EXECUTION COPY
STOCKHOLDERS' AGREEMENT
Among
AMERICAN SKIING COMPANY,
OAK HILL CAPITAL PARTNERS, L.P.,
THE OTHER ENTITIES NAMED IN ANNEX A HERETO
and
LESLIE B. OTTEN
Dated as of August 6, 1999
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT dated August 6, 1999 (this
"Agreement") among OAK HILL CAPITAL PARTNERS, L.P., a Delaware limited
partnership ("Oak Hill") and the other entities identified in Annex A attached
hereto (together with Oak Hill, the "Stockholders"), LESLIE B. OTTEN ("Mr.
Otten") and AMERICAN SKIING COMPANY, a Maine corporation (the "Company").
WHEREAS, the execution and delivery of this Agreement is a
condition to the obligations of the Company and the Stockholders under the
Preferred Stock Subscription Agreement dated July 9, 1999 by and between the
Company and the Stockholders (the "Subscription Agreement"), pursuant to which
the Company shall sell to the Stockholders, and the Stockholders shall purchase
from the Company, the Company's 8.5% Series B Convertible Participating
Preferred Stock, par value $.01 per share (the "Series B Preferred"), upon the
terms and subject to the conditions set forth in the Subscription Agreement;
WHEREAS, upon consummation of the transaction contemplated by
the Subscription Agreement, the Stockholders will beneficially own an aggregate
of 150,000 shares of Series B Preferred, each of which may be convertible into
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"); and
WHEREAS, the Company, Mr. Otten and the Stockholders now wish
to enter into this Agreement to set forth their agreement as to the matters set
forth herein with respect to, among other things, representation on the
Company's Board of Directors (the "Board") and the Transfer (as defined below)
of the Restricted Securities (as defined below);
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company, Mr. Otten and the Stockholders hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions ( Unless otherwise defined in this
Agreement, capitalized terms are used herein as defined in the Subscription
Agreement.
(b) As used in this Agreement, the following terms shall have
the following meanings:
2
"Affiliate" has the meaning set forth in Rule 12b-2, as in
effect on the date hereof, under the Exchange Act.
"Associate" has the meaning set forth in Rule 12b-2, as in
effect on the date hereof, under the Exchange Act.
"Beneficially Own" has the meaning set forth below:
A Person shall be deemed to "Beneficially Own" any securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3 of
the Exchange Act, as in effect on the date of this Agreement;
(ii) which are Beneficially Owned, directly or indirectly, by
any other Person (or any Affiliate or Associate of such other Person)
with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or
not in writing), for the purpose of acquiring, holding, voting or
disposing of such securities; or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of time
or upon the satisfaction of conditions) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by law to be closed in The
City of New York or the State of Maine.
"By-laws" means the by-laws of the Company, as amended and
restated as of the date hereof and as may be amended from time to time.
"Change of Control" means any event that gives any Person or
Group other than holders of the Series B Preferred, the Stockholders, Mr. Otten
or their Permitted Transferees the ability to control the Company (a) through
the acquisition of either (i) substantially all of the assets of the Company and
its Subsidiaries, taken as a whole, or (ii) a majority of the aggregate voting
power of the Company's capital stock or (b) by otherwise being able to elect or
designate a majority of the Board through a management contract or otherwise.
"Class A Common Stock" means the Company's Class A common
stock, par value $.01 per share.
"Class A Director" means a Director elected by holders of the
Class A Common Stock pursuant to the Articles of Incorporation.
"Common Stock Director" means a Director elected by the
holders of Common Stock pursuant to the Articles of Incorporation.
"Conversion Stock" means the Common Stock issued by the
Company upon conversion of the Series B Preferred.
"Director" means a member of the Board.
"Employee Plan" means any equity incentive plan, agreement,
bonus, award, stock purchase plan, stock option plan or other stock arrangement
with respect to any directors, officers or other employees of the Company.
"Executive Committee" means the executive committee of the
Board established in accordance with the By-laws.
"Fair Market Value" shall mean for any applicable measurement
date the closing price of the Common Stock on the NYSE or, in the event that
trading hours on the NYSE are extended past 4:00 p.m. (EST), the last sale price
at 4:00 p.m. (EST).
"Fully Diluted Basis" means, in respect of the Common Stock,
the method of calculating the number of shares of Common Stock outstanding on an
applicable measurement date, pursuant to which the following shares shall be
deemed to be outstanding: (i) all shares of Common Stock outstanding on the date
hereof, (ii) all shares of Common Stock issuable upon conversion of outstanding
shares of the Class A Common Stock or the Series B Preferred, (iii) all shares
of Common Stock issued after the date hereof pursuant to the exercise of stock
options under Employee Plans or upon conversion of the Class A Common Stock, the
Series B Preferred or the Senior Preferred Stock, (iv) all shares of Common
Stock issuable pursuant to any securities or stock options of the Company
outstanding at any time which are convertible into or exercisable for shares of
Common Stock at a conversion or exercise price at or below the then current Fair
Market Value of the Common Stock, (v) any shares of Common Stock issued after
the date hereof, other than pursuant to clause (ii), (iii) or (iv) above, at a
price per share at or above $10.50 per share; provided that such issuance has
been approved by at least eight members of the Board and (vi) any shares of
Common Stock issued for any consideration other than cash as may be approved by
the Board.
