EXHIBIT 10.7
SECURITYHOLDERS AGREEMENT
DATED AS OF SEPTEMBER 30, 1996
AMONG
PETERSEN INVESTMENT CORP.,
PETERSEN HOLDINGS, L.L.C.,
BRIGHTVIEW COMMUNICATIONS GROUP, INC.,
AND
THE OTHER PARTIES HERETO
TABLE OF CONTENTS
Page
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE SECURITYHOLDERS............. 2
1.1 Representations and Warranties of the Securityholders........ 2
ARTICLE II
VOTING AGREEMENTS................................................. 3
2.1 Election of Directors........................................ 3
2.2 Other Voting Matters......................................... 3
2.3 Irrevocable Proxy............................................ 4
2.4 Attendance and Inspection.................................... 4
ARTICLE III
TRANSFERS OF SECURITIES........................................... 4
3.1 Restrictions on Transfer of Executive Securities............. 4
3.2 Restrictions on Transfers of Securities...................... 5
(a) Transfer Restrictions................................... 5
(b) Right of First Refusal.................................. 5
(c) Tag-Along Rights........................................ 7
(d) Permitted Transfers..................................... 9
Termination of Restrictions.................................. 10
3.3 Transfers in Violation of Agreement.......................... 11
ARTICLE IV
EXIT TRANSACTIONS................................................. 11
4.1 Sale of the Company.......................................... 11
4.2 Initial Public Offering...................................... 14
ARTICLE V
REGISTRATION RIGHTS............................................... 15
5.1 Demand Registrations......................................... 15
(a) Requests for Registration............................... 15
(b) Long-Form Registrations................................. 15
(d) Priority on Demand Registrations........................ 16
(e) Restrictions on Demand Registrations.................... 16
(f) Selection of Underwriters............................... 17
5.2 Piggyback Registrations...................................... 17
(a) Right to Piggyback...................................... 17
(b) Piggyback Expenses...................................... 17
(c) Priority on Primary Registrations....................... 17
(d) Priority on Secondary Registrations..................... 17
(e) Selection of Underwriters............................... 18
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(f) Other Registrations..................................... 18
5.3 Holdback Agreements.......................................... 18
5.4 Registration Procedures...................................... 18
5.5 Registration Expenses........................................ 21
5.6 Indemnification.............................................. 21
5.7 Participation in Underwritten Registrations.................. 22
5.8 Other Registration Rights.................................... 23
ARTICLE VI
PREEMPTIVE RIGHTS.................................................. 23
6.1 Issuance of New Securities to Willis Stein................... 23
ARTICLE VII
MISCELLANEOUS...................................................... 24
7.1 Certain Defined Terms........................................ 24
7.2 Legends...................................................... 31
(a) Securityholders Agreement.............................. 31
(b) Removal of Legends..................................... 31
7.3 Expenses of Directors, etc................................... 31
7.4 Amendment and Waiver......................................... 31
7.5 Severability................................................. 32
7.6 Entire Agreement............................................. 32
7.7 Successors and Assigns....................................... 32
7.8 Counterparts................................................. 32
7.9 Remedies..................................................... 32
7.10 Notices...................................................... 33
7.11 Governing Law................................................ 33
7.12 Descriptive Headings......................................... 34
7.13 Further Assurance............................................ 34
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SECURITYHOLDERS AGREEMENT
-------------------------
This Securityholders Agreement (this "Agreement") is entered into
as of September 30, 1996 by and among BrightView Communications Group,
Inc., a Delaware corporation (the "Manager"), in its capacities as a
Securityholder (as defined herein) and as an issuer of Securities (as
defined herein), Petersen Holdings, L.L.C., a Delaware limited liability
company (the "LLC"), Petersen Investment Corp., a Delaware corporation
("PIC"), in its capacities as a Securityholder and as an issuer of
Securities (as defined herein), Petersen Publishing Company, a California
corporation ("PPC"), Willis Stein & Partners, L.P., a Delaware limited
partnership ("Willis Stein") and each other Person identified on Schedule
A. Willis Stein, PIC, PPC, the other Persons identified as
"Securityholders" and the Executives, and each other Person who becomes a
holder of Securities in accordance with this Agreement (in each case in
such Person's capacity as a holder of Securities) are sometimes referred to
herein collectively as the "Securityholders" and individually as a
"Securityholder." Certain capitalized terms used herein are defined in
Section 7.1.
RECITALS
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A. PIC, the Manager, PPC and certain of the other
Securityholders and the Executives are, or shall become, the members of the
LLC pursuant to a Limited Liability Company Agreement (the "LLC
Agreement"), dated as of September 30, 1996. The Manager is the Managing
Member (as defined in the LLC Agreement) of the LLC. Manager and the LLC
are the only members of Petersen Publishing Company, L.L.C., a Delaware
limited liability company ("Operating LLC").
B. Contemporaneously with the execution of this Agreement, LLC,
the Manager, PIC and certain of the other Securityholders will enter into a
Securities Purchase Agreement, dated as of September 30, 1996 (the
"Securities Purchase Agreement"), pursuant to which certain of such
Securityholders will purchase certain Securities of LLC, the Manager and
PIC.
C. Certain of the Securityholders hold Preferred Units, Class A
Common Units, Class B Common Units and/or Class C Common Units of the LLC
as set forth on Schedule A hereto.
D. Certain of the Securityholders hold shares of Class A Common
Stock $.01 par value per share (the "PIC Common Stock"), and Class A
Preferred Stock, $.01 par value per share ("PIC Preferred Stock," and
collectively with the PIC Common Stock, the "PIC Stock,") of PIC as set
forth on Schedule A hereto.
E. Each of the Securityholders (other than PIC) holds shares of
Class A Common Stock, $.01 per value per share (the "Class A Common
Stock"), or Class B Common Stock, $.01 par value per share (the "Class B
Common Stock", and collectively
with the Class A Common Stock, the "Manager Common Stock"), of the Manager
as set forth on Schedule A hereto.
F. The parties hereto desire to provide in advance for, among
other things, (i) the establishment of the composition of the Manager's
board of directors (the "Board"), (ii) continuity in the management,
ownership and control of the Manager, (iii) certain restrictions on
transfers of Securities and (iv) certain rights with respect to the
registration of Securities issued by the Manager.
The parties hereto agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE SECURITYHOLDERS
1.1 REPRESENTATIONS AND WARRANTIES OF THE SECURITYHOLDERS. Each
Securityholder (as to himself or itself only) represents and warrants to
PIC, the Manager, the LLC and the other Securityholders that, as of the
time such Securityholder becomes a party to this Agreement:
(a) this Agreement (or the separate joinder agreement executed
by such Securityholder) has been duly and validly executed and delivered by
such Securityholder, and constitutes a legal and binding obligation of such
Securityholder, enforceable against such Securityholder in accordance with
its terms;
(b) the execution, delivery and performance by such
Securityholder of this Agreement and the consummation by such
Securityholder of the transactions contemplated hereby will not, with or
without the giving of notice or lapse of time, or both (i) violate any
provision of law, statute, rule or regulation to which such Securityholder
is subject, (ii) violate any order, judgment or decree applicable to such
Securityholder, or (iii) conflict with, or result in a breach or default
under, any term or condition of any agreement or other instrument to which
such Securityholder is a party or by which such Securityholder is bound;
(c) such Securityholder is the beneficial owner of the
Securities set forth opposite such Person's name on Schedule A hereto, free
and clear of all liens, charges and other encumbrances; and
(d) such Securityholder has not granted and is not party to any
proxy, voting trust or other agreement which is inconsistent with,
conflicts with or violates any provision of this Agreement.
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ARTICLE II
VOTING AGREEMENTS
2.1 ELECTION OF DIRECTORS. (a) Each Person that is a party to
this Agreement hereby agrees that such Person will vote, or cause to be
voted, all voting Securities of the Manager over which such Person has the
power to vote or direct the voting, and will take all other necessary or
desirable actions within such Person's control (whether in his or its
capacity as a stockholder, director, member of a board committee or officer
of the Manager or otherwise and including without limitation attendance at
meetings in person or by proxy for purposes of obtaining a quorum and
execution of consents in lieu of meetings; provided that nothing in this
Section 2.1 shall require a director, in his or her capacity as such, to
violate such director's fiduciary duties to holders of Manager's Capital
Stock), and the Manager will take all necessary and desirable actions
within its control (including without limitation calling special board and
stockholder meetings), so that:
(i) the authorized number of directors for the board of
directors of the Manager is established and maintained at the number of
directors as from time to time may be designated by the Majority Willis
Stein Holders, which number shall initially be 11;
(ii) only individuals (the "Willis Stein Directors")
designated by the Majority Willis Stein Holders shall be elected to the
Board;
(iii) the removal from the Board (with or without cause) of
any representative designated hereunder by the Majority Willis Stein
Holders shall be at the written request of the Majority Willis Stein
Holders, but only upon such written request and under no other
circumstances; and
(iv) in the event that any representative designated
hereunder by the Majority Willis Stein Holders ceases to serve as a member
of the Board during his term of office, the resulting vacancy on the Board
shall be filled by a representative designated by the Majority Willis Stein
Holders as provided hereunder.
(b) The provisions of this Section 2.1 shall terminate
automatically and be of no further force or effect upon a Qualified IPO.
2.2 OTHER VOTING MATTERS. Each party to this Agreement hereby
agrees that such party will vote, or cause to be voted, all voting
Securities of the Manager and its Subsidiaries over which such party has
the power to vote or direct the voting, either in person or by proxy,
whether at a stockholders meeting, or by written consent, in the manner in
which the Majority Willis Stein Holders directs in connection with the
approval of any amendment or amendments to the Manager's Certificate of
Incorporation, the merger, share exchange, combination or consolidation of
the Manager with any other Person or Persons, the sale, lease or exchange
of all or substantially all of the property and assets of the Manager
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and its Subsidiaries on a consolidated basis, and the reorganization,
recapitalization, liquidation, dissolution or winding-up of the Manager;
provided however that no such action shall (a) be inconsistent with the
terms of this Agreement, or (b) have a material adverse effect on any
Securityholder's rights or interests in respect of any Securities, if such
effect would be borne disproportionately by such Securityholder relative to
the effect on the rights or interests of other Securityholders in respect
of holdings of Securities of the same class.
