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EXHIBIT 10.2
MANAGEMENT STOCKHOLDERS AGREEMENT
This Management Stockholders Agreement (the "Agreement") is entered
into as of January 27, 1998 by and among Liberty Group Publishing, Inc., a
Delaware corporation (the "Company"), Green Equity Investors II, L.P., a
Delaware limited partnership ("GEI"), and the person identified on Annex A
attached hereto (hereinafter referred to as the "Management Investor"), with
reference to the following facts:
WHEREAS, GEI is the principal shareholder of the Company;
WHEREAS, Management Investor is the Chief Executive Officer and
President of the Company;
WHEREAS, GEI has contributed and sold to the Management Investor 3,200
shares of the Company's common stock (the "Common Stock"), in full satisfaction
of the Company's obligations under Section 5.1(a) of the Employment Agreement
(as defined below), such contribution and sale by GEI being deemed to be
pursuant to the Employment Agreement;
WHEREAS, pursuant to the employment agreement, among the Company,
Liberty Group Operating, Inc. and the Management Investor (the "Employment
Agreement"), the Company, GEI and the Management Investor have agreed to enter
into this Agreement; and
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. Management Investor Representations.
(a) Investment Risk. The Management Investor represents and
acknowledges that (i) as a result of the Management Investor's (A) existing
relationship with the Company and by virtue of being an executive of a business
enterprise engaged in the publication of newspapers, and (B) experience in
financial matters, the Management Investor is properly able to evaluate the
capital structure of the Company, the business of the Company and its
subsidiaries and the risks inherent therein; (ii) the Management Investor has
been given the opportunity to obtain any additional information or documents
from and to ask questions, and receive answers of, the officers and
representatives of the Company and its subsidiaries to the extent necessary to
evaluate the merits and risks related to an investment in the Company; (iii) the
Management Investor has been and will be, to the extent the Management Investor
deems necessary, advised by legal counsel of the Management Investor's choice in
connection with this Agreement and the issuance and sale of Common Stock and
(IV) THE MANAGEMENT INVESTOR'S FINANCIAL CONDITION WILL BE SUCH THAT THE
MANAGEMENT INVESTOR WILL BE ABLE TO BEAR THE ECONOMIC RISK OF HOLDING
UNREGISTERED COMMON STOCK FOR WHICH THERE IS NO MARKET AND TO SUFFER A COMPLETE
LOSS OF THE MANAGEMENT INVESTOR'S INVESTMENT THEREIN. The Management Investor
further acknowledges that investment in the
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Common Stock hereunder involves significant risks and that these risks include,
without limitation, the facts that the Company is a newly-formed holding company
and that the Company will have a leveraged financial structure.
(b) Purchase for Investment.
(i) The Management Investor represents and warrants
that: (A) the Common Stock acquired by the Management Investor pursuant to the
Employment Agreement will be acquired for the Management Investor's own account
for investment, without any present intention of selling or further distributing
the same and the Management Investor does not have any reason to anticipate any
change in the Management Investor's circumstances or any other particular
occasion or event which would cause the Management Investor to sell any of such
Common Stock and (B) the Management Investor is fully aware that in agreeing to
issue such Common Stock to the Management Investor the Company and GEI will be
relying upon the truth and accuracy of these representations and warranties. The
Management Investor agrees that the Management Investor will not sell or
otherwise dispose of any Common Stock except in compliance with the Securities
Act of 1933, as amended (the "Act"), the rules and regulations of the Securities
and Exchange Commission (the "Commission") thereunder, the relevant state
securities laws applicable to the Management Investor's action and the terms of
this Agreement.
(ii) Subject to Section 6 below, in addition to the
other restrictions provided in this Agreement, the Management Investor agrees
that prior to making any disposition of any Common Stock acquired pursuant to
the Employment Agreement (other than a disposition to the Company), the
Management Investor will give not less than 10 days' advance written notice to
the Company describing the manner of such proposed disposition. The Management
Investor further agrees that the Management Investor will not effect such
proposed disposition until either (A) the Management Investor has provided to
the Company, if so requested by the Company, an opinion of counsel reasonably
satisfactory in form and substance to the Company that such proposed disposition
is exempt from registration under the Act and any applicable state securities
laws or (B) a registration statement under the Act covering such proposed
disposition has been filed by the Company under the Act and has become effective
and compliance with applicable state securities laws has been effected.
(iii) The Management Investor acknowledges that no
trading market for the Common Stock exists currently or is expected to exist at
any time in the foreseeable future and that, as a result, the Management
Investor may be unable to sell any of the Common Stock acquired pursuant to the
Employment Agreement for an indefinite period. Further, the Company has no
obligation to register any of the Common Stock, except as expressly provided in
Section 7 of this Agreement.
(iv) THE MANAGEMENT INVESTOR ACKNOWLEDGES AND AGREES
THAT NOTHING HEREIN, INCLUDING THE OPPORTUNITY TO MAKE ANY EQUITY INVESTMENT IN
THE COMPANY, SHALL BE DEEMED TO CREATE ANY IMPLICATION CONCERNING THE ADEQUACY
OF THE MANAGEMENT INVESTOR'S SERVICES TO ANY OF THE COMPANY OR ITS SUBSIDIARIES
OR SHALL BE CONSTRUED AS AN AGREEMENT BY
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THE COMPANY OR ITS SUBSIDIARIES, EXPRESS OR IMPLIED, TO EMPLOY THE MANAGEMENT
INVESTOR OR CONTRACT FOR THE MANAGEMENT INVESTOR'S SERVICES, TO RESTRICT THE
RIGHT OF THE COMPANY OR ITS SUBSIDIARIES TO DISCHARGE THE MANAGEMENT INVESTOR OR
CEASE CONTRACTING FOR THE MANAGEMENT INVESTOR'S SERVICES OR TO MODIFY, EXTEND OR
OTHERWISE AFFECT IN ANY MANNER WHATSOEVER THE TERMS OF ANY EMPLOYMENT AGREEMENT
OR CONTRACT FOR SERVICES WHICH MAY EXIST BETWEEN THE MANAGEMENT INVESTOR AND THE
COMPANY OR ITS SUBSIDIARIES.