"Group" has the meaning set forth in Rule 13d-5, as in effect
on the date hereof, under the Exchange Act.
"Holders" means the Stockholders, Mr. Otten or any Permitted
Transferee to whom the rights under this Agreement are assigned in accordance
with the provisions of Section 5.12 hereof.
"Independent" means, in respect of a Director, an individual
who meets the following criteria: (i) is not, and has not previously been,
within the past three years, an employee of the Company, Mr. Otten, the
Stockholders or any of their Affiliates; (ii) is not related by birth or
marriage to Mr. Otten or any employee of the Company, the Stockholders, or their
respective Affiliates; and (iii) is otherwise independent of Mr. Otten, the
Stockholders and their respective Affiliates.
"ING Registration Rights Agreement" means the Registration
Rights Agreement dated as of November 10, 1997 between the Company and ING.
"Maturity Date" means August 6, 2009.
"Nominating Committee" means the nominating committee of the
Board established in accordance with the By-laws that shall be responsible for,
among other things, identifying and nominating certain Independent individuals
to be elected as Directors of the Company.
"Otten Director" means a Director elected by the holders of
Class A Common Stock or a Director designated by Mr. Otten pursuant to the terms
of this Agreement.
"Person" means any individual, firm, corporation, partnership,
limited partnership, limited liability company, association, trust,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3), as in effect on the
date hereof, of the Exchange Act.
"Pledge Agreement" means that certain Pledge Agreement between
Mr. Otten and ING dated as of November 10, 1997 pursuant to which all of the
shares of Class A Common Stock and Common Stock Beneficially Owned by Mr. Otten
are pledged to ING.
"Register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document with the SEC in compliance with the Securities Act and the
declaration or ordering of effectiveness by the SEC of such registration
statement or document.
"Registrable Stock" shall mean (i) the Conversion Stock, (ii)
the Series B Preferred, (iii) any shares of Common Stock Beneficially Owned by
Mr. Otten, the Stockholders or their Permitted Transferees or (iv) any Common
Stock issued as (or upon the conversion or exercise of any warrant, right,
option or other convertible security which is issued as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of, the
Series B Preferred or the Conversion Stock. For purposes of this Agreement, any
Registrable Stock shall cease to be Registrable Stock when with respect to such
Registrable Stock (w) a registration statement covering such Registrable Stock
has been declared effective and such Registrable Stock has been disposed of
pursuant to such effective registration statement, (x) such Registrable Stock is
sold in a transaction in which the rights under the provisions of Article V are
not assigned in accordance with Section 5.12, (y) such Registrable Stock may be
sold pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144(A)) without registration under the Securities Act or (z) Mr. Otten, on
the one hand, or the Stockholders, on the other hand, no longer Beneficially Own
at least 2% of the outstanding shares of Common Stock (on a Fully Diluted
Basis).
"Restricted Securities" means the Senior Preferred Stock,
Series B Preferred, the Conversion Stock, the Class A Common Stock and Common
Stock, including any of such stock issued as payment of a dividend.
"Standstill Period" shall mean any time during the period
beginning on the date hereof and ending on August 6, 2004 during which either
(i) the Stockholders Beneficially Own 15% or more of the outstanding shares of
Common Stock (on a Fully Diluted Basis) or (ii) the Stockholders and their
Affiliates or Associates Beneficially Own 33 1/3% or more of the outstanding
shares of Senior Preferred Stock.
"Stockholder Director" means a Director designated by the
Stockholders pursuant to this Agreement or elected by the holders of the Series
B Preferred pursuant to the Articles of Incorporation.
(c) The following terms have the meanings set forth in the
Sections set forth below:
Term Location
Agreement................................................Preamble
Anti-Dilutive Rights.....................................ss.4.05(a)
Board....................................................Recitals
Budget...................................................ss.3.02(a)(i)
Common Stock.............................................Recitals
Company..................................................Preamble
Departing Otten Director.................................ss.2.02(b)
Departing Stockholder Director...........................ss.2.02(a)
Executive................................................ss.2.06
Initiating Holders.......................................ss.5.03(a)
Maintenance Securities...................................ss.4.05(a)
Material Subsidiaries....................................ss.2.04(a)
Maximum Stockholder Stock Ownership Percentage...........ss.4.03(a)
Mr. Otten................................................Preamble
Oak Hill.................................................Preamble
Otten Permitted Transferee...............................ss.4.02(a)
Permitted Transferees....................................ss.4.02(a)
Series B Preferred.......................................Recitals
Shelf Registration.......................................ss.5.05(a)
Stockholder Permitted Transferee.........................ss.4.02(a)
Stockholders.............................................Preamble
Subscription Agreement...................................Recitals
Transfer.................................................ss.4.02(a)
(d) References in this Agreement to annexes, articles,
sections, paragraphs, clauses, schedules and exhibits are to annexes, articles,
sections, paragraphs, clauses, schedules and exhibits in or to this Agreement
unless otherwise indicated. Whenever the context may require, any pronoun
includes the corresponding masculine, feminine and neuter forms. Any term
defined by reference to any agreement, instrument or document has the meaning
assigned to it whether or not such agreement, instrument or document is in
effect. The words "include", "includes" and "including" are deemed to be
followed by the phrase "without limitation". Unless the context otherwise
requires, any agreement, instrument or other document defined or referred to
herein refers to such agreement, instrument or other document as from time to
time amended, supplemented or otherwise modified from time to time. Unless the
context otherwise requires, references herein to any Person or entity include
its successors and assigns. The words "shall" and "will" have the same meaning
and effect.