2.3 IRREVOCABLE PROXY. In order to secure the obligations of
each Securityholder who now or hereafter holds any voting securities to
vote such Person's voting Securities in accordance with the provisions of
Section 2.1 and Article IV hereof, each Securityholder hereby appoints
Willis Stein as his or its true and lawful proxy and attorney-in-fact, with
full power of substitution, to vote all of his or its voting Securities for
the election and/or removal of directors and all such other matters as
expressly provided for in Section 2.1 and Article IV. Willis Stein may
exercise the irrevocable proxy granted to it hereunder at any time any such
Securityholder fails to comply with the provisions of this Agreement. The
proxies and powers granted by each such Securityholder pursuant to this
Section 2.3 are coupled with an interest and are given to secure the
performance of such Securityholder's obligations to the Majority Willis
Stein Holders under this Agreement. Such proxies and powers shall be
irrevocable until after the occurrence of a Qualified IPO and shall survive
the death, incompetency, disability, bankruptcy or dissolution of such
Securityholder and the subsequent holders of his or its Securities. No
Securityholder shall grant any proxy or become party to any voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement.
2.4 ATTENDANCE AND INSPECTION. The Majority Non-Willis Stein
Holders shall be entitled to designate one person (by providing written
notice to the Company of the identity of the person so designated) who
shall be entitled to participate as an observer at all meetings of the
Board (the "Board Visitor"). The Majority Non-Willis Stein Holders shall
be entitled to replace the person designated as the Board Visitor (by
providing written notice to the Company of such replacement and of the
identity of the new designee). The Company shall provide the same notice
of meetings of the Board to the Board Visitor as the Company provides to
the members of the Board. The Company shall permit the Board Visitor, upon
reasonable notice and during normal business hours, to visit and inspect
any of the properties (including, without limitation, the books and
records) of the Company and its Subsidiaries.
ARTICLE III
TRANSFERS OF SECURITIES
3.1 RESTRICTIONS ON TRANSFER OF EXECUTIVE SECURITIES.
Notwithstanding anything to the contrary contained in this Agreement, no
holder of Executive Securities may Transfer any Executive Securities,
except with the prior written consent of the Manager, which consent the
Manager may withhold at its sole discretion.
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3.2 RESTRICTIONS ON TRANSFERS OF SECURITIES.
(a) Transfer Restrictions. Notwithstanding any other provision
of this Agreement, except in a Transfer pursuant to Article IV below, no
holder of Securities may Transfer any Securities except in accordance with
this Article III or pursuant to a Public Sale. Notwithstanding any other
provision of this Agreement, no holder of Common Units, PIC Common Stock or
Manager Common Stock may Transfer any of such Securities, unless such
holder Transfers contemporaneously, in the same manner of Transfer and to
the same transferee (i) in the case of a Transfer of Common Units or PIC
Common Stock, the same relative portion of Manager Common Stock or (ii) in
the case of a Transfer of Manager Common Stock, the same relative portion
of Common Units or PIC Common Stock, in each case based upon the
transferor's Ownership Percentage of each such type or class of Securities
held by such holder immediately prior to such Transfer. Also
notwithstanding any other provision of this Agreement, no holder of Common
Units, Preferred Units, PIC Common Stock or PIC Preferred Stock which are
Investor Securities may Transfer any of such Securities, unless such holder
Transfers contemporaneously (i) in the case of a Transfer of Common Units,
the same relative portion of Preferred Units, (ii) in the case of a
Transfer of Preferred Units, the same relative portion of Common Units,
(iii) in the case of a Transfer of PIC Common Stock, the same relative
portion of PIC Preferred Stock, or (iv) in the case of a Transfer of PIC
Preferred Stock, the same relative portion of PIC Common Stock, in each
case based upon the transferor's Investor Ownership Percentage of each such
type or class of Securities held by such holder immediately prior to such
Transfer.
(b) Right of First Refusal.
(i) Each holder of Investor Securities who proposes to
Transfer Securities other than pursuant to a Public Sale (for purposes of
this Section 3.2(b), a "Selling Holder") will give written notice of such
proposed Transfer (the "Transfer Notice") to the Manager and the holders of
Investor Securities (the "Other Holders") at least forty-five (45) days
prior to making such proposed Transfer. The Transfer Notice will disclose
in reasonable detail the identity of the prospective transferee, the
Securities to be transferred (for purposes of this Section 3.2(b), the
"Offered Securities") and the price, terms and conditions of the proposed
Transfer. The Other Holders and the Manager shall be entitled to ask
questions and receive such information as they shall reasonably request
concerning such proposed Transfer and, if requested by the Manager, the
Selling Holder shall be required to supplement the Transfer Notice to
reflect such additional information. The Selling Holder will not consummate
any such Transfer until forty-five (45) days after the Transfer Notice has
been given to the Other Holders and the Manager unless each of the Other
Holders and the Manager elect not to purchase Offered Securities pursuant
to this Section 3.2(b) or each of the Other Holders and the Manager waive
their rights under this Section 3.2(b) prior to the expiration of such
forty-five (45) day period. (The date of the first to occur of such events
is referred to as the "Authorization Date.")
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(ii) First, the Manager or LLC (or any assignee of any of
the foregoing other than Willis Stein or PIC or any Persons controlled
by either Willis Stein or PIC), as designated by the Manager (each
such Person, a "Purchaser", and all such Persons collectively, the
"Purchasers"), may elect to purchase all or any portion of the Offered
Securities upon the same price, terms and conditions as those set
forth in the Transfer Notice by delivering written notice (the
"Repurchase Notice") to the Selling Holder and the Other Holders
within thirty (30) days after the Transfer Notice is given. The
Repurchase Notice will set forth the number of Offered Securities to
be acquired by each such Purchaser.
(iii) Subject to subparagraph (v) below, if the Purchasers
have elected to purchase less than all of the Offered Securities, each
of the Other Holders shall be entitled to purchase upon the same terms
and conditions as those set forth in the Transfer Notice all or any
portion of the Offered Securities that the Purchasers have not elected
to purchase (the "Available Securities"); provided that if Other
Holders elect to purchase in the aggregate an amount of such
Securities which exceeds the amount of Available Securities, such
Available Securities will be allocated among each Other Holder who so
elects to purchase Securities, as determined by the Willis Stein
Majority Holders based upon the portion of the aggregate Ownership
Percentage of all Other Holders electing to exercise purchase rights
hereunder represented by such Other Holder's Ownership Percentage.
Each of the Other Holders may elect to purchase Available Securities
by giving written notice (an "Election Notice") to the Manager within
ten (10) days after the earlier to occur of the latest date on which a
Repurchase Notice may be delivered in accordance with subparagraph
(ii) above or delivery of a Repurchase Notice.
(iv) If the Manager delivers a Repurchase Notice or
receives one or more Election Notices, then on or prior to the
Authorization Date, the Manager shall notify the Selling Holder (the
"Supplemental Repurchase Notice") as to the number of shares being
purchased from such holder by the Other Holders delivering the
Election Notice, if any (the "Electing Holders"), and the time and
place for the closing of all purchases described in the Repurchase
Notice and the Election Notice, if any, which shall not be later than
thirty (30) days after the Authorization Date. Upon receipt of a
Supplemental Repurchase Notice from the Manager, the Selling Holder
will be obligated to sell, and the Purchasers and the Other Holders
delivering an Election Notice shall be obligated to purchase, the
Offered Securities on the terms described in the Transfer Notice and
to the Persons described in the Supplemental Repurchase Notice, and
shall not Transfer any Offered Securities to any other Person, or take
any action inconsistent therewith. At the time the Manager delivers
the Supplemental Repurchase Notice to the Selling Holder, the Manager
shall also deliver written notice to each Electing Holder setting
forth the number of shares each Electing Holder is entitled to
purchase, the aggregate purchase price and the time and place of the
closing of the transaction.
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(v) Notwithstanding anything in this Section 3.2(b) to the
contrary, if the Purchasers and the Other Holders do not, in the
aggregate, elect to purchase all of the Offered Securities specified
in the Transfer Notice, the Selling Holder may (subject to compliance
with Sections 3.1 and 3.2(c) hereof) Transfer all, but not less than
all, of the Offered Securities specified in the Transfer Notice to the
transferees specified in the Transfer Notice at a price and on terms
no more favorable to the transferee(s) thereof than those specified in
the Transfer Notice during the 90-day period immediately following the
Authorization Date. Any such Offered Securities which are not
Transferred in compliance with the preceding sentence within such 90-
day period will again be subject to the provisions of this Section
3.2(b) in connection with any subsequent Transfer or proposed
Transfer.
(c) Tag-Along Rights. Prior to making any Transfer of Securities
(other than a Public Sale or a Transfer to one or more of the Issuers (or
their assignees) or any Transfer pursuant to Section 3.2(b)), (i) prior to
the fourth anniversary of the date of this Agreement, each holder of
Securities proposing to make such a Transfer and (ii) after the fourth
anniversary of the date of this Agreement, the Controlling Holder (any such
Person proposing to make a Transfer who at such time is subject to this
Section 3.2(c), a "Selling Holder") shall give at least forty-five (45)
days' prior written notice to other holders of Securities (for purposes of
this Section 3.2(c) each, an "Other Holder") and the Manager, which notice
(for purposes of this Section 3.2(c), the "Sale Notice") shall describe in
reasonable detail the type and amount of Securities to be sold (for
purposes of this Section 3.2(c), the "Offered Securities"), the price,
terms and conditions of such proposed Transfer, and the identity of the
prospective transferee and which notice may be the same notice as the
Transfer Notice. For purposes hereof, the "Controlling Holder" means Willis
Stein and other Persons under its control, so long as Willis Stein is the
Majority Willis Stein Holder, and otherwise means each holder who, when
included with its Affiliates, is the Majority Willis Stein Holder. Any of
the Other Holders may, within fifteen (15) days of the delivery of the Sale
Notice, give written notice (each, a "Tag-Along Notice") to the Selling
Holder that such Other Holder wishes to participate in such proposed
Transfer upon the terms and conditions set forth in the Sale Notice, which
Tag-Along Notice shall specify the Securities such Other Holder desires to
include in such proposed Transfer; provided, however, that (1) each Other
Holder shall be required, as a condition to being permitted to sell
Securities pursuant to this Section 3.2(c) in connection with a Transfer of
Offered Securities, to sell Securities of the same type and class and in
the same relative proportions as the Securities (except that, subject to
the restrictions on Transfer in Section 3.1, an Executive will be permitted
to include Manager Common Stock and Class A Common Units without including
Preferred Units in any such sale if such Executive and its Permitted
Transferees hold no Preferred Units or have agreed to include in such sale
all Preferred Units held by such Persons prior to inclusion therein of
Manager Common Stock and Class A Common Units, and, if any Executive
Securities are included in any such sale, the purchase price shall be
allocated between each class of Executive Securities and each other class
of securities included therein so that Preferred Securities are valued at
the Liquidation Value thereof or at such other value as shall be determined
in good faith by the Manager) which comprise the Offered Securities; and
(2) to exercise its tag-along rights hereunder, each Other
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Holder must agree to provide for the benefit of the transferee the same
representations, warranties, covenants, indemnities and agreements as the
Selling Holder agrees to provide in connection with the Transfer of the
Offered Securities (except that in the case of representations and
warranties, or covenants pertaining to the Selling Holder of the Offered
Securities, each of the Other Holders shall, to the extent applicable, make
comparable representations and warranties and covenants with respect to
such Other Holder and the Securities it Transfers in such transaction) and
must agree to bear his or its ratable share (which may be joint and several
but shall be based on the value of Securities that are Transferred) of all
liabilities to the transferees arising out of representations, warranties
and covenants (other than those representations, warranties and covenants
that pertain to a given Securityholder or its Securities, who shall bear
all of the liability related thereto), indemnities or other agreements made
in connection with the Transfer. Each Securityholder will bear (x) its or
his own costs of any sale of Securities pursuant to this Section 3.2(c) and
(y) its or his pro-rata share (based upon the relative amount of Securities
sold) of the reasonable costs of any sale of Securities pursuant to this
Section 3.2(c) (excluding all amounts paid to any Securityholder or his or
its Affiliates as a transaction fee, broker's fee, finder's fee, advisory
fee, success fee, or other similar fee or charge related to the
consummation of such sale) to the extent such costs are incurred for the
benefit of all Securityholders and are not otherwise paid by the acquiring
party.