2. Legend on Certificates.
Each stock certificate issued to the Management Investor, if
any, representing Common Stock issued pursuant to the Employment Agreement and
each stock certificate issued to GEI, if any, representing Common Stock shall
bear the following (or substantially equivalent) legends on the face or reverse
side thereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 OR ANY SUCCESSOR RULE UNDER
THE ACT OR LIBERTY GROUP PUBLISHING, INC. (THE "COMPANY")
RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A MANAGEMENT STOCKHOLDERS AGREEMENT DATED AS OF JANUARY 27,
1998, BETWEEN THE PURCHASER PARTY THERETO AND THE COMPANY, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY,
AND THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT OR OTHER DISPOSITION COMPLIES
WITH THE PROVISIONS OF SUCH AGREEMENT.
Any stock certificate issued at any time in exchange or substitution for any
certificates bearing such legends (except a new certificate issued upon the
completion of a public distribution of Common Stock represented thereby) shall
also bear such (or substantially equivalent) legends, unless the Common Stock
represented by such certificate is no longer subject to the provisions of this
Agreement and, in the opinion of counsel for the Company, the Common Stock
represented thereby need no longer be subject to restrictions pursuant to the
Act or applicable state securities law. The
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Company shall not be required to transfer on its books any certificate for
Common Stock in violation of the provisions of this Agreement.
3. Transfer of Stock.
(a) Transfer Procedure; Right of First Refusal. The Management
Investor may sell, pledge, give, bequeath, transfer, assign, encumber or dispose
of (a "transfer") any Common Stock (or any interest therein) acquired pursuant
to the Employment Agreement to any independent party unrelated to the Management
Investor (the "Outside Party"); provided, however, that each such Outside Party
shall first (i) execute a written consent in form and substance satisfactory to
the Company to be bound by all of the provisions of this Agreement and (ii) give
a duplicate original of such consent to the Company.
(b) Transfer to Related Transferees. The Management Investor
may transfer the Management Investor's Common Stock without restriction to the
Management Investor's Related Transferees (as defined below) provided that each
such Related Transferee shall first (i) execute a written consent in form and
substance satisfactory to the Company to be bound by all of the provisions of
this Agreement and (ii) give a duplicate original of such consent to the
Company. The "Related Transferees" of the Management Investor shall consist of
the Management Investor's spouse, the Management Investor's adult lineal
descendants, the adult spouses of such lineal descendants, trusts solely for the
benefit of the Management Investor's spouse or the Management Investor's minor
or adult lineal descendants, corporations, partnerships or limited liability
companies the sole equity owners of which are the Management Investor, the
Management Investor's spouse or the Management Investor's minor or adult lineal
descendants, and, in the event of death or incapacity, the Management Investor's
personal representatives (in their capacities as such), estate and named
beneficiaries. In the event of any transfer by the Management Investor to his
Related Transferees of all or any part of the Management Investor's Common Stock
(or in the event of any subsequent transfer by any such Related Transferee to
another Related Transferee of the Management Investor), such Related Transferees
shall receive and hold said Common Stock subject to the terms of this Agreement
and the rights and obligations hereunder of the Management Investor from whom
such Common Stock was originally transferred as though said Common Stock was
still owned by the Management Investor, and such Related Transferees shall be
deemed Management Investors for the purposes of this Agreement (except as stated
in Sections 13(b) and (c) hereof).
4. Company "Call" Option.
(a) The provisions of Section 5.1(b), (c), (d), (e), (f) of
the Employment Agreement and the defined terms contained in the Employment
Agreement that are used in such provisions are incorporated herein by reference
as if such provisions were set forth in full herein.
(b) If the Company does not elect to exercise its option set
forth in paragraph (a) of this Section 4, the Company shall give written notice
that it is not so electing to GEI within the
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time periods set forth in paragraph (a) of this Section 4 for the giving of
notice. Upon receipt of such notice from the Company, GEI shall have the option,
exercisable by written notice (a "GEI Purchase Notice") delivered to the
Management Investor (or, in the case of a deceased Management Investor, the
Management Investor's personal representative) within the time periods set forth
in paragraph (a) of this Section 4 for the giving of notice, to purchase from
the Management Investor (and the Related Transferees, if any, of the Management
Investor or, in the case of a deceased or incapacitated Management Investor, his
personal representative (the "Seller" ) (and, upon the giving of the GEI
Purchase Notice, GEI shall be obligated to purchase and the Seller shall be
obligated to sell) all, or any lesser portion indicated in the GEI Purchase
Notice, of the Common Stock held by the Seller at the per share price set forth
in paragraph (a) of this Section 4.
(c) In the event the Company has elected to purchase shares of
Common Stock pursuant to this Section 4 but, as of the proposed closing of such
purchase, such purchase by the Company is prohibited by law or would cause a
default under the terms of any indenture or loan agreement or other instrument
to which the Company or any of its subsidiaries may be a party, the obligations
of the Seller (with respect to the Company) and the Company pursuant to this
Section 4 shall be foregone forever and no such default would be caused;
provided, however, that in such event, if GEI so elects and no violation of law
would be caused and no default under the terms of any indenture or loan
agreement or other instrument to which the Company or any of its subsidiaries
may be a party would result, the Company shall transfer its obligations under
this Section 4 to GEI or to a subsidiary, in which case GEI or the subsidiary
(as the case may be) and the Management Investor (and the Related Transferees,
if any, of the Management Investor) shall be obligated to complete the purchase
of shares of Common Stock pursuant to this Section 4. In the event that pursuant
to GEI's election the Company has transferred its obligations under this Section
4 to GEI and a purchase of shares of Common Stock by GEI pursuant to this
Section 4 is prohibited by law or would cause a default under the terms of any
indenture or loan agreement or other instrument to which GEI may be a party, the
obligations of GEI pursuant to this Section 4 shall be foregone forever and no
such default shall be caused.
