1
EXHIBIT 4.3D
EXECUTED FORM
CLASSIC COMMUNICATIONS, INC.
(formerly Classic Telecommunications Corp.)
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
This Amended and Restated Stockholders Agreement ("Agreement") is
entered into as of October 31, 1995, among Classic Communications, Inc., a
Delaware corporation (the "Company"), J. Xxxxxxx Xxxxxxx ("Xxxxxxx"), Xxxxxxx X.
Xxxxx ("Xxxxx"), Xxxxxx X. Seach ("Seach"), Xxxx Xxxxxxxxxx ("Xxxxxxxxxx"), and
Xxxxx X. Xxxxxxxx ("Xxxxxxxx"; Belisle, Smith, Seach, Xxxxxxxxxx, and Xxxxxxxx
are referred to collectively as "Management" and each individually as a "Member
of Management"), Austin Ventures, L.P., a Delaware limited partnership
("Austin"), Austin Ventures III-A, L.P., a Delaware limited partnership ("Austin
III-A"), Austin Ventures III-B, L.P., a Delaware limited partnership ("Austin
III-B"; Austin, Austin III-A and Austin III-B are collectively referred to as
"Austin Ventures"), BT Capital Partners, Inc., a Delaware corporation ("BT
Capital"), Texas Growth Fund, a trust fund created by the Constitution of the
State of Texas ("Growth Fund"), NationsBanc Capital Corp. ("NationsBanc"), a
Texas corporation, and The Chase Manhattan Bank, N.A. ("Chase"). (Austin, Austin
III-A, Austin III-B, BT Capital, Growth Fund, NationsBanc and Chase are referred
to collectively as the "Investors" and each individually as an "Investor."
Management and Investors are referred to collectively as "Stockholders" and each
individually as a "Stockholder.")
Recitals:
The Stockholders are holders of shares of Common Stock, Preferred
Stock, Management Options and Warrants (each as defined herein) constituting all
of the issued and outstanding capital stock of the Company or rights to acquire
the same. The parties deem it in the best interests of the Company to provide
for continuity in the management and ownership of the Company as provided in
this Agreement.
The parties hereto do hereby agree as follows:
A. DEFINITIONS
For the purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Affiliate" means with respect to any Person, a Person (other
than a Subsidiary) (1) which directly or indirectly controls, or is controlled
by, or is under common control with, such Person, (2) which owns 10% or more of
the equity interest of such Person, or (3) 10% or more of the voting stock (or
in the case of a Person which is not a corporation, 10% or more of the equity
interest) of which is owned by such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and
2
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"BT Investor" means any person affiliated with BT Capital
Partners, Inc.
"Business Day" means any day other than a Saturday, Sunday or
public holiday under the laws of the States of Texas and New York.
"CAI" means Classic Acquisition, Inc., a Delaware corporation
and wholly-owned subsidiary of Classic Cable.
"Cable Systems" means the cable television systems owned or
acquired by the Company and its Subsidiaries from time to time.
"Class C Stock" means the Class C Common Stock, $0.01 par
value per share, of Classic Communications, Inc.
"Classic Cable" means Classic Cable, Inc., a Delaware
corporation and wholly-owned subsidiary of the Company.
"Classic Telephone" means Classic Telephone, Inc., a Delaware
corporation and wholly-owned subsidiary of Classic Cable.
"Common Stock" means the Company's Voting Common Stock and
Nonvoting Common Stock.
"Company Subsidiaries" means Classic Cable, Classic Telephone,
CAI, Holdings, Ponca, each of the Holdings Subsidiaries and any other Person
that is or becomes a Subsidiary of the Company after the date hereof.
"Contractual Obligation" means, with respect to a Person, any
provision of any security issued by such Person, including provisions contained
in the articles or certificate of incorporation or bylaws of such Person, or of
any agreement, franchise, license, permit, undertaking, contract, indenture,
mortgage, deed of trust or other instrument or understanding to which such
Person is a party or by which it or any of its property is bound.
"Credit Agreement" means the Amended and Restated Credit
Agreement dated as of October 31, 1995 between Classic Cable, WTAC, the Lenders
named therein, and Chase Manhattan Bank, N.A., as Administrative Agent, as the
same shall be amended, restated, modified and supplemented (including, without
limitation, to increase the amount of credit available thereunder) and in effect
from time to time.
"Distribution of Assets" means, as applied to any Person, any
payment or other distribution, division or application, partial or complete,
voluntary or involuntary, by operation
-2-
3
of law or otherwise, of assets of such Person of any kind or character, whether
in cash, property or securities, to any creditor or creditors of the Company.
"GAAP" means generally accepted United States accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board that
are applicable to the circumstances as of the date of determination.
"Green Purchase Agreement" means the Stock Purchase Agreement
dated as of October 1, 1995, between Xxxxxxxxx Xxxxx and Classic Cable providing
for the purchase by Classic Cable of all shares of capital stock of WTAC held by
Xxxxxxxxx Xxxxx.
"Holdings" means Universal Cable Holdings, Inc., a Delaware
corporation and wholly-owned subsidiary of Classic Cable.
"Holdings Subsidiaries" means Universal Cable Communications
Inc., Universal Cable of Beaver, Oklahoma, Inc., and Universal Cable Midwest,
Inc., each of which is a Delaware corporation and a wholly-owned subsidiary of
Holdings, and Universal Cable Com, Inc., a Delaware corporation and a
wholly-owned subsidiary of Universal Cable Communications Inc.
"Investor Affiliate" means, as to any Investor, its general or
limited partners, stockholders or trust beneficiaries, or any partnership,
limited liability company, corporation or other Person that directly or
indirectly controls, is controlled by, or is under common control with such
Investor.
"Investor Stock" means all shares of Common Stock, Warrants
and Preferred Stock now owned or hereafter acquired by an Investor or any
successor of an Investor, including, without limitation, shares of Common Stock
issued upon exercise of Warrants and additional shares of Preferred Stock issued
pursuant to the terms of the Company's Certificate of Incorporation, and all
shares of Management/Investor Stock.
"Lien" means any security interest, mortgage, lien, adverse
claim, restriction or other encumbrance.
"Majority Investors" means the holders of at least 80% of the
outstanding shares of Common Stock issued to the Investors, provided, however,
that for purposes of this calculation, (i) all shares of Common Stock issuable
pursuant to the Warrants shall be deemed to be issued and outstanding, (ii) for
purposes of paragraph B.3, any Warrants acquired by Chase pursuant to the Stock
Purchase Agreement, or any Investor Stock acquired upon exercise of such
Warrants, shall be excluded and (iii) under no circumstances shall the
percentage vote to which the Warrants and Investor Stock referred to in the
foregoing clause (ii) shall be entitled be greater than 4.9% of the total Common
Stock and Warrants issued to the Investors.
-3-
4
"Management/Investor Stock" means the 2,500 shares of Voting
Common Stock issued to Xxxxxxx in exchange for the shares of Class C Stock
issued to him pursuant to the 1992 Purchase Agreement.
"Management Options" means the options held by Management
pursuant to the Company's 1995 Stock Option Plan. Holders of options have no
rights as stockholders until issuance of a stock certificate for shares covered
by such options.
"Nonvoting Common Stock" means the Company's Nonvoting Common
Stock, $0.01 par value per share.
"Organic Change" means (i) the sale, assignment, transfer,
pledge or other disposition by the Company of any of the capital stock of any
Company Subsidiary or the authorization or issuance by any Company Subsidiary of
any additional shares of stock of any class which results in a dilution of the
Company's ownership of such Company Subsidiary; (ii) any sale, lease or exchange
of all or substantially all of the property and assets of the Company or any
Company Subsidiary whether or not in the ordinary course of business and whether
directly or through the sale of stock of any Company Subsidiary or Company
Subsidiaries; (iii) the issuance by the Company of any capital stock except as
permitted in this Agreement and the Stock Purchase Agreement; or (iv) any merger
or consolidation to which the Company or any Company Subsidiary is a party other
than the merger of a wholly-owned Company Subsidiary into the Company or another
wholly-owned Company Subsidiary; provided, however, that (A) if the Majority
Investors consent to any transaction of the type described in the foregoing
clauses (i) through (iv), such transaction shall not be an "Organic Change"
within the meaning of this Agreement, and (B) the pledges of stock and assets of
the Company Subsidiaries pursuant to the Credit Agreement and the related
documents provided for therein, and the enforcement of the remedies provided for
therein, shall not constitute an "Organic Change".
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Ponca" means Ponca Holdings, Inc., a Delaware corporation and
wholly-owned subsidiary of Classic Cable.
"Preferred Stock" means the Company's 15% PIK Redeemable
Senior Preferred Stock, par value $0.01 per share, and the Company's 15% PIK
Redeemable Junior Preferred Stock, par value $.01 per share, as such Preferred
Stock may be amended from time to time.
"Preferred Stock Holders" means the holders of the Preferred
Stock.
"Purchase Agreements" means (i) the 1992 Purchase Agreement;
(ii) the purchase agreement for notes and common stock of Ponca/Universal
Holdings, Inc., dated as of June 18, 1993, as amended, among Ponca/Universal
Holdings, Inc., Xxxxxxx, Xxxxxx Ventures, BT Capital,
-4-
5
and Growth Fund; (iii) the investment agreement for preferred stock, common
stock and a warrant of Ponca/Universal Holdings, Inc., dated as of July 26,
1994, as amended, among Ponca/Universal Holdings, Inc. and NationsBanc; (iv) the
stock purchase agreement for common stock of Classic Communications, Inc., dated
as of May 5, 1995, among Classic Communications, Inc., Xxxxxxx, Xxxxxx Ventures,
BT Capital, Growth Fund and NationsBanc; and (v) the Stock Purchase Agreement.
"1992 Purchase Agreement" means the purchase agreement for
notes and common stock of Ponca/Universal Holdings, Inc., dated as of July 7,
1992, as amended, among Ponca/Universal Holdings, Inc., Xxxxxxx, Xxxxxx Ventures
and BT Capital.
"Requirement of Law" means, with respect to a Person, the
articles or certificate of incorporation and bylaws or other organization or
governing documents of such Person, and any law, treaty, rule, regulation,
right, privilege, qualification, license or franchise or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject or pertaining to any or all of the transactions
contemplated or referred to herein.
"Restricted Stock" means all shares of Common Stock and other
equity securities of the Company now owned or hereafter acquired by Management,
including without limitation, shares of Voting Common Stock issued upon exercise
of the Management Options, but does not include Management/Investor Stock.
"Stock Purchase Agreement" means the stock purchase agreement
for common stock, preferred stock and warrants, dated as of October 31, 1995,
among the Company, Xxxxxxx, Xxxxxx Ventures, BT Capital, Growth Fund,
NationsBanc and Chase.
"Subsidiary" means as to any Person (i) any corporation more
than 50% of the outstanding voting securities of which are owned by such Person
or such Person's Subsidiary, directly or indirectly, and (ii) a partnership,
limited liability company or other Person in which such Person or such Person's
Subsidiary holds a general partnership or other equity interest sufficient to
enable it to direct the management and policies thereof.
"Voting Common Stock" means the Company's Voting Common Stock,
$0.01 par value per share.
"WTAC" means WT Acquisition Corporation, a Delaware
corporation.
"WTAC Subsidiaries" means Television Enterprises, Inc., De-Cal
Cable, Inc., and Calco Construction Company, Inc., each a Texas corporation,
Transwestern Video, Inc., an Oklahoma corporation, and W.K. Communications,
Inc., a Kansas corporation, each a wholly-owned subsidiary of WTAC, and any
other Person that is or becomes a Subsidiary of WTAC after the date hereof.
-5-
6
"Warrants" means the warrants created in the Company's Common
Stock Purchase Warrant issued to (i) NationsBanc dated as of October 31, 1995,
to purchase 12,128 shares of Common Stock, as adjusted pursuant to the terms
thereof, (ii) NationsBanc dated as of October 31, 1995 to purchase 3,000 shares
of Common Stock, as adjusted pursuant to the terms thereof, (iii) BT Capital
dated as of October 31, 1995 to purchase 3,000 shares of Common Stock, as
adjusted pursuant to the terms thereof, and (iv) Chase dated as of October 31,
1995 to purchase 15,207 shares of Common Stock, as adjusted pursuant to the
terms thereof, and, in each case, any replacement or substitute warrants for all
or any portion thereof.
B. ELECTION OF DIRECTORS; RESTRICTIONS ON STOCK; SALE OF COMPANY.
B.1 Election of Directors; Quorum.
B.1(a) In any election of directors of the Company, the Stockholders
shall vote all shares of Common Stock of the Company owned or controlled by them
in favor of a Board of Directors comprising directors designated as follows:
(i) for so long as Xxxxxxx owns any Common Stock, one shall be
a director designated by Xxxxxxx;
(ii) for so long as Austin Ventures owns at least 10% of the
fully-diluted Common Stock, two shall be directors designated by Austin
Ventures;
(iii) for so long as BT Capital owns at least 10% of the
fully-diluted Common Stock, two shall be directors designated by BT
Capital;
(iv) for so long as Growth Fund owns at least 2.5% of the
fully-diluted Common Stock, one shall be a director designated by
Growth Fund; and
(v) for so long as NationsBanc owns at least 10% of the
fully-diluted Common Stock, two shall be directors designated by
NationsBanc.
In the event of any vacancy in the Board of Directors of the Company occurring
for any reason, each of the Stockholders covenants and agrees to vote all shares
of Common Stock owned or controlled by them and to otherwise use their best
efforts to fill the vacancy in such a manner that the Board of Directors of the
Company will include eight directors so designated. In the event that the number
of persons then comprising the entire Board of Directors of the Company is
proposed to be increased to a number in excess of eight, each of the
Stockholders covenants and agrees to vote all shares of Common Stock of the
Company owned or controlled by it in favor of additional person(s) as
director(s) jointly designated by the Investors and Xxxxxxx. The Company agrees
to use its best efforts to cause such designees to be elected to the Board of
Directors of the Company.