If none of the Other Holders gives the Selling Holder a timely
Tag-Along Notice with respect to the Transfer proposed in the Sale Notice,
then, subject to satisfying the provisions contained in Section 3.2(b), the
Selling Holder may Transfer such Offered Securities on the terms and
conditions set forth in, and to the transferee identified in, the Sale
Notice at any time within ninety (90) days after the later to occur of (i)
expiration of the fifteen-day period for giving Tag-Along Notices with
respect to such Transfer and (ii) the Authorization Date. Any such Offered
Securities not Transferred by the Selling Holder during such ninety-day
period will again be subject to the provisions of this Section 3.2(c) upon
subsequent Transfer. If one or more Other Holders gives the Selling Holder
a timely Tag-Along Notice (each, an "Electing Holder"), then the Selling
Holder shall use all reasonable efforts to obtain the agreement of the
prospective transferee to the participation of the Electing Holders in any
contemplated Transfer, on the same terms and conditions as are applicable
to the Offered Securities, and no Selling Holder shall transfer any of the
Offered Securities to the prospective transferee if such prospective
transferee declines to allow the participation of the Electing Holders. If
the prospective transferee is unwilling or unable to acquire all of the
Offered Securities and all of the Securities specified in each timely Tag-
Along Notice upon such terms, then the Selling Holder may elect either to
cancel such proposed Transfer or to allocate the maximum number or amount
of each type or class of Offered Securities that the prospective transferee
is willing to purchase (the "Allocable Securities") among the Selling
Holder and the Electing Holders as follows (it being understood that the
prospective transferees shall be required to purchase Offered Securities of
the same type or class on the same terms and conditions and to consummate
such Transfer on those terms and conditions):
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(i) each participating Securityholder (including the
Selling Holder) shall be entitled to sell a number of shares or amount
of each type or class of Offered Securities (not to exceed, for any
Electing Holder, the number of shares or amount of such type or class
of Offered Securities identified in such Electing Holder's Tag-Along
Notice) equal to the product of (A) the number or amount of Allocable
Securities of such type or class of Securities and (B) a fraction, the
numerator of which is such Securityholder's Ownership Percentage of
such type or class of Offered Securities and the denominator of which
is the aggregate Ownership Percentage for all participating
Securityholders of such type or class of Offered Securities; and
(ii) if after allocating the Allocable Securities of any
type or class of Offered Securities to such Securityholders in
accordance with clause (i) above, there are any Allocable Securities
of such type or class that remain unallocated, then they shall be
allocated (in one or more successive allocations on the basis of the
allocation method specified in clause (i) above) among the Selling
Holder and each such Electing Holder that has elected in its Tag-Along
Notice to sell a greater number of shares or amount of such type or
class of Offered Securities than previously has been allocated to it
pursuant to clause (i) and this clause (ii) (all of whom (but no
others) shall, for purposes of clause (i) above, be deemed to be the
participating Securityholders) until all such Allocable Securities
have been allocated in accordance with this clause (ii).
No Allocable Securities in excess of the number or amount of Offered
Securities may be transferred pursuant to this Section 3.2(c) unless the
provisions of Section 3.2(b) are complied with for such excess Securities.
(d) Permitted Transfers. The rights and restrictions contained
in Sections 3.1, 3.2(a). 3.2(b) and 3.2(c) shall not apply with respect to
any of the following Transfers of Securities:
(i) any Transfer of Securities in accordance with Section
4.1;
(ii) any Transfer of Securities incidental to the
exercise, conversion or exchange of other Securities to the holder of
such other Securities in accordance with the terms of such other
Securities, any combination of shares (including any reverse stock
split) or any recapitalization, reorganization or reclassification of,
or any merger or consolidation involving any of the Issuers, including
without limitation the transactions described in Sections 4.1 and 4.2;
and
(iii) any Transfer to a Permitted Transferee so long as
prior to such Transfer such Permitted Transferee has executed and
delivered to the Manager an agreement in form and substance
satisfactory to the Manager to be bound by the terms herein in the
same manner and to the same extent as the transferor thereof, and
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assuming the obligations of the transferor hereunder with respect to
the Securities so transferred.
Notwithstanding the foregoing, no party hereto shall avoid the provisions
of this Agreement by making one or more Transfers to one or more Permitted
Transferees and then disposing of all or a portion of such party's interest
in any such Permitted Transferee.
(e) Notwithstanding any other provision hereof, for all purposes
of Article III and Article IV, (i) Class A Common Stock and Class B Common
Stock shall be deemed to be Securities of the same class and type; (ii) PIC
Preferred Stock and Preferred Units shall be deemed to be Securities of the
same class and type, and (iii) PIC Common Stock and Common Units shall be
deemed to be Securities of the same class and type, so that, e.g., an
Electing Holder pursuant to Section 3.2(c) holding PIC Preferred Stock will
be permitted to Transfer shares of such stock in a Transfer of Preferred
Units proposed by a Selling Holder, on the terms and subject to the same
conditions as the terms and conditions on which such Electing Holder would
be permitted to include Preferred Units in such Transfer. Without limiting
the foregoing, if a Securityholder holds PIC Preferred Stock, such
Securityholder's "Ownership Percentage" of Preferred Units shall be
calculated by attributing to such Securityholder the portion of the
Preferred Units held by PIC equal to the percentage of outstanding shares
of PIC Preferred Stock held by such Securityholder, and if such
Securityholder holds PIC Common Stock, such Securityholder's "Ownership
Percentage" of Common Units shall be calculated by attributing to such
Securityholder the portion of the Common Units held by PIC equal to the
percentage of outstanding shares of PIC Common Stock held by such
Securityholder. Similarly, if a Securityholder holds Preferred Units, such
Securityholder's "Ownership Percentage" of PIC Preferred Stock shall be
calculated by attributing to such Securityholder ownership of a number of
shares of PIC Preferred Stock equal to the product of (x) the number of
shares of PIC Preferred Stock which are actually outstanding, multiplied by
(y) a fraction, the numerator of which is the amount of Preferred Units
held by such Securityholder, and the denominator of which is the amount of
Preferred Units held by PIC; and if a Securityholder holds Common Units,
such Securityholder's "Ownership Percentage" of PIC Common Stock shall be
calculated by attributing to such Securityholder ownership of a number of
shares of PIC Common Stock equal to the product of (x) the number of shares
of PIC Common Stock which are actually outstanding, multiplied by (y) a
fraction, the numerator of which is the amount of Common Units held by such
Securityholder, and the denominator of which is the amount of Common Units
held by PIC. In no event will any holder of PIC Common Stock or PIC
Preferred Stock be permitted to Transfer any of such stock pursuant to
Section 3.2(c) if PIC is an "Electing Holder" with respect to such
transaction and Transfers Common Units or Preferred Units, respectively,
therein.
(f) Termination of Restrictions. The restrictions set forth in
this Section 3.2 shall continue with respect to each Security until the
earlier of (i) the date on which such Security has been transferred in a
Public Sale or pursuant to Article IV hereof, or (ii) the consummation of a
Qualified IPO. Notwithstanding any other provision of this Agreement,
except as set forth in the preceding sentence, the restrictions contained
in Article III shall
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continue to be applicable to all Securities after any Transfer and no
Transfer shall be consummated, or be deemed consummated, for any purpose
unless each transferee of such Securities shall have agreed in a writing,
in form and substance satisfactory to the Manager delivered to the Manager
prior to such Transfer, to be bound by the provisions of this Agreement
affecting the securities so Transferred. Notwithstanding any of the
provisions of this Agreement, no holder of Securities may Transfer any
Securities to any Person who, in the good faith judgement of the Willis
Stein Majority Holders, is directly or indirectly, involved or has any
equity investment, in any business which is competitive with the business
of Operating LLC, without the prior written consent of the Willis Stein
Majority Holders.
3.3 TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or
attempted Transfer of any Securities in violation of any provision of this
Agreement shall be void; no Issuer of such Securities shall record such
Transfer on its books or treat any purported transferee of such Securities
as the owner of such Securities for any purpose; and the transferor of such
Securities shall not be relieved of any of its obligations as a
Securityholder under this Agreement.