5. Purchase Price, Closing and Terms of Payment for "Call" Sales.
(a) The provisions of Sections 5.1(c), (d) and (e) of the
Employment Agreement and the defined terms contained in the Employment Agreement
that are used in such provisions are incorporated herein by reference as if such
provisions were set forth in full herein with such adjustments and modifications
necessary such that defined terms in the Employment Agreement will have the
corresponding meaning under this Agreement.
(b) The closing for all purchases and sales of Common Stock
provided for in Section 4 hereof shall be at the principal executive offices of
the Company at 10:30 a.m., Central Standard Time, on the sixtieth day after the
giving of the applicable notice set forth in paragraph (a) above or the GEI
Purchase Notice; provided, however, that if the Management Investor (or a
Related Transferee) who has become obligated to sell shares of Common Stock
hereunder is deceased or incapacitated on the closing date and such deceased
person's personal representative shall not have been appointed and qualified by
such date, then the closing shall be postponed until the tenth day
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after the appointment and qualification of such personal representative. If the
aforesaid closing date falls on a day which is not a business day, then the
closing shall be held on the next succeeding business day.
(c) The purchase price for the purchase and sale of Common
Stock pursuant to the provisions hereof shall be paid in cash, by certified or
by official bank check.
(d) The Seller or Sellers of shares of Common Stock sold
pursuant to Section 4 hereof, if such shares are represented by one or more
certificates issued by the Company, shall cause such certificated shares to be
delivered to the Company at the closing free and clear of all liens, charges or
encumbrances of any kind, other than restrictions set forth in this Agreement.
Such Seller or Sellers shall take all actions as the Company shall request as
necessary to vest in the Company at such closing all shares sold pursuant to
Section 4 hereof, whether in certificated or uncertificated form, free and clear
of all liens, charges and encumbrances incurred, voluntarily or involuntarily,
by or through Seller, other than restrictions set forth in this Agreement. At
each closing pursuant to Section 4, the Company shall deliver to the Seller
reasonable assurances to the effect that the Company's or a subsidiary's
purchase of shares thereat has been duly and validly authorized and complies
with applicable state securities laws.
6. Termination and Lapse of Rights and Restrictions; Application to
Other Stock.
(a) The provisions of Sections 1(b) (ii), 3, 4, 7, 9 and 10 of
this Agreement shall lapse and be of no further effect with respect to shares of
Common Stock upon the commencement of the public trading of the Company's Common
Stock (or any capital stock exchanged for or distributed upon such Common Stock
as described in paragraph (b) of this Section 6) on any national securities
exchange, on the NASDAQ National Market System or on the NASDAQ "Small Cap"
Issues System. The provisions of Section 3 shall lapse and be of no further
effect with respect to shares of Common Stock sold in a public distribution
pursuant to an effective registration statement under the Act or pursuant to the
provisions of Rule 144 under the Act.
(b) The provisions of Section 7 of this Agreement shall lapse
and be of no further effect with respect to shares of Common Stock transferred
by the Management Investor, except for transfers pursuant to Section 3(b)
hereof.
(c) In the event any capital stock of the Company or any other
corporation shall be distributed on, with respect to, or in exchange for shares
of Common Stock of the Company as a stock dividend, stock split, spin-off,
reclassification or recapitalization in connection with any merger or
reorganization, the restrictions, rights and options set forth in Sections 3, 4,
7, 8 and 9 shall apply with respect to such other capital stock to the same
extent as they are, or would have been applicable, to the Common Stock acquired
hereunder on, or with respect to, which such other capital stock was
distributed.
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7. Right of First Refusal - New Securities.
(a) The Management Investor shall have a right of first refusal to
purchase his proportionate number, or any lesser number, of any New Securities
which the Company may, from time to time after the date hereof, propose to sell
and issue. For purposes of this Section 7, the Management Investor's
"proportionate number" means the product obtained by multiplying (i) the number
of New Securities proposed to be sold and issued by (ii) the numerator of which
will be the number of shares of Common Stock owned by the Management Investor
(including shares owned by the Management Investor's Related Transferees) and
the denominator of which will be the total number of shares of Common Stock
owned by all holders of Common Stock.
(b) In the event the Company proposes to undertake an issuance of New
Securities, it will give the Management Investor written notice of its intention
to do so, describing the New Securities and the price and terms upon which the
Company proposes to issue the same, and setting forth the number of shares which
the Management Investor is entitled to purchase and the aggregate purchase price
therefor. The Management Investor will have 10 business days from the date of
receipt of any notice to agree to purchase up to his proportionate number of
such New Securities, for the price and upon the terms specified in the notice by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased.
(c) In the event the Management Investor fails to exercise such right
of first refusal within said 10 business-day period, the Company will have 180
days thereafter to sell the New Securities as to which the Management Investor's
right was not exercised, at a price and upon such other terms no more favorable
to the purchasers thereof than those specified in the Company's notice. In the
event the Company has not sold such New Securities within said 180-day period,
the Company will not thereafter issue or sell any New Securities without first
offering such New Securities to the Management Investor in the manner provided
above.
(d) For purposes of this Section 7, "New Securities" means (i) any
common stock or common stock equivalents of the Company, including, but not
limited to, any common stock appreciation, phantom stock or profit participation
rights, whether now authorized or not, (ii) any rights, options, or warrants to
purchase any such common stock or common stock equivalents, or to purchase any
securities of any type whatsoever that are, or may become, convertible into any
such common stock or common stock equivalents and (iii) any securities of any
type whatsoever that are, or may become, convertible into common stock or common
stock equivalents; provided, however, that "New Securities" will not include (A)
securities offered to the public pursuant to a registration statement declared
effective by the Commission, (B) stock or options issued to employees and
directors of the Company and the issuance of stock upon exercise of such options
in accordance with their terms, and (C) securities issued in exchange for assets
of another person or entity (other than cash or marketable securities),
including securities issued in exchange for securities of another person or
entity whereby the Company ends up owning, by merger or otherwise, greater than
50% of the voting power of such person or entity. For the purposes of this
Section 7, a "common stock equivalent" means capital stock of the Company that
participates on a parity with the Common
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Stock with respect to dividends and distributions on liquidation. It is
expressly agreed that the preferred stock of the Company issued on the date
hereof does not constitute common stock equivalents.