-6-
7
B.1(b) Notwithstanding the foregoing, the Board of Directors shall
initially comprise four members, as follows: (i) Xxxxxxx, as the designee of
Xxxxxxx, (ii) Xxxxxxx X. Xxxxxx, as the designee of Austin Ventures, (iii) Xxxxx
X. Xxxxxxxxx, as the designee of Growth Fund, and (iv) Xxxxxxx X. Xxxxxxx, as
the designee of NationsBanc. BT Capital, NationsBanc, and Austin Ventures shall
each be entitled at any time on or after the date hereof to designate additional
persons for election to fill the vacancies in the Board of Directors in
accordance with paragraph B.1(a) above.
B.1(c) The Company shall reimburse each director of the Company (or
person(s) designated by Austin Ventures, Growth Fund, BT Capital or NationsBanc
to attend any meeting of the Board of Directors if Austin Ventures, Growth Fund,
BT Capital or NationsBanc, as the case may be, has not exercised its right to
designate the number of persons which it is entitled to designate to serve as
directors of the Company pursuant to paragraph B.1(a) above; provided, that the
expenses of no more than two representatives of Austin Ventures, one
representative of Growth Fund, two representatives of BT Capital and two
representatives of NationsBanc, as directors or otherwise, shall be reimbursable
by the Company with respect to any meeting of the Board of Directors) who does
not receive a salary from the Company as an officer or employee for all
reasonable out-of-pocket expenses incurred by such director (or designated
attendee) in connection with the attendance by such director (or designated
attendee) at meetings of the Board of Directors of the Company.
B.1(d) The Board of Directors of each of the Company Subsidiaries is to
be constituted in the same manner as provided in paragraphs B.1(a) and B.1(b)
above in respect of the Company's Board of Directors and each Stockholder
covenants and agrees, if necessary, to vote its shares of capital stock in order
to cause the Boards of Directors of the Company and the Company Subsidiaries to
hold regular meetings at least six times during each fiscal year of the Company
and to meet at least once during each two calendar month period.
B.1(e) The Stockholders shall vote all shares of Common Stock owned or
controlled by them in favor of, and otherwise to use their best efforts to
cause, and the Company covenants and agrees to cause, the Bylaws and the
Certificate of Incorporation of the Company and each Company Subsidiary to
provide that (x) in order to constitute a quorum for a meeting of the Board of
Directors of the Company and each Company Subsidiary at least a majority of the
directors designated by the Investors (the "Majority Investor Directors") must
be present in person, (y) the provisions of the Bylaws and Certificate of
Incorporation reflecting the provisions of clause (x) above may be amended only
upon the vote of at least one director designated by Xxxxxxx (for so long as
Xxxxxxx is entitled to designate a director) and by the Majority Investor
Directors, and (z) the number of shares of authorized capital stock of the
Company shall be increased as necessary to assure that sufficient shares are
available for issuance upon exercise of the Warrants.
B.2 Provisions Applicable to Restricted Stock.
B.2(a) General Restrictions on Transfer.
-7-
8
(i) During the term of this Agreement, none of the Restricted
Stock now owned or hereafter acquired by Management may be sold, assigned,
transferred, pledged, encumbered or otherwise hypothecated (each a "transfer")
except in accordance with the provisions of this Agreement.
(ii) Any attempted transfer of Restricted Stock other than in
accordance with this Agreement (other than an involuntary transfer by operation
of law) shall be null and void and the Company shall refuse to recognize any
such transfer and shall not reflect on its records any change in record
ownership of shares of Restricted Stock pursuant to any such transfer.
(iii) Notwithstanding anything herein to the contrary, but
subject to Section B.4 hereof, a Member of Management may transfer any or all of
the Restricted Stock beneficially owned by him (x) to his spouse or children and
(y) to trusts established for the benefit of his spouse or children, in each
event free of the restrictions and requirements of paragraphs B.2(b) and B.2(c)
hereof, provided that in connection with the transfer, the transferee grants to
such transferor an irrevocable proxy coupled with an interest to vote all of the
shares of Restricted Stock so transferred, and provided further that the
provisions of this Agreement, including, without limitation, paragraphs B.2(b),
B.2(c) and B.2(d) and Section B.5, shall be applicable to the shares of
Restricted Stock so transferred.
B.2(b) Right of First Refusal.
(i) Subject to paragraph B.2(c) hereof, whenever and as often
as a Member of Management shall desire to sell any shares of Restricted Stock
pursuant to a bona fide offer for the purchase thereof in a private transaction,
he shall be deemed an "Offeror" for purposes of paragraphs B.2(b) and B.2(c) and
shall give notice (the "Notice") to each Investor (each an "Investor Offeree"
and collectively the "Investor Offerees") in writing to such effect, enclosing a
copy of such bona fide offer (it being agreed that Offeror shall cause any such
offer to be reduced to writing) and specifying the number of shares of
Restricted Stock which Offeror desires to sell, the name of the person or
persons to whom Offeror desires to make such sale and the dollar value of the
consideration which has been offered in connection therewith. Upon receipt of
the Notice, the Investor Offerees shall have the first right and option to
purchase all of the shares proposed to be sold, pro rata according to their
respective holdings of Common Stock (determined on a fully-diluted basis), for
cash at a purchase price equal to the dollar value of such consideration (in the
event such consideration includes non-cash consideration, the dollar value of
such non-cash consideration shall be determined by the Company's Board of
Directors, whose good faith determination shall be conclusive, provided that
Offeror shall not participate in such determination), exercisable for a period
of 20 days from the date of receipt of the Notice. Failure of any Investor
Offeree to respond to the Notice within the 20-day period shall be deemed to
constitute a notification to Offeror of such Investor Offeree's decision not to
exercise the first right and option to purchase the shares under this paragraph
B.2(b)(i).
(ii) In such event (and in the event that an Investor Offeree
shall notify Offeror of such Investor Offeree's decision not to exercise its
first right and option) Offeror shall give
-8-
9
written notice to each of the other Investor Offerees who has agreed to purchase
his or its pro rata share of the shares proposed to be transferred and each such
Investor Offeree shall have the right, exercisable for a period of five days
from the date of receipt of such notice, to purchase the remaining shares, for
cash at a purchase price equal to the dollar value of the consideration offered
for such shares as set forth in the Notice, pro rata according to such Investor
Offeree's holdings of Common Stock (determined on a fully-diluted basis). This
process shall be repeated until one or more of such Investor Offerees has
agreed, or none of such Investor Offerees has agreed, to accept the offer with
respect to all of the shares proposed to be transferred. Failure of any such
Investor Offeree to respond to such notice within the five-day period shall be
deemed to constitute a notification to Offeror of such Investor Offeree's
decision not to exercise the first right and option to purchase the remaining
shares under this paragraph B.2(b)(ii).
(iii) In the event that all of the shares proposed to be
transferred are not purchased by the Investor Offerees, Offeror shall give
Notice as specified above to each Member of Management, excluding himself (each
a "Management Offeree" and collectively the "Management Offerees"), specifying
the remaining number of shares of Restricted Stock which Offeror desires to
sell. Upon receipt of the Notice, the Management Offerees shall have the right
and option to purchase all of the shares proposed to be sold to them, pro rata
according to their respective holdings of Common Stock (determined on a
fully-diluted basis), for cash at a purchase price equal to the dollar value of
the consideration offered for such shares as set forth in the Notice,
exercisable for a period of 20 days from the date of receipt of the Notice.
Failure of any Management Offeree to respond to the Notice within the 20-day
period shall be deemed to constitute a notification to Offeror of such
Management Offeree's decision not to exercise the first right and option to
purchase the shares under this paragraph B.2(b)(iii).
(iv) In such event (and in the event that a Management Offeree
shall notify Offeror of such Management Offeree's decision not to exercise its
right and option) Offeror shall give written notice to each of the other
Management Offerees who has agreed to purchase his pro rata share of the shares
proposed to be transferred and each such Management Offeree shall have the
right, exercisable for a period of five days from the date of receipt of such
notice, to purchase the remaining shares, for cash at a purchase price equal to
the dollar value of the consideration offered for such shares as set forth in
the Notice, pro rata according to such Management Offeree's holdings of Common
Stock (determined on a fully-diluted basis). This process shall be repeated
until one or more of such Management Offerees has agreed, or none of such
Management Offerees has agreed, to accept the offer with respect to all of the
shares proposed to be transferred. Failure of any such Management Offeree to
respond to such notice within the five-day period shall be deemed to constitute
a notification to Offeror of such Management Offeree's decision not to exercise
the first right and option to purchase the remaining shares under this paragraph
B.2(b)(iv).
(v) The Investor Offerees and Management Offerees (together,
the "Offerees") may exercise the right and option provided in paragraphs
B.2(b)(i) through (iv) by giving written notice to Offeror not later than the
close of business on the date of expiration of such right and option (or if such
date is not a Business Day, then on or before the close of business on the next
-9-
10
succeeding Business Day), advising of the election to exercise the same and the
date (not later than five days from the date of expiration of all applicable
rights and options to purchase shares under this paragraph B.2(b)) upon which
payment of the purchase price for the shares shall be made. Offeror shall
deliver to the Offeree(s) at the Company's principal office, on the payment date
specified in such notice, the certificate or certificates representing such
shares, properly endorsed for transfer, against payment of the purchase price
therefor by the Offeree(s) in immediately available funds.
(vi) In the event that all of the shares proposed to be
transferred are not purchased by the Offerees hereunder, Offeror shall then
offer the Company the right and option to purchase the balance of the shares for
cash at the same purchase price and on the same terms offered to the Offerees.
Failure of the Company to respond to such notice within a 10-day period shall be
deemed to constitute a notification to Offeror of the Company's decision not to
exercise the right and option to purchase such shares under this paragraph
B.2(b)(vi).
(vii) The Company may exercise the right and option provided
in paragraph B.2(b)(vi) by giving written notice to Offeror not later than the
close of business on the date of expiration of such right and option (or if such
date is not a Business Day, then on or before the close of business on the next
succeeding Business Day), advising of the election to exercise the same and the
date (not later than five days from the date of such notice) upon which payment
of the purchase price for the shares shall be made. Offeror shall deliver to the
Company's principal office, on the payment date specified in such notice, the
certificate or certificates representing the shares being purchased by the
Company, properly endorsed for transfer, against payment of the purchase price
therefor by the Company in immediately available funds.
(viii) If all the shares proposed to be transferred are not
purchased by the Offerees and the Company in accordance with this paragraph
B.2(b), Offeror (A) shall not be required to sell any of the shares proposed to
be transferred to the Offerees or to the Company, and (B) may, during the 60-day
period commencing on the expiration of the rights and options provided for in
this Section B.2, sell all (but not less than all) of such shares to the
transferee named in the Notice for a consideration equal to or greater than the
consideration specified in the Notice, free of the restrictions contained in
paragraph B.2(b) of this Agreement (but subject to the other terms and
conditions hereof, including, without limitation, paragraph B.2(c)). In
addition, in the event that all of the shares proposed to be transferred are not
purchased by the Offerees and the Company in accordance with this paragraph
B.2(b), each Offeree shall be entitled, at its option within seven Business Days
of being notified that such shares are not to be purchased, to exercise the
rights specified in paragraph B.2(c) below.
(ix) Notwithstanding the foregoing, the Investors may
designate their respective Investor Affiliates (or any of them) to exercise such
Investor's right and option pursuant to this paragraph B.2(b) to purchase any or
all of the shares proposed to be transferred by Offeror.
B.2(c) Come-Along. Whenever and as often as Offeror shall receive
from a prospective purchaser a bona fide offer to purchase any shares of
Restricted Stock which Offeror wishes to
-10-
11
accept, the Offerees shall have the right, at each Offeree's option, either to
exercise such Person's rights under paragraph B.2(b) hereof or to require
Offeror to arrange for the sale, to the prospective purchaser, on terms and
conditions at least as favorable to the Offeree as the terms and conditions set
out in the offer received by Offeror, of the number of the Offeree's shares of
Common Stock and Warrants which bears the same proportion to the number of
shares of Common Stock and Warrants (determined on a fully-diluted basis) owned
by such Offeree as the number of shares of Common Stock and Warrants being sold
by Offeror bears to the total number of shares of Common Stock and Warrants
(determined on a fully-diluted basis) owned by the Offeror, to the prospective
purchaser on terms and conditions at least as favorable to the Offeree as the
terms and conditions set out in the offer received by Offeror. If the
prospective purchaser will not purchase all the shares of Common Stock and
Warrants which Offeror and the Offerees wish to sell pursuant to this paragraph
B.2(c), the number of shares of Common Stock and shares issuable upon exercise
of the Warrants which Offeror and the Offerees shall be permitted to sell to
such prospective purchaser shall be a number of shares equal to the number of
shares which the prospective purchaser desires to purchase times a fraction, the
numerator of which is the number of shares of Common Stock (determined on a
fully-diluted basis) beneficially owned by Offeror or each selling Offeree, as
appropriate, and the denominator of which is the aggregate number of shares of
Common Stock (determined on a fully-diluted basis) beneficially owned by Offeror
and the selling Offerees. An Offeree may exercise his or its right under this
paragraph B.2(c) by written notice given within 10 days after the date on which
such person received the Notice required by paragraphs B.2(b)(i) and (iii)
above.
B.2(d) Purchase of Restricted Stock and Management/Investor Stock.
