
Director, he or she shall not participate in any discussions or meetings, or be
given any information or be permitted to vote with respect to any matter,
action or transaction, which
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the Board in its absolute discretion believes would create the appearance of
impropriety or otherwise result in a conflict of interest. Further, the
ownership of an equity interest in the securities of an entity engaged in
activities or businesses competitive with those of the Company or any affiliate
thereof and which is listed on a recognized securities exchange or traded in
the national over-the-counter market shall not be deemed to be competitive
hereunder if such equity interest is less than one percent (1%) of the equity
of such entity and the fair market value of such equity interest in the
aggregate was less than $500,000, determined as of the date or dates of any
such purchase or purchases.
Section 6.3. Procedure. In the event the Board is informed or
otherwise has reason to believe that a Stockholder, his or her spouse, or a
child or grandchild sharing the same home as such Stockholder, is engaging in
conduct which is materially competitive with an activity or business in which
the Company or any of its affiliates is engaged, then and in that event the
Company shall give such person ten (10) Business Days' (as hereinafter defined)
prior notice in writing, specifying the conduct or activity which the Board
deems to be materially competitive. During said ten (10) business-day period
such person may (i) either cure such conduct or activity or (ii) contest in
writing the determination of the Board, and if the parties cannot resolve the
dispute, the dispute shall be submitted to binding arbitration, as hereinafter
provided in Article IX.
ARTICLE VII
FUTURE CHANGES IN CAPITAL STRUCTURE
All references in this Agreement to numbers of shares shall be deemed
adjusted as appropriate to reflect any stock splits, reverse stock splits,
stock dividends or other changes in the Company's capital structure that may
occur after the date hereof. If the Company hereafter declares a dividend
payable in, or subdivides or combines, shares of its Common Stock, or if the
Company engages in a recapitalization, reorganization, merger, consolidation,
split-up, transfer of assets, combination or exchange of shares of Common
Stock, or if any other event shall occur which in the judgment of the Board
calls for action by way of adjusting the number of shares of its Common Stock,
the Company shall forthwith take such action as in the Board's judgment shall
be necessary or appropriate to preserve the owners of the Common Stock's rights
with respect to the Common Stock substantially proportionate to their rights
existing prior to such event. Nothing in this Agreement is intended to preserve
a Stockholder's equity interest in the Company against dilution resulting from
the issuance of securities by the Company in the future.
ARTICLE VIII
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TERM OF AGREEMENT; AMENDMENT
Section 8.1. Term of Agreement.
(a) This Agreement shall become effective as of the Effective Date of
the IPO. Except as provided in subparagraph (b), the initial term of this
Agreement shall be twenty (20) years and shall be automatically extended for
additional five (5) year periods unless terminated by Class B Stockholders then
holding sixty-five percent (65%) or more of the voting power of the Class B
Shares, provided that notice of termination is given no less than eight (8)
months nor more than eighteen (18) months prior to the end of the initial term
or any successive five (5) year term, as the case may be.
(b) Unless otherwise terminated in accordance with subparagraph (a)
above, this Agreement shall terminate at the time when all of the outstanding
shares of Class B Common Stock are automatically converted into Class A Common
Stock as provided for in Section 2.6.
Section 8.2. Amendment of Agreement. The amendment of this
Agreement shall require the affirmative vote of Class B Stockholders then
holding eighty-five percent (85%) or more of the voting power of the Class B
Shares, provided that such amendment shall not materially prejudice the
economic or voting rights of any Class B Stockholder or diminish the ability of
such Class B Stockholder or any member of his or her Family to serve as a
Director, unless such Class B Stockholder has consented to such amendment. Any
amendment which is essentially ministerial in nature and non-substantive may be
made by the affirmative vote of Class B Stockholders then holding sixty-five
percent (65%) or more of the voting power of the Class B Shares. To be
effective and binding upon the parties, any such amendment shall be in writing
and shall be signed by Class B Stockholders holding not less than the
percentage of voting power of the Class B Shares required hereunder.
