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EXHIBIT 99.4
STOCKHOLDERS AGREEMENT
Agreement dated as of January 30, 1998 between WELSH, CARSON,
ANDERSON & STOWE VII, L.P., a Delaware limited partnership (the "Stockholder"),
AURORA ELECTRONICS, INC., a Delaware corporation ("Parent") and THE CERPLEX
GROUP, INC., a Delaware corporation (the "Company").
WHEREAS, pursuant to an Agreement and Plan of Merger of even
date herewith (the "Merger Agreement") among Parent, Holly Acquisition Corp., a
newly organized wholly-owned Delaware subsidiary of Parent ("Sub"), and the
Company, Parent desires to acquire the Company through the merger (the
"Merger") of Sub with and into the Company;
WHEREAS the Stockholder beneficially owns approximately 74% of
the outstanding voting stock of Parent, consisting of 433,319 shares of
Convertible Preferred Stock, $.01 par value ("Parent Preferred Stock"), of
Parent;
WHEREAS Parent desires to amend its Restated Certificate of
Incorporation pursuant to a Certificate of Amendment substantially in the form
of Exhibit A hereto (the "Parent Certificate of Amendment") to authorize, among
other things, additional shares of Common Stock, $.03 par value ("Parent Common
Stock"), of Parent that are contemplated to be issued in the Merger;
WHEREAS the Stockholder is willing to agree to vote in favor
of the Parent Certificate of Amendment at any meeting of the stockholders of
the Parent called for such purpose and to execute and deliver any written
consent approving the Parent Certificate of Amendment in lieu of such meeting;
WHEREAS, subject to the consummation of the Merger and the
transactions contemplated by the Securities Purchase and Exchange Agreement of
even date herewith (the "Securities Purchase and Exchange Agreement"), among
Parent, the several purchasers named in Annex I thereto (including the
Stockholder), and WCAS Capital Partners II, L.P., a Delaware limited
partnership, the Stockholder is willing to convert all the outstanding shares
of Parent Preferred Stock owned by it into Parent Common Stock on the terms and
subject to the conditions set forth therein; and
WHEREAS, in the event the Merger Agreement terminates in
accordance with its terms without consummation of the Merger contemplated
thereby, (i) the Stockholder is willing to grant the Company an option to
purchase (A) an aggregate $18,069,375 principal amount of Amended and Restated
Senior Subordinated Notes due November 19, 2001 (collectively, the "Cerplex
Subordinated Notes"), of the Company and (B) warrants (collectively, the
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"Cerplex Warrants") to purchase an aggregate 1,500,096 shares of Common Stock,
$.001 par value, of the Company, for a price equal to the consideration paid by
the Stockholder for said Notes and Warrants pursuant to the Note and Warrant
Assignment and Transfer Agreement, dated of even date herewith, among the
several note and warrant holders named in Schedule I thereto and the
Stockholder, and (ii) Parent is willing to grant the Company an option to
purchase all outstanding Subordinated Notes due June 30, 1998 (the "Cerplex
Bridge Notes") purchased by Parent pursuant the Note Purchase Agreement of even
date herewith between Parent and the Company at a price equal to the principal
amount of the Cerplex Bridge Notes plus accrued interest thereon;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto hereby
agree as follows:
SECTION 1. Voting Agreement.
(a) From and after the date hereof, at any meeting (whether
annual or special or both) of the stockholders of Parent, including any
adjournment or postponement thereof, the Stockholder agrees, with respect to
all shares of Parent Common Stock and Parent Preferred Stock owned by such
Stockholder on the date hereof or acquired hereafter that are entitled to vote
at such meeting or over which such Stockholder has voting power (and any and
all other shares of Parent Common Stock or Parent Preferred Stock or other
securities issued on or after the date hereof in respect or upon conversion of
any such shares), (i) to vote in favor of the Parent Certificate of Amendment,
(ii) to execute and deliver one or more consents in writing (pursuant to
Section 228 of the General Corporation Law of the State of Delaware (the
"GCL")) in lieu of such meeting or adjournment thereof, and (iii) if no meeting
of stockholders is scheduled in accordance with the Merger Agreement, or any
such meeting is canceled or adjourned, and no action is taken by written
consent in lieu thereof, to call a special meeting of stockholders of Parent or
to act by written consent for the purpose of approving the Parent Certificate
of Amendment or any action with respect thereto.