(i) In the event that a Member of Management (A) commits a
material breach of his duty of loyalty to the Company or any Company Subsidiary,
(B) is found guilty of a criminal offense that has a material adverse effect
upon the business or reputation of the Company or any Company Subsidiary, (C) is
terminated as an employee of the Company for willful refusal to perform his
assigned duties, which willful refusal has had, or if continued, could
reasonably be expected to have, a material adverse effect on the Company or the
Company Subsidiaries or their respective businesses or prospects, and which
willful refusal has continued after such Member of Management has received at
least two written warnings specifically advising him of his shortcomings and
providing him with an opportunity to resume performance in accordance with his
assigned duties, or (D) commits a material breach of his covenants contained in
Section B.2 of this Agreement, the Company, at its option, may purchase all or
any portion of the Restricted Stock or Management/Investor Stock held by him,
for a cash purchase price of $1 per share of Restricted Stock and $100 per share
of Management/Investor Stock.
(ii) In the event that a Member of Management resigns from the
Company or any Company Subsidiary or refuses to be employed by the Company or
any other Company Subsidiary, the Company, at its option, may (A) purchase all
or any portion of the shares of Restricted Stock and Management/Investor Stock
owned by the Member of Management, for cash at a purchase price for the
Restricted Stock equal to the greater of (x) $1.00 per share or (y) the Fair
Market Value (as defined below) of the shares of Restricted Stock, and a
purchase price
-11-
12
for the Management/Investor Stock equal to the greater of (x) $100 per share or
(y) the Fair Market Value of the shares of Management/Investor Stock.
(iii) Within 60 days of the date upon which the Company first
determines that an event entitling the Company to purchase Restricted Stock or
Management/Investor Stock pursuant to paragraph B.2(d)(i) or B.2(d)(ii) has
occurred, the Company shall give the affected Member of Management written
notice of such occurrence, indicating the number of shares of Restricted Stock
and Management/Investor Stock, if any, which the Company elects to purchase (the
"Repurchase Notice"). Upon receipt of the Repurchase Notice, the affected Member
of Management shall be obligated to sell such Restricted Stock and
Management/Investor Stock to the Company. The purchase of Restricted Stock and
Management/Investor Stock pursuant to this paragraph B.2(d) shall be consummated
within 90 days of the date of the Repurchase Notice or, if later, the fifteenth
day after receipt of the Appraised Valuation in the event the Restricted Stock
or Management Investor Stock is being purchased at Fair Market Value; provided,
however, that in the event the Restricted Stock or Management/Investor Stock is
being purchased at Fair Market Value based on an Appraised Valuation (as defined
below), the Company may elect not to purchase such Restricted Stock and
Management/Investor Stock by delivering a notice to such effect to the affected
Member of Management within ten days following the receipt of the Appraised
Valuation.
(iv) In the event the Company elects not to repurchase all or
any portion of the Restricted Stock and Management/Investor Stock, it shall
deliver written notice (the "Notice") to each Investor (the "Investor Offerees")
of the occurrence of an event under paragraph B.2(d)(i) or B.2(d)(ii) and of the
number of shares of Restricted Stock and Management/Investor Stock owned by the
affected Member of Management which will not be purchased by the Company. Upon
receipt of the Notice, the Investor Offerees shall have the right and option to
purchase all of the shares of Restricted Stock and Management/Investor Stock
owned by the affected Member of Management which will not be purchased by the
Company, pro rata according to their respective holdings of Common Stock
(determined on a fully-diluted basis), for cash at the purchase prices
established in paragraph B.2(d)(i) or B.2(d)(ii), respectively, exercisable for
a period of 20 days from the date of receipt of the Notice. Failure of any
Investor Offeree to respond to the Notice within the 20-day period shall be
deemed to constitute a notification to the Company of such Investor Offeree's
decision not to exercise the first right and option to purchase the shares under
this paragraph B.2(d)(iv).
(v) In the event that any Investor Offerees fail to respond to
the Notice under paragraph B.2(d)(iv) in a timely manner (and in the event that
an Investor Offeree shall notify the Company of such Offeree's decision not to
exercise its right and option), the Company shall give written notice to each of
the other Investor Offerees who has agreed to purchase his or its pro rata share
of the shares of Restricted Stock and Management/Investor Stock owned by the
affected Member of Management and each such Investor Offeree shall have the
right, exercisable for a period of five business days from the date of receipt
of such notice, to purchase the remaining shares, for cash at the purchase
prices established in paragraphs B.2(d)(i) or B.2(d)(ii), respectively, pro rata
according to such Investor Offeree's holdings of Common Stock
-12-
13
(determined on a fully-diluted basis). This process shall be repeated until one
or more of such Investor Offerees has agreed, or none of such Investor Offerees
has agreed, to purchase all of the shares of Restricted Stock and
Management/Investor Stock owned by the affected Member of Management. Failure of
any such Investor Offeree to respond to such notice within the five-day period
shall be deemed to constitute a notification to the Company of such Investor
Offeree's decision not to exercise the first right and option to purchase the
remaining shares under this paragraph.
(vi) In the event that all of the shares proposed to be
transferred are not purchased by the Investor Offerees, the Company shall give
Notice as specified above to each Member of Management, excluding the affected
Member of Management (each a "Management Offeree" and collectively the
"Management Offerees"), specifying the number of shares of Restricted Stock and
Management/Investor Stock which will not be purchased by the Company and the
Investor Offerees. Upon receipt of the Notice, the Management Offerees shall
have the right and option to purchase all of the remaining shares, pro rata
according to their respective holdings of Common Stock (determined on a
fully-diluted basis), for cash at the purchase prices established in paragraphs
B.2(d)(i) or B.2(d)(ii), respectively, exercisable for a period of 20 days from
the date of receipt of the Notice. Failure of any Management Offeree to respond
to the Notice within the 20-day period shall be deemed to constitute a
notification to the Company of such Management Offeree's decision not to
exercise the right and option to purchase the shares under this paragraph
B.2(d)(vi).
(vii) In the event that any Management Offerees fail to
respond to the Notice under paragraph B.2(d)(vi) in a timely manner (and in the
event that a Management Offeree shall notify the Company of such Management
Offeree's decision not to exercise its right and option) the Company shall give
written notice to each of the other Management Offerees who has agreed to
purchase his or its pro rata share of the shares owned by the affected Member of
Management and each such Management Offeree shall have the right, exercisable
for a period of five days from the date of receipt of such notice, to purchase
the remaining shares, for cash at the purchase prices established in paragraphs
B.2(d)(i) or B.2(d)(ii), respectively, pro rata according to such Management
Offeree's holdings of Common Stock (determined on a fully-diluted basis). This
process shall be repeated until one or more of such Management Offerees has
agreed, or none of such Management Offerees has agreed, to purchase all of the
shares of stock owned by the affected Member of Management. Failure of any such
Management Offeree to respond to such notice within the five-day period shall be
deemed to constitute a notification to the Company of such Management Offeree's
decision not to exercise the right and option to purchase the remaining shares
under this paragraph.
(viii) The Company shall then notify the affected Member of
Management of the number of shares of Restricted Stock and Management/Investor
Stock which the Investors, other Members of Management and the Company have
elected to purchase, and the Member of Management shall be obligated to sell
such Restricted Stock or Management/Investor Stock to them. The purchase of
Restricted Stock or Management/Investor Stock pursuant to this paragraph B.2(d)
shall be consummated within 90 days of the date of such notice or, if later, the
-13-
14
fifteenth day after receipt of the Appraised Valuation (as defined below) by the
Company; provided, however, that in the event the Restricted Stock or
Management/Investor Stock is being purchased at Fair Market Value based on an
Appraised Valuation, any purchaser who is an Investor or Member of Management
may elect not to purchase such Restricted Stock or Management/Investor Stock by
delivering a notice to such effect to the Company within ten days following its
receipt of the Appraised Valuation.
(ix) For purposes of this paragraph B.2(d), "Fair Market
Value" of any Restricted Stock or Management/Investor Stock means the value of
such Restricted Stock or Management/Investor Stock determined in accordance with
the following formula:
(A) Within 10 days after the Company determines that an
event giving rise to an option to repurchase shares of Restricted Stock
or Management/Investor Stock pursuant to this paragraph B.2(d) has
occurred, the Company shall notify the affected Member of Management in
writing of the Company's valuation of such Restricted Stock or
Management/Investor Stock (the "Company's Valuation"). If such Member
of Management does not object to the Company's Valuation within 10 days
following receipt thereof, "Fair Market Value" means the Company's
Valuation.
(B) If such Member of Management objects to the Company's
Valuation, he shall so notify the Company, stating his proposed
valuation of the Restricted Stock or Management/Investor Stock. If the
Company and such Member of Management then agree on a valuation (an
"Agreed Valuation") within 10 days following the Company's receipt of
such notice from such Member of Management, then "Fair Market Value"
means the Agreed Valuation.
(C) If within 10 days following receipt by the Company of
such notice from such Member of Management, no Agreed Valuation has
been reached, then "Fair Market Value" shall be the amount determined
by Xxxxxxx & Associates to be the value of the Restricted Stock or
Management/Investor Stock, based upon its independent review and
valuation of the Company (the "Appraised Valuation"). The Appraised
Valuation shall establish a valuation for the shares without giving
effect to whether the Restricted Stock or Management/Investor Stock
comprises only a minority interest in the equity of the Company. The
Company shall notify Xxxxxxx & Associates of the need for a valuation
pursuant to this paragraph B.2(d)(ix)(C) within 10 days after such need
is determined. Xxxxxxx & Associates shall complete its valuation and
deliver its report to the Company and to such Member of Management
within 45 days following its notification of the need for a valuation.
The report of Xxxxxxx & Associates shall state in detail the basis for
its valuation and shall be conclusive and binding on the Company and
such Member of Management.
-14-
15
(D) The fee charged by Xxxxxxx & Associates for
establishing the Appraised Valuation shall be paid 1/2 by the Company
and 1/2 by such Member of Management.
B.2(e) Recovery of Purchase Price under Green Purchase Agreement. In
order to provide that the purchase price of the shares of capital stock of WTAC
purchased by Classic Cable pursuant to the Green Purchase Agreement shall be
borne by the Members of Management, it is agreed that, notwithstanding any
provision to the contrary in this Agreement, in the Certificate of Incorporation
of the Company, or in any other document or
instrument, all amounts payable with respect to capital stock of the Company
issued pursuant to the Management Options, whether as dividends, as a return of
capital, upon liquidation, or otherwise, shall be paid first to the holders of
Investor Stock, ratably in accordance with the number of shares of Investor
Stock held by them, until the holders of Investor Stock shall have received, in
the aggregate, $600,000. Thereafter, all amounts payable in respect of such
shares of capital stock of the Company shall be paid in accordance with the
Certificate of Incorporation of the Company.
B.3 Provisions Applicable to Investor Stock.
B.3(a) Warrants. In applying the provisions of this Section B.3, the
Common Stock issuable upon exercise of the Warrants shall be deemed to be issued
and outstanding and owned of record by the registered holder of the Warrants.
Without limiting the foregoing, a transfer of Warrants shall be treated as a
transfer of the Common Stock issuable upon exercise thereof and shall be subject
to the restrictions set forth in this Section B.3.
B.3(b) General Restrictions on Transfer.
(i) None of the Investor Stock now owned or hereafter acquired
by any Stockholder may be transferred except in accordance with the provisions
of this Agreement.
(ii) Any attempted transfer of Investor Stock not in compliance
with this Agreement (other than an involuntary transfer by operation of law)
shall be null and void and the Company shall refuse to recognize such transfer
and shall not reflect on its records any change in record ownership of shares of
Investor Stock pursuant to any such transfer.
(iii) Notwithstanding anything herein to the contrary, subject
to Section B.4 hereof, the following transfers of Investor Stock may be made
free of the restrictions and requirements of this Section B.3: (A) an Investor
or any subsequent holder of Investor Stock may transfer any or all of its
Investor Stock to any of its Investor Affiliates, (B) BT Capital may grant
participation in its Investor Stock to any BT Investor, (C) any Investor may
transfer or grant participation in shares of a particular class of Investor
Stock to any other holder of the same class of Investor Stock, and (D) a
transfer by a holder of Management/Investor Stock to the Persons and on the
terms set forth in paragraph B.2(a)(iii).
-15-
16
B.3(c) Right of First Refusal.
(i) Subject to paragraph B.3(d) hereof, whenever and as often
as a holder of Investor Stock (the "Selling Holder") shall desire to sell any
shares of Investor Stock pursuant to a bona fide offer for the purchase thereof
in a private transaction, he shall give notice (the "Notice") to each other
holder of Investor Stock (each a "Non-Selling Holder" and collectively the
"Non-Selling Holders") in writing to such effect, enclosing a copy of such bona
fide offer (it being agreed that Selling Holder shall cause any such offer to be
reduced to writing) and specifying the number of shares of Investor Stock which
Selling Holder desires to sell, the name of the person or persons to whom
Selling Holder desires to make such sale and the dollar value of the
consideration which has been offered in connection therewith. Upon receipt of
the Notice, the Non-Selling Holders shall have the first right and option to
purchase all of the shares proposed to be sold, pro rata according to their
respective holdings of Investor Stock (determined on a fully-diluted basis), for
cash at a purchase price equal to the dollar value of such consideration (in the
event such consideration includes non-cash consideration, the dollar value of
such non-cash consideration shall be determined by the Company's Board of
Directors, whose good faith determination shall be conclusive, provided that
Selling Holder shall not participate in such determination), exercisable for a
period of 40 days from the date of receipt of the Notice. Failure of any
Non-Selling Holder to respond to the Notice within the 40-day period shall be
deemed to constitute a notification to Selling Holder of such Non-Selling
Holder's decision not to exercise the first right and option to purchase the
shares under this paragraph B.3(c)(i).