ARTICLE IX
RESOLUTION OF DISPUTES
Section 9.1. Arbitration. Except as provided in Section 9.2, all
controversies arising out of or relating to this Agreement or the breach hereof
shall be settled by arbitration in the County of Nassau, State of New York, in
accordance with the rules of the American Arbitration Association, and judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. Any arbitration hereunder shall be before three (3)
arbitrators.
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Section 9.2. Injunctive Relief. Each of the parties hereto
acknowledges that the breach, or threatened breach, of any of the provisions of
this Agreement by a party will cause irreparable harm to the other parties,
which harm cannot be adequately or fully redressed by the payment of monetary
damages. Each party acknowledges that the terms of this Agreement are
reasonable under the circumstances. Accordingly, the parties hereto shall be
entitled, in addition to any other right or remedy they may have at law or in
equity, to an injunction enjoining or restraining any other party from any
breach or threatened breach of this Agreement and/or specific performance
enforcing the terms of this Agreement. Each of the parties hereto hereby
waives the defense in any equitable proceeding that there is an adequate remedy
at law for any such breach.
Section 9.3. Equitable Remedies. Notwithstanding the provisions
of Section 9.1, any proceeding for injunctive relief or specific performance in
connection with this Agreement shall be commenced in the Supreme Court of the
State of New York, County of Nassau, and each of the parties hereby accepts the
exclusive jurisdiction of such Court for such purpose; provided, however, that
the petitioner may commence such proceeding in such other court as may be
necessary, in the petitioner's judgment, in order to more effectively or
expeditiously obtain personal jurisdiction over the respondent.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. Interpretation. To the extent feasible, the terms,
conditions and provisions of this Agreement shall be interpreted in accordance
with the objectives set forth in the "Preamble".
Section 10.2. Legend on Certificate. Upon the execution of this
Agreement, each certificate evidencing any of the Class B Shares held by a
Stockholder, his or her Family or Qualified Private Foundations, shall be
endorsed as follows:
The shares of stock evidenced by this certificate are subject
to the restrictions of and are transferable only upon compliance with the
provisions of a 1997 Leeds Family Stockholders' Agreement entered into by and
among the Company and the holders of the Class B Common Stock of the Company.
A copy of such Agreement is on file in the office of the Company.
In addition, all such certificates shall bear such other legends as,
in the opinion of the Company's counsel, are necessary to ensure compliance
with federal and any applicable state
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securities laws.
Section 10.3. Representative and Successors in Interest.
(a) Except as may be otherwise specifically provided in this
Agreement, in the event of a person's death or incapacity, his or her
Representative and/or successors in interest shall succeed to all his or her
rights and obligations under this Agreement and shall be bound by all the terms
and conditions hereof, and they shall be entitled to exercise such rights, and
shall be required to fulfill such obligations, in the same manner and to the
same extent that such person would have been so entitled or required but for
his or her death or incapacity.
(b) Except as otherwise provided herein to the contrary, this
Agreement shall be binding upon, and shall inure to the benefit of, the parties
and their respective heirs, legal representatives, successors and permitted
assigns.
Section 10.4. Waiver; Complete Agreement. None of the parties shall
be deemed to waive any of his, her or its rights hereunder unless such waiver
is in writing and signed by him, her or it. No delay or omission by any party
in exercising or enforcing any right hereunder shall operate as a waiver of
such rights, and a waiver on one occasion shall not be construed as a waiver of
any right or remedy on any future occasion. This Agreement contains the full,
final and exclusive statement of the agreement of the parties hereto and
supersedes and replaces any and all prior understandings, arrangements and
agreements, written or oral, among the parties relating to the Class B Common
Stock (including but not limited to the 1991 Leeds Family Shareholders'
Agreement and the 1997 Stockholders' Agreement), and no promises, agreements or
representations with respect to the matters herein contained shall be binding
upon any of the parties unless set forth herein.