ARTICLE II
GOVERNANCE
SECTION 2.01. Board Representation. (a) In accordance with
the Certificate of Designation and subject to the rights of holders of the
Company's serial preferred stock, as of the date hereof and for so long as the
Stockholders shall be entitled to nominate at least one Director pursuant to
Section 2.01(b), the Board shall consist of 11 members, initially consisting of
(i) four Stockholder Directors, (ii) four Otten Directors and (iii) three
Independent Common Stock Directors recommended by the Nominating Committee and
approved by the Board.
(b) Each of Mr. Otten and the Stockholders shall vote all
Restricted Securities Beneficially Owned by him or it, as the case may be, to
cause, and the parties hereto each shall otherwise use its best efforts to
cause, there to be (i) four Stockholder Directors for so long as the
Stockholders Beneficially Own at least 25% of the outstanding shares of Common
Stock (on a Fully Diluted Basis), (ii) three Stockholder Directors for so long
as the Stockholders Beneficially Own at least 20% but less than 25% of the
outstanding shares of Common Stock (on a Fully Diluted Basis), (iii) two
Stockholder Directors for so long as the Stockholders Beneficially Own at least
15% but less than 20% of the outstanding shares of Common Stock (on a Fully
Diluted Basis), or (iv) one Stockholder Director for so long as the Stockholders
Beneficially Own at least 5% but less than 15% of the outstanding shares of
Common Stock (on a Fully Diluted Basis).
(c) Each of Mr. Otten and the Stockholders shall vote all
Restricted Securities Beneficially Owned by him or it, as the case may be, to
cause, and the parties hereto each shall otherwise use its best efforts to
cause, there to be (i) four Otten Directors for so long as Mr. Otten
Beneficially Owns at least 25% of the outstanding shares of Common Stock (on a
Fully Diluted Basis), (ii) three Otten Directors for so long as Mr. Otten
Beneficially Owns at least 20% but less than 25% of the outstanding shares of
Common Stock (on a Fully Diluted Basis), (iii) two Otten Directors for so long
as Mr. Otten Beneficially Owns at least 15% but less than 20% of the outstanding
shares of Common Stock (on a Fully Diluted Basis), or (iv) one Otten Director
for so long as Mr. Otten Beneficially Owns at least 5% but less than 15% of the
outstanding shares of Common Stock (on a Fully Diluted Basis).
(d) Mr. Otten shall cause holders of Class A Common Stock to
exercise their rights to elect Class A Directors in order to effectuate, to the
extent necessary, the provisions contained in this Section 2.01; provided,
however, notwithstanding anything contained in this Section 2.01 to the
contrary, for so long as any shares of Class A Common Stock are outstanding and
entitled to elect Class A Directors, holders of shares of Class A Common Stock
shall have the sole right to elect Class A Directors.
SECTION 2.02. Resignations and Replacements. (a) If any
Stockholder Director is removed or otherwise ceases to serve as a Director for
any reason other than in accordance with the Certificate of Designation (a
"Departing Stockholder Director") or Section 2.01(b) or 2.02(c), the parties
hereto each shall use its best efforts to cause the vacancy created by such
Director ceasing to serve to be filled by a Stockholder Director who shall serve
out the remaining term of the Departing Stockholder Director, after which time,
such Stockholder Director position shall be filled according to Section 2.01(b).
(b) If any Otten Director is removed or otherwise ceases to
serve as a Director for any reason (a "Departing Otten Director") other than in
accordance with Section 2.01(c) or 2.02(d), the parties hereto each shall use
its best efforts to cause the vacancy created by such Director ceasing to serve
to be filled by an Otten Director who shall serve out the remaining term of the
Departing Otten Director, after which time, such Otten Director position shall
be filled according to Section 2.01(c).