ARTICLE IV
EXIT TRANSACTIONS
4.1 SALE OF THE COMPANY.
(a) If the Manager elects to consummate, or to cause the LLC to
consummate, a transaction constituting a Sale of the Company, the Manager
shall notify the other Securityholders in writing of that election, each of
the other Securityholders will consent to and raise no objections to the
proposed transaction, and each of the Securityholders and the Issuers will
take all other actions reasonably necessary or desirable to cause the
consummation of such Sale of the Company on the terms proposed by the
Manager; provided that: (i) if the proposed Sale of the Company is
structured as or involves a sale or redemption (i.e., a purchase by the LLC
of Common Units and PIC Common Stock) of Securities, the Securityholders
will agree to sell their pro-rata share of the Securities being sold in
such Sale of the Company on the terms and conditions approved by the
Manager (it being the understanding and intent of the Securityholders that
any such Sale of the Company would be effected as a sale of PIC Stock,
Manager Common Stock and Units (excluding the Units held by PIC or the
Manager), and that the holders of PIC Common Stock and the holders of Class
A Common Units other than PIC or the Manager would be paid consideration of
the same type and in the same amount, treating each share of PIC Common
Stock as equivalent to a Class A Common Unit, and that the holders of PIC
Preferred Stock and the holders of Preferred Units other than PIC would
receive consideration of the same type and in the same amount, in
proportion to the Preference Amount of such Preferred Securities), and each
of the Securityholders will execute any merger or sale agreement approved
by the Manager in connection with such Sale of the Company, (ii) each
Securityholder shall be severally obligated to join (on a basis reflecting
the manner in which
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loss and expenses would be allocated or borne pursuant to the Holdings LLC
Agreement and the Company's certificate of incorporation upon liquidation of the
LLC and Manager) in any indemnification or other obligations that the Manager
agrees to in connection with such Sale of the Company (other than any such
obligations that relate specifically to a particular Securityholder such as
indemnification with respect to representations and warranties given by a
Securityholder regarding such Securityholder's title to and ownership of a
Security, as to which obligations each such Securityholder shall be solely
liable); provided that no Securityholder shall be obligated in connection with a
Sale of the Company to agree to indemnify or hold harmless the prospective
transferee(s) with respect to an amount in excess of the net cash proceeds to be
paid to such Securityholder in connection with such Sale of the Company and
(iii) the holders of Common Units and the holders of Preferred Units (other than
holders of the Common Units and Preferred Units originally issued to PPC or
issued in respect of such units, and other than PIC and Manager) (collectively
the "LLC Sharing Parties") shall make a payment (or cause a payment to be made)
to PIC five (5) days prior to the due date of the federal, state, local or
foreign corporate income tax return of PIC (or earlier due date for any
estimated tax return if applicable) in an aggregate amount equal to the PIC Tax
Make-Whole Amount. (At the request of PIC, such amounts may be withheld from the
proceeds of any Sale of the Company otherwise payable to any of the LLC Sharing
Parties). The PIC Tax Make-Whole Amount shall be equal to the product of (i) the
sum of (A) the PIC Tax Amount, plus (B) the PIC Shareholder Tax Detriment
Amount, plus (C) the Tax Gross-Up Amount, multiplied by (ii) a fraction, the
numerator of which is the aggregate gains to be realized (with respect to or in
exchange for their equity interests in the LLC and the Manager) in connection
with the Sale of the Company by the LLC Sharing Parties, and the denominator of
which is the aggregate gains to be realized (with respect to or in exchange for
their equity interests in the LLC and the Manager) in connection with the Sale
of the Company by the LLC Sharing Parties, PIC and the Manager. Each LLC Sharing
Party shall be severally (and not jointly) obligated to pay a portion of the PIC
Tax Make-Whole Amount equal to a fraction, the numerator of which is the
aggregate gains to be realized (with respect to or in exchange for its equity
interests in the LLC and the Manager) in connection with the Sale of the Company
by such LLC Sharing Party, and the denominator of which is the aggregate gains
to be realized (with respect to or in exchange for their equity interests in the
LLC and the Manager) in connection with the Sale of the Company by all LLC
Sharing Parties. For purposes of this Agreement, the PIC Tax Amount shall mean
the amount of any federal, state, local and foreign income tax liability of PIC
attributable to the taxable income recognized by PIC as a result of the Sale of
the Company, including any receipt of assets from the LLC or distribution of
assets by PIC to its shareholders or creditors in connection with the Sale of
the Company. For purposes of this Agreement, the PIC Shareholder Tax Detriment
Amount shall mean an amount equal to the sum of (i) the excess of (A) the income
tax liability incurred by the PIC shareholders as a result of the Sale of the
Company, including any receipt of assets from PIC in connection with the Sale of
the Company, over (B) the income tax liability that would have been incurred by
the PIC shareholders as a result of the Sale of the Company if such shareholders
had, from the inception of the LLC, owned the equity interests in the LLC owned
by PIC (taking into account, without limitation, any increase in tax basis the
PIC shareholders would have received on account of the undistributed income of
the LLC), plus (ii) an amount sufficient to cause the sum of the
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amounts described in clauses (i) and (ii) of this sentence, net of any income
taxes payable by the PIC shareholders as a result of receiving with respect to
their investment in PIC a payment to equal such amounts, to equal the amount
described in clause (i) of this sentence. For purposes of this Agreement, the
Tax Gross-Up Amount shall mean an amount sufficient to cause the sum of the PIC
Tax Amount, the PIC Shareholder Tax Detriment Amount and the Tax Gross-Up
Amount, net of any income taxes payable by PIC as a result of receiving such
payments, to equal the sum of the PIC Tax Amount and the PIC Shareholder Tax
Detriment Amount. All determinations necessary in applying this section shall be
made in good faith by the LLC's accountants and shall assume that all of the PIC
shareholders are subject to tax at the maximum federal, state and local income
tax rate applicable to an individual resident in Chicago, Illinois on income of
the relevant character.
(b) During each of the taxable years in which PIC owns an equity
interest in the LLC, if the LLC makes a distribution to the holders of the LLC
interests and the distribution is (i) not in connection with a Sale of the
Company and (ii) is in excess of the amount required to be distributed pursuant
to Section 5.5 of the LLC Agreement (the "Excess Distribution"), then the LLC
Sharing Parties shall make a payment (or cause a payment to be made) to PIC five
(5) days prior to the due date of the federal, state, local or foreign corporate
income tax return of PIC (or earlier due date for any estimated tax return if
applicable) in an amount calculated in the same manner as the PIC Tax Make-Whole
Amount, as appropriately adjusted to substitute the Excess Distribution
(including any events by which the LLC generated funds enabling the LLC to make
the Excess Distribution) for a Sale of the Company. Each LLC Sharing Party shall
be obligated to pay a portion of the amount described in the preceding sentence
equal to a fraction, the numerator of which is the portion of the Excess
Distribution to be received by such LLC Sharing Party, and the denominator of
which is the aggregate portion of the Excess Distribution to be received by all
LLC Sharing Parties.
(c) The intent of Section 4.1(a)(iii) and Section 4.1(b), above, are
to cause a person subject to income tax as an individual who invests in LLC
equity interests through PIC to achieve the same after-tax return from such
investment as an LLC Sharing Party who is subject to income tax as an individual
achieves from such LLC Sharing Party's direct investment in equivalent LLC
equity interests (in both cases, after taking into account the payments
described in Section 4.1(a)(iii) and Section 4.1(b)). Section 4.1(a)(iii) and
Section 4.1(b) shall be interpreted in a manner consistent with the intent
described in the preceding sentence and in no event shall Section 4.1(a)(iii)
and Section 4.1(b) be applied to produce a higher after-tax return to the
shareholders of PIC (deeming all such shareholders to be taxable as individuals)
than the return achieved by an LLC Sharing Party holding an equivalent interest
(provided that any LLC Sharing Party that is subject to New York City
Unincorporated Business Tax will have its after-tax return calculated as if all
LLC Sharing Parties are subject to New York City Unincorporated Business Tax).
(d) The obligations of the Securityholders with respect to a Sale of
the Company are subject to a satisfaction of the following conditions: (i) upon
the consummation of the Sale of the Company, including any related redemptions
(e.g., a
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purchase by the LLC of Common Units and PIC Common Stock), prior to taking into
account any payments pursuant to Section 4.1(a)(iii) and Section 4.1(b), all of
the holders of a particular class or series of Securities shall receive the same
form and amount of consideration per share, unit or amount of Securities
(provided that, in the case of PIC equity holders, the consideration received
shall be deemed to include the amount of corporate taxes actually paid by PIC),
or if any holders of a particular type, class or series of Securities are given
an option as to the form and amount of consideration to be received, all holders
of such type, class or series will be given the same option (treating PIC Common
Stock and Common Units as being of the same type, class and series of Securities
for all purposes of this clause (i), excluding for such purposes the Units held
by PIC or the Manager), (ii) all holders of then currently exercisable rights to
acquire a particular type, class or series of Securities will be given an
opportunity to either (A) exercise such rights prior to the consummation of the
Sale of the Company and participate in such sale as holders of such Securities
or (B) upon the consummation of the Sale of the Company, receive in exchange for
such rights consideration equal to the amount determined by multiplying (1) the
same amount of consideration per share, unit or amount of Securities received by
the holders of such type and class of Securities in connection with the Sale of
the Company less the exercise price per share, unit or amount of such rights to
acquire such Securities by (2) the number of shares, units or aggregate amount
of Securities represented by such rights, and (iii) the holders of Preferred
Securities, shall receive in respect of all of the issued and outstanding
Preferred Securities in such Sale of the Company consideration having a fair
market value equal to the aggregate Preference Amount with respect thereto
before any consideration is paid in respect of any of the Common Equity
Securities in such Sale of the Company; provided however, that if less than all
of the outstanding Preferred Securities are acquired in such Sale of the Company
or if the value of the consideration in such Sale of the Company is less than
the aggregate Preference Amount with respect to all outstanding Preferred
Securities then the consideration in such Sale of the Company shall be allocated
among the holders of the Preferred Securities, ratably based on the aggregate
Preference Amount of Preferred Securities held by each such holder.
(e) If PIC, the Manager or the LLC enters into any negotiation or
transaction for which Rule 506 under the Securities Act (or any similar rule
then in effect) may be available with respect to such negotiation or transaction
(including a merger, consolidation or other reorganization), each Securityholder
that is not an "accredited investor" (within the meaning of Rule 501(a) of the
Securities Act) will, at the request of the Manager, appoint a purchaser
representative (as such term is defined in Rule 501 under the Securities Act)
approved by the Manager and the Manager will pay the fees of such purchaser
representative. If any such Securityholder declines to appoint the purchaser
representative approved by the Manager such Securityholder will appoint another
purchaser representative, and such Securityholder will be responsible for the
fees of the purchaser representative so appointed.