(ii) In such event (and in the event that a Non-Selling Holder
shall notify Selling Holder of such Non-Selling Holder's decision not to
exercise its first right and option) Selling Holder shall give written notice to
each of the other Non-Selling Holders who has agreed to purchase his or its pro
rata share of the shares proposed to be transferred and each such Non-Selling
Holder shall have the right, exercisable for a period of five days from the date
of receipt of such notice, to purchase the remaining shares, for cash at a
purchase price equal to the dollar value of the consideration offered for such
shares as set forth in the Notice, pro rata according to such Non-Selling
Holder's holdings of Investor Stock (determined on a fully-diluted basis). This
process shall be repeated until one or more of such Non-Selling Holders has
agreed, or none of such Non-Selling Holders has agreed, to accept the offer with
respect to all of the shares proposed to be transferred. Failure of any such
Non-Selling Holder to respond to such notice within the five-day period shall be
deemed to constitute a notification to Selling Holder of such Non-Selling
Holder's decision not to exercise the first right and option to purchase the
remaining shares under this paragraph B.3(c)(ii).
(iii) In the event that all of the shares proposed to be
transferred are not purchased by the Non-Selling Holders, Selling Holder shall
give Notice as specified above to each Member of Management (each a "Management
Offeree" and collectively the "Management Offerees"), specifying the remaining
number of shares of Investor Stock which Selling Holder desires to sell. Upon
receipt of the Notice, the Management Offerees shall have the right and option
to purchase all of the shares proposed to be sold to them, pro rata according to
their respective holdings of Common Stock (determined on a fully-diluted basis),
for cash at a purchase price equal to the
-16-
17
dollar value of the consideration offered for such shares as set forth in the
Notice, exercisable for a period of 20 days from the date of receipt of the
Notice. Failure of any Management Offeree to respond to the Notice within the
20-day period shall be deemed to constitute a notification to Selling Holder of
such Management Offeree's decision not to exercise the right and option to
purchase the shares under this paragraph B.3(c)(iii).
(iv) In such event (and in the event that a Management Offeree
shall notify Selling Holder of such Management Offeree's decision not to
exercise its first right and option) Selling Holder shall give written notice to
each of the other Management Offerees who has agreed to purchase his or its pro
rata share of the shares proposed to be transferred and each such Management
Offeree shall have the right, exercisable for a period of five days from the
date of receipt of such notice, to purchase the remaining shares, for cash at a
purchase price equal to the dollar value of the consideration offered for such
shares as set forth in the Notice, pro rata according to such Management
Offeree's holdings of Common Stock (determined on a fully-diluted basis). This
process shall be repeated until one or more of such Management Offerees has
agreed, or none of such Management Offerees has agreed, to accept the offer with
respect to all of the shares proposed to be transferred. Failure of any such
Management Offeree to respond to such notice within the five-day period shall be
deemed to constitute a notification to Selling Holder of such Management
Offeree's decision not to exercise the right and option to purchase the
remaining shares under this paragraph B.3(c)(iv).
(v) The Non-Selling Holders and Management Offerees (together,
the "Offerees") may exercise the right and option provided in paragraphs
B.3(c)(i) through (iv) by giving written notice to Selling Holder not later than
the close of business on the date of expiration of such right and option (or if
such date is not a Business Day, then on or before the close of business on the
next succeeding Business Day), advising of the election to exercise the same and
the date (not later than five days from the date of expiration of all applicable
rights and options to purchase shares under this paragraph B.3(c)) upon which
payment of the purchase price for the shares shall be made. Selling Holder shall
deliver to the Offeree(s) at the Company's principal office, on the payment date
specified in such notice, the certificate or certificates representing such
shares, properly endorsed for transfer, against payment of the purchase price
therefor by the Offeree(s) in immediately available funds.
(vi) In the event that all of the shares proposed to be
transferred are not purchased by the Non-Selling Holders and the Management
Offerees hereunder, the Selling Holder shall then offer the Company the right
and option to purchase the balance of the shares for cash at the same purchase
price and on the same terms offered to the Non-Selling Holders and the
Management Offerees. Failure of the Company to respond to such notice within a
15-day period shall be deemed to constitute a notification to the Selling Holder
of the Company's decision not to exercise the right and option to purchase such
shares under this paragraph B.3(c)(vi).
(vii) The Company may exercise the right and option provided
in paragraph B.3(c)(vi) by giving written notice to the Selling Holder not later
than the close of business on the date of expiration of such right and option
(or if such date is not a Business Day, then on or
-17-
18
before the close of business on the next succeeding Business Day), advising of
the election to exercise the same and the date (not later than five days from
the date of such notice) upon which payment of the purchase price for the shares
shall be made. The Selling Holder shall deliver to the Company's principal
office, on the payment date specified in such notice, the certificate or
certificates representing the shares being purchased by the Company, properly
endorsed for transfer, against payment of the purchase price therefor by the
Company in immediately available funds.
(viii) If all the shares proposed to be transferred are not
purchased by the Non-Selling Holders, the Management Offerees and the Company in
accordance with this paragraph B.3(c), the Selling Holder (A) shall not be
required to sell any of the shares proposed to be transferred to the Non-Selling
Holders, the Management Offerees or the Company, and (B) may, during the 60-day
period commencing on the expiration of the rights and options provided for in
this Section B.3, sell all (but not less than all) of such shares to the
transferee named in the Notice for a consideration equal to or greater than the
consideration specified in the Notice, free of the restrictions contained in
this paragraph B.3(c) (but subject to the other terms and conditions hereof
including, without limitation, paragraph B.3(d)). In addition, in the event that
all of the shares proposed to be transferred are not purchased by the Offerees
and the Company in accordance with this paragraph B.3(c), each Offeree shall be
entitled, at its option within seven Business Days of being notified that such
shares are not to be purchased, to exercise the rights specified in paragraph
B.3(d) below.
(ix) Notwithstanding the foregoing, the holders of Investor
Stock may designate its respective Investor Affiliates (or any of them) to
exercise such Investor's right and option pursuant to this paragraph B.3(c) to
purchase any or all of the shares proposed to be transferred by the Selling
Holder.
B.3(d) Come-Along. Whenever and as often as the Selling Holder (except
for NationsBanc and BT Capital, with respect to their Preferred Stock only)
shall receive from a prospective purchaser a bona fide offer to purchase any
shares of Investor Stock which such Selling Holder wishes to accept, the
Non-Selling Holders (except for NationsBanc and BT Capital with respect to their
Preferred Stock only) shall have the right, at each Non-Selling Holder's option,
either to exercise such Person's rights under paragraph B.3(c) hereof or to
require the Selling Holder to arrange for the sale, to the prospective
purchaser, on terms and conditions at least as favorable to such Non-Selling
Holder as the terms and conditions set out in the offer received by the Selling
Holder, of the number of the Non-Selling Holder's shares of Investor Stock which
bears the same proportion to the number of shares of Investor Stock owned by
such Non-Selling Holder as the number of shares of Investor Stock sold by the
Selling Holder bears to the total number of shares of Investor Stock owned by
such Selling Holder. If the prospective purchaser will not purchase all the
shares of Investor Stock which the Selling Holder and the Non-Selling Holders
wish to sell pursuant to this paragraph B.3(d), the number of shares of Investor
Stock which the Selling Holder and the Non-Selling Holders shall be permitted to
sell to such prospective purchaser shall be a number of shares equal to the
number of shares which the prospective purchaser desires to purchase times a
fraction, the numerator of which is the
-18-
19
number of shares of Investor Stock beneficially owned by the Selling Holder or
each other selling Non-Selling Holder, as appropriate, and the denominator of
which is the aggregate number of shares of Investor Stock beneficially owned by
the Selling Holder and the Non-Selling Holders who elect to participate in such
sale. A Non- Selling Holder may exercise his or its right under this paragraph
B.3(d) by written notice given within 10 days after the date on which such
person received the Notice required by paragraph B.3(c)(i) above. For purposes
of this paragraph B.3(d) only, the term "Investor Stock" shall be deemed to
exclude Preferred Stock.
B.4 Purchasers or Transferees of Capital Stock. Except as otherwise
specifically provided herein, any Person who shall acquire (voluntarily or
involuntarily, by operation of law or otherwise) any shares of Common Stock,
Warrants or Preferred Stock shall be bound by all the terms and conditions of
this Agreement to the same extent as the parties hereto, and, prior to
registration of the transfer of any such securities on the books of the Company,
any purchaser or other transferee shall execute an agreement with the parties
hereto agreeing to be bound hereby.
B.5 Sale of the Company.
B.5(a) Definition. The term "Sale of the Company," as used in this
Agreement, means either (i) a sale of all or substantially all of the assets, or
all or substantially all of the capital stock, of (A) the Company, or one or
more of the Company Subsidiaries, or (B) WTAC or one or more of the WTAC
Subsidiaries, in one or more transactions for cash or freely salable securities
and a subsequent liquidation of the Company or WTAC in which their respective
stockholders receive liquidating distributions of such proceeds of sale after
payment or provision for the valid debts and liabilities of the Company or WTAC,
as the case may be, (ii) a merger or consolidation of (A) the Company or one or
more of the Company Subsidiaries, or (B) WTAC or one or more of the WTAC
Subsidiaries, with or into one or more corporations, limited liability companies
or partnerships in which (x) the Company or it Subsidiaries, or (y) WTAC or the
WTAC Subsidiaries receive cash or freely salable securities for all of its or
their assets, as the case may be, and a subsequent liquidation of (A) the
Company or one or more of its Subsidiaries, or (B) WTAC or one or more of its
Subsidiaries, in which the stockholders of the Company or WTAC, as the case may
be, receive liquidating distributions of such proceeds of sale, merger or
consolidation after payment or provision for the valid debts and liabilities of
the Company or WTAC, as the case may be, or (iii) a merger or consolidation of
the Company with or into another corporation, limited liability company or a
partnership in which the Stockholders receive cash or marketable securities for
all of their stock of the Company.
B.5(b) Stockholders' Right to Cause a Sale. The Majority Investors
shall be entitled at any time by written notice to the Company and each other
Stockholder to direct the Company to cause a Sale of the Company. Upon receipt
of such notice, the Company shall, at the request of the Majority Investors (i)
retain a third party appraisal firm reasonably satisfactory to the Company and
the Majority Investors as soon as possible (but in no event more than 30 days
after such notice is given) for the purpose of providing such valuations of the
Company as a whole and various combinations of its assets or the assets of its
subsidiaries as the Company and the Majority Investors deem reasonably
satisfactory, and for the purpose of advising the Company
-19-
20
and the Investors concerning the private sale of the Company's assets or stock
or the assets of its subsidiaries or a merger or consolidation of the Company or
its subsidiaries with or into another corporation or partnership, (ii) take all
commercially reasonable action necessary to effect a Sale of the Company, and
(iii) consult with and, to the extent reasonably practicable, conform to the
wishes of the Investors in determining the manner and form of the Sale of the
Company. The Company shall use commercially reasonable efforts to enter into a
binding agreement for a Sale of the Company (subject to normal contingencies)
within 120 days from the date of notice under this paragraph B.5(b).
B.5(c) Offer from an Affiliate. Unless the Majority Investors approve
such an offer, an offer to purchase the Company by any Member of Management or
any Affiliate of any Member of Management shall not relieve the Company of its
obligation to effect a Sale of the Company as provided in this Section B.5.
B.5(d) Tax Savings. In order to subject the proceeds received by the
Stockholders to one level of taxation, the Company shall use commercially
reasonable efforts to structure a Sale of the Company in the form of a sale of
the capital stock of the Company as opposed to sale of the stock or assets of
one or more of the Company Subsidiaries or a sale of the stock or assets of WTAC
or one or more of the WTAC Subsidiaries. In the event of the sale of the capital
stock of the Company, the proceeds of such sale shall be divided as provided in
the Company's Certificate of Incorporation.
B.5(e) Cash Consideration. Any Sale of the Company shall be for cash
unless otherwise agreed by the Majority Investors. Unless otherwise agreed by
the Majority Investors, in the event of a Sale of the Company which by its terms
results in cash distributions to the Company rather than the stockholders of the
Company, the Company shall be liquidated promptly thereafter so that the
proceeds of the Sale of the Company will be distributed to the Stockholders.
B.5(f) Sale Documentation. The Stockholders agree that upon any Sale of
the Company pursuant hereto, they will execute all documents reasonably required
to effect such sale, provided such documents are customary in form and substance
for transactions of that type. The Stockholders further agree that they will
vote their shares of Common Stock in favor of any such Sale of the Company and
will not exercise any right to dissent and seek appraisal of their interests
under the laws of the State of Delaware or any other state or pursue any other
comparable statutory remedy in connection with the Sale of the Company.
B.6 Legends on Certificates. During the term of this Agreement, each
certificate representing shares of Restricted Stock and Investor Stock shall
bear legends in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
TRANSFERRED UNLESS
-20-
21
THE COMPANY HAS RECEIVED A WRITTEN OPINION FROM COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY STATING THAT
SUCH TRANSFER IS BEING MADE IN COMPLIANCE WITH ALL APPLICABLE
FEDERAL AND STATE SECURITIES LAWS. THE TRANSFER OF SECURITIES
REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT IS SUBJECT TO
TRANSFER RESTRICTIONS, OBLIGATIONS AND OTHER CONDITIONS
SPECIFIED IN THE AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
AMONG THE COMPANY AND CERTAIN SECURITYHOLDERS.
The Company shall make a notation on its records and give instructions to any
transfer agent of the Common Stock, Warrants and Preferred Stock in order to
implement the restrictions on transfer established in this Agreement.
B.7 Certain Matters Relating to Regulation Y.
For purposes hereof, "Regulation Y" shall mean Regulation Y
promulgated by the Board of Governors of the Federal Reserve System (12 C.F.R.
ss.225) or any successor regulation.