(c) In the event that at any time any Stockholder Director is
elected or appointed to the Board pursuant to Section 2.01(b) and the number of
Stockholder Directors is greater than the number of Directors that the
Stockholders have the right to designate by virtue of Section 2.01(b) of this
Agreement, then that excess number of Stockholder Directors (starting with any
Class A Director that is a Stockholder Director or, in the event that no
Stockholder Director is a Class A Director, starting with the Stockholder
Director with the longest remaining term of office) shall be deemed to have
resigned immediately upon the occurrence of such event such that the remaining
number of Stockholder Directors, if any, conform to the provisions of this
Agreement, and the Stockholders or Mr. Otten, as the case may be, shall take all
action promptly to effect the resignation or removal of such Director. The
parties hereto each shall use its best efforts to cause the vacancy created by
such Stockholder Director ceasing to serve to be filled by an Independent
individual recommended by the Nominating Committee and approved by the Board or,
in the case of a Class A Director, to be filled by a designee of Mr. Otten.
(d) In the event that at any time any Otten Director is
elected or appointed to the Board pursuant to Section 2.01(c) and the number of
Otten Directors is greater than the number of Directors that Mr. Otten has the
right to designate by virtue of Section 2.01(c) of this Agreement, then that
excess number of Otten Directors (starting with the Otten Director with the
longest remaining term of office) shall be deemed to have resigned immediately
upon the occurrence of such event such that the remaining number of Otten
Directors, if any, conform to the provisions of this Agreement, and the
Stockholders or Mr. Otten, as the case may be, shall take all action promptly to
effect the resignation or removal of such Director. The parties hereto each
shall use its best efforts to cause the vacancy created by such Otten Director
ceasing to serve to be filled by an Independent individual recommended by the
Nominating Committee and approved by the Board.
SECTION 2.03. Rights of Estate of Mr. Otten. Mr. Otten hereby agrees
and hereby directs his estate that in the event of his death, all of his shares
of Class A Common Stock shall be converted into Common Stock effective as the
date of such death.
SECTION 2.04. Committees Generally; Nominating Committee. (a)
For so long as the Stockholders Beneficially Own at least 20% of the outstanding
shares of Common Stock (on a Fully Diluted Basis), each of the parties hereto
shall use its best efforts to cause the Nominating Committee to have two members
and to cause one Stockholder Director (i) to serve as a member of each committee
of the Board, (ii) to serve as a member of the board of directors of each of ASC
East, Inc., ASC West, Inc., ASC Utah and American Skiing Company Resort
Properties, Inc. or any other board or comparable body necessary to manage any
subsidiary of the Company, whether existing now or created after the date
hereof, that is material to the Company and its subsidiaries, taken as a whole
(together, the "Material Subsidiaries") and (iii) to serve as a member of each
committee of the board of directors of the Material Subsidiaries; provided,
however, that if any applicable law or regulation of the NYSE (or other exchange
on which the Common Stock is listed) shall prohibit the Board from appointing
any of the Stockholder Directors to serve on any committee, this Agreement shall
not require any Stockholder Director to serve on such committee; provided,
further, however, that in such event, the Company and Mr. Otten shall consult
with the Stockholders and each shall use its best efforts to ensure that the
Stockholders are able to achieve a level of participation in the operation of
the Board and the boards of each of the Material Subsidiaries that is
substantially similar to such committee representation and to otherwise preserve
the rights described in this Section 2.04.
(b) Each of the parties hereto shall use its best efforts to
cause the Board (i) to approve any Independent individual recommended by the
Nominating Committee for election to the Board and (ii) to recommend to the
stockholders of the Company that such nominee be elected to the Board.
(c) For so long as there shall be at least one Otten Director and Mr.
Otten is the Company's chief executive officer, each of the parties hereto shall
use its best efforts to cause at least one Otten Director to be a member of the
Nominating Committee.
SECTION 2.05. Meetings; Budget; Board Fees and Expenses. (a)
The Board shall meet at least four times during each fiscal year, except that
there shall be at least six meetings of the Board during the first fiscal year
following the issuance of the Series B Preferred.
(b) Beginning January 1, 2000, proposals for the Budget (as
hereinafter defined) shall be presented to the Board by management of the
Company at least 60 days prior to the beginning of the Company's fiscal year.
The parties hereto each shall use its best efforts to cause the Board to approve
a Budget conforming to Section 3.02(a)(i) prior the beginning of each fiscal
year. At each meeting of the Board, the Budget approved for the current fiscal
year shall be reported on and updated and any additional "material" (as
"materiality" is described in Section 3.02(a)(i)(E)) changes to the Budget since
the previous Board meeting will be subject to Board approval.
(c) The Stockholder Directors shall be entitled to receive
compensation in the same amount as the Company's other non-employee Directors
and to be reimbursed for all reasonable expenses related to attending meetings
and performing other customary duties incident to their directorship. The Otten
Directors shall be entitled to receive compensation in their capacity as
Directors in the same amount as the Company's other non-Stockholder Directors
receive in their capacity as Directors as set forth in the By-Laws and to be
reimbursed all reasonable expenses related to attending meetings and performing
other customary duties incident to their directorship.