(f) Each Securityholder will bear its or his pro-rata share (based
upon the relative amount of proceeds received with respect to Securities sold)
of the reasonable costs of any sale of Securities pursuant to a Sale of the
Company (but only if such Sale of the
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Company is actually consummated) to the extent such costs are incurred for the
benefit of all Securityholders and are not otherwise paid by the Manager or the
acquiring party. Costs incurred by or on behalf of a Securityholder for its or
his sole benefit will not be considered costs of the transaction hereunder.
4.2 INITIAL PUBLIC OFFERING. Subject to Article V, the Manager shall
control all aspects of any initial Public Offering, including any initial Public
Offering of Manager Common Stock (an "IPO"), including without limitation the
timing and pricing thereof. In connection with an IPO, the Manager may formulate
a reorganization or restructuring plan (the "Reorganization Plan") to
restructure or reorganize one or more of the Issuers. Each holder of Securities
shall take whatever action is required under such Reorganization Plan to effect
the transactions contemplated therein so long as such plan does not affect such
holding in a manner which is materially adverse and disproportionate to the
manner in which such plan affects other holders of securities of the same class.
Any Reorganization Plan may, without limitation, provide that: (i) all Common
Units (other than Common Units held by PIC) and PIC Common Stock be contributed
to the Manager without consideration therefor on a tax-deferred basis pursuant
to Section 351 of the Code, (ii) all shares or amounts of Preferred Securities
be exchanged for or converted into stock of the Manager or a successor
corporation (whether of a series with similar or different economic terms
(including Manager Common Stock) but provided that the fair market value (as
determined in the good faith judgement of the Board of Directors of the Manager)
of such stock shall not be less than the Preference Amount of such Preferred
Securities at the time of such transaction) and/or (iii) PIC and/or the LLC
merge with and into the Manager or sell all of its assets to the Manager;
provided that if in connection with any Reorganization Plan voting Equity
Securities of the Manager are exchanged for Units, at the request of any holder
of Class B Common Stock, the Company shall offer to such holder of Class B
Common Stock non-voting Equity Securities of the Manager which possess the same
rights (other than with respect to voting) and preferences as such voting Equity
Securities.
ARTICLE V
REGISTRATION RIGHTS
5.1 DEMAND REGISTRATIONS.
(a) Requests for Registration. The Majority Willis Stein Holders may
request by written notice to the Manager at any time or from time to time the
registration under the Securities Act of all or any portion of their Registrable
Securities on Form S-1 or any similar long-form registration ("Long-Form
Registrations") or on Form S-2 or S-3 or any similar short-form registration
("Short-Form Registrations") if available. The Majority Non-Willis Stein Holders
may request by written notice to the Manager on not more than two occasions a
short-form Registration of all or any portion of their Registrable Securities so
long as the Manager has become eligible to use any applicable short form. All
registrations requested pursuant to this Section 5.1(a) are referred to herein
as "Demand Registrations".
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Each request for a Demand Registration shall specify the approximate number of
Registrable Securities requested to be registered and the anticipated per share
price range for such offering. Within ten days after receipt of any such
request, the Manager shall give written notice of such requested registration to
all other holders of Registrable Securities, which notice shall offer such
holders the opportunity to participate in the registration on the terms hereof,
and shall include, subject to Section 5.1(d) in such registration all
Registrable Securities with respect to which the Manager has received written
requests for inclusion therein within 15 days after the receipt of the Manager's
notice. Notwithstanding anything to the contrary herein, unless the Manager
agrees otherwise, the Manager shall not be required to effect a "shelf"
registration under this Section 5.1(a).
(b) Long-Form Registrations. The Majority Willis Stein Holders shall
be entitled to request four Demand Registrations that are Long-Form
Registrations in which the Manager shall pay all Registration Expenses. If
Willis Stein distributes to its partners a majority of its Registrable
Securities, the Majority Non-Willis Stein Holders shall thereafter be entitled
on one occasion to request a Demand Registration that is a Long-Form
Registration. A registration shall not count as one of the permitted Long-Form
Demand Registrations if it does not become effective or if the Person requesting
such registration is not able to register and sell at least 85% of the
Registrable Securities requested to be included in such registration because of
the exercise of Piggyback Registration rights provided hereunder; provided that
in any event the Manager shall pay all Registration Expenses in connection with
any registration initiated as a Demand Registration whether or not it has become
effective and whether or not such registration has counted as one of the
permitted Demand Registrations.
(c) Short-Form Registrations. In addition to the Long-Form
Registrations provided pursuant to Section 5.1(b), the Majority Willis Stein
Holders shall be entitled to request an unlimited number of Short-Form
Registrations in which the Manager shall pay all Registration Expenses and the
Majority Non-Willis Stein Investors shall be entitled to request two Short-Form
Registrations in which the Manager shall pay all Registration Expenses; provided
that the aggregate offering value of the Registrable Securities requested to be
registered in any Short-Form Registration must equal at least $10,000,000.
Demand Registrations shall be Short-Form Registrations whenever the Manager is
permitted to use any applicable short form. After the Manager has become subject
to the reporting requirements of the Securities Exchange Act, the Manager shall
use its best efforts to make Short-Form Registrations available for the sale of
Registrable Securities.
(d) Priority on Demand Registrations. If the managing underwriters for
a Demand Registration advise the Manager in writing that in their opinion the
number of Registrable Securities and, if permitted hereunder, other securities
requested to be included in such offering exceeds the number of Registrable
Securities and other securities, if any, which can be sold in an orderly manner
in such offering within a price range acceptable to the holders of the
Registrable Securities initially requesting registration, without adversely
affecting the marketability of the offering, then the Manager shall exclude from
such registrations such excess amount of Registrable Securities, and shall
include in such
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registration prior to the inclusion of any securities which are not Registrable
Securities, the number of Registrable Securities requested to be included which
in the opinion of such underwriters can be sold in an orderly manner within the
price range of such offering without adversely affecting the marketability of
the offering, pro rata among the respective holders thereof on the basis of the
amount of Registrable Securities owned by each such holder.
(e) Restrictions on Demand Registrations. The Manager shall not be
obligated to effect any Demand Registration within 180 days after the effective
date of a previous Demand Registration or a previous registration in which the
holders of Registrable Securities were given piggyback rights pursuant to
Section 5.2 unless the underwriter in such previous registration consents to a
shorter period. The Manager may postpone for up to 180 days the filing or the
effectiveness of a registration statement for a Demand Registration if the Board
determines in its reasonable good faith judgment that such Demand Registration
would reasonably be expected to have a material adverse effect on any proposal
or plan by the Manager or any of its Subsidiaries to engage in any acquisition
of assets (other than in the ordinary course of business) or any merger,
consolidation, business combination, tender offer, joint venture, reorganization
or similar transaction; provided that in such event, the holders of Registrable
Securities initially requesting such Demand Registration shall be entitled to
withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations
hereunder and the Manager shall pay all Registration Expenses in connection with
such registration.
(f) Selection of Underwriters. The Manager shall have the right to
select the investment banker(s) and manager(s) to administer the offering,
subject to the approval (which shall not be unreasonably withheld) of the
Majority Willis Stein Holders.
5.2 PIGGYBACK REGISTRATIONS.
(a) Right to Piggyback. Whenever the Manager proposes to register any
of its securities (whether for itself or any of its securityholders) under the
Securities Act (other than pursuant to a Demand Registration) and the
registration form to be used may be used for the registration of Registrable
Securities (a "Piggyback Registration"), the Manager shall give prompt written
notice (in any event within three business days after its receipt of notice of
any exercise of demand registration rights other than under this Agreement) to
all holders of Registrable Securities of its intention to effect such a
registration and, subject to subparagraph (c) and (d) below, shall include in
such registration all Registrable Securities with respect to which the Manager
has received written requests for inclusion therein within 20 days after the
receipt of the Manager's notice.
(b) Piggyback Expenses. The Registration Expenses in all Piggyback
Registrations shall be paid by the Manager.
(c) Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Manager or a successor,
and the managing underwriters advise the Manager in writing that in their
opinion the number of securities
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requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Manager shall exclude from such registrations such excess amount
of Registrable Securities, and shall include in such registration (i) first, the
securities the Manager proposes to sell, (ii) second, the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such Registrable Securities on the basis of the number of Registrable Securities
owned by each such holder, and (iii) third, other securities requested to be
included in such registration.
(d) Priority on Secondary Registrations. If the managing underwriters
of a Piggyback Registration on behalf of the holders of the Manager's Securities
advise the Manager in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Manager shall exclude from such registrations such excess amount
of Registrable Securities, and shall include in such registration (i) first, the
securities requested to be included therein by the holders requesting such
registration and the Registrable Securities requested to be included in such
registration, pro rata among such holders on the basis of the number of shares
owned by each such holder and (ii) second, other securities requested to be
included in such registration.
(e) Selection of Underwriters. The selection of investment banker(s)
in any Piggyback Registration and manager(s) for the offering must be approved
by the holders of a majority of the Registrable Securities included in such
Piggyback Registration. Such approval shall not be unreasonably withheld.
(f) Other Registrations. If the Manager has previously filed a
registration statement with respect to Registrable Securities pursuant to
Section 5.1 or pursuant to this Section 5.2, and if such previous registration
has not been withdrawn or abandoned, the Manager shall not file or cause to be
effected any other registration of any of its equity securities or securities
convertible into or exchangeable or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of at least 180 days has elapsed from the effective date of such
previous registration unless the underwriter in the previous registration
consents to a shorter period.
5.3 HOLDBACK AGREEMENTS.
(a) Each holder of Registrable Securities shall not effect any Public
Sale of equity securities of the Manager, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the 180-day period beginning on the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration in which
Registrable Securities are included (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree.