Notwithstanding anything in this Agreement or the Warrants to
the contrary, Chase shall not, and shall not permit any of its Affiliates to,
transfer any Warrants or Investor Stock held by it to any Person other than (1)
in connection with any public offering or public sale of securities of the
Company (including a public offering registered under the Securities Act of
1933, as amended, and a public sale pursuant to Rules 144 or 144A of the
Securities and Exchange Commission or any similar rules then in force), (2) to a
Person or group of Persons (within the meaning of the Securities and Exchange
Act of 1934, as amended (the "1934 Act") if, after such sale, such Person or
group of Persons in the aggregate would own or control securities which possess
in the aggregate the ordinary voting power to elect a majority of the Company's
directors, provided that such sale has been approved by the Company's Board of
Directors or a committee thereof, (3) to a Person or group of Persons (within
the meaning of the 0000 Xxx) if, after such sale, such Person or group of
Persons in the aggregate would own or control securities of the Company
(excluding the portion of the securities being disposed of by Chase (and its
Affiliates) in connection with such sale) which possess in the aggregate the
ordinary voting power to elect a majority of the Company's directors, (4) to a
Person or group of Persons (within the meaning of the 0000 Xxx) if, after such
sale, such Person or group of Persons would not, in the aggregate, own, control
or have the right to acquire more than two percent (2%) of the outstanding
securities of any class of voting securities of the Company, (5) to a Person or
group of Persons (within the meaning of the 0000 Xxx) if, prior to such sale,
such Person or group of Persons in the aggregate already own or control
securities the Company which possess in the aggregate the ordinary voting power
to elect a majority of the Company's directors, (6) in connection with a merger,
consolidation or similar transaction involving the Company if, after such
transaction, a Person or group of Persons (within the meaning of the 0000 Xxx)
would own or control securities which possess in the aggregate the ordinary
voting power to elect a majority
-21-
22
of the surviving corporation's directors, provided that such transaction has
been approved by the Company's Board of Directors or a committee thereof, (7) to
any Member of Management, the Company or any other Investor, pursuant to the
provisions of Section B.2 or B.3 and (8) as otherwise permitted by applicable
law and regulations.
C. ADDITIONAL COVENANTS OF THE COMPANY WITH THE INVESTORS.
C.1 Covenants.
C.1(a) Financial Statements and Other Information. The Company will
furnish to each Investor (so long as it holds any Common Stock, Preferred Stock
or Warrants) and to each holder of at least 10% of the outstanding Common Stock
or Preferred Stock (each, a "Recipient"):
(i) Not later than December 31 of each fiscal year, capital and
operating expense budgets, projections of sources and applications of
funds and profit and loss projections (prepared in accordance with
GAAP, consistently applied) for the Company (and each of the Company
Subsidiaries with which it prepares consolidated financial statements)
on a consolidated basis for each month of the next succeeding fiscal
year, all itemized in reasonable detail and prepared by the Company.
Any material revisions made in such budgets or projections shall be
furnished promptly to each Recipient.
(ii) As soon as available and in any event within 90 days after
the end of each fiscal year, audited financial statements of the
Company (and the Company Subsidiaries with which it prepares
consolidated financial statements) on a consolidated and consolidating
basis, including a balance sheet as at the end of such fiscal year,
statements of income and retained earnings and a related statement of
cash flows for such fiscal year and the figures for the preceding year,
together with all notes thereto, prepared in reasonable detail and in
accordance with GAAP, consistently applied, and accompanied by the
report thereof of Ernst & Young or such other "Big Six" firm of
independent certified public accountants as may be selected by the
Company. Such financial statements shall be certified by the chief
financial officer of the Company to be complete and accurate, to fairly
present the financial condition of the Company and the Company
Subsidiaries, and to be prepared in accordance with GAAP, consistently
applied.
(iii) As soon as reasonably possible and in any event within
30 days after the end of each month, monthly financial reports of the
Company (and the Company Subsidiaries with which it prepares
consolidated financial statements) on a consolidated basis, including a
balance sheet as of the end of the preceding calendar month, statements
of income and retained earnings, a related statement of cash flows for
such month (prepared in accordance with GAAP, consistently applied),
such figures for the corresponding month of the preceding fiscal year,
and comparisons to the budget for such month.
(iv) As soon as reasonably possible and in any event within 30
days after the end of each month, a statement signed by the chief
executive and chief financial officers of
-22-
23
the Company, setting forth in reasonable detail, as to each of the
Cable Systems, (A) the number and type of subscribers to such system as
at the end of such month, (B) the range of rates charged to subscribers
during such month, (C) the total miles of activated plant as of the end
of such month, (D) the Company's best estimate of the number of
residential units passed as of the end of such month, (E) the number of
subscribers terminating and adding cable service during such month, and
(F) the monthly and year-to-date revenues, expenses and operating
expenses of the Company and the Company Subsidiaries on a consolidated
basis, together with the corresponding figures for the Company's and
the Company Subsidiaries' budgets on a consolidated basis provided to
each Recipient by the Company pursuant to paragraph C.1(a)(i) hereof.
(v) Promptly, and in no event more than 10 days after receipt
thereof, copies of all audit reports, so-called "management letters",
and other communications and reports submitted to the Company or any
Company Subsidiary by independent certified public accountants in
connection with each interim or special audit of a Company Subsidiary
made by such accountants.
(vi) Promptly, but in any event within 10 days after the
Company has knowledge thereof, written notice of any actual or
anticipated material adverse change in any Company Subsidiary's
operations or financial condition, including any material adverse
change relating to any of the Cable Systems or any part thereof
contained in a single municipality.
(vii) With each report pursuant to paragraphs C.1(a)(ii) or
C.1(a)(iii) hereof, an Officer's Certificate of the Company,
substantially in the form attached hereto as Annex 1.
(viii) Simultaneously with delivery to the Lenders (as defined
in the Credit Agreement) under the Credit Agreement, copies of all
financial statements, information and notices delivered to such Lenders
which are not otherwise delivered to each Recipient pursuant to
subparagraphs (i) through (vii) above.
(ix) Immediately upon receipt thereof by the Company, copies
of all financial statements, information and notices delivered to the
Company by WTAC.
(x) Promptly after receipt of any request therefor from an
Investor, such information as such Investor shall request in order for
it to deliver or make all reports or filings required to be made by it
or any of its Affiliates with the Small Business Administration or any
other governmental authority.
C.1(b) Information and Inspection. As often as any Investor shall
reasonably request, the Company shall furnish to the Investors with reasonable
promptness full information pertinent to any covenant, provision or condition
hereof or to any matter in connection with the business of the Company, any
Company Subsidiary, WTAC or any WTAC Subsidiary. In addition, during
-23-
24
normal business hours upon reasonable notice, the Company shall permit any
authorized representative designated by an Investor to visit (at its own
expense) and inspect any properties of the Company or any Company Subsidiary,
including its books and records (and to make extracts therefrom), and to discuss
its affairs, finances and accounts with the Company's and each Company
Subsidiary's officers, accountants and attorneys.
C.1(c) Additional Advice. Promptly, and in any event within 10 days
after the discovery or receipt of notice of the existence of any default in the
performance by the Company, any Company Subsidiary, WTAC or any WTAC Subsidiary
under any covenant or agreement contained in the Credit Agreement, this
Agreement, any Purchase Agreement, or any other Contractual Obligation to which
any of them is subject or by which any of them is bound, or the commencement of
any litigation against the Company, any Company Subsidiary, WTAC or any WTAC
Subsidiary in which the amount in controversy exceeds $50,000, the Company shall
give written notice to each Investor specifying the nature and period of
existence thereof and what actions the Company, any Company Subsidiary, WTAC or
any WTAC Subsidiary has taken and proposes to take with respect thereto.
C.1(d) Affirmative Covenants. Without the prior written consent of the
Majority Investors, the Company shall, and shall cause each Company Subsidiary
to:
(i) maintain in full force and effect all franchises, permits,
licenses, easements and other rights necessary to the operation of the Cable
Systems;
(ii) maintain its corporate existence and its business; and
maintain all properties which are reasonably necessary for the conduct of its
business, now or hereafter owned by it, in good repair, working order and
condition, reasonable wear and tear excepted, and make any replacements of
properties necessary for the successful operation of its business;
(iii) maintain, on all insurable properties now or hereafter
owned by it, insurance against loss or damage by fire or other casualty
(including business interruption coverage) to the extent customary with respect
to similar properties of companies conducting business similar to that conducted
by it, and to maintain public liability and worker's compensation insurance
covering it to the extent customary with respect to companies conducting
business similar to that conducted by it;
(iv) comply in all respects with this Agreement and in all
material respects with all other material Contractual Obligations to which it is
now or hereafter subject or by which it or any of its properties and assets are
now or hereafter bound, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings and adequate reserves
have been established on its books with respect thereto in accordance with GAAP;
(v) pay and discharge when payable all taxes, assessments and
governmental charges imposed upon its respective properties or upon the income
or profits therefrom (in each case before the same becomes delinquent and before
penalties accrued thereon) and all claims for
-24-
25
labor, materials or supplies which if unpaid might by law become a Lien upon any
of its respective properties, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings and adequate reserves (as
determined in accordance with GAAP, consistently applied) have been established
on its respective books with respect thereto;
(vi) comply with all Requirements of Law, the violation of
which might reasonably be expected to have material adverse effect upon its
financial condition, operating results or business prospects; and
(vii) maintain proper books of record and account which fairly
represent its financial condition and results of operations and make provisions
on its financial statements for all such proper reserves as in each case are
required in accordance with GAAP, consistently applied.
C.1(e) Negative Covenants. Without the prior written consent of the
Majority Investors, the Company shall not, and shall cause each Company
Subsidiary not to:
(i) enter into any agreement, lease, contract or other
transaction, either directly or indirectly, with any Member of Management or any
Affiliate of any Member of Management, on terms that are less favorable to it
than those which might be obtained at the time from an unaffiliated third party;
(ii) enter into any material amendment of any Contractual
Obligation, if such amendment would by its terms restrict the Company's
performance of its obligations to the Stockholders hereunder, under any Investor
Stock or under any agreement or instrument relating hereto or contemplated
hereby;
(iii) enter into any agreement providing for an Organic
Change;
(iv) incur any Indebtedness (as defined in the Credit
Agreement), except as permitted under the Credit Agreement;
(v) make loans or advances to or guarantees for the benefit of
any Person, except as provided for in the Credit Agreement and for advances or
guarantees given to suppliers in the ordinary course of business, and advances
to employees in an amount not to exceed $1,000 per employee pursuant to normal
employment arrangements;
(vi) except as provided by the terms of the Preferred Stock
and except for the redemption from Xxxxxxx of up to 2,500 shares of Nonvoting
Common Stock which is not Restricted Stock at a price not in excess of $250,000,
purchase, redeem or otherwise acquire or retire for value any of its capital
stock or other equity securities or declare or make any distribution with
respect to any of its capital stock or other equity securities other than as
provided for in the Preferred Stock or the Warrants;
-25-
26
(vii) acquire any interest in any business entity (whether by
a purchase of assets, purchase of stock or other securities, merger, loan or
otherwise), or establish or acquire, directly or indirectly, any Subsidiary;
(viii) amend its certificate of incorporation or bylaws, issue
any shares of capital stock (other than (x) pursuant to the exercise of the
Warrants, (y) pursuant to the Company's 1995 Stock Option Plan, and (z) the
issuance of additional shares of Preferred Stock in connection with the payment
in-kind of dividends as provided in the Preferred Stock), or issue any options
(other than pursuant to the Company's 1995 Stock Option Plan), warrants or
rights to acquire shares of its capital stock, or any other equity securities,
issue any profit participation or stock appreciation, or adopt any phantom stock
plan; or
(ix) create, assume, incur or permit to exist, any Lien on any
of its assets or properties other than (A) Liens securing Indebtedness under or
in respect of, or permitted by, the Credit Agreement, (B) Liens for taxes not
yet due or which are being contested in good faith and for which adequate
reserves have been established, (C) deposits or pledges made to secure the
payment of utilities or similar services, worker's compensation or unemployment
insurance, pensions or social security obligations, (D) interests or title of a
lessor under a lease, (E) easements, rights-of-way, restrictions or similar
charges not interfering with its ordinary conduct of business, or (F) mechanics'
liens, materialman's liens and other Liens by suppliers of goods and services in
the ordinary course of business where payment for the related obligation has
been (or is being) made in full in accordance with the terms thereof.
C.1(f) Compliance with Agreements. The Company will perform and
observe, and will cause each Company Subsidiary to perform and observe, all of
its material obligations to the Stockholders and the holders of Preferred Stock,
Warrants, and Common Stock set forth in (i) this Agreement, (ii) such
instruments, (iii) the agreements under which such instruments were purchased,
(iv) the Company's 1995 Stock Option Plan, and (v) the Certificate of
Incorporation of the Company or such Company Subsidiary, including, without
limitation, the payment of dividends and interest with respect to the Company's
securities.
C.1(g) Indemnification. The Company, without limitation as to time,
will indemnify each Investor and its officers, directors, employees and agents
against, and hold each Investor and its officers, directors, employees and
agents harmless from, all losses, claims, damages, liabilities, costs (including
the costs of preparation and attorneys' fees and expenses) (collectively, the
"Losses") incurred pursuant to any investigation or proceeding against the
Company, such Investor or any of its officers, directors, employees and agents
arising out of or in connection with this Agreement or any Purchase Agreement
(or any other document or instrument executed herewith or pursuant hereto or
thereto), which investigation or proceeding requires the participation of, or is
commenced or filed against, one or more of the Investors and any of its or their
officers, directors, employees and agents because of this Agreement, any
Purchase Agreement or such other documents and the transactions contemplated
hereby or thereby, other than any Losses resulting from action on the part of
the Investors or their officers, directors, employees and agents which is
finally determined in such proceeding to be primarily
-26-
27
and directly a result of such party's gross negligence or willful misconduct.