8. Piggyback Registration Rights.
(a) As used in this Agreement, the term "Holder" means the
Management Investor, a Related Transferee of the Management Investor or an
Outside Party.
(b) Subject to the provisions herein, if the Company at any
time proposes to effect a public offering of Common Stock registered under the
Act (other than registration (x) on Forms S-4 or S-8 or any successor forms
thereto or (y) filed in connection with an exchange offer), the Company shall
give written notice of the proposed registration to each Holder at least thirty
(30) days prior to the filing thereof, and each Holder shall have the right to
request that all or any part of its shares of Common Stock be included in such
registration by giving written notice to the Company within fifteen (15) days
after the giving of such notice by the Company (any Holder giving the Company a
notice requesting that shares of Common Stock owned by it be included in such
proposed registration being hereinafter referred to in this Section 8 as a
"Registering Holder"); provided, however, that, the Holder shall not be entitled
to request that all or any part of its shares of Common Stock be included in an
initial public offering of Common Stock registered under the Act, unless all or
any part of GEI's Common Stock is included in such registration statement;
provided, further, however, that, (i) if the registration is in whole or in part
an underwritten primary registration on behalf of the Company and the managing
underwriters of such offering determine that the aggregate amount of securities
of the Company which all Registering Holders and all other security holders of
the Company, pursuant to contractual rights to participate in such registration
("Other Holder"), propose to include in such registration statement exceeds the
maximum amount of securities that should be included therein, the Company will
include in such registration, first, the shares which the Company proposes to
sell and, second, the shares of such Registering Holders and other securities to
be sold for the account of Other Holders, pro rata among all such Registering
Holders and Other Holders, taken together, on the basis of the relative equity
interests in the Company of all Registering Holders and Other Holders who have
requested that securities owned by them be so included (it being agreed and
understood, however, that such underwriters shall have the right to eliminate
entirely the participation in such registration of all Registering Holders and
Other Holders), and (ii) if the registration is an underwritten secondary
registration on behalf of any of the Other Holders pursuant to demand
registration rights and the managing underwriters determine that the aggregate
amount of securities which all Registering Holders and all Other Holders propose
to include in such registration exceeds the maximum amount of securities that
should be included therein, (a) if GEI does not have the right to participate in
such demand registration pro rata with those demanding registration, the Company
will include in such registration, first, the securities to be sold for the
account of the Other Holders demanding registration (but only to the extent such
Other Holders are entitled to demand inclusion thereof), second, any securities
to be sold for the account of the Company, and, third, the shares of such
Registering Holders and other securities to be sold for the account of the Other
Holders electing to include (but not being entitled to demand inclusion of)
securities in such registration, pro rata among
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all such Registering Holders and Other Holders, taken together, on the basis of
relative equity interests in the Company of all such Registering Holders and
such Other Holders who have requested that securities owned by them be included
(it being agreed and understood, however, that such underwriters shall have the
right to eliminate entirely the participation therein of all such Registering
Holders and Other Holders not entitled to demand inclusion of securities in such
registration), and (b) if GEI has the right to demand such registration or to
participate in such demand registration pro rata with those demanding such
registration, the Company will include in such registration, first, the
securities to be sold for the account of the Other Holders demanding
registration (but only to the extent such Other Holders are entitled to demand
inclusion thereof), the securities to be sold for the account of GEI and the
securities to be sold for the account of the Registering Holders pro rata on the
basis of their relative equity interests in the Company, second, any securities
to be sold for the account of the Company, and, third, the shares to be sold for
the account of the Other Holders electing to include (but not being entitled to
demand inclusion of) securities in such registration, pro rata among all such
Registering Holders and Other Holders, taken together, on the basis of relative
equity interests in the Company of all such Registering Holders and such Other
Holders who have requested that securities owned by them be included (it being
agreed and understood, however, that such underwriters shall have the right to
eliminate entirely the participation therein of all such Registering Holders and
Other Holders not entitled to demand inclusion of securities in such
registration). Shares of Common Stock proposed to be registered and sold for the
account of any Registering Holder shall be sold to prospective underwriters
selected or approved by the Company on the terms and subject to the conditions
of one or more underwriting agreements negotiated between the Company and/or
Other Holders demanding registration and the prospective underwriters. For the
purposes hereof, an "Affiliate" of any person or entity means any other person
or entity controlling, controlled by or under common control with such person or
entity; provided, however, that none of the Management Stockholders (defined
below) or any of their Affiliates shall be deemed to be an Affiliate of GEI.
"Management Stockholders" means, collectively, all holders of capital stock or
other securities issued by the Company who are also employees of the Company or
its subsidiaries.
In the event the Company proposes to register any of its Common Stock
under the Act on Form S-8 (or any successor thereto), if the Company determines
that it is permissible to do so and will not result in material added costs to
the Company from such registration, the Company shall, at a Registering Holder's
request, include in such registration such Registering Holder's shares of Common
Stock.
The Registering Holders shall be permitted to withdraw all or a part of
the shares of Common Stock held by such Registering Holders which were to be
included in such registration at any time prior to the effective date of such
registration. The Company shall not be required to maintain the effectiveness of
the registration statement for such registration beyond the earlier to occur of
120 days after the effective date thereof or consummation of the distribution by
the Registering Holders included in such registration statement. The Company may
withdraw any registration statement at any time before it becomes effective, or
postpone the offering of securities, without obligation or liability to any
Holder.
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(c) The registration rights sets forth in this Section 8 shall
terminate and be of no further effect with respect to the shares of Common Stock
held by a Holder after such shares have been sold to the public pursuant to a
registration statement under the Act or pursuant to the provisions of Rule 144
under the Act.
