CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement"), dated as of December
14, 1995, is entered into among the stockholders of The Millbrook Press Inc., a
Delaware corporation (the "Company"), listed on the signature pages hereto
(individually referred to herein as a "Stockholder" and collectively as the
"Stockholders"). The Company is also a party to this Agreement for purposes of
the covenant set forth in Section 8 hereof.
RECITALS
1. Each of Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxxxx is currently serving
both as a director and an officer of the Company, and Xxxx X. Xxxxxxxx is
currently serving as an officer of the Company (each of such persons referred to
individually as an "Officer" and collectively as the "Officers").
2. The Company and People's Bank (the "Lender") propose to enter into
that certain Loan and Security Agreement, dated as of even date herewith (the
"Loan Agreement"), providing, subject to the terms and conditions thereof, for
extensions of credit to be made by the Lender to the Company in an aggregate
principal amount not to exceed $2,700,000 (the "Loans").
3. In order to induce the Lender to enter into the Loan Agreement, the
Officers will enter into that certain Guaranty of Validity of Accounts, dated as
of even date herewith (the "Guaranty"), substantially in the form of EXHIBIT A
attached hereto, pursuant to which the Officers will personally guarantee the
validity of the present and future accounts receivable of the Company.
4. The Stockholders acknowledge that the Lender has requested that each
Officer enter into the Guaranty because of his status as an officer of the
Company.
5. The Officers have indicated that they do not regard the indemnity
available under those certain Indemnification Agreements, dated as of February
23, 1994 (the "Indemnification Agreements"), by and between the Company and each
Officer, respectively, as adequate to protect them from the risks of personal
loss associated with the Guaranty. In this connection, each Officer and the
other Stockholders have agreed to enter into this Contribution Agreement in
order to provide greater protection to the Officers against the risks of
personal liability under the Guaranty.
AGREEMENTS
To induce the Officers to enter into the Guaranty, and in consideration
thereof, the parties hereto have agreed as follows:
1. RIGHT OF CONTRIBUTION. (a) Each of the Officers shall have a right
of contribution from the other Stockholders for any loss, claim, damage,
liability, cost or expense (including reasonable attorneys' fees) arising from
any claims, demands, proceedings or lawsuits initiated by the Bank against any
Officer arising out of or in connection with the Guaranty (the "Losses");
PROVIDED, HOWEVER, that such Officer shall have first sought indemnification
from the Company pursuant to his respective Indemnification Agreement, and the
Company shall have failed to provide indemnification to such Officer in
circumstances under which such indemnification was required to have been
provided by the Company in accordance with the terms of such Indemnification
Agreement, before such Officer shall have any right of contribution pursuant to
this Agreement; and
(b) The amount of any Losses to be contributed by each Stockholder
shall be determined on a pro rata basis among the Stockholders based on their
respective pro rata percentage ownership of shares of capital stock in the
Company immediately prior to such contribution (such contributions are herein
referred to as a "Contribution"). For any Losses as to which Contribution is
required hereunder, each Stockholder shall be required to make a Contribution
equal to the product of (i) such Stockholder's percentage interest in the
Company's capital stock multiplied by (ii) the Contribution Amount specified in
the applicable Contribution Notice applicable to such Losses (as such terms are
defined below). In the event that any Stockholder (a "Defaulting Stockholder")
fails to contribute such Stockholder's proportional share of a Contribution, the
other Stockholders shall pay a proportional share (pro rata based on their
respective ownership of shares of capital stock in the Company) of the amount of
the Defaulting Stockholder's unpaid proportional share of such Contribution. All
Stockholders shall cooperate with each other in pursuing such remedies with
respect to a Defaulting Stockholder as may be necessary or appropriate to compel
such Defaulting Stockholder to repay to the other Stockholders all amounts
contributed by such other Stockholders with respect to the Defaulting
Stockholder's proportional share of any Contribution.