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(b) The Manager (i) shall not effect any Public Sale of its
equity securities, or any securities convertible into or exchangeable or
exercisable for such units or securities, during the seven days prior to
and during the 180-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to
registrations on Form S-8 or any successor form), unless the underwriters
managing the registered public offering otherwise agree, and (ii) shall
cause each holder of units, or any securities convertible into or
exchangeable or exercisable for units, purchased from the Manager at any
time after the date of this Agreement (other than in a registered public
offering) to agree not to effect any Public Sale of any such units or
securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
5.4 REGISTRATION PROCEDURES. Whenever the holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Article V, the Manager shall use its best
efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof,
and pursuant thereto the Manager shall as expeditiously as possible:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective (provided that a reasonable
time before filing a registration statement or prospectus or any amendments
or supplements thereto, the Manager shall furnish to the counsel selected
by the holders of a majority of the Registrable Securities covered by such
registration statement copies of all such documents proposed to be filed,
which documents shall be subject to the review and comment of such
counsel);
(b) notify each holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not
less than 180 days and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such
registration statement;
(c) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other
acts and things which may be reasonably necessary or
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advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such seller (provided
that the Manager shall not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process in any
such jurisdiction);
(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, whereupon such sellers shall cease
distributing any Registrable Securities until, at the request of any such
seller, the Manager shall prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Manager are
then listed and, if not so listed, to be listed on NASDAQ and, if listed on
NASDAQ, use its best efforts to secure designation of all such Registrable
Securities covered by such registration statement as a NASDAQ "national
market system security" within the meaning of Rule 11Aa2-1 promulgated by
the SEC or, failing that, to secure NASDAQ authorization for such
Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as such
with respect to such Registrable Securities with the NASD;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
holders of a majority of the Registrable Securities being sold or the
underwriters reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including effecting a stock
split or a combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Manager, and
cause the Manager's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
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(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first day of the
Manager's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 promulgated
by the SEC;
(k) permit any holder of Registrable Securities which holder, in
its sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Manager, to participate in the preparation of
such registration statement and to require the insertion therein of
material, furnished to the Manager in writing, which in the reasonable
judgment of such holder and its counsel should be included; and
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any equity securities included in such registration
statement for sale in any jurisdiction, the Manager shall use its best
efforts promptly to obtain the withdrawal of such order.
5.5 REGISTRATION EXPENSES. All expenses incident to the
Manager's performance of or compliance with this Agreement, including
without limitation all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, NASD fees, printing expenses,
messenger and delivery expenses, fees and disbursements of custodians, and
fees and disbursements of counsel for the Manager and all independent
certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Manager (all such expenses
being herein called "Registration Expenses"), shall be borne as provided in
this Agreement, except that the Manager shall, in any event, pay its
internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit or quarterly review, the expense of any
liability insurance and the expenses and fees for listing the securities to
be registered on each securities exchange on which similar securities
issued by the Manager are then listed or on the NASD automated quotation
system.
5.6 INDEMNIFICATION.
(a) The Manager agrees to indemnify, to the extent permitted by
law, each holder of Registrable Securities, its officers and directors and
each Person who controls such holder (within the meaning of the Securities
Act) against all losses, claims, damages, liabilities and expenses caused
by any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by
or contained in any information furnished in writing to the Manager by such
holder expressly for use therein or by such holder's failure to deliver a
copy of the registration statement or prospectus or any amendments or
supplements thereto
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after the Manager has furnished such holder with a sufficient number of
copies of the same. In connection with an underwritten offering, the
Manager shall indemnify such underwriters, their officers and directors and
each Person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder shall
furnish to the Manager in writing such information and affidavits as the
Manager reasonably requests for use in connection with any such
registration statement or prospectus and, to the extent permitted by law,
shall indemnify the Manager, its directors and officers and each Person who
controls the Manager (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from any untrue
or alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or
omission is contained in any information or affidavit so furnished in
writing by such holder; provided that the obligation to indemnify shall be
individual, not joint and several, for each holder and shall be limited to
the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to
give prompt notice shall not impair any Person's right to indemnification
hereunder to the extent such failure has not prejudiced the indemnifying
party) and (ii) unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party
shall not be subject to any liability for any settlement made by the
indemnified party without its consent. An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(d) The indemnification provided for under this Article V shall
remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and shall survive the Transfer of
securities. In order to provide for contribution in any case in which
either (i) any holder of Registrable Securities exercising rights under
this Agreement makes a claim for indemnification pursuant to this Section
5.6 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration
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of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact
that this Section 5.6 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any
such holder in circumstances for which indemnification is provided under
this Section 5.6; then, in each such case, the Manager and such holder will
contribute to the aggregate losses, claims, damages or liabilities which
they would otherwise be obligated to indemnify under Section 5.6(a) or (b)
(after contribution from others) in such proportions so that such holder is
responsible for the portion of such aggregate losses, claims, damages or
liabilities represented by the percentage that the public offering price of
its Registrable Securities offered by the registration statement bears to
the public offering price of all securities offered by such registration
statement, and the Manager is responsible for the remaining portion;
provided, however, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the proceeds to it from the
sale of all Registrable Securities sold by it pursuant to such registration
statement, and (B) no person or entity guilty of fraudulent
misrepresentation, within the meaning of Section 11(f) of the Securities
Act, shall be entitled to contribution from any person or entity who is not
guilty of such fraudulent misrepresentation.
5.7 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Person or Persons entitled
hereunder to approve such underwriter and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents required under the terms of such underwriting
arrangements.
5.8 OTHER REGISTRATION RIGHTS. Except as provided in this
Agreement, the Manager shall not grant to any Persons the right to request
the Manager to register any equity securities of the Manager, or any
securities convertible or exchangeable into or exercisable for such
securities, without the prior written consent of the Majority Willis Stein
Holders.
ARTICLE VI
PREEMPTIVE RIGHTS
6.1 ISSUANCE OF NEW SECURITIES TO WILLIS STEIN
(a) If at any time after the date of this Agreement an Issuer
proposes to issue or sell (a "Proposed Issuance") to Willis Stein, PIC or
any Person controlled by Willis Stein or PIC, any Common Equity Securities
or Preferred Securities (collectively, "New Securities"), such Issuer shall
first offer to sell to each other holder of Investor Securities a portion
of each type of such New Securities equal to the quotient determined by
dividing (a) the amount of Fully-Diluted Equity represented by Investor
Securities held or beneficially owned by such holder of Investor Securities
by (b) the total amount of Fully-Diluted Equity
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represented by Investor Securities outstanding immediately prior to such
issuance or sale. Each holder of Investor Securities shall be entitled to
purchase such New Securities at the most favorable price and on the most
favorable terms as such New Securities are to be offered to Willis Stein.
(b) In order to exercise its purchase rights hereunder, each
holder of Investor Securities must, within ten Business Days after receipt
of written notice from the Issuer describing in reasonable detail the New
Securities being offered, the purchase price thereof, the payment terms
therefor and the percentage allotment for each holder of Investor
Securities, deliver a written agreement (each, an "Acceptance Agreement) to
the Issuer irrevocably committing to purchase an amount of New Securities
equal to such holder's percentage allotment of New Securities, on the terms
specified in such written notice and on such other customary terms not
inconsistent therewith on which such New Securities are issued to Willis
Stein.
(c) If the Issuer has received any Acceptance Agreements, the
Issuer may, at its sole discretion, elect to cancel the Proposed Issuance
by delivery of written notice to the holders of Investor Securities who
have delivered Acceptance Agreements. If the Issuer elects to consummate
the Proposed Issuance, then the Issuer shall be entitled to sell to Willis
Stein during the ninety days following such expiration on terms and
conditions no more favorable to the purchasers thereof than those offered
to the holders of Investor Securities all such New Securities which the
holders of Investor Securities have not elected to purchase pursuant to any
Acceptance Agreement; and contemporaneously with any such issuance, each
holder of Investor Securities that has executed an Acceptance Agreement
shall be obligated to purchase from the Issuer thereof, and each such
Issuer shall be obligated to sell to each such holder, the New Securities
which such holder has committed to purchase pursuant to such Acceptance
Agreement. Any New Securities offered or sold by an Issuer after such
ninety-day period must be reoffered to the holders of Investor Securities
pursuant to the terms of this Section 6.1.
(d) The provisions of this Section 6.1 will not apply to the
following issuances of New Securities:
(i) any New Securities issued upon the conversion or
exercise of any Common Equity Equivalents not issued in violation of
this Section 6.1; or
(ii) any issuance of New Securities incident to the
exercise, conversion or exchange of any securities of an Issuer that
were not issued in violation of this Section 6.1, a subdivision of
shares (including any stock dividend or stock split), any combination
of shares (including any reverse stock split) or any recapitalization,
reorganization or reclassification of the Company.
(e) Nothing in this Section 6.1 shall be deemed to prevent
Willis Stein purchasing for cash any New Securities without first complying
with the provisions of this Section 6.1; provided, that in connection with
such purchase, (a) the Manager's Board has
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determined in good faith (1) that one or more of the Issuers needs an
immediate cash investment, (2) that no alternative financing is otherwise
available on reasonable terms, and (3) that the delay caused by compliance
with the provisions of this Section 6.1 in connection with such investment
would be reasonably likely to cause harm to an Issuer, (b) the Person
making such purchase (for purposes of this Section 6.1, the "Purchasing
Holder") gives prompt notice to the other holders of Investor Securities,
which notice shall describe, in reasonable detail, the New Securities being
purchased by the Purchasing Holder and the purchase price thereof, and (c)
the Purchasing Holder and the applicable Issuer take all steps reasonably
necessary to enable the Other Holders of Investor Securities to effectively
exercise their rights under the terms specified in this Section 6.1 with
respect to the New Securities issued to the Purchasing Holder in reliance
on this Section 6.1(e).
ARTICLE VII
MISCELLANEOUS
7.1 CERTAIN DEFINED TERMS. Capitalized terms used in the
Agreement which are not otherwise defined in this Agreement and which are
defined in the LLC Agreement shall have the meanings attributed to such
terms in the LLC Agreement. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:
"Acquisition" means the acquisition of the publishing assets of
Petersen Publishing Company by Operating LLC and its affiliates pursuant to
the Purchase Agreement (as defined in the LLC Agreement).
"Affiliate" of any particular Person means any other Person
Controlling, Controlled by or under common Control with such particular
Person or, in the case of a natural Person, any other member of such
Person's Family Group.
"Agreement" has the meaning set forth in the preface.
"Allocable Securities" has the meaning given to such term in
Section 3.2(c).
"Available Securities" has the meaning given such terms in
Section 3.2(b)(iii).
"Board" has the meaning given such term in Recital F.
"Business Day" means any day other than a Saturday or Sunday, a
legal holiday or day on which commercial banks in New York, Chicago or Los
Angeles are required by law to be closed.
"Common Equity Equivalents" means (without duplication with any
Common Equity Securities or other Common Equity Equivalents) rights,
warrants, options (including the Options), convertible securities,
exchangeable securities, indebtedness or other rights, in
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each case exercisable for or convertible or exchangeable into, directly or
indirectly, Common Equity Securities or securities exercisable for or
convertible or exchangeable into Common Equity Securities, whether at the
time of issuance or upon the passage of time or the occurrence of some
future event.