SECTION 2. Further Assurances. Subject to the terms and
conditions herein provided, the Stockholder agrees to (i) perform its
obligations under the Securities Purchase and Exchange Agreement in accordance
with the terms thereof, provided, however, that the foregoing shall not require
the Stockholder to waive any condition to its obligation to close set forth
therein, (ii) continue to guarantee the obligations under the Credit Agreement
dated as of March 29, 1996, as amended, among Aurora Electronics Group, Inc.,
The Chase Manhattan Bank, as Agent
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thereunder (the "Agent"), the guarantors named therein and the lenders named
therein, in accordance with the terms of the Amended and Restated Guarantee,
dated as of December 23, 1997 (the "Chase Guarantee") made by the Stockholders
in favor of the Agent, and (iii) to forbear exercising any rights under the
Cerplex Subordinated Notes through June 30, 1998 (or, if earlier, until the
expiration of the Option Period (as defined below)) and (iv) to use its
reasonable best efforts to cause Parent to take all actions, and to cause
Parent to do all things, that Parent has agreed to do or perform, pursuant to
the Merger Agreement, the Securities Purchase and Exchange Agreement, the
Cerplex Note Purchase Agreement and the Cerplex Note, subject to the terms and
conditions set forth in such agreements. Subject to the terms and conditions
herein provided, with respect to the Cerplex Subordinated Notes the Stockholder
further agrees, and the Company and the Stockholder hereby amend Section
4.1(b)(ii) of each of those separate Amended and Restated Note Purchase
Agreements, each dated as of April 9, 1997, as amended by the First Amendment
Agreement dated as of August 20, 1997 to provide, that on any interest payment
date commencing with the February 19, 1998 interest payment date until the
sooner to occur of (i) June 30, 1998, (ii) the expiration of the Option Period
and (iii) payment in full in cash of all indebtedness and termination of all
obligations to provide financial accommodations under that certain Credit
Agreement dated as of October 12, 1994 between the Company, the lender listed
on the signature page thereof and Citibank, N.A., the Company may satisfy its
obligation to pay interest on each Cerplex Subordinated Note (each, a "Note")
by adding an additional principal amount to the then outstanding principal
amount of such Note equal to the aggregate amount of the interest payment in
respect of such Note that is due on such interest payment date.
Notwithstanding the foregoing provisions of this Section 2, it is understood
and agreed that the Stockholder in performing its obligations under this
Section 2 in no circumstances (except as and to the extent specifically
provided in the Securities Purchase and Exchange Agreement and under the Chase
Guarantee and the Chase Letter) shall be required (x) to expend any monies,
guarantee any obligations, deliver any assets, institute any litigation or
otherwise make any undertakings with respect thereto similar in purpose or
effect or (y) cause Parent to waive any condition to its obligation to
consummate the transactions contemplated by the Merger Agreement, the
Securities Purchase and Exchange Agreement, the Cerplex Note Purchase Agreement
and the Cerplex Note.
SECTION 3. Conversion of Parent Preferred Stock. Subject to,
and simultaneously with, the consummation of the Merger and the transactions
contemplated by the Securities Purchase and Exchange Agreement, the Stockholder
agrees to convert into Parent Common Stock in accordance with the Certificate
of Incorporation of Parent all outstanding shares of Parent Preferred Stock
owned of record or beneficially by it immediately
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prior to the transactions contemplated by the Securities Purchase and Exchange
Agreement. The number of shares of Parent Common Stock held by, or issuable
to, the Stockholder pursuant to the exercise of all warrants, convertible
securities and other rights (including, without limitation, antidilution
rights) is as set forth in Section 5.02 of the Merger Agreement and Schedule
5.02 thereto, and there are no outstanding antidilution rights other than those
waived pursuant to Section 6 below.
SECTION 4. Company's Option to Repurchase Certain Securities.
The Stockholder and Parent agree that in the event that the Merger Agreement is
terminated in accordance with its terms and the Merger is not consummated, the
Company shall have the right and option, for a period of 30 days after the
termination of the Merger Agreement (the "Option Period"), to purchase from (i)
the Stockholder, all (but not less than all) of the Cerplex Subordinated Notes
and the Cerplex Warrants for an aggregate purchase price equal to $5,784,458 in
cash and/or (ii) from Parent, all (but not less than all) the outstanding
Cerplex Bridge Notes for a purchase price equal to the principal amount thereof
plus all interest accrued thereon to the date of payment. The Company shall
exercise such right and option to purchase such securities by mailing a written
notice (a "Notice of Election") to the Stockholder or Parent, as the case may
be, within the Option Period. If a Notice of Election shall have been received
as aforesaid by the Stockholder or Parent, the Stockholder or Parent, as the
case may be, shall sell the subject securities to the Company as set forth
above. The closing of any such sale shall take place at the offices of Reboul,
MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York, New York
10111, no later than 30 days following the expiration of the Option Period, or
such other place and earlier date as may be agreed by all parties to said
transaction. At such closing (i) the Stockholder shall deliver the Cerplex
Subordinated Notes and Cerplex Warrants to be sold, and/or (ii) Parent shall
deliver the Cerplex Bridge Notes to be sold, as the case may be, in any such
case duly endorsed for transfer, against receipt of the purchase price therefor
by certified or official bank check or by wire transfer of immediately
available funds to the accounts specified by the Stockholder or Parent.