(d) In connection with any registration of shares under the
Act pursuant to this Section 8, the Company will furnish each Holder whose
shares of Common Stock are registered thereunder with a copy of the registration
statement and all amendments thereto and will supply each such Holder with
copies of any prospectus included therein (including a preliminary prospectus
and all amendments and supplements thereto), in such quantities as may be
reasonably necessary for the purpose of the proposed sale or distribution
covered by such registration. The Company shall not, however, be required to
maintain the registration statement and to supply copies of a prospectus for a
period beyond 120 days after the effective date of such registration statement,
at the end of such period, the Company may deregister any shares of Common Stock
covered by such registration statement and not then sold or distributed. In
connection with any such registration of shares of Common Stock, the Company
will, at the request of the managing underwriter with respect thereto, use its
best efforts to qualify such registered shares for sale under the securities
laws of such state as is reasonably required to permit the distribution of such
registered shares; provided, however, that the Company shall not be required in
connection therewith or as condition thereof to qualify as a foreign corporation
or to execute a general consent to service of process in any jurisdiction or
become subject to taxation in any jurisdiction.
(e) In connection with any registration of shares under the
Act pursuant to this Section 8, the Company will cause the shares of Common
Stock registered pursuant to such registration to be listed on the principal
securities exchange or automated quotation system on which similar securities
issued by the Company are then listed or quoted (if any), if the listing or
quotation of such shares is then permitted under the rules of such exchange or
automated quotation system.
(f) Notwithstanding any other provision of this Section 8,
Holder agrees that in the event of an underwritten public offering of Common
Stock for the account of the Company, such Holder will not offer for public sale
(other than as part of such underwritten public offering) any shares of Common
Stock during the ten (10) days prior to, and such number of days (not in excess
of 180) after, the effective date of the registration statement in connection
with such pubic offering as the underwriters may request in writing, without the
consent of the underwriters; provided, however, that, in the case of death of a
Holder, if consented to by the underwriters, a Holder shall be permitted to
offer for public sale prior to the expiration of such period shares of Common
Stock reasonably necessary to generate funds of the payment of estate taxes.
(g) Except as otherwise required by state securities laws or
the rules and regulations promulgated thereunder, all expenses, disbursements
and fees incurred by the Company in connection with carrying out its obligations
under this Section 8, including, but not limited to , listing the shares
pursuant to paragraph (e) above, shall be borne by the Company; provided,
however, that each Holder shall pay (i) all costs and expenses of counsel for
such Holder, if such counsel is not also counsel for the Company, (ii) all
underwriting discounts, commissions and
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expenses and all transfer taxes with respect to the shares of Common Stock sold
by such Holder and (iii) all other expenses incurred by such Holder and
incidental to the sale and delivery of the shares of Common Stock to be sold by
such Holder.
(h) It shall be a condition of each Holder's rights hereunder
to have shares of Common Stock owned by such Holder registered that:
(i) such Holder shall cooperate with the Company by
supplying such information and executing such customary documents
relating to such Holder or the securities of the Company owned by such
Holder in connection with such registration as the Company or the
underwriters may reasonably request;
(ii) such Holder shall enter into any undertakings
and take such other action relating to the conduct of the proposed
offering which the Company or the underwriters may reasonably request
as being necessary to insure compliance with federal and state
securities laws and the rules or other requirements of the National
Association of Securities Dealers, Inc. or which the Company or the
underwriters may reasonably request to otherwise effectuate the
offering; and
(iii) such Holder shall execute and deliver an
agreement to indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, any underwriter (as defined in the Act) and each person, if
any who controls the Company or such underwriter within the meaning of
the Act, against such losses, claims, damages or liabilities (including
reimbursement for reasonable legal and other expenses) to which the
Company or any such director, officer, underwriter or controlling
person may become subject under the Act or otherwise, in such manner as
is customary for registration of the type then proposed and, in any
event, equivalent in scope to indemnities given by the Company in
connection with such registration, but only with respect to written
information furnished by such Holder in his or her capacity as a
selling shareholder in connection with such registration; provided,
however, that such Holder's aggregate liability thereunder shall be
limited to the net proceeds received from the sale of such Holder's
Common Stock in such registration.
(i) In the event of any registration under the Act of any
shares of Common Stock pursuant to this Section 8, the Company hereby agrees to
indemnify and hold harmless each Holder disposing of such shares against such
losses, claims, damages or liabilities (including reimbursement for legal and
other expenses) to which such Holder may become subject under the Act or
otherwise, in such manner as is customary for registrations of the type then
proposed, but not with respect to written information furnished by such Holder
in his capacity as a selling shareholder in connection with such registration.
To the extent the indemnification provided for in this Section 8(i) is
unavailable to an indemnified party, or is insufficient in respect of any
losses, claims, damages or liabilities referred to herein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative
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benefits received by the Company, on the one hand, and the Holder, on the other
hand, from the registration of such shares of Common Stock or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, on
the one hand, and the Holder, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
(j) At all times after the Company has filed a registration
statement with respect to its Common Stock with the Commission pursuant to the
requirements of either the Act or the Securities Exchange Act of 1934 (the
"Securities Exchange Act") and such registration has become effective, the
Company will file in a timely manner all reports and other documents required to
be filed by it under the Act and the Securities Exchange Act and the rules and
regulations adopted by the Commission thereunder, all to the extent required to
enable such Holder to sell Common Stock pursuant to Rule 144 under the Act (as
such rule may be amended from time to time) or any similar rule or regulation
hereafter adopted by the Commission. Upon request, the Company shall deliver to
any Holder a written statement as to whether it has complied with such
requirements.