SECTION 2.06. Termination of Executives. Any decision to
terminate the chief operating officer, president (other than Mr. Otten), chief
financial officer or the general counsel of the Company or the chief operating
officer (or equivalent position) of American Skiing Company Resort Properties,
Inc. (each, an "Executive") will be made by Mr. Otten for so long as he
continues to serve as the Company's chief executive officer; provided, however,
that before terminating any Executive, Mr. Otten must (i) seek the approval of
the Executive Committee of such termination at a duly called meeting and (ii) in
the event that the Executive Committee does not approve such termination, seek
the approval of the Board of such termination at a duly called meeting, after
which time Mr. Otten may terminate such Executive without any such approval.
SECTION 2.07. Employee Plans. No Employee Plan will be
adopted or amended in any material respect unless it has been approved by the
compensation and stock option committee of the Board, such approval to include
the affirmative vote of at least one Stockholder Director.
SECTION 2.08. Removal of Chief Executive Officer. Each of the
parties hereto shall use its best efforts to cause the Board to amend the
By-laws of the Company to require that the termination of the chief executive
officer of the Company will require either (i) the affirmative vote of at least
seven Directors, in the event that there are 11 Directors, (ii) the affirmative
vote of at least six Directors (including at least one Independent Director), in
the event that there are 10 Directors, (iii) the affirmative vote of at least
two-thirds of the Directors (including at least one Independent Director), in
the event that there are fewer than 10 Directors or (iv) the affirmative vote of
at least a majority of the Directors (including at least one Independent
Director), in the event that there are more than 11 Directors.
ARTICLE III
VOTING RIGHTS
SECTION 3.01. Voting Restrictions. (a) Mr. Otten agrees to
vote the shares of Common Stock or Class A Common Stock Beneficially Owned by
him to effect the terms of Article II of this Agreement and on other matters to
vote in a manner consistent with the terms of this Agreement.
(b) The Stockholders agree to vote any shares of Common Stock
or Series B Preferred Beneficially Owned by the Stockholders to effect the terms
of Article II of this Agreement and on other matters to vote in a manner
consistent with the terms of this Agreement.
SECTION 3.02. Special Board Rights. (a) For so long as the
Stockholders Beneficially Own at least 20% of the outstanding shares of Common
Stock (on a Fully Diluted Basis), the Company shall not take the actions listed
in clauses (i) through (ix) below without the affirmative vote of at least one
Stockholder Director, either as part of the vote of the full Board or the
Executive Committee.
(i) Approval of an annual operating and capital budget, which
shall include operating plans, detailed capital expenditure plans and a
business plan (the "Budget"), which Budget will include, without
limitation:
(A) detailed operating assumptions relating to,
without limitation, (1) pricing, (2) expected skier visits,
(3) an explanation of changes in operating cost from the prior
year, (4) head-count and expected seasonal head-count, (5)
departmental "sales, general and administrative" expenses,
including marketing plans and related budgets, and (6) a
detailed analyses of all required capital expenditures,
including return on investment analysis and a prioritization
of both growth and maintenance capital expenditures;
(B) planned material acquisitions, divestitures and
other development decisions (1) involving more than $2,000,000
in the aggregate or (2) reasonably expected to have an impact
of 5% or more on the Company's consolidated revenues or
earnings;
(C) overall corporate strategy, including actions
that involve repositioning the Company, commencing new lines
of business or significantly expanding lines of existing
business (other than the skiing business) or making material
investments in joint ventures or non-controlled operating
companies;
(D) requirements for capital in accordance with the
Budget, including, without limitation, planned material
financings (whether in the form of debt or equity), including
(1) issuance of debt or equity securities, (2) entering into
material new credit or financing agreements, (3) materially
increasing lines of credit or making material changes in
existing credit arrangements, (4) pledging material assets,
(5) the payment of dividends on outstanding capital stock of
the Company and (6) any redemption or repurchase of capital
stock of the Company, other than (x) the redemption or
repurchase of the Series B Preferred and (y) redemptions in
accordance with the terms of an Employee Plan; and
(E) a "materiality" standard for variations in the
Budget requiring Board approval.
(ii) Significant executive personnel decisions (other than
terminations), including, without limitation, hiring decisions or
decisions materially changing the compensation or responsibilities of
any Executive and the chief executive officer of the Company.
(iii) Material actions that are likely to affect the Company's
operating and strategic direction that are reasonably expected or
likely to have an impact of 5% or more on the Company's consolidated
revenues or earnings.
(iv) Any amendment to the Articles of Incorporation or
By-laws.
(v) Any voluntary liquidation, dissolution, winding up,
recapitalization or reorganization of the Company.
(vi) Initiation of material litigation other than with respect
to any counterclaim made by the Company in response to any claim made
by a third party.
(vii) Any merger, consolidation or other business combination
of the Company with or into another Person or any sale of all or
substantially all the assets of the Company or any of its Material
Subsidiaries.
(viii) Material changes to or reduction in insurance coverage.
(ix) Material financing or capital markets activity not
expressly provided in the Budget.