2. NOTICE OF CONTRIBUTION. After an Officer has first requested,
pursuant to his respective Indemnification Agreement, and been denied
indemnification thereunder in circumstances under which such indemnification was
required to have been provided by the Company in order to satisfy a claim of
such Officer for indemnification by the Company for any Losses, the applicable
Officers shall give immediate notice thereof (the "Contribution Notice") to the
Stockholders (which notice shall specify the Company's denial of indemnification
and the actual or anticipated Contribution necessary from all Stockholders for
such Losses) (the "Contribution Amount"), and each Stockholder shall make the
requisite Contribution as determined pursuant to Section 1(b)
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hereof within twenty (20) days after receipt of such Contribution Notice.
3. ENFORCEMENT. If a claim or request for Contribution under this
Agreement is not paid by any Stockholder within twenty days after the
Contribution Notice has been received by such Stockholder, the applicable
Officer or Officers may at any time thereafter bring suit against such
Stockholder to recover the unpaid amount of the claim or request for
Contribution and if successful, in whole or in part, such Officer shall be
entitled to be paid also the expenses of prosecuting such suit. Each Stockholder
shall have the right to recoup from each Officer the amount of any Contribution
theretofore paid by such Stockholder to such Officer pursuant to this Agreement,
to the extent it is established that such Contribution was not required to have
been made in accordance with the terms hereof.
4. EXCLUSIONS. Notwithstanding any other provision of this Agreement,
the Stockholders shall not be liable under this Agreement to make any
Contribution in connection with any claim made against each Officer:
(a) to one extent that such Officer is indemnified and
actually paid pursuant to his respective
Indemnification Agreement with the Company;
(b) to the extent that payment is actually made to the
Officer under a valid, enforceable and collectible
insurance policy;
(c) to the extent that such Officer is indemnified and
actually paid otherwise than pursuant to this
Agreement; and
(d) to the extent that acts or omissions of such Officer
giving rise to the Losses for which the Contribution is to be
paid are found by a court of competent jurisdiction to have
resulted from bad faith, fraud, gross negligence or reckless
or intentional misconduct; and
(e) where the Stockholders are prohibited by applicable
law from paying same.
5. PARTIAL CONTRIBUTION. If any Officer is entitled to Contribution by
the Stockholders pursuant to this Agreement for some or a portion of any Losses,
but not, however, for the total amount thereof, the Stockholders shall
nevertheless contribute to such Officer the portion of such Contribution to
which the Officer is entitled.
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6. ADVANCE OF LOSSES. An Officer may seek contributions to cover the
cost of expenses, except the amount of any settlement, incurred by such Officer
in connection with any litigation, which Contribution shall be paid in advance
of a final determination of such litigation upon the request of any Officer,
provided that no Stockholder shall have an obligation to make advances unless
such Officer has first sought indemnification from the Company pursuant to his
respective Indemnification Agreement and the Company shall have failed to
provide indemnification in circumstances under which such indemnification was
required to have been provided by the Company in order to satisfy such claim or
request for indemnification. Each Officer hereby undertakes to repay to the
Stockholders the amount of any Contribution theretofore paid by the Stockholders
to the extent that it is ultimately determined that such Losses are not
reasonable or that such Officer is not entitled to Contribution pursuant to
Section 1 or Section 4 hereof.
7. APPROVAL OF LOSSES. No Losses for which Contribution shall be sought
under this Agreement, other than those in respect to judgments and verdicts
actually rendered, shall be incurred without the prior consent of the
Stockholders representing at least a majority of the outstanding shares of
capital stock of the Company, which consent shall not be unreasonably withheld,
provided, that if such consent is unreasonably withheld, failure to obtain such
consent shall not offset the obligation of the Stockholders to contribute to the
payment of all reasonably incurred Losses. The Stockholders representing a
majority of the outstanding shares of the capital stock of the Company, shall
act to approve or deny Contribution for Losses within twenty (20) days of
receipt of the Contribution Notice by the last Stockholder to receive such
Contribution Notice. If the Stockholders representing a majority of the
outstanding shares of the capital stock of the Company deem it advisable, such
Stockholders shall be permitted to assume the defense of any litigation for
which Contribution for Losses is sought pursuant hereto.
8. Replacement Guarantor. The Company and the Shareholders hereby
covenant with each of the Officers that the Company shall, and the Stockholders
will cause the Company to:
(i) provide a replacement guarantor acceptable to
Lender who shall commit in writing to undertake the
obligations contained in the Guaranty, and
(ii) secure from Lender and unconditional release from
such Officer's obligations under the Guaranty,
in the event of, and with such replacement to be effective as of, such Officer's
complete cessation of involvement, whether by termination of employment or
otherwise, with the Company.