9. Tag-Along Rights.
(a) Right to Participate in Sale. If GEI enters into an
agreement to transfer, sell or otherwise dispose of (such transfer, sale or
other disposition being referred to as a "Tag-Along Sale") shares of Common
Stock of the Company held on the date hereof, then GEI shall afford the Holder
the opportunity to participate proportionately in such Tag-Along Sale in
accordance with this Section 9. The Holder shall have the right, but not the
obligation (except as provided in Section 10), to participate in such Tag-Along
Sale. The number of shares of Common Stock that the Holder will be entitled to
include in such Tag-Along Sale (the "Management Investor's Allotment") shall be
determined by multiplying (i) the number of shares of Common Stock held by the
Holder on the Tag-Along Sale Date (as defined below), by (ii) a fraction, the
numerator or which shall equal the total number of shares of Common Stock
proposed to be sold or otherwise disposed of pursuant to the Tag-Along Sale and
the denominator of which shall equal the total number of shares of Common Stock
that are beneficially owned by (a) GEI and (b) any holder of shares of Common
Stock (including the Holder) that has the right to "tag-along" in the Tag-Along
Sale on the Tag-Along Sale Date. The "Tag Along Notice Date" shall be the date
that the Tag-Along Sale Notice (as defined below) is first delivered, mailed or
sent by courier, Telex or telecopy to the Holder.
(b) Limitation on Management Investor Representations;
Indemnity. Any sales of shares of Common Stock by a Holder as a result of the
"Tag-Along Rights" granted to the Holder pursuant to this Agreement shall be on
the same terms and conditions as the proposed Tag-Along Sale by GEI; provided,
however, that in negotiating a Tag-Along Sale, GEI shall use its reasonable,
good faith efforts to provide (i) that the only representation and warranty
which the Holder shall be required to make in connection with any transfer is a
warranty with respect to the Holder's own ability to convey title thereto free
and clear of liens, encumbrances or adverse claims and (ii) that the warranty
made in connection with any transfer is the several liability of the Holder (and
not joint
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with any other person) and that such liability is limited to the amount of
proceeds actually received by such Holder.
(c) Sale Notice. GEI shall provide the Holder with written
notice (the "Tag- Along Sale Notice") not more than sixty (60) nor less than
twenty (20) days prior to the proposed date of the Tag-Along Sale (the
"Tag-Along Sale Date"). Each Tag-Along Sale Notice shall set forth: (i) the name
and address of each proposed transferee or purchaser of shares in the Tag-Along
Sale; (ii) the number of shares proposed to be transferred or sold by GEI; (iii)
the proposed amount and form of consideration to be paid for such shares and the
terms and conditions of payment offered by each proposed transferee or
purchaser; (iv) the aggregate number of shares of Common Stock held of record as
of the close of business on the day immediately preceding the Tag-Along Notice
Date by GEI; (v) the Management Investor's Allotment assuming the Holder elected
to sell the maximum number of shares of Common Stock possible; (vi) confirmation
that the proposed purchaser or transferee has been informed of the "Tag-Along
Rights" provided for herein and has agreed to purchase shares of Common Stock
(including Vested Shares) in accordance with the terms hereof and (vii) the
Tag-Along Sale Date.
(d) Tag-Along Notice. If the Holder wishes to participate in
the Tag-Along Sale, the Holder shall provide written notice (the "Tag-Along
Notice") to GEI no less than ten (10) days prior to the Tag-Along Sale Date. The
Tag-Along Notice shall set forth the number of shares of Common Stock that such
Holder elects to include in the Tag-Along Sale, which shall not exceed the
Management Investor's Allotment. The Tag-Along Notice shall also specify the
aggregate number of additional shares of Common Stock owned of record as of the
close of business on the day immediately preceding the Tag-Along Notice Date by
such Holder, if any, which such Holder desires also to include in the Tag-Along
Sale ("Additional Shares") in the event there is any under- subscription for the
entire amount of all Management Investors' Allotments of all shares that may be
included by persons having, and pursuant to, tag-along rights relative to GEI
(collectively, the "Management Investors' Allotments"). In the event there is an
under-subscription by all holders of Management Investors' Allotments for the
entire amount of the Management Investors' Allotments, GEI shall apportion the
unsubscribed Management Investors' Allotments to such holders whose tag- along
apportionment shall be on a pro rata basis among such holders in accordance with
the number of Additional Shares specified by all such holders in their Tag-Along
Notice. The Tag-Along Notices given by the Holder shall constitute the Holder's
binding agreement to sell such shares of Common Stock on the terms and
conditions applicable to the Tag-Along Sale, subjects to the provisions of
Section 9 (b) above; provided, however, that in the event that there is any
material change in the terms and conditions of such Tag-Along Sale applicable to
the Holder after the Holder gives the Tag-Along Notice, then, notwithstanding
anything herein to the contrary, the Holder shall have the right to withdraw
from participation in the Tag-Along Sale with respect to all of its shares of
Common Stock affected thereby. If the purchaser does not consummate the purchase
of all of such shares on the same terms and conditions applicable to GEI (except
as otherwise provided herein) then GEI shall not consummate the Tag-Along Sale
of any of its shares to such transferee or purchaser, unless the shares of the
Holder and GEI are reduced or limited pro rata in proportion to the respective
number of shares actually sold in any such Tag-Along Sale.
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If a Tag-Along Notice is not received by GEI from the Holder prior to
the ten-day period specified above, GEI shall have the right to sell or
otherwise transfer the number of shares specified in the Tag-Along Notice to the
proposed purchaser or transferee without any participation by such Holder, but
only on terms and conditions which are no more favorable in any material respect
to GEI than as stated in the Tag-Along Notice to the Holder and only if such
Tag-Along Sale occurs on a date within sixty (60) business days of the Tag-Along
Sale Date.
(e) Authority to Record Transfer/Delivery of Certificates. On
the Tag-Along Sale Date, the Holder, if a participant therein, authorizes the
Company (or the Company's transfer agent, if any) to record in the Company's
books and records the transfer of all of the Holder's shares of Common Stock
which are not represented by one or more certificates issued by the Company,
from the Holder to the purchaser in the Tag-Along Sale. On the Tag-Along Sale
Date, the Holder, if a participant therein, shall also deliver all certificates,
if any, issued by the Company which represent shares of the Company's Common
Stock, duly endorsed for transfer with signatures guaranteed, to the purchaser
in the Tag-Along Sale, in the manner and at the address indicated in the
Tag-Along Notice against delivery of the purchase price for such shares;
provided, however, that in the event the Company has possession of any such
certificate(s) pursuant to this Agreement, upon the written request of the
Holder at least five (5) business days in advance of the Tag-Along Sale Date,
the Company shall deliver such certificate(s) to the purchaser at the time and
in the manner described above.