The Company agrees to reimburse each Investor and its officers, directors,
employees and agents promptly for all such Losses as they are incurred by such
Investor and its officers, directors, employees and agents. Each Investor agrees
to reimburse the Company for any payments made by the Company to such Investor
pursuant to this paragraph for Losses which are finally determined in such
proceeding to result primarily and directly from the gross negligence or willful
misconduct of such Investor. The obligations of the Company under this paragraph
will be separate obligations and the obligations under this paragraph to the
Investors or any of their officers, directors, employees and agents will not be
extinguished solely because any Investor or its officers, directors, employees
or agents are not entitled to indemnity under this paragraph. The obligations of
the Company under this paragraph will survive the termination of this Agreement
and any transfer of Preferred Stock, Warrants or Common Stock by any Investor.
C.1(h) Environmental Matters.
(i) Upon an Investor's receipt of any environmental order,
notice, permit, application, or other communication or report (an "Environmental
Notice"), the Company, any Company Subsidiary, WTAC or any WTAC Subsidiary shall
at its expense, at the request of the Majority Investors, obtain an
environmental site assessment or environmental audit report or an update of any
of the foregoing from an independent environmental consultant satisfactory to
the Majority Investors with respect to the premises identified in the
Environmental Notice, all in form and content satisfactory to Majority
Investors.
(ii) Without limiting the provisions of paragraph C.1(g)
hereof, the Company agrees to defend, protect, indemnify and hold harmless the
Investors and each of their officers, directors, employees, attorneys and agents
(collectively called the "Indemnitees") from and against all liabilities,
obligations (including removal and remedial actions), losses, damages (including
foreseeable and unforeseeable consequential damages and punitive damages),
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
(including reasonable attorneys' and consultants' fees and disbursements) of any
kind or nature whatsoever that may at any time be incurred by, imposed on or
asserted against such Indemnitees directly or indirectly based on, or arising or
resulting from, (A) the actual or alleged presence of Hazardous Materials (as
defined below) on any property now, previously or hereafter owned, leased or
otherwise held by the Company or any of the Company Subsidiaries, WTAC or any of
the WTAC Subsidiaries, (B) any Environmental Claim (as defined below) relating
to the Company, the Company Subsidiaries, WTAC, the WTAC Subsidiaries or any of
their operations, or (C) the exercise of the Investors' rights under any of the
provisions of this paragraph (the "Indemnified Matters") regardless of when such
Indemnified Matters arise.
(iii) As used herein, "Hazardous Materials" means (A) any
petroleum or petroleum products, radioactive materials, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation, transformers
or other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls, or radon gas; (B) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous
-27-
28
wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "contaminants" or
"pollutants," or words of similar import, under any applicable Environmental Law
(as defined below); and (C) any other chemical, material or substance, exposure
to which is prohibited, limited or regulated by any governmental authority. As
used herein, "Environmental Law" means any federal, state or local statute, law,
rule, regulation, ordinance, code, policy or rule of common law now or hereafter
in effect and in each case as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment relating to the environment, health, safety or Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601
et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. ss.
1801 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
ss. 6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.;
the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. ss. 3608 et seq.; Occupational Safety and Health Act, 29 U.S.C. ss. 651
et seq.; and their counterparts under applicable state and local laws. As used
herein, "Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such Environmental Law
("Claims"), including without limitation (x) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages, fines or penalties pursuant to any applicable
Environmental Law, and (y) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
C.1(i) Brokerage. The Company and the Company Subsidiaries shall pay,
and hold each Investor harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys' fees and out-of-pocket
expenses) arising in connection with any claim for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by the Purchase Agreements.
C.1(j) Management; Conflicts of Interest. For so long as each Member of
Management holds the position or performs the duties currently held by him or
any other position with the Company or the Company Subsidiaries, such Member of
Management shall devote substantially all of his business time and attention to
managing the business and affairs of the Company and the Company Subsidiaries,
and shall offer to the Company all opportunities that become available to him
for investment in or acquisition of cable television systems or operations and
related businesses suitable for investment or acquisition by the Company in
accordance with the Company's business objectives, as determined from time to
time by the Company's Board of Directors. Each Member of Management shall serve
at the pleasure of the Board of Directors of the Company, in its absolute
discretion, and nothing contained in this paragraph C.1(j) or elsewhere in this
Agreement shall be construed to create in any Member of Management any right to
continued employment by the Company or any Company Subsidiary.
-28-
29
C.1(k) Meetings; Representation. The Company shall have regular
meetings of its Board of Directors at least every calendar quarter and of the
stockholders at least once a year, as provided for in the Company's Bylaws, and
minutes of such meetings shall be prepared and maintained as a part of the
permanent records of the Company. The Company shall provide each Investor with
written notice of all proposed agendas (which shall not, however, limit the
matters which may be acted upon in the event a majority of the directors or
stockholders present, as appropriate, vote to discuss or act upon any other
matter) for all meetings of the Stockholders, Board of Directors and Executive
Committee of the Company at lease five days in advance (except in the case of
special meetings of the Board of Directors or meetings of the Executive
Committee, in which case such notice shall be as prompt as practicable) and,
except as otherwise provided by paragraph B.1(c) hereof, at least one
representative of each Investor, in addition to the directors designated by such
Investor hereunder, will be permitted to attend such meetings, at its own
expense. Executive Committee meetings may be called without prior approval by
the Company's Board of Directors.
C.2 Changes to WTAC Certificate of Incorporation. The Company shall
not consent to any amendment to the Certificate of Incorporation of WTAC, or to
that certain Second Amended and Restated Stockholders Agreement, dated as of May
5, 1995, among WTAC, Xxxxxxxxx Xxxxx and Classic Cable that would increase the
percentage of Available Assets (as defined in such Certificate of Incorporation)
that is distributable to holders of WTAC Class A Stock.
D. MISCELLANEOUS.
D.1 Termination.
D.1(a) Notwithstanding the provisions of paragraph D.1(b) hereof, all
rights and obligations created by this Agreement shall terminate upon the
earlier to occur of (i) the written agreement of the parties hereto holding 90%
or more of the shares of Common Stock, together with the holders of 90% of the
Warrants and 90% of the Preferred Stock, (ii) the acquisition by a single Person
of all of the issued and outstanding shares of Common Stock and Preferred Stock
and all of the issued and outstanding Warrants and (iii) the date upon which at
least 25% of the outstanding shares of Common Stock shall have been sold
pursuant to a registration statement filed and declared effective by the
Securities and Exchange Commission.
D.1(b) The provisions of Section B.1 and the second sentence of
Paragraph B.5(f) hereof shall terminate on October 30, 2005.
D.2 No Employment Agreement. Nothing in this Agreement shall be
construed to create an employment agreement for any Member of Management.
Members of Management acknowledge and agree that they are employees at will.
D.3 Management Compensation. For so long as the following Members of
Management is employed by the Company in his current position, the Company shall
pay to him
-29-
30
an annual salary as follows: Xxxxxxx - $200,000; Xxxxx - $140,000; Seach -
$135,000 and Xxxxxxxx - $75,000 (pro rated for any partial year); such annual
salary to be subject to upward adjustment from time to time at the discretion of
the Company's Board of Directors. Each Member of Management shall be entitled to
receive such other benefits as determined from time to time by the Company's
Board of Directors. In the event that a Member of Management is terminated as an
employee of the Company other than for one of the reasons specified in clauses
(A) through (D) of paragraph B.2(d)(i) hereof, the Company shall (i) promptly
thereafter pay to him as severance compensation an amount equal to the salary
paid to him over the prior twelve month period, and (ii) continue to provide him
with medical insurance coverage for a period of twelve months after his
termination.
D.4 Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally or by
cable, telex, facsimile transmission, telegram or overnight delivery service, or
72 hours after having been mailed by certified or registered mail, return
receipt requested and postage prepaid, to the recipient. Such notices, demands
and other communications will be sent to each party at the address indicated
below:
To the Company: Classic Communications, Inc.
000 Xxxxxxxx Xxx.
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: J. Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
With a copy (which shall
not constitute notice) to: Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
To Management: X. Xxxxxxx Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Seach
Xxxxx X. Xxxxxxxx
000 Xxxxxxxx Xxx.
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
-30-
31
Xxxx Xxxxxxxxxx
000 X.X. Xxxxx Xx.
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxx 00000
Facsimile No.: (000) 000-0000
With a copy (which shall
not constitute notice) to: Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
To Investors: Austin Ventures, X.X.
Xxxxxx Ventures III-A, X.X.
Xxxxxx Ventures III-B, L.P.
x/x Xxxxxx Xxxxxxxx
0000 Xxxxxxx Xxxxx
000 Xxxx 0xx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
BT Capital Partners, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxxx
Facsimile No.: (000) 000-0000
Texas Growth Fund
c/o TGF Management Corp.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
-31-
32
NationsBanc Capital Corp.
NationsBank Corporate Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
The Chase Manhattan Bank, N.A.
One Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
With copies (which shall
not constitute notice) to: Edens, Snodgrass, Xxxxxxx & Xxxxxxxx, P.C.
000 Xxxxxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
and: Jenkens & Xxxxxxxxx
2200 One American Center
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxx
Facsimile No.: (000) 000-0000
and: Fennebresque, Clark, Xxxxxxxx & Hay
NationsBank Corporate Center
Suite 2900
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxx, Esq.
Facsimile No.: (000) 000-0000
and: Milbank, Tweed, Xxxxxx & XxXxxx
One Chase Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified to the sending party by prior written notice.
-32-
33
D.5 Governing Law. The corporate laws of Delaware shall govern all
questions concerning the relative rights of the Company and the Stockholders.
All other questions concerning the construction, validity and interpretation of
this Agreement shall be governed by the internal laws of the State of Texas
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws or any jurisdiction other than the State of Texas.
D.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
D.7 Reorganization, Etc. The provisions of this Agreement shall apply
to any stock or other securities resulting from any stock split or reverse
split, stock dividend, reclassification, subdivision, consolidation or
reorganization of any stock or other securities of
the Company and to any stock or other securities of the Company or of any
successor company which may be received by any of the parties hereto by virtue
of their respective ownership of Common Stock.
D.8 Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
D.9 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
D.10 Binding Effect. Except as otherwise expressly provided herein, all
covenants and agreements in this Agreement by or on behalf of any of the parties
hereto will bind and inure to the benefit of the respective heirs, personal
representatives, successors and assigns of the parties hereto whether so
expressed or not. In addition, and whether or not any express assignment has
been made, the provisions of this Agreement which are for any Investor's benefit
as a purchaser or holder of Common Stock, Preferred Stock or Warrants are also
for the benefit of, and enforceable by, any subsequent holder of such Common
Stock, Preferred Stock or Warrants. The Company shall not make any assignment or
transfer of any of its rights or obligations hereunder without the prior written
consent of all of the Investors.
D.11 Loss of Securities; Reissue of Securities in Lesser Denominations.
Upon:
(i) receipt of evidence satisfactory to the Company of loss,
theft, mutilation or destruction of a stock certificate or warrant, and
(ii) in the case of any such loss, theft, or destruction, upon
delivery of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon surrender
and cancellation of such stock certificate or warrant, the
-33-
34
Company will make and deliver a new stock certificate or warrant of like tenor,
in lieu of such lost, stolen, mutilated or destroyed certificate or warrant. In
addition, upon request of any holder of a stock certificate, warrant or other
securities of the Company now or hereafter issued by the Company to a
Stockholder, and upon surrender of such certificate, warrant or other securities
to the Company and compliance with any restrictive legends, the Company will
reissue, in lesser denominations to parties designated by such holder, new
certificates, warrants or other securities in the equivalent amounts of such
other securities surrendered.
D.12. Prior Agreement. This Agreement supercedes and replaces in its
entirety the Stockholders Agreement dated as of October 15, 1995 among the
Company, Management and certain of the Investors.
D.13. Amendments. This Agreement may be amended upon the affirmative
vote of the holders of not less than (i) 90% of the outstanding shares of Common
Stock and (ii) 90% of the outstanding shares of Preferred Stock.
* * * *
-34-
35
IN WITNESS WHEREOF, the parties hereto have caused this Stockholders'
Agreement to be executed as of the date first above written.
COMPANY:
CLASSIC COMMUNICATIONS, INC.
By: /s/ J. XXXXXXX XXXXXXX
-----------------------------------
J. Xxxxxxx Xxxxxxx
Chief Executive Officer
XXXXXXX:
By: /s/ J. XXXXXXX XXXXXXX
-----------------------------------
J. Xxxxxxx Xxxxxxx
XXXXX:
By: /s/ XXXXXXX X. XXXXX
-----------------------------------
Xxxxxxx X. Xxxxx
SEACH:
By: /s/ XXXXXX X. SEACH
-----------------------------------
Xxxxxx X. Seach
XXXXXXXXXX:
By: /s/ XXXX XXXXXXXXXX
-----------------------------------
Xxxx Xxxxxxxxxx
-35-
36
XXXXXXXX:
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------
Xxxxx X. Xxxxxxxx
AUSTIN VENTURES, L.P.
By: AV PARTNERS, L.P.
Its: General Partner
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx
General Partner
AUSTIN VENTURES III-A, L.P.
By: AV PARTNERS III, L.P.
Its: General Partner
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx
General Partner
AUSTIN VENTURES III-B, L.P.
By: AV PARTNERS III, L.P.
Its: General Partner
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx
General Partner
-36-
37
BT CAPITAL PARTNERS, INC.
By: /s/ XXXXXX XXXXXXXXXX
-----------------------------------
Xxxxxx Xxxxxxxxxx
Managing Director
BOARD OF TRUSTEES OF TEXAS GROWTH
FUND - 1991 TRUST, AS TRUSTEES
By: TGF MANAGEMENT CORP.
Its: Executive Director
By: /s/ XXXXX X. XXXXXXXXX
-----------------------------------
Xxxxx X. Xxxxxxxxx
President
NATIONSBANC CAPITAL CORP.