(b) The Stockholders shall use their best efforts to cause the
Stockholder Directors to abstain from voting on all matters in which the
Stockholders have an interest that differs from those of the Company's other
stockholders in accordance with applicable law and customary corporate practice,
including, without limitation, matters relating to any (i) dividend on the
Series B Preferred (other than as part of the Budget approval process provided
in Section 3.02(a)(i)), (ii) redemption of the Series B Preferred, (iii)
amendment of or waiver under any agreement to which any Stockholder or Affiliate
or Associate thereof is a party or (iv) any other transaction between the
Company and/or any of its Subsidiaries or other Affiliates and any Stockholder
and/or any Affiliate or Associate thereof.
(c) Mr. Otten shall use his best efforts to cause the Otten
Directors to abstain from voting on all matters in which such Directors have an
interest that differs from those of the Company's other stockholders in
accordance with applicable law and customary corporate practice, including,
without limitation, matters relating to (i) any amendment of or waiver under any
agreement to which any such Otten Director or any Affiliate or Associate of such
Otten Director is a party or (ii) any other transaction between the Company
and/or any of its Subsidiaries or other Affiliates and any such Otten Director
and/or any Affiliate or Associate of such Director.
ARTICLE IV
STANDSTILL PROVISIONS
SECTION 4.01. Ownership of the Series B Preferred. The
Stockholders severally and not jointly, represent and warrant to all other
parties hereto that the Stockholders, together with their Affiliates and
Associates, Beneficially Own in the aggregate, as of the date hereof, 150,000
shares of Series B Preferred and no other securities of the Company.
SECTION 4.02. Transfer Restrictions. (a) Until the earlier of
(i) August 6, 2000 or (ii) the occurrence of a Change of Control, the
Stockholders and Mr. Otten shall not, and shall cause their Permitted
Transferees not to, directly or indirectly, sell, transfer, assign, pledge,
hypothecate or otherwise dispose of ("Transfer") any Restricted Securities,
except (A) to an Affiliate that expressly assumes all of such Stockholder's or
Mr. Otten's, as the case may be, obligations under this Agreement (with respect
to any Stockholder, a "Stockholder Permitted Transferee", with respect to Mr.
Otten, an "Otten Permitted Transferee", and together with the Stockholder
Permitted Transferees, "Permitted Transferees") following the delivery of
written notice of such Transfer to the Company, (B) any Transfer from Mr. Otten
or any Otten Permitted Transferee to ING (or its successor) pursuant to the
terms of the Pledge Agreement or any sale by Mr. Otten or any Otten Permitted
Transferee to any third party if all of the net after tax proceeds from such
sale are used to repay indebtedness under the Credit Agreement dated as of
November 10, 1997 between Mr. Otten and ING, including any amendment,
replacement or refinancing thereof, (C) any Transfer by the estate of Mr. Otten
or any Otten Permitted Transferee following Mr. Otten's death, (D) any Transfer
by Mr. Otten or any Otten Permitted Transferee, which together with all other
Transfers by Mr. Otten or any Otten Permitted Transferee during the immediately
preceding 12 months (other than pursuant to clause (B) above), does not exceed
10% of the number of shares of Common Stock Beneficially Owned by Mr. Otten and
the Otten Permitted Transferees on the date hereof, (E) any Transfer by Mr.
Otten or any Otten Permitted Transferee at any time following the termination of
Mr. Otten's employment with the Company as chief executive officer, (F) in
transactions (including tender offers and exchange offers) either (1) approved
by the Board or (2) with respect to the Stockholders or any Stockholder
Permitted Transferees only, in which Mr. Otten Transfers any Restricted
Securities (other than pursuant to clauses (B)-(E) above) and (G) any pledge of
Restricted Securities; provided, however, that in the event of a material breach
or default under this Agreement, the Voting Agreement or the Subscription
Agreement (x) by Mr. Otten or the Company, then any Stockholder or any
Stockholder Permitted Transferee may Transfer Restricted Securities or (y) by
any of the Stockholders, then Mr. Otten or any Otten Permitted Transferee may
Transfer Restricted Securities, in each case, subject only to the restrictions
contained in Section 4.02(b).
(b) Notwithstanding paragraph (a) above, the Stockholders, Mr.
Otten and the Permitted Transferees shall not Transfer any Restricted Securities
(i) except through private or public sales that comply with applicable
securities laws, (ii) to Persons (or any other reasonably foreseeable subsequent
transferee) who, to the knowledge of any of the Stockholders, Mr. Otten or their
Permitted Transferees, as the case may be, following such Transfer would
Beneficially Own 10% or more of the outstanding shares of Common Stock (on a
Fully Diluted Basis) or (iii) to a Person (A) that is a direct competitor in any
major line of business of the Company or its Subsidiaries or (B) whose ownership
of the Restricted Securities could reasonably be expected, in the opinion of the
Board, to materially disadvantage the businesses of the Company and its
Subsidiaries or could reasonably be expected to have an adverse effect on the
future profitability of the Company and its Subsidiaries, taken as a whole.