(f) Exempt Transfers. The provisions of this Section 9 shall
not apply to (i) any bona fide underwritten offering of Common Stock pursuant to
an effective registration statement under the Act; (ii) any transfer, sale or
other disposition by GEI to one of its Affiliates (except that (A) prior to any
such disposition, the party receiving such shares of Common Stock shall agree in
writing to be bound by the terms of this Agreement applicable to GEI as if such
transferee were an original party hereto and (B) any such shares of Common Stock
shall continue to be subject to this Agreement); (iii) any redemption by the
Company of its Common Stock or (iv) any GEI Distribution (as defined in Section
14).
10. Drag-Along Sales.
(a) Right to Require Sale. Notwithstanding any other provision
hereof, if GEI agrees to sell 100% of the shares of Common Stock held by it to a
third person who is not an affiliate of GEI (a "Third Party") or if GEI agrees
to sell a portion of its shares pursuant to a transaction in which more than 50%
of the total Common Stock of the Company will be sold to a Third Party (either
of such sales, a "Drag-Along Sale"), then, upon the demand of GEI, each Holder
hereby agrees to sell to such Third Party the same percentage of the total
number of shares of Common Stock held by such Holder on the date of the
Drag-Along Notice, as the number of shares GEI is selling in the Drag-Along
Sales bears to the total number of shares held be GEI as of the date of the
Drag-Along Notice (the "Sale Percentage"), at the same price and on the same
terms and conditions as GEI has agreed to with such Third Party; provided,
however, that GEI shall use its reasonable, good faith efforts to provide that
the only representation and warranty which the Holder shall be required to make
in connection with the Drag-Along Sale is a representation and warranty with
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respect to the Holder's own ownership of the shares of Common Stock to be sold
by it and its ability to convey title thereto free and clear of liens,
encumbrances or adverse claims; provided, further, however, that the Holder
shall not be obligated to participate in any Drag-Along Sale unless the
liability of such Holder with respect to any representation and warranty made in
connection with the Drag-Along Sale is the several liability of such Holder (and
not joint with any other person) and that such liability is limited to the
amount of proceeds actually received by such Holder in the Drag- Along Sale;
provided further, that the Holder shall not be obligated to participate in any
Drag-Along Sale unless the Holder is provided an opinion of counsel to the
effect that the Drag-Along Sale is not in violation of applicable federal or
state securities or other laws or, if the Holder is not provided with an opinion
with respect to any matters contemplated by this proviso, GEI shall (in addition
to the indemnification contemplated below) indemnify the Holder for any
violation. If the Drag-Along Sale is in the form of a merger transaction, the
Holder agrees to vote his or her shares of Common Stock in favor of such merger
and not to exercise any rights of appraisal or dissent afforded under applicable
law.
(b) Drag-Along Notice. Prior to making any Drag-Along Sale, if
GEI elects to exercise the option described in this Section 9, GEI shall provide
the Holder with written notice (the "Drag-Along Notice") not more than sixty
(60) nor less than twenty (20) days prior to the proposed date of the Drag-Along
Sale (the "Drag-Along Sale Date"). The Drag-Along Notice shall set forth: (i)
the name and address of the Third Party; (ii) the proposed amount and form of
consideration to be paid per share and the terms and conditions of payment
offered by the Third Party; (iii) the aggregate number of shares of Common Stock
held by GEI as of the date that the Drag-Along Notice is first delivered, mailed
or sent by courier, telex or telecopy to the Holder; (iv) the sale percentage;
(v) the Drag-Along Sale Date and (vi) confirmation that the proposed Third Party
has agreed to purchase the Management Investor's shares of Common Stock in
accordance with the terms hereof.
(c) Authority to Record Transfer/Delivery of Certificates. The
Company (or the Company's transfer agent, if any) shall record in the Company's
books and records the transfer of the Sale Percentage of the Holder's shares of
Common Stock which is not represented by one or more certificates issued by the
Company, from the Holder to the Third Party, on the Drag-Along Sale Date. If any
part of the Sale Percentage of the Holder's shares of Common Stock is
represented by one or more certificates issued by the Company, the Holder shall
deliver such certificate or certificates for such shares, duly endorsed for
transfer with signatures guaranteed, to such Third Party on the Drag-Along Sale
Date in the manner and at the address indicated in the Drag-Along Notice against
delivery of the purchase price for the shares; provided, however, that in the
event the Company has possession of any such certificate(s) pursuant to this
Agreement, upon the written request of the Holder at least five (5) business
days in advance of the Drag-Along Sale Date, the Company shall deliver such
certificate(s) to the purchaser at the time and in the manner described above.
(d) Consideration. The provisions of this Section 9 shall
apply regardless of the form of consideration received in the Drag-Along Sale;
provided, however, that each Holder may require that it receive its
consideration in the form of cash, cash equivalents or marketable securities of
equal value to the consideration that it would otherwise receive in the
Drag-Along Sale.
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11. Notices. All notices or other communications under this Agreement
shall be given in writing and shall be deemed duly given and received on the
third full business day following the day of the mailing thereof by registered
or certified mail or when delivered personally or sent by facsimile transmission
as follows:
(a) if to the Company, at its principal executive offices at the
time of the giving of such notice, or at such other place as the Company shall
have designated by notice as herein provided to the Management Investor,
Attention: Xxxxxxx Xxxxxx;
(b) if to the Management Investor, at the address of the
Management Investor as it appears in Annex A or at such other place as the
Management Investor shall have designated by notice as herein provided to the
Company;
(c) if to GEI, at its principal executive offices at the time
of the giving of such notice, or at such other place as GEI shall have
designated by notice as herein provided to the Company.