"Common Equity Securities" means, collectively, the Manager
Common Stock, the PIC Common Stock, the Common Units and any other type,
class or series of authorized capital stock of or equity interests in any
of the Issuers which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate
in dividends or in the distribution of assets upon any liquidation,
dissolution or winding up of such Issuer.
"Control" (including, with correlative meaning, all conjugations
thereof) means with respect to any Person, the ability of another Person to
control or direct the actions or policies of such first Person, whether by
ownership of voting securities, by contract or otherwise.
"Demand Registrations" has the meaning given such term in Section
5.1(a).
"Electing Holder" has the meaning given such term in Section
3.2(c).
"Election Notice" has the meaning given such term in Section
3.2(b)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Executives" means the Persons designated as "Executives" in
Schedule A hereto.
"Executive Securities" means (a) the Manager Common Stock and
Common Units acquired by D. Claeys Bahrenburg and Neal Vitale pursuant to
their respective Executive Agreements (other than pursuant to Section 1(a)
of each such agreement) and by certain other Executives pursuant to Section
2D of the Securities Purchase Agreement, (b) any Options and any Common
Equity Securities issued upon exercise of such Options, (c) any other
Common Equity Securities hereafter issued to employees of or consultants to
any of the Manager, the LLC and Operating LLC which are designated by the
Willis Stein Majority Holders as "Executive Securities," and (d) any
Securities of any of the Issuers issued with respect to Securities referred
to in any of clauses (a), (b) or (c) above by way of a payment-in-kind,
stock dividend or stock split or in connection with a combination of
shares, exchange, conversion, recapitalization, merger, consolidation or
other reorganization.
"Family Group" means, with respect to any individual, such
individual's spouse and descendants (whether natural or adopted) and any
trust established and maintained for the benefit of such individual, such
individual's spouse or such individual's descendants (whether natural or
adopted).
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"Fully-Diluted Equity" means, as of any date of determination,
the amount or number of shares or units of Common Equity Securities
outstanding plus (without duplication) all shares of Common Equity
Securities issuable, whether at such time or upon the passage of time or
the occurrence of future events, upon the exercise, conversion or exchange
of all then-outstanding Common Equity Equivalents.
"Independent Third Party" means any Person who, immediately prior
to the contemplated transaction, does not beneficially own five percent
(5%) or more of the Fully-Diluted Equity or the Preferred Securities, if
any, who is not an Affiliate of any such five percent (5%) beneficial owner
and is not a member of the Family Group of any such five percent (5%)
beneficial owner.
"Investor Ownership Percentage" means, for each holder of
Investor Securities, with respect to each type and class of Investor
Securities held by such holder, the percentage obtained by dividing the
number of shares or units or amount of such Investor Securities of such
type or class held by such holder of Investor Securities by the total
number of outstanding shares or units or amount of such Investor Securities
of such type or class.
"Investor Securities" means all Securities other than Executive
Securities.
"Issuers" means the Manager, the LLC and PIC, each in its
capacity as an issuer of Securities.
"Liquidation Value" means, with respect to any series of
Preferred Securities of an Issuer, the fixed sum or percentage of par value
or stated value in respect of the rights of the holders thereof to
participate in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of such Issuer.
"LLC Agreement" has the meaning given such term in Recital A.
"Long-Form Registrations" has the meaning given such term in
Section 5.1(a).
"Majority Non-Willis Stein Holders" means, at any time, the
holders of a majority of the Investor Securities of the Manager (other than
Securities held by Willis Stein) then outstanding.
"Majority Willis Stein Holders" means, at any time, the holders
of a majority of the Willis Stein Manager Securities then outstanding.
"Member" has the meaning given to such term in the LLC Agreement.
"NASD" means the National Association of Securities Dealers.
"NASDAQ" means the NASD Automated Quotation System.
-27-
"Offered Securities" when used in Section 3.2(b), has the meaning
given such term in Section 3.2(b)(i), and when used in Section 3.2(c), has
the meaning given such term in Section 3.2(c).
"Options" means any options to purchase shares of Common Equity
Securities granted by one of the Companies to any Executive on or after the
date of this Agreement.
"Other Holder" has the meaning given such term in Section 3.2(b)
or 3.2(c), as applicable.
"Ownership Percentage" means, for each Securityholder and with
respect to each type and class of Security, subject to Section 3.2(e)
above, the percentage obtained by dividing the number of shares or units or
amount of such Security held by such Securityholder by the total number of
shares or units or amount of such Security outstanding; provided that for
purposes of Section 3.2(b)(iii), such calculation will be made excluding
Securities held by the Selling Holder.
"Permitted Transferee" means, in the case of a Transfer by an
individual, any transferee by the applicable laws of descent and
distribution or any member of such Person's Family Group, or in the case of
a Transfer by a Person which is not an individual, an Affiliate of such
Person.
"Person" means an individual, a partnership, a joint venture, a
corporation, an association, a joint stock company, a limited liability
company, a trust, an unincorporated organization or a government or any
department or agency or political subdivision thereof.
"Piggyback Registration" has the meaning given such term in
Section 5.2(a).
"Preferred Securities" means the Preferred Units, the PIC
Preferred Stock and any other type, class or series of authorized capital
stock or other interest in capital of any of the Issuers that is limited to
a fixed sum or percentage of par value or stated value in respect of the
rights of the holders thereof to participate in dividends and in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of such entity.
"Preference Amount" with respect to any Preferred Securities
means the sum of (i) with respect to Preferred Units, the sum of the
Unreturned Preferred Capital and the Unpaid Preferred Yield with respect
thereto, and (ii) with respect to any other Preferred Securities, including
any PIC Preferred Stock, the sum of the Liquidation Value thereof plus the
aggregate amount of accrued and unpaid dividends thereon.
"Public Offering" means a sale of Common Equity Securities to the
public in an offering pursuant to an effective registration statement filed
with the SEC pursuant to the Securities Act, as then in effect, provided
that a Public Offering shall not include an
-28-
offering made in connection with a business acquisition or combination or
an employee benefit plan.
"Public Sale" means a sale of Securities pursuant to a Public
Offering or a Rule 144 Sale.
"Qualified IPO" means receipt by Manager of at least $75,000,000
gross cash proceeds upon consummation of an underwritten sale of its common
stock pursuant to a registration statement filed under the Securities Act
of 1933, provided that the sum of (a) the product of the net price per
share of such offering multiplied by the aggregate number of shares of
common stock issued by Manager and outstanding as of the closing of the
Acquisition (as adjusted for stock splits, combinations of shares and other
recapitalizations subsequent thereto), other than Executive Securities,
plus (b) the aggregate amount of all cash paid as distributions or
dividends on the equity securities of LLC which were outstanding as of the
closing of the Acquisition, other than Executive Securities, plus (c) the
fair market value of such LLC securities, and of any other property
received by the holders thereof at any time in respect of such securities
in connection with any Sale of the Company prior thereto, in each case as
determined by the Board, equals or exceeds $330,000,000.
"Registrable Securities" means (i) the shares of Class A Common
Stock of Manager issued pursuant to the Securities Purchase Agreement dated
as of September ___, 1996 among certain of the parties hereto (the
"Securities Purchase Agreement"), (ii) the shares of Class A Common Stock
of Manager issued or issuable upon conversion of the Class B Common Stock
of Manager issued pursuant to the Securities Purchase Agreement or upon
conversion of non-voting securities issued pursuant to a Reorganization
Plan, (iii) any voting common stock of Manager issued to the holders of
Securities in connection with a Reorganization Plan or issued or issuable
with respect to rights on securities so issued, (iv) any Common Equity
Securities of the Manager (other than non-voting securities) issued in
respect of or in exchange for or upon conversion of Investor Securities,
and (v) any other Common Equity Securities of the Manager (other than non-
voting Securities) issued or issuable with respect to the securities
referred to in any of clauses (i), (ii), (iii) and (iv) by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization, including
pursuant to a Reorganization Plan. As to any particular Registrable
Securities, such securities will cease to be Registrable Securities when
they have been (i) Transferred in a Public Sale or (ii) otherwise
Transferred and new certificates not bearing the legend set forth in
Section 7.2(a) hereof shall have been delivered by the Manager and
subsequent disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or such state
securities or blue sky laws then in force. For purposes of this Agreement,
a Person will be deemed to be a holder of Registrable Securities whenever
such Person has the right to acquire such Registrable Securities (upon
conversion or exercise in connection with a transfer of securities or
otherwise, but disregarding any restrictions or limitations upon the
exercise of such right), whether or not such acquisition has actually been
effected.
"Registration Expenses" has the meaning given such term in
Section 5.5.
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"Reorganization Plan" has the meaning given such term in Section
4.2.
"Repurchase Notice" has the meaning given such term in Section
3.2(b)(ii).
"Rule 144" means Rule 144 adopted under the Securities Act (or
any successor rule or regulation).
"Rule 144 Sale" means a sale of Securities to the public through
a broker, dealer or market-maker pursuant to the provisions of
Rule 144.
"Sale of the Company" means the consummation of a transaction,
whether in a single transaction or in a series of related transactions that
are consummated contemporaneously (or consummated pursuant to
contemporaneous agreements), with any Independent Third Party other Person
or Persons pursuant to which such Person or Persons (a) acquire (whether by
merger, stock purchase, recapitalization, reorganization, redemption,
issuance of capital stock or otherwise) a majority of the Fully-Diluted
Equity of the Manager and the LLC or (b) acquire assets constituting all or
substantially all of the assets of the Manager, the LLC and their
respective Subsidiaries on a consolidated basis.
"Sale Notice" has the meaning given such term in Section 3.2(c).
"SEC" means the Securities and Exchange Commission.
"Securities" means (i) any Common Equity Securities or Preferred
Securities purchased or otherwise acquired by a Securityholder, (ii) any
other equity securities issued or issuable with respect to the securities
referred to in clause (i) above by way of stock dividend or stock split or
in connection with a combination or shares, recapitalization, merger,
consolidation or other reorganization and (iii) any other equity securities
of PIC, the Manager or the LLC held by a Securityholder. As to any
particular Securities, such Securities shall cease to be Securities when
they have been Transferred pursuant to a Public Sale.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securityholder" has the meaning given such term in the preface.
"Selling Holder" when used in Section 3.2(b), has the meaning
given such term in Section 3.2(b)(i), and when used in Section 3.2(c), has
the meaning given such term in Section 3.2(c).