By: /s/ XXXXXXX X. XXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxx
Senior Vice President
THE CHASE MANHATTAN BANK, N.A.
By: /s/ XXXX X. XXXXX
-----------------------------------
Xxxx X. Xxxxx
Vice President
-37-
38
ANNEX 1
FORM OF OFFICER'S CERTIFICATE
The undersigned hereby certifies that:
1. He is the duly elected, qualified and acting Chairman and Chief
Executive Officer of Classic Communications, Inc., a Delaware corporation (the
"Company").
2. He has reviewed and is familiar with the Amended and Restated
Stockholders' Agreement (the "Stockholders' Agreement") dated as of October 31,
1995, among the Company, Management and the Investors named therein.
3. This Certificate is delivered pursuant to paragraph C.1(a)(vii) of
the Stockholders' Agreement in connection with the delivery of the financial
reports of the Company and each of the Company Subsidiaries (as defined in the
Stockholders' Agreement) for the month or fiscal year ended .
-----------------
4. The financial reports referred to in the preceding paragraph are
complete and accurate in all material respects, fairly present the financial
condition of the Company and each of the Company Subsidiaries and their results
of operations, and have been prepared in accordance with generally accepted
accounting principles, consistently applied (except, if monthly reports, for the
omission of footnotes and other disclosures normally required by such
principles).
Dated: COMPANY:
-----------------------
CLASSIC COMMUNICATIONS, INC.
By:
--------------------------------
J. Xxxxxxx Xxxxxxx
Chairman and
Chief Executive Officer
Executed 10/31/95
-38-
39
AMENDMENT NO. 1
This AMENDMENT NO. 1 is entered into as of October 31, 1995
between CLASSIC COMMUNICATIONS, INC., a Delaware corporation (the "Company"), J.
XXXXXXX XXXXXXX ("Xxxxxxx"), XXXXXXX X. XXXXX ("Xxxxx"), XXXX XXXXXXXXXX
("Xxxxxxxxxx"), and XXXXX X. XXXXXXXX ("Xxxxxxxx") (Belisle, Smith, Seach,
Xxxxxxxxxx and Xxxxxxxx are referred to collectively as "Management" and each
individually as a "Member of Management"), AUSTIN VENTURES, L.P., a Delaware
limited partnership ("Austin"), AUSTIN VENTURES III-A, L.P., a Delaware limited
partnership ("Austin III-A"), AUSTIN VENTURES III-B, L.P., a Delaware limited
partnership ("Austin III-B"), Austin, Austin III-A and Austin III-B are
collectively referred to as "Austin Ventures"), BT CAPITAL PARTNERS, INC., a
Delaware corporation ("BT Capital"), TEXAS GROWTH FUND, a trust fund created by
the Constitution of the State of Texas ("Growth Fund"), NATIONSBANC CAPITAL
CORP. ("NationsBanc"), a Texas corporation, and THE CHASE MANHATTAN BANK, N.A.
("Chase"), Austin, Austin III-A, Austin III-B, BT Capital, Growth Fund,
NationsBanc and Chase are referred to collectively as the "Investors" and each
individually as an "Investor". Management and Investors are referred to
collectively as "Stockholders" and each individually as a "Stockholder").
Recitals:
The Company and the Stockholders are parties to an Amended and
Restated Stockholders Agreement (the "Stockholder Agreement") entered into as of
October 31, 1995 and wish to amend the stockholders Agreement in certain
respects. Accordingly, the parties hereto hereby agree as follows:
A. Definitions. Except as herein otherwise expressly provided,
terms defined in the Stockholders Agreement are used herein as defined therein.
B. Amendments to Stockholders Agreement.
B.1 The definitions of "Majority Investors" and "Warrants" in
paragraph A of the Stockholders Agreement as hereby amended in their entirety to
read as follows:
"Majority Investors" means the holders of at least 80% of the
outstanding shares of Common Stock issued to the Investors, provided,
however, that for purposes of this calculation, (i) all shares of
Common Stock issuable pursuant to the Warrants shall be deemed to be
issued and outstanding, (ii) for purposes of paragraph B.3, any
Warrants acquired by Chase pursuant to the Stock Purchase Agreement (or
by any lender under the Credit Agreement pursuant to paragraph B.8
hereof), or any Investor Stock acquired upon exercise of such Warrants,
shall be excluded and (iii) under no circumstances shall the percentage
vote to which the Warrants and
40
Investor Stock referred to in the foregoing clause (ii) shall be
entitled to be greater than 4.9% of the total Common Stock and
Warrants issued to the Investors. "
Warrants" means the warrants created in the Company's Common
Stock Purchase Warrant issued to (i) NationsBanc dated as of October
31, 1995, to purchase 12,128 shares of Common Stock, as adjusted
pursuant to the terms thereof, (ii) NationsBanc dated as of October
31, 1995 to purchase 3,000 shares of Common Stock, as adjusted
pursuant to the terms thereof, (iii) BT Capital dated as of October
31, 1995 to purchase 3000 shares of Common Stock, as adjusted pursuant
to the terms thereof, (iv) Chase dated as of October 31, 1995 to
purchase 15,207 shares of Common Stock, as adjusted pursuant to the
terms thereof and (v) the Person acquiring Warrants pursuant to
paragraph 8B hereof, and, in each case, any replacement or substitute
warrants for all or any portion thereof.
B.2 Paragraph b.& of the Stockholders Agreement is hereby
amended in its entirety to read as follows:
For purposes hereof, "Regulation &" shall mean Regulation &
promulgated by the Board of Governors of the Federal Reserve System (12
C.F.R. ss. 225) or any successor regulation.
Notwithstanding anything in this Agrement or the Warrants to
the contrary, neither Chase nor any lender under the Credit Agreement
that shall acquire Warrants pursuant to paragraph B.8 hereof (Chase,
and any such lender, being herein collectively referred to as
"Lenders") shall, nor shall any Lender permit any of its Affiliates to,
transfer any Warrants or Investor Stock held by it to any Person other
than 91) in connection with any public offering or public sale of
securities of the company (including a public offering registered under
the Securities Act of 1933, as amended, and a public sale pursuant to
Rule 144 or 144 A of the Securities and Exchange Commission or other
similar rules then in force, (2) to a Person or group of Persons
(within the meaning of the Securities and Exchange Act of 1934, as
amended (the "1934 Act") if, after such sale, such Person or group of
Persons in the aggregate would own or control securities which possess
in the aggregate the ordinary voting power to elect a majority of the
company's directors, provided that such sale has been approved by the
Company's Board of Directors or a committee thereof, (3) to a Person or
group of Persons (within the meaning of the 0000 Xxx) if, after such
sale, such Person or Group of Persons in the aggregate would own or
control securities of the company (excluding the portion of the
securities being disposed of by such Lender (and its Affiliates) in
connection with such sale) which possess in the
41
aggregate the ordinary voting power to elect a majority of the
company's directors (4) to a Person or group of Persons (within the
meaning of the 0000 Xxx) if, after such sale, such Person or group of
Persons would not, in the aggregate, own, control or have the rgith to
acquire more than two percent (2%) of the outstanding securities of any
class of voting securities of the Company, (5) to a person or group fo
Persons (within the meaning of the 0000 Xxx) if, prior to such sale,
such Person or group of Persons (within the meaning of the 0000 Xxx)
if, prior to such sale, such Person or group of Persons in the
aggregate already own or control securities of the Company which
possess in the aggregate the ordinary voting power to elect a majority
of the company's directors, (6) in connection with a merger,
consolidation or similar transaction involving the company if, after
such transaction, a Person or group of Persons (within the meaning of
the 0000 Xxx) would own or control securities which possess in the
aggregate the ordinary voting power to elect a majority of the
surviving corporation's directors, provided that such transaction has
been approved by the Company's Board of Directors or a committee
thereof, (7) to any Member of Management, the company or any other
Investor, pursuant to the provisions of Section B.2 or B.3 and (8) as
otherwise permitted by applicable law and regulations.
B.3 The Stockholders Agreement is hereby amended by adding a
new paragraph B8 after paragraph B.7 to read as follows:
B.8 Transfers in Connection with Credit Agreement Syndication.
Notwithstanding anything in this Agreement to the contrary
(including, without limitation, the provisions of paragraph B.3
thereof), if Chase shall assign or otherwise transfer any of the loans
or other credit or commitments under the Credit Agreement (including
without limitation by means of selling participations therein), Chase
may request (upon 3 Business Days' prior notice to the Company) that a
number of the Warrants held by Chase be canceled on the date of such
assignment and transfer and that a like number of Warrants be issued by
the Company to the Person to whom such loans or other credit or
commitments are being assigned or otherwise transferred. Any such
issuance by the company shall be subject to the consent of the Company
to the Person to whom such loans or other credit or commitments are
being assigned or otherwise transferred. Any such issuance by the
Company shall be subject to the consent of the Company which shall not
be unreasonably withheld or delayed. Upon the date specified in such
request, the Company shall (subject to granting such consent) issue,
and Chase shall deliver to the Company for cancellation, such number of
Warrants as aforesaid and the
42
Company and such Person shall execute and deliver an Instrument of
transfer in the form of Exhibit A hereto pursuant to which such Person
(i) becomes an "Investor" hereunder and under the Amended and Restated
Registration Rights Agreement dated as of October 31, 1995, by and
among the Company, Xxxxxxx and the Investors, in each case entitled to
all the benefits accordedc to an Investor under, and subject to all of
the obligations imposed upon an Investor pursuant to, this Agreement
and such Amended and Restated Registration Rights Agreement, as if such
Person had been one of the Investors that was an original signatory
party hereto or thereto and 9ii) becomes entitled to the rights of a
"Purchaser" under Section 4 and 5 of the stock Purchase Agreement, as
if such Person had been one of the "Purchasers" was an original
signatory party thereto. Any such cancellation, issuance and exchange
of Warrant shall not be subject to the provisions of this Agreement.
C. Miscellaneous. Except as herein provided, the Stockholders Agreement
shall remain unchanged and in full force and affect. This Amendment No. 1 may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 1 by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to be executed as of the date first above written.
CLASSIC COMMUNICATIONS, INC.
By: /s/ XXXXXXX X. XXXXX
----------------------------------------------
Xxxxxxx X. Xxxxx President
XXXXXXX:
/s/ J. XXXXXXX XXXXXXX
-------------------------------------------------
J. Xxxxxxx Xxxxxxx
XXXXX:
/s/ XXXXXXX X. XXXXX
-------------------------------------------------
Xxxxxxx X. Xxxxx
SEACH:
/s/ XXXXXXX X. XXXXX
-------------------------------------------------
Xxxxxx X. Seach
43
XXXXXXXXXX:
/s/ XXXX XXXXXXXXXX
-------------------------------------------------
Xxxx Xxxxxxxxxx
XXXXXXXX:
/s/ XXXXX X. XXXXXXXX
-------------------------------------------------
Xxxxx X. Xxxxxxxx
AUSTIN VENTURES, L.P.
By: AV Partners, L.P., Its General Partner
By: /s/ XXXXXXX X. XXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxx
AUSTIN VENTURES III-A, L.P.
By: AV Partners III, L.P., Its General
Partner
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Xxxxxxx X. Xxxxxx
AUSTIN VENTURES III-B, L.P.
By: AV Partners III, L.P., Its General
Partner
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Xxxxxxx X. Xxxxxx
BT CAPITAL PARTNERS, INC.
By: /s/ XXXXXX XXXXXXXXXX
------------------------------------------
Xxxxxx Xxxxxxxxxx
Board of Trustees of TEXAS GROWTH
FUND - 1991 Trust, as Trustees
By: TGF Management Corp.,
its Executive Directors
By: /s/ XXXXX X. XXXXXXXXX
-----------------------------------
Xxxxx X. Xxxxxxxxx, President
NATIONSBANC CAPITAL CORP.
By: /s/ XXXXXXX X. XXXXXXX
---------------------------------------------------
Xxxxxxx X. Xxxxxxx, Xx. Vice President
CHASE MANHATTAN BANK
(National Association)
By: /s/ XXXX X. XXXXX
----------------------------------------------------
Xxxx X. Xxxxx, Vice President
44
CLASSIC COMMUNICATIONS, INC.
AMENDMENT NO. 2
THIS AMENDMENT NO. 2 is entered into as of December 27, 1995, between
CLASSIC COMMUNICATIONS, INC., a Delaware corporation (the "Company"), J. XXXXXXX
XXXXXXX ("Xxxxxxx"), XXXXXXX X. XXXXX ("Xxxxx"), XXXXXX X. SEACH ("Seach"), XXXX
XXXXXXXXXX ("Xxxxxxxxxx"), and XXXXX X. XXXXXXXX ("Xxxxxxxx") (Belisle, Smith,
Seach, Xxxxxxxxxx, and Xxxxxxxx are referred to collectively as "Management" and
each individually as a "Member of Management"); AUSTIN VENTURES, L.P., a
Delaware limited partnership ("Austin"), AUSTIN VENTURES III-A, L.P., a Delaware
limited partnership ("Austin III-A"), AUSTIN VENTURES III-B, L.P., a Delaware
limited partnership ("Austin III-B") (Austin, Austin III-A and Austin III-B are
collectively referred to as "Austin Ventures"), BT CAPITAL PARTNERS, INC., a
Delaware corporation ("BT Capital"), TEXAS GROWTH FUND, a trust fund created by
the Constitution of the State of Texas ("Growth Fund"), NATIONSBANC CAPITAL
CORP., a Texas corporation ("NationsBanc"), THE CHASE MANHATTAN BANK, N.A.
("Chase"), and UNION VENTURE CORPORATION, a California corporation ("Union")
(Austin, Austin III-A, Austin III-B, BT Capital, Growth Fund, NationsBanc,
Chase, and Union are referred to collectively as the "Investors" and each
individually as an "Investor"); Management and Investors are referred to
collectively as "Stockholders" and each individually as a "Stockholder").