12. Specific Performance. Due to the fact that the securities of the
Company cannot be readily purchased or sold in the open market and for other
reasons, the parties will be irreparably damaged in the event that this
Agreement is not specifically enforced. In the event of a breach or threatened
breach of the terms, covenants and/or conditions of this Agreement by any of the
parties hereto, the other parties shall, in addition to all other remedies, be
entitled (without any bond or other security being required) to a temporary
and/or permanent injunction, without showing any actual damage or that monetary
damages would not provide an adequate remedy, and/or a decree for specific
performance, in accordance with the provisions hereof.
13. Miscellaneous.
(a) Except as provided in the last sentence of this paragraph,
this Agreement, the Employment Agreement and the Waiver executed by Xxxxxxx X.
Xxxxxx, dated January 27, 1998, constitutes the entire agreement of the parties
with respect to the subject matter hereof and may not be modified or amended
except by a written agreement signed by the Company, GEI and the Management
Investor. Anything in this Agreement to the contrary notwithstanding, any
modification or amendment of this Agreement by a written agreement signed by the
Management Investor shall be valid and binding upon any and all persons or
entities who may, at any time, have or claim any rights under or pursuant to
this Agreement in respect of Common Stock acquired hereunder is subject to, and
the Company and the Management Investor agree to be bound by, all of the terms
and conditions of this Agreement.
(b) No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature. Anything in
this Agreement to the contrary notwithstanding, any waiver, consent or other
instrument under or pursuant to this Agreement signed by, or binding upon, the
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Management Investor shall be valid and binding upon any and all persons or
entities (other than the Company) who may, at any time, have or claim any rights
under or pursuant to this Agreement in respect of the Common Stock acquired
hereunder.
(c) Except as otherwise expressly provided herein, this
Agreement shall be binding upon and inure to the benefit of the Company, its
successors and assigns and the Management Investor and the Management Investor's
heirs, personal representatives, successors and assigns; provided, however, that
nothing contained herein shall be construed as granting the Management Investor
the right to transfer any Common Stock acquired hereunder except in accordance
with this Agreement and any transferee shall hold such Common Stock having only
those rights and being subject to the restrictions provided for in this
Agreement.
(d) If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
(e) The provisions of this Agreement shall apply to all shares
of Common Stock acquired hereunder by the Management Investor (including the
Management Investor's Related Transferees and any Outside Parties).
(f) Except as set forth in Section 12, the provisions of
Section 7.7(b) of the Employment Agreement and the defined terms contained in
the Employment Agreement that are used in such provisions are incorporated
herein by reference as if such provision was set forth in full herein with such
adjustments and modifications necessary such that defined terms in the
Employment Agreement will have the corresponding meaning under this Agreement.
(g) The section headings contained herein are for the purposes
of convenience only and are not intended to define or limit the contents of said
sections.
(h) Each party hereto shall cooperate and shall take such
further action and shall execute and deliver such further documents as may be
reasonably requested by any other party in order to carry out the provisions and
purposes of this Agreement.
(i) The Management Investor represents that, if the Management
Investor is married, the Management Investor's spouse has signed the
Acknowledgment and Agreement of Spouse relating to the Management Investor at
the end of this Agreement.
(j) Words in the singular shall be read and construed as
though in the plural and words in the plural shall be read and construed as
though in the singular in all cases where they would so apply.
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(k) This Agreement may be executed in one or more counterparts,
all of which taken together shall be deemed one original.
(l) Except as it relates to provisions or agreements set forth
in the Employment Agreement which shall be governed by the provisions of Section
7.2 of the Employment Agreement, the Management Investor hereby irrevocably and
unconditionally consents to the jurisdiction of any Delaware State court or
federal court of the United States sitting in the State of Delaware in any
action or proceeding relating to this Agreement and consents to service of
process in connection therewith by the delivery of notice to such Management
Investor's address set forth in this Agreement.
(m) This Agreement shall be deemed to be a contract under the
laws of the State of Delaware and for all purposes shall be construed and
enforced in accordance with the internal laws of said state without regard to
the principles of conflicts of law.
14. GEI Distributions Exempt.
It is expressly understood and agreed that GEI may distribute
to its partners or equity participants, in accordance with the terms of its
limited partnership agreement, all or any part of the shares of the Company's
capital stock or other Company securities held by it (any such distribution, a
"GEI Distribution"). Notwithstanding anything to the contrary contained in this
Agreement, any GEI distribution shall not constitute a "sale," "transfer" or
"disposition" for any purpose under this Agreement and shall be exempt in all
respects from the terms and conditions of this Agreement. As an example, and
without limiting the generality of the foregoing, it is expressly understood and
agreed that a GEI Distribution shall not constitute a Tag-Along Sale for the
purposes of Section 9 hereof. Further, it is also expressly understood and
agreed that, following a GEI Distribution (i) the shares of the Company's
capital stock or other Company securities distributed to the partners or equity
participants of GEI shall in no way be subject to this Agreement and (ii) any
partner or equity participant of GEI which receives shares of the Company's
capital stock or other Company securities pursuant to a GEI Distribution shall
not be required or deemed to become a party to this Agreement or otherwise be
subject to this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Management
Stockholders Agreement as of the first date written above.
LIBERTY GROUP PUBLISHING, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
------------------------------------
Its: President
------------------------------------
GREEN EQUITY INVESTORS II, L.P.
By: Grand Avenue Capital Partners, L.P
By: Grand Avenue Capital Corporation,
its general partner
By: /s/ Xxxxxxx X. Annick
--------------------------------------
Name: Xxxxxxx X. Annick
------------------------------------
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx
20
Acknowledgment and Agreement of Spouse
The undersigned, being the spouse of the Management Investor listed on
Annex A hereto, hereby agrees to be bound by the provisions of this Agreement.
By: _______________________________
Name: _____________________________
21
Annex A
I. Name and Address II. Number of Shares
of Management Investor Subject to Agreement
================================================================================
Xxxxxxx X. Xxxxxx 3,200
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
A-1