(c) Each Stockholder agrees not to, directly or indirectly,
Transfer its interests in any Stockholder Permitted Transferee so that it ceases
to be a Stockholder Permitted Transferee unless prior thereto the Restricted
Securities held by such entity are transferred to any Stockholder or one or more
Stockholder Permitted Transferees.
(d) Mr. Otten agrees not to, directly or indirectly, Transfer
his interests in any Otten Permitted Transferee so that it ceases to be an Otten
Permitted Transferee unless prior thereto the Restricted Securities held by such
entity are transferred to Mr. Otten or one or more Otten Permitted Transferees.
(e) No transferee (other than a Stockholder, Mr. Otten or
their Permitted Transferees) of Restricted Securities shall be entitled to any
of the rights set forth under this Agreement by virtue of its ownership of such
Restricted Securities.
(f) Any attempted Transfer in violation of this Section 4.02
shall be null, void and of no force and effect, and the Company shall not give
effect to any such attempted Transfer.
SECTION 4.03. Acquisition of Additional Shares; Other
Restrictions. During the Standstill Period, except with the prior approval of a
majority of the Directors who are not Stockholder Directors and except as
expressly permitted by this Agreement or any amendment hereto, the Stockholders
shall not, directly or indirectly, and shall cause the Stockholder Permitted
Transferees not to, directly or indirectly:
(a) acquire, announce an intention to acquire, offer
to acquire, or enter into any agreement, arrangement or undertaking of
any kind the purpose of which is to acquire, by purchase, exchange or
otherwise (i) Beneficial Ownership of any shares of Common Stock or any
other security convertible into, or any option, warrant or right to
acquire, Common Stock, if such acquisition would cause the Beneficial
Ownership of the Stockholders and the Stockholder Permitted Transferees
to be (A) more than 49.9% of the outstanding shares of Common Stock (on
a Fully Diluted Basis) if prior to such transaction the Stockholders
and the Stockholder Permitted Transferees Beneficially Own 40% or more
of the outstanding shares of Common Stock (on a Fully Diluted Basis) or
(B) more than 40% of the outstanding shares of Common Stock (on a Fully
Diluted Basis) if prior to such transaction the Stockholders and the
Stockholder Permitted Transferees Beneficially Own less than 40% of the
outstanding shares of Common Stock (on a Fully Diluted Basis) (each of
the percentages described in clauses (A) and (B) above being
hereinafter referred to, as applicable, as the "Maximum Stockholder
Stock Ownership Percentage"), (ii) one-third or more of the outstanding
shares of Senior Preferred Stock or (iii) a significant portion of the
assets of the Company or any of its Affiliates. With respect to clause
(i) above, any increase in Beneficial Ownership by the Stockholders and
any Stockholder Permitted Transferees resulting from any Accretion
Amounts (as such term is defined in the Certificate of Designation),
from any dividend in the form of Common Stock made with respect to the
Conversion Stock, or from any repurchase of Common Stock by the Company
shall not be included in the Maximum Stock Ownership Percentage;
provided, however, that in all cases, the Stockholders may acquire
securities of the Company pursuant to Section 4.05 or pursuant to the
issuance of any dividends on Common Stock.
(b) solicit, or participate in any solicitation of,
proxies with respect to any Common Stock or other voting securities of
the Company, or become a "participant" in a "solicitation" (as such
terms are defined in Rule 14A of the Exchange Act) in opposition to any
matter that has been recommended by a majority of the Directors or in
favor of any matter that has not been approved by a majority of the
Directors unless the Company or Mr. Otten has breached any material
provision of Article II or Article III (which breach shall not have
been cured within 10 Business Days following receipt by the breaching
party of written notice of such breach);
(c) propose or otherwise solicit stockholders of the
Company for the approval of one or more stockholder proposals, seek or
solicit support for (whether publicly or privately) any written consent
of stockholders of the Company, attempt to call a special meeting of
stockholders, nominate or attempt to nominate any Person for election
as a Director (except in accordance with Article II), or seek the
removal or resignation of any Director (except in accordance with
Article II), in each case in opposition to any matter that has been
recommended by a majority of the Directors or in favor of any matter
that has not been approved by a majority of the Directors unless the
Company or Mr. Otten has breached any material provision of Article II
or Article III (which breach shall not have been cured within 10
Business Days following receipt by the breaching party of written
notice of such breach);
(d) deposit any securities of the Company into a
voting trust or similar agreement or subject any securities of the
Company to any arrangement or agreement with respect to the voting of
such Common Stock other than an agreement or arrangement solely among
the Stockholders and the Stockholder Permitted Transferees;
(e) take any action to form, join or in any way
participate in any partnership, limited partnership, syndicate or other
Group with respect to Common Stock or otherwise act in concert with any
Person for the purpose of circumventing the provisions or purposes of
this Agreement;
(f) unless the Company is the subject of a bona fide
unsolicited tender offer, exchange offer or other takeover attempt,
propose (or publicly announce or otherwise disclose an intention to
propose), any tender or exchange offer, merger, consolidation, share
exchange, business combination, restructuring, recapitalization or
similar transaction involving the Company;
(g) solicit, offer, seek to effect, negotiate with or
provide any confidential information relating to the Company or its
business to any other Person with respect to any tender or exchange
offer, merger, consolidation, share exchange, business combination,
restructuring, recapitalization or similar transaction involving the
Company;
(h) make or in any way advance any request or
proposal to amend, modify or waive any provision of this Agreement in a
manner that requires public disclosure by any of the parties hereto; or
(i) announce an intention to do, or solicit, assist,
prompt, induce or attempt to induce any Person to do, any of the
actions restricted or prohibited under subparagraphs (a) through (h)
above.