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9. TERMINATION. This Agreement is a continuing agreement and shall
remain in full force and effect until (i) the payment in full of the Company's
obligations to the Lender under the Loan Agreement, and (ii) the Lender shall
have no commitment to make any Loan to the Company under the Loan Agreement, at
which time this Agreement shall be terminated.
10. NOTICES. All notices and demands to or upon the respective parties
hereto to be effective shall be in writing and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand, or five (5) days after having been deposited in the mail, air postage
prepaid, or in the case of notice by telecopier (fax), when sent, or in the case
of overnight courier service, one business day after delivery to a nationally
recognized overnight courier service, to such addresses as appear on the record
books of the Company.
11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one instrument.
12. GOVERNING LAW. This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the State of Delaware, without
regard to the rule regarding conflicts of law thereof.
13. GENDER. All pronouns and all variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person or persons, thing or entity may require.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
STOCKHOLDERS: 21ST CENTURY COMMUNICATIONS T-E
PARTNERS, L.P.
By: Sandler Investment Partners, L.P.,
general partner
By: Sandler Capital Management,
general partner
By: EMEBE Corp., general
partner
By: ------------------------
Name:
Title:
21ST CENTURY COMMUNICATIONS
PARTNERS, L.P.
By: Sandler Investment Partners, L.P.,
general partner
By: Sandler Capital Management,
general partner
By: EMEBE Corp., general
partner
By: ------------------------
Name:
Title:
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21ST CENTURY COMMUNICATIONS FOREIGN
PARTNERS, L.P.
By: Sandler Investment Partners, L.P.,
general partner
By: Sandler Capital Management,
general partner
By: EMEBE Corp., general
partner
By: ------------------------
Name:
Title:
APPLEWOOD ASSOCIATES, L.P.
By:-------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: General Partner
WOODLAND PARTNERS
By:-------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: General Partner
ARCHON PRESS, LTD.
By:-------------------------------
Name:
Title:
----------------------------------
Xxxxxx Xxxxxxx
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21ST CENTURY COMMUNICATIONS FOREIGN
PARTNERS, L.P.
By: Sandler Investment Partners, L.P.,
general partner
By: Sandler Capital Management,
general partner
By: EMEBE Corp., general
partner
By: ------------------------
Name:
Title:
APPLEWOOD ASSOCIATES, L.P.
By:-------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: General Partner
WOODLAND PARTNERS
By:-------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: General Partner
ARCHON PRESS, LTD.
By:-------------------------------
Name:
Title:
----------------------------------
Xxxxxx Xxxxxxx
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21ST CENTURY COMMUNICATIONS FOREIGN
PARTNERS, L.P.
By: Sandler Investment Partners, L.P.,
general partner
By: Sandler Capital Management,
general partner
By: EMEBE Corp., general
partner
By: ------------------------
Name:
Title:
APPLEWOOD ASSOCIATES, L.P.
By:-------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: General Partner
WOODLAND PARTNERS
By:-------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: General Partner
ARCHON PRESS, LTD.
By:-------------------------------
Name:
Title:
----------------------------------
Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
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Xxxx Xxxxxxxxx
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Xxxxx Xxxxx
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Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxx
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Xxxxxxxx Xxxxxx
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Xxxx Xxxxxx
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Xxxxxx Xxxxx
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Xxxx Xxxxxxxx
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Xxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
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Xxxx Xxxxxxxxx
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Xxxxx Xxxxx
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Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxx
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Xxxxxxxx Xxxxxx
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Xxxx Xxxxxx
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Xxxxxx Xxxxx
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Xxxx Xxxxxxxx
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THE COMPANY: THE MILLBROOK PRESS INC.
By: -------------------------------
Name:
Title: Vice President
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Xxxxx Xxxxxxx
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Xxxxxx Xxxxxx and Xxxx Xxxxxx,
as JTWROS
OFFICERS: ------------------------------------
Xxxx Xxxxxxxx
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Xxxxx Xxxxxxx
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Xxxxxx Xxxxxx
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