R E C I T A L S
The Company and the Stockholders, other than Union, are parties to an
Amended and Restated Stockholders Agreement, entered into as of October 31, 1995
and amended pursuant to Amendment No. 1 (the "Stockholders Agreement"), and wish
to amend the Stockholders Agreement to add Union as an Investor. The Company and
the Stockholders, other than Union, are also parties to an Amended and Restated
Registration Rights Agreement, entered into as of October 31, 1995 and modified
pursuant to Amendment No. 1 (the "Registration Rights Agreement"), and wish to
amend the Registration Rights Agreement to add Union as an Investor.
Accordingly, the parties hereto hereby agree as follows:
A. DEFINITIONS. Except as herein otherwise expressly provided, terms
defined in the Stockholders Agreement are used herein as defined therein.
B. CONSENT. Austin Ventures, BT Capital, Growth Fund, and NationsBanc
hereby consent to the Company entering into that certain Stock Purchase
Agreement, dated as of December 27, 1995, by and among the Company and Union
(the "Union Stock Purchase Agreement"), and hereby waive the restrictions set
forth in Section C.1(e)(iii) of the Stockholders Agreement with respect to the
Union Stock Purchase Agreement.
C. ADDITIONAL INVESTOR. Upon consummation of the Union Stock Purchase
Agreement, Union shall become an "Investor" under the Stockholders Agreement and
under the Registration Rights Agreement, in each case entitled to all the
benefits accorded to an Investor under, and subject
45
to all of the obligations imposed upon an Investor pursuant to, each such
Agreement as if Union had been one of the Investors that was an original
signatory party thereto (and, to the extent applicable, Union hereby assumes the
obligations of an Investor pursuant to each such Agreement).
D. NOTICES. For purposes of the Stockholders Agreement and the
Registration Rights Agreement, Union hereby agrees that all notices, demands or
other communications to be given to it shall be sent to it at the following
address:
Union Venture Corporation
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile No. 213/629-5328
With a copy (which Xxxxx & Xxxxxx
shall not constitute 0 Xxxx Xxxxx, Xxxxx 000
notice) to: Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No. 714/252-0961
E. MISCELLANEOUS. Except as herein provided, the Stockholders Agreement
shall remain unchanged and in full force and effect. This Amendment No. 2 may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same amendatory instrument and any of the parties hereto
may execute this Amendment No. 2 by signing any such counterpart.
* * * *
- 2 -
46
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to be executed as of the date first above written.
COMPANY:
CLASSIC COMMUNICATIONS, INC.
By: /s/ J. XXXXXXX XXXXXXX
----------------------------------
J. Xxxxxxx Xxxxxxx
Chief Executive Officer
XXXXXXX:
By: /s/ J. XXXXXXX XXXXXXX
----------------------------------
J. Xxxxxxx Xxxxxxx
XXXXX:
By: /s/ XXXXXXX X. XXXXX
----------------------------------
Xxxxxxx X. Xxxxx
SEACH:
By: /s/ XXXXXX X. SEACH
----------------------------------
Xxxxxx X. Seach
XXXXXXXXXX:
By: /s/ XXXX XXXXXXXXXX
----------------------------------
Xxxx Xxxxxxxxxx
- 3 -
47
XXXXXXXX:
By: /s/ XXXXX X. XXXXXXXX
--------------------------------
Xxxxx X. Xxxxxxxx
AUSTIN VENTURES, L.P.
By: AV Partners, L.P.
Its: General Partner
By: /s/ XXXXXXX X. XXXXXX
--------------------------------
Xxxxxxx X. Xxxxxx
General Partner
AUSTIN VENTURES III-A, L.P.
By: AV Partners III, L.P.
Its: General Partner
By: /s/ XXXXXXX X. XXXXXX
--------------------------------
Xxxxxxx X. Xxxxxx
General Partner
AUSTIN VENTURES III-B, L.P.
By: AV Partners III, L.P.
Its: General Partner
By: /s/ XXXXXXX X. XXXXXX
--------------------------------
Xxxxxxx X. Xxxxxx
General Partner
- 4 -
48
BT CAPITAL PARTNERS, INC.
By: /s/ XXXXXX XXXXXXXXXX
---------------------------
Xxxxxx Xxxxxxxxxx
Managing Director
BOARD OF TRUSTEES OF TEXAS
GROWTH FUND - 1991 TRUST, AS
TRUSTEE
By: TGF Management Corp.
Its: Executive Director
By: /s/ XXXXX X. XXXXXXXXX
---------------------------
Xxxxx X. Xxxxxxxxx
President
NATIONSBANC CAPITAL CORP.
By: /s/ XXXXXXX X. XXXXXXX
---------------------------
Xxxxxxx X. Xxxxxxx
Senior Vice President
THE CHASE MANHATTAN BANK, N.A.
By: /s/ XXXX X. XXXXX
---------------------------
Xxxx X. Xxxxx
Vice President
- 5 -
49
UNION VENTURE CORPORATION
By: /s/ XXXXXX X. XXXXXX
---------------------------
Xxxxxx X. Xxxxxx
President
- 6 -
50
AMENDMENT NO. 3, WAIVER, AND AGREEMENT
This AMENDMENT NO. 3, WAIVER, AND AGREEMENT (this "Agreement") is
entered into and is effective as of December 19, 1997, by and among the parties
to the Stockholders Agreement (described below) and Xxxxx Xxx Xxxxxxx ("Xxxxx
Xxxxxxx"). This Agreement relates to the AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT ("STOCKHOLDERS AGREEMENT") dated as of October 31, 1995, as amended,
by and among Classic Communications, Inc. ("Company"), J. Xxxxxxx Xxxxxxx
("Xxxxxxx Xxxxxxx"), Xxxxxxx X. Xxxxx, Xxxxxx X. Seach, Xxxx Xxxxxxxxxx, Xxxxx
X. Xxxxxxxx, Xxxxxx Ventures, L.P., Austin Ventures III-A, L.P., Austin Ventures
III-B, L.P., BT Capital Partners, Inc., Texas Growth Fund, NationsBanc Capital
Corp., The Chase Manhattan Bank, Union Venture Corporation, and certain
additional warrantholders of the Company. Capitalized terms used in this
Agreement but not otherwise defined have the meanings assigned to them in the
Stockholders Agreement.
Recitals
(i) This Agreement is entered into to effectuate certain agreements
between Xxxxxxx Xxxxxxx and Xxxxx Xxxxxxx regarding the transfer of certain
shares of stock of the Company from Xxxxxxx Xxxxxxx to Xxxxx Xxxxxxx in
connection with their divorce, and to replace a reference in the Stockholders
Agreement to the "1995 Stock Option Plan" of the Company, which was never
adopted, with a reference to the documents that were adopted and entered into in
lieu of the stock option plan. The Stockholders Agreement may be amended,
pursuant to Section D.13 thereof, by the holders of not less than 90% of the
outstanding shares of the Company's common stock and preferred stock,
respectively.
(ii) Xxxxx Xxxxxxx becomes a party to the Stockholders Agreement in
anticipation of the possibility that she will be a holder of the shares in the
future. Upon delivery of the shares to Xxxxx Xxxxxxx, they will be purchased
from her by the Company. The Company will deliver a promissory note to Xxxxx
Xxxxxxx in payment for the shares, and the note will be secured by the shares
pursuant to the terms of a pledge agreement to be executed by the Company. In
case of an event of default on the Note or the pledge agreement, Xxxxx Xxxxxxx
may become a holder of the shares. In anticipation of that eventuality, Xxxxx
Xxxxxxx hereby becomes a party to the Stockholders Agreement.
(iii) In addition, the transfer of the shares by Xxxxxxx Xxxxxxx
requires the waiver by the Company and the other shareholders of certain
restrictions contained in the Stockholders Agreement.
Accordingly, the undersigned parties agree as follows:
A. AMENDMENT.
The definition of "Management Options" in Section A of the Stockholders
Agreement is amended to read in its entirety as follows:
51
"Management Options" means the Company's 1996 Restricted Stock
Award Plan, and the Stock Exchange Agreement dated as of May 1, 1996,
by and among the Company, Xxxxxxx Belisle, Smith, Seach, Xxxxxxxxxx,
and Xxxxxxxx.
B. ADDITIONAL PARTY.
1. On the effective date of this Agreement:
(a) Xxxxx Xxxxxxx becomes an additional party to the
Stockholders Agreement, entitled to all benefits accorded to a Member of
Management under, and subject to all of the obligations imposed upon a Member of
Management pursuant to, the Stockholders Agreement as if she had been one of the
Members of Management that was an original signatory party thereto (and, to the
extent applicable, she assumes the obligations of a Member of Management
pursuant to the Stockholders Agreement); and
(b) All shares of Common Stock transferred to Xxxxx Xxxxxxx by
Xxxxxxx Xxxxxxx are subject to the terms, conditions, and restrictions in the
Stockholders Agreement that are applicable to shares of Common Stock owned by
Members of Management, except the provisions waived in Section C of this
Agreement.
2. For purposes of the Stockholders Agreement, Xxxxx Xxxxxxx agrees
that all notices to be given will be sent to her at the following address:
Xx. Xxxxx Xxxxxxx
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
With a copy to: Fulbright & Xxxxxxxx
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No. 713/651-5246
C. WAIVER.
1. In connection with the transfer from Xxxxxxx Xxxxxxx to Xxxxx
Xxxxxxx of 7,578 shares of Restricted Stock pursuant to the terms of Paragraph
B.2(a)(iii) of the Stockholders Agreement, the Company and its undersigned
stockholders waive, with respect to these shares only, the provisions of
Paragraph B.2(a)(iii) that:
(a) require the transferee of Restricted Stock to grant to the
transferor an irrevocable proxy coupled with an interest to vote all of the
shares of Restricted Stock so transferred; and
2
52
(b) apply the terms of Paragraph B.2(d) of the Stockholders
Agreement to shares of Restricted Stock so transferred.
2. In connection with the transfer from Xxxxxxx Xxxxxxx to Xxxxx
Xxxxxxx of 2,500 shares of Management/Investor Stock pursuant to the terms of
Paragraph B.3(b)(iii) of the Stockholders Agreement, the Company and its
undersigned stockholders waive, with respect to these shares only, the
provisions of Paragraph B.3(b)(iii)(D) that apply the terms of Paragraph B.2(d)
of the Stockholders Agreement to shares of Management/Investor Stock so
transferred.
D. GENERAL.
1. Continuing Effect. Except as provided herein, the Stockholders
Agreement remains unchanged and in full force and effect.
2. Governing Law. The corporate laws of the State of Delaware will
govern all questions concerning the relative rights of the Company and the other
parties to this Agreement. All other questions concerning the construction,
validity and interpretation of this Agreement shall be governed by the internal
laws of the State of Texas without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
3. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which taken
together will constitute one and the same instrument.
4. Descriptive Headings. The descriptive headings in this Agreement are
inserted for convenience only and do not limit or otherwise affect any of the
terms hereof.
5. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
6. Binding Effect. The agreements in this Agreement by or on behalf of
any of the parties hereto will bind and inure to the benefit of the respective
heirs, personal representatives, successors and assigns of the parties hereto.
* * * * *
3
53
EXECUTED as of the date and year first written above.
/s/ XXXXX XXX XXXXXXX
--------------------------------------- AUSTIN VENTURES III-A, L.P.
XXXXX XXX XXXXXXX
By: AV Partners III, L.P.
Its: General Partner
/s/ J. XXXXXXX XXXXXXX
--------------------------------------- By: /s/ XXXXXXX X. XXXXXX
J. XXXXXXX XXXXXXX ------------------------------------
Xxxxxxx X. Xxxxxx
General Partner
CLASSIC COMMUNICATIONS, INC.
By: /s/ XXXXXX X. SEACH AUSTIN VENTURES III-B, L.P.
------------------------------------
Name: Xxxxxx X. Seach By: AV Partners III, L.P.
------------------------- Its: General Partner
Title: President
------------------------ By: /s/ XXXXXXX X. XXXXXX
------------------------------------
Xxxxxxx X. Xxxxxx
/s/ XXXXXXX X. XXXXX General Partner
---------------------------------------
XXXXXXX X. XXXXX
BT CAPITAL PARTNERS, INC.
/s/ XXXXXX X. SEACH
--------------------------------------- By: /s/ XXXXXX XXXXXXXXXX
XXXXXX X. SEACH ------------------------------------
Xxxxxx Xxxxxxxxxx
/s/ XXXX XXXXXXXXXX Managing Director
---------------------------------------
XXXX XXXXXXXXXX
BOARD OF TRUSTEES OF
/s/ XXXXX X. XXXXXXXX TEXAS GROWTH FUND - 1991 TRUST,
--------------------------------------- AS TRUSTEE
XXXXX X. XXXXXXXX
By: TGF Management Corp.
Its: Executive Director
AUSTIN VENTURES, L.P.
By: /s/ XXXXX X. XXXXXXXXX
By: AV Partners, L.P. ------------------------------------
Its: General Partner Xxxxx X. Xxxxxxxxx
President
By: /s/ XXXXXXX X. XXXXXX
------------------------------------
Xxxxxxx X. Xxxxxx
General Partner
4
54
NATIONSBANC CAPITAL CORP.
By: /s/ XXXXXX XXXXXXXX III
------------------------------------
Xxxxxx Xxxxxxxx III
Senior Vice President
THE CHASE MANHATTAN BANK, N.A.
By: /s/ XXXXXX XXXXXXXX III
------------------------------------
Name: Xxxxxx Xxxxxxxx III
Vice President
UNIONBANCAL VENTURE
CORPORATION
By: /s/ XXXXXXX XXXXX
------------------------------------
Name: Xxxxxxx Xxxxx
-------------------------
Title: Vice President
------------------------
5