"Short-Form Registrations" has the meaning given such term in
Section 5.1(a).
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"Subsidiary" means any entity with respect to which another
entity has the power to vote or direct the voting of sufficient securities
to elect directors having a majority of the voting power of the board of
directors of such entity or otherwise has the power, by contract or
otherwise, to control the business and affairs of such entity.
"Supplemental Repurchase Notice" has the meaning given to such
term in Section 3.2(b)(iv).
"Tag-Along Notice" has the meaning given such term in Section
3.2(c).
"Transfer" means (in either the noun or the verb form, including
with respect to the verb form, all conjugations thereof within their
correlative meanings) with respect to any Security, the gift, sale,
assignment, transfer, pledge, hypothecation or other disposition (whether
for or without consideration, whether directly or indirectly, and whether
voluntary, involuntary or by operation of law) of such Security or any
interest therein.
"Transfer Notice" has the meaning set forth in Section
3.2(b)(i).
"Willis Stein Manager Securities" means (a) the Securities issued
by the Manager acquired by Willis Stein and (b) any Securities issued by
the Manager with respect to Securities referred to in any of clause (a)
above by way of a payment-in-kind, stock dividend or stock split or in
connection with a combination of shares, exchange, conversion,
recapitalization, merger, consolidation or other reorganization.
7.2 LEGENDS.
(a) Securityholders Agreement. Each certificate or instrument
evidencing Securities and each certificate or instrument issued in exchange
for or upon the Transfer of any such Securities (if such securities remain
subject to this Agreement after such Transfer) shall be stamped or
otherwise imprinted with a legend (as appropriately completed under the
circumstances) in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO A CERTAIN SECURITYHOLDERS AGREE-
MENT DATED AS OF SEPTEMBER 30, 1996 AMONG THE
ISSUER OF SUCH SECURITIES (THE "MANAGER") AND
CERTAIN OF THE MANAGER'S SECURITYHOLDERS AND, AS
SUCH, ARE SUBJECT TO CERTAIN VOTING PROVISIONS,
PURCHASE RIGHTS AND RESTRICTIONS ON TRANSFER SET
FORTH IN THE SECURITYHOLDERS AGREEMENT. A COPY
OF SUCH SECURITYHOLDERS AGREEMENT WILL BE FUR-
NISHED WITHOUT CHARGE BY THE MANAGER TO THE
HOLDER HEREOF UPON WRITTEN REQUEST."
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(b) Removal of Legends. Whenever in the opinion of the issuer of
such Securities and counsel reasonably satisfactory to the issuer of such
Securities (which opinion shall be delivered to the issuer of such
Securities in writing) the restrictions described in the legend set forth
above cease to be applicable to any Securities, the holder thereof shall be
entitled to receive from the Issuer thereof, without expense to the holder,
a new instrument or certificate not bearing a legend stating such
restriction.
7.3 EXPENSES OF DIRECTORS, ETC. The Manager shall pay the
reasonable out-of-pocket expenses incurred by each director in connection
with attending the meetings of the Board and any committee thereof. In
addition, the Manager shall be authorized to enter into indemnification
agreements with the directors and may pay to each director (but not to any
director, other than Robert E. Petersen, who is also an employee of the
Operating LLC) an annual fee of $35,000, payable in advance in four equal
quarterly installments. So long as any Willis Stein Director serves on the
Board and for four years thereafter, the Manager shall maintain directors
and officers indemnity insurance coverage satisfactory to Willis Stein, and
the Manager's certificate of incorporation and bylaws shall provide for
indemnification and exculpation of directors to the fullest extent
permitted under applicable law.
7.4 AMENDMENT AND WAIVER. Subject to Section 7.13 and except as
otherwise provided herein, any modification, amendment or waiver of any
provision of this Agreement shall be effective against the Manager, the LLC
and the Securityholders if such modification, amendment or waiver is
approved in writing by the Majority Willis Stein Holders, the Manager and
the LLC; provided that any amendment, modification or waiver of any
provision of this Agreement which has a material adverse effect on any
Securityholder in its capacity as such, if such effect would be borne
disproportionately by such Securityholder relative to other Securityholders
holding Securities of the same class, shall be effective against such
Securityholder only if consented to in writing by such Securityholder. The
failure of any party to enforce any of the provisions of this Agreement
shall in no way be construed as a waiver of such provisions and shall not
affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms. Each Issuer
agrees that it will use its reasonable best efforts to amend the
Securityholders Agreement and the LLC Agreement to the extent required to
enable each Investor to comply with federal laws (including the Bank
Holding Company Act of 1956) which may be applicable to such Investor so
long as such amendment would not adversely affect any Issuer or any other
holder of Securities.
7.5 SEVERABILITY. Whenever possible, each provision of this
Agreement shall 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
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other
jurisdiction, but this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.
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7.6 ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein or in the LLC Agreement, Securities Purchase Agreement or the other
written agreements of even date herewith, this document embodies the
complete agreement and understanding among the parties hereto with respect
to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any
way.
7.7 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be
enforceable by the Issuers, Willis Stein, holders of Willis Stein Manager
Securities and their respective successors and assigns and the
Securityholders and any subsequent holders of Securities and the respective
successors and permitted assigns of each of them, so long as they hold
Securities.
7.8 COUNTERPARTS. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
7.9 REMEDIES. The Issuers and the Securityholders shall be
entitled to enforce their rights under this Agreement specifically, to
recover damages by reason of any breach of any provision of this Agreement
(including costs of enforcement) and to exercise any and all other rights
existing in their favor. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that each of the Issuers or any
Securityholder may in its or his sole discretion apply to any court of law
or equity of competent jurisdiction for specific performance or injunctive
relief (without posting a bond or other security) in order to enforce or
prevent any violation or threatened violation of the provisions of this
Agreement.
7.10 NOTICES. Any notice provided for in this Agreement
shall be in writing and shall be either personally delivered, or mailed
first class mail (postage prepaid) or sent by reputable overnight courier
service (charges prepaid) to any of the Issuers at the address set forth
below and to any other recipient at the address indicated on the attached
Schedule of Notice Addresses and to any subsequent holder of Securities
subject to this Agreement at such address as indicated by the records of
the issuer of such Securities, or at such other address or to the attention
of such other person as the recipient party has specified by prior written
notice to the sending party. Notices will be deemed to have been given
hereunder (i) when sent by facsimile (receipt confirmed), if received
during business hours on a business day and otherwise on the first business
day following thereafter, (ii) when delivered personally, (iii) five days
after deposit in the U.S. mail and (iv) one business day after deposit
with a reputable overnight courier service (prepaid for overnight service).
The Issuers' address is:
c/o Willis Stein & Partners, L.P.
227 West Monroe Street, Suite 4300
Chicago, IL 60606
Telecopy: (312) 422-2418
Attention: Avy H. Stein
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Daniel H. Blumenthal
and to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Telecopy: (312) 861-2200
Attention: John A. Weissenbach
Any notice delivered to a Securityholder other than Willis Stein, the
Manager, any Executive, PPC or PIC shall also be sent to:
Cahill Gordon & Reindel
Eighty Pine Street
New York, New York 10005-1702
Telecopy: (212) 269-5420
Attention: Roger Meltzer
7.11 GOVERNING LAW. The corporate law of the State of
Delaware shall govern all issues and questions concerning the relative
rights of the Manager and its stockholders and of PIC and its stockholders
and the limited liability company law of the state of Delaware shall govern
all issues and questions concerning the relative rights of the LLC and its
members. All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Illinois without giving
effect to any choice of law or conflict of law provision or rule (whether
of the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Illinois.
7.12 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
7.13 FURTHER ASSURANCE. In connection with this Agreement
and the transactions contemplated hereby each party hereto shall execute
and deliver any additional documents and instruments and perform any
additional acts (including amendments to this Agreement) that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and to give effect to the intent of the parties hereto. In
furtherance of the foregoing, the parties acknowledge that in connection
with the Reorganization Plan, each party hereto will execute such
amendments and modifications to this Agreement as are reasonably requested
by the Manager to effectuate the intent of the parties hereto and provide
for substantially the same rights and obligations of each party upon the
consummation of the transactions contemplated by the Reorganization Plan as
are contemplated hereby.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Securityholders Agreement on the day and year first above written.
BRIGHTVIEW COMMUNICATIONS GROUP, INC.,
in its capacity as an Issuer of Securities and as
a Securityholder
By: ____________________________________
Name: Daniel H. Blumenthal
Title: Vice President
PETERSEN INVESTMENT CORP.,
in its capacity as an Issuer of Securities and as
a Securityholder
By: ____________________________________
Name: Daniel H. Blumenthal
Title: Vice President
PETERSEN HOLDINGS, L.L.C.
By: BrightView Communications Group, Inc.
Its: Managing Member
By: ____________________________________
Name:
Title:
WILLIS STEIN & PARTNERS, L.P.
By: Willis Stein & Partners, L.L.C.
Its: General Partner
By: ____________________________________
Its: Managing Director
PETERSEN PUBLISHING COMPANY
By: ____________________________________
Robert E. Petersen
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Chairman
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners
Its: General Partner
By: ___________________________________
Name: Brian Richmond
Title: General Partner
BANK AMERICA INVESTMENT CORPORATION
By: ____________________________________
Name:
Title:
CIVC PARTNERS II
By: ___________________________________
Name:
Title: A General Partner
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
By: ___________________________________
Name:
Title:
ALLSTATE INSURANCE COMPANY
By: ___________________________________
Name:
Title:
FUI, INC.
By: ___________________________________
Name:
Title:
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NORWEST EQUITY CAPITAL, L.L.C.
By: Itasca NEC, L.L.C.
Its: Managing Member
By: ___________________________________
Name:
Title:
NASSAU CAPITAL PARTNERS II, L.P.
By: Nassua Capital, L.L.C.
Its: General Partner
By: ___________________________________
Name:
Title:
NAS PARTNERS I, L.L.C.
By: ___________________________________
Name:
Title:
_______________________________________
James D. Dunning, Jr.
_______________________________________
Laurence H. Bloch
_______________________________________
Stuart Karu
_______________________________________
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Thomas J. Strauss
_______________________________________
Irwin Bard
_______________________________________
Bernard Shavitz
_______________________________________
D. Claeys Bahrenburg
_______________________________________
Neal Vitale
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SCHEDULE OF SECURITYHOLDERS
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