Section 10.5. Further Assurances. Each of the parties hereto, upon
request of another party, shall take all such actions and execute and deliver
such further instruments, documents and agreements as may be necessary or
appropriate to effectuate the intent of this Agreement. At any closing of the
purchase of the Selling Stockholder's Class B Shares, the Selling Stockholder
shall deliver the stock certificate(s) representing the Class B Shares to be
sold, which certificate(s) shall be duly endorsed for transfer in blank or have
duly executed stock powers attached. At the closing, the Selling Stockholder
shall also represent and warrant in writing to the Company, the Remaining
Stockholders and/or the Third Party Purchaser, as the case may be, that (i) the
Selling Stockholder is the owner of record of such Class B Shares; (ii) the
Selling Stockholder holds such Class B Shares free and clear of all claims,
liens, options, charges, encumbrances or rights of others (except for any
encumbrances arising pursuant to this Agreement); (iii) the Selling Stockholder
has full right, power and
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authority to transfer and convey such Class B Shares to the Company, the
Remaining Stockholders or the Third Party Purchaser, as the case may be; and
(iv) such transfer and conveyance do not conflict with, violate or infringe any
legal restriction, contract or instrument to which the Selling Stockholder is
subject or by which he, she or it is bound.
In the event a party shall not take all such actions or execute and
deliver all such further instruments, documents and agreements, then and in
that event the Company shall have the right to execute and deliver on such
party's behalf, and such party hereby appoints the Company, and its duly
authorized agents, as such party's agent and attorney-in-fact for the purpose
of executing and delivering any and all other instruments, documents,
agreements and other writings necessary to effectuate the terms of this
Agreement. The powers of attorney herein granted, being coupled with an
interest, are irrevocable and shall not be revoked by the death, dissolution or
incapacity of any party hereto or for any other reason.
Section 10.6. Invalidity of Noncomplying Conveyances.
(a) Any purported gift, sale, transfer, assignment, mortgage,
pledge, hypothecation, or grant of a security interest in all or any of the
Common Stock in violation of this Agreement shall be null and void, and the
Company shall not be required to recognize any such gift, sale, transfer,
assignment, mortgage, pledge, hypothecation or grant of a security interest as
passing any interest in such Common Stock.
(b) In the event of any transfer of any Common Stock by a
Stockholder, his or her Representative, any successor in interest, any
Permitted Transferee or Qualified Private Foundation, by operation of law
(other than transfers occasioned by an individual's death) or court order,
including but not limited to any foreclosure, adjudication in bankruptcy,
divorce, appointment of a receiver of the assets of a holder or owner of Common
Stock, or levy and execution, such owner or holder shall give immediate notice
("Immediate Notice") thereof to the Company, including in such notice the date
and circumstances of such transfer and the name and address of the transferee.
Each Sibling Stockholder's Group (subject to the provisions of Section 1.2(d)),
or if they determine not to purchase all such Common Stock, the Company, at
their option, upon giving written notice to such transferee, shall have the
right to purchase such Common Stock at the closing price of the Company's
stock on the date prior to the date on which such Immediate Notice is given,
provided such notice of purchase is given within sixty (60) days after receipt
of such Immediate Notice.
Section 10.7. Applicable Law; Severability. THIS AGREEMENT HAS
BEEN MADE AND ENTERED INTO IN THE STATE OF NEW YORK AND SHALL BE
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GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REFERENCE TO ITS PRINCIPLES REGARDING CHOICE OR CONFLICT
OF LAW. WHEREVER POSSIBLE, EACH PROVISION OF THIS AGREEMENT SHALL BE
INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW,
BUT IF ANY PROVISIONS HEREOF SHALL BE PROHIBITED BY OR INVALID UNDER ANY SUCH
LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY, WITHOUT INVALIDATING OR NULLIFYING THE REMAINDER OF SUCH PROVISION
OR ANY OTHER PROVISION OF THIS AGREEMENT.
Section 10.8. Certificate of Incorporation of CMP Media Inc.