SECTION 5. Duration of Agreement. This Agreement shall
terminate upon the earliest to occur of (i) June 30, 1998, (ii) the
consummation of the Merger and (iii) the termination of the Merger Agreement in
accordance with its terms; provided, however, that the option contained in
Section 4 hereof shall terminate at the end of the Option Period, in accordance
with the provisions of such Section 4.
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SECTION 6. Certain Waivers. The Stockholder hereby agrees to
waive:
(i) any adjustment in the Conversion Price (as defined in
the Certificate of Designations, Preferences and Rights of Convertible
Preferred Stock of Parent) of the Convertible Preferred Stock that
might otherwise have operated by virtue of the issuance by Parent on
August 14, 1997, of 775,194 shares of Parent Common Stock in
settlement of a certain class action complaint;
(ii) any adjustment in the respective Exercise Prices (as
defined in the applicable Warrant) of the Warrants (as defined below)
that might otherwise operate by virtue of the issuance by Parent of
the shares of Parent Common Stock that are contemplated to be issued
in the Merger; and
(iii) any rights to purchase Convertible Preferred Stock
pursuant to Section 4.01 of the Amended and Restated Financial Support
Agreement, dated as of July 31, 1997, among Parent, the Stockholder
and the other parties named therein.
For the purposes of this Agreement, the term "Warrants" shall mean (i) the
Common Stock Purchase Warrant, dated September 30, 1996, issued by Parent to
the Stockholder, (ii) the Common Stock Purchase Warrant, dated January 27,
1997, issued by Parent to the Stockholder, (iii) the Common Stock Purchase
Warrant, dated June 6, 1997, issued by Parent to the Stockholder and (iv) the
Common Stock Purchase Warrant, dated July 31, 1997, issued by Parent to the
Stockholder, in each case as the same may have been amended from time to time.
SECTION 7. Termination of Cerplex Warrants. Effective
immediately preceding the consummation of the Merger, the Cerplex Warrants (and
any shares issued upon exercise thereof) shall terminate, shall be of no force
or effect and shall not be deemed outstanding for the purpose of calculating
the Exchange Ratio in the Merger Agreement.
SECTION 8. Headings. Headings of articles, sections and
paragraphs of this Agreement are inserted for convenience of reference only and
shall not affect the interpretation or be deemed to constitute a part hereof.
SECTION 9. Severability. In the event that any one or more
of the provisions contained in this Agreement or in any other instrument
referred to herein shall, for any reason, be held to be invalid, illegal or
unenforceable, such illegality, invalidity or unenforceability shall not affect
any other provisions of this Agreement.
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SECTION 10. Benefits of Agreement; Assignment of Rights by
the Company. Nothing expressed by or mentioned in this Agreement is intended
or shall be construed to give any person other than the parties hereto and
their respective successors and permitted assigns any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto and their respective successors and permitted assigns. Notwithstanding
the foregoing, it is understood and agreed that the Company may assign its
right and option to purchase securities pursuant to Section 4 hereof to a third
party or parties by delivering a written notice of assignment to the
Stockholder and Parent during the Option Period.
SECTION 11. Notices. Any notice or other communications
required or permitted hereunder shall be deemed to be sufficient and received
if contained in a written instrument delivered in person or by courier or duly
sent by first class certified mail, postage prepaid, or by facsimile addressed
to such party at the address or facsimile number set forth below:
(1) if to the Company, to it at:
The Cerplex Group, Inc.
1382 Bell Avenue
Tustin, California 92780
Attn: William A. Klein
(2) if to the Stockholder, to it at:
Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, New York 10022
Attn: Thomas E. McInerney
(3) if to Parent, to it at:
Aurora Electronics, Inc.
9477 Waples Street, Suite 250
San Diego, California 92121
Attn: Chief Executive Officer
or, in any case, at such other address or facsimile number as shall have been
furnished in writing by such party to the other party hereto. All such
notices, requests, consents and other communications shall be deemed to have
been received (a) in the case of personal or courier delivery, on the date of
such delivery, (b) in the case of mailing, on the fifth business day following
the date of such mailing and (c) in the case of facsimile, when received.
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SECTION 12. Modification. Neither this Agreement nor any
provision hereof may be modified, changed, discharged or terminated except by
an instrument in writing signed by the Company and the Stockholder.
SECTION 13. Counterparts. This Agreement may be executed in
any number of counterparts, and each such counterpart hereof shall be deemed to
be an original instrument, but all such counterparts together shall constitute
but one agreement.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, ENFORCEABLE UNDER, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF DELAWARE.
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as of the day and year first above written.
WELSH, CARSON, ANDERSON &
STOWE VII, L.P.
By WCAS VII Partners, L.P.,
General Partner
By /s/ THOMAS E. MCINERNEY
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General Partner
THE CERPLEX GROUP, INC.
By /s/ WILLIAM A. KLEIN
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Name: William A. Klein
Title: Chairman
AURORA ELECTRONICS, INC.
By /s/ JIM C. COWART
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Name: Jim C. Cowart
Title: Chairman