Wherever possible, each provision of this Agreement shall be interpreted in
such manner as to be consistent with the provisions of the Company's
Certificate of Incorporation as amended and/or restated from time to time, but
if any provision of this Agreement shall be inconsistent with any provisions of
such Certificate of Incorporation, the provisions of such Certificate of
Incorporation shall govern.
Section 10.9. Compliance. Notwithstanding any other provision of
this Agreement no Stockholder, his or her Family, Qualified Private
Foundations, or his or her Representative or agent will sell or attempt to sell
any shares of Common Stock, except in accordance with all applicable federal
and state securities laws, all applicable rules and regulations of the SEC, and
any applicable underwriters' limitations and restrictions.
Section 10.10. Incapacity and/or Inability of Stockholder to Act.
In the event a person, because of his or her incapacity, is unable to act, then
and in that event, any action which may be taken by such person may be taken by
his or her duly authorized proxy or attorney-in-fact, provided however, that no
such action may be taken by such proxy or attorney-in-fact which is
inconsistent with the voting, transfer and the other terms, conditions and
provisions of this Agreement.
Section 10.11. Notices. All notices, requests, consents,
designations and demands required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given (a) when
personally delivered to an individual party or to an authorized officer of a
corporate party, whether by messenger, courier or other person, (b) on the
second Business Day after the date it is sent by certified or registered mail,
return receipt requested, or (c) on the next Business Day after the date it is
sent via facsimile (provided it is actually received and is not materially
illegible), as follows:
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If to the Company:
CMP Media Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: President and Chief Executive Officer
Fax: (000) 000-0000
with a copy to:
CMP Media Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
If to an owner or holder of Common Stock, to the name and address set
forth in Schedule 10.11 or to such person or entity at such other mail or
facsimile address as such person or entity shall have last designated by notice
given to the Company and the other parties in accordance herewith.
With respect to any notice required to be given hereunder, if a party
giving such notice has actual knowledge that the party to whom notice is to be
given in accordance with this Agreement will not receive actual notice in a
timely manner, then and in that event, the party giving such notice shall use
his, her or its reasonable efforts to attempt to provide such notice in a
timely manner.
Section 10.12. Assignment. Except as expressly provided in this
Agreement, no party may assign any rights or delegate any obligations or
liabilities hereunder without the prior written consent of all the other
parties, except that the Company may assign any of its rights and delegate any
of its duties to an entity that controls, is controlled by or is under common
control with the Company; provided, however, that no such assignment or
delegation shall relieve the assignor from his, her or its obligations or
liabilities hereunder.
Section 10.13. Survival. This Agreement shall survive any merger,
sale or other disposition of the Company provided that the Class B Stockholders
then own securities having more than fifty percent (50%) of the combined voting
power of any such successor entity.
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Section 10.14. Gender and Number. Except as otherwise indicated by
the context, references herein to one gender shall include the other genders,
and references herein to the plural shall include the singular.
Section 10.15. Dates. If any date referenced in this Agreement
falls on a day that is not a Business Day, the next succeeding Business Day
shall be deemed substituted for such date. "Business Day" shall mean any day
that the office of the Secretary of State of the State of Delaware is open for
receipt of official corporate filings.
Section 10.16. Headings. The headings herein are for convenience of
reference only and shall not be considered in construing this Agreement.
Section 10.17. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed as an original and all of
which shall together constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the individual parties have executed this
Agreement, and the Company has caused this Agreement to be executed by an
officer thereunto duly authorized, as of the day and year first above written.
CMP MEDIA INC.
By:
----------------------------
Xxxxxxx X. Xxxxx
President
Attest:
By:
----------------------------
(CORPORATE SEAL)
------------------------
XXXXXX X. XXXXX
------------------------
LILO J. LEEDS
------------------------
XXXXXXX X. XXXXX
------------------------
XXXXXXX X. LEEDS
------------------------
XXXXXX X. XXXXX
------------------------
XXXX XXXXX-LEEDS
------------------------
XXXXXXXX XXXXX
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