SECTION 4.04. Additional Shares. All shares of Restricted
Securities acquired by any of the parties hereto or the Permitted Transferees
pursuant to or in compliance with this Article IV or as a result of a
recapitalization of the Company, or any Accretion Amount (as such term is
defined in the Certificate of Designation) or stock dividends or any other
action taken by the Company, shall be subject to all of the terms, covenants and
conditions of this Agreement.
SECTION 4.05. Anti-Dilutive Rights. (a) Except as provided in
Section 4.05(c) below, the Company shall not issue, sell or transfer to any
Person any Common Stock or securities convertible into, or exercisable for,
Common Stock unless the Stockholders, Mr. Otten and any Permitted Transferees
are offered in writing the right to purchase, at the same price and on the same
terms proposed to be issued and sold, an amount of such Common Stock or other
securities (the "Maintenance Securities") as is necessary for each of the
Stockholders, Mr. Otten and any Permitted Transferees to maintain, individually,
the same level of its respective percentage Beneficial Ownership of Common Stock
(on a Fully Diluted Basis) as it owned immediately prior to such issuance
("Anti-Dilutive Rights"). In the case of a public offering, the Company shall,
as part of its offer, provide a copy of any preliminary prospectus containing
either the indicative price range of the offered securities or trading
information relating to the offered securities, as the case may be, and other
information concerning the offering reasonably requested by the Stockholders,
Mr. Otten or any Permitted Transferee. The Stockholders, Mr. Otten and any
Permitted Transferee shall have the right, during the period specified in
Section 4.05(b), to accept the offer for any or all of the Maintenance
Securities offered to each of them on their own behalf or on behalf of any
Affiliate (and, in the case of Oak Hill, on behalf of Oak Hill Securities Fund,
L.P.) not otherwise accepting such offer to acquire Maintenance Securities under
this Section 4.05.
(b) If any Stockholder, Mr. Otten or any Permitted Transferee
does not deliver to the Company written notice of acceptance of any offer made
pursuant to Section 4.05(a) with respect to a public offering within five
Business Days after receipt by such Stockholder, Mr. Otten, or any Permitted
Transferee, as the case may be, of a preliminary prospectus (filed with the SEC
as part of a registration statement) containing the pricing information
indicated in Section 4.05(a) above, or, with respect to any transaction other
than a public offering, within 15 Business Days after receipt of such offer by
such Stockholder, Mr. Otten, or any Permitted Transferee, as the case may be,
such Stockholder, Mr. Otten or Permitted Transferee shall be deemed to have
waived its or his, as the case may be, right to purchase all or any part of its
Maintenance Securities as set forth in such offer but such Stockholder, Mr.
Otten or any such Permitted Transferee shall retain its or his, as the case may
be, rights under this Section 4.05 with respect to future offers.
(c) The Anti-Dilutive Rights set forth above shall not apply
to (i) the grant or exercise of options to purchase Common Stock or the issuance
of shares of Common Stock to employees or Directors of the Company or any of its
Subsidiaries or otherwise pursuant to an Employee Plan or similar plan whether
in existence on the date hereof or otherwise duly adopted by the Board hereafter
(whether or not such options were issued prior to the date hereof, or are
hereafter issued), (ii) the issuance of warrant shares, or of shares of Common
Stock issuable upon exercise of any option, warrant, convertible security or
other rights to purchase or subscribe for Common Stock which, in each case, had
been issued prior to the date hereof or in compliance with Section 4.05(a) or
Section 4.05(c)(i), (iii) securities issued pursuant to any stock split, stock
dividend or other similar stock recapitalization or (iv) securities issued by
the Company for any consideration other than cash as may be approved by the
Board.
(d) A closing for the purchase of such Maintenance Securities
pursuant to this Section 4.05(d) shall occur on the later of (i) the date on
which such public or private issuance occurs and (ii) such date as may be
mutually agreed to by the Company, Mr. Otten, any Otten Permitted Transferee and
Oak Hill on behalf of any Stockholder and any Stockholder Permitted Transferee,
as the case may be, and shall take place at the offices of the Company or at
such other reasonable location as the Company may otherwise notify any
Stockholder, Mr. Otten and/or any Permitted Transferee, as the case may be, at
the time specified by the Company in such notice provided to any Stockholder,
Mr. Otten or any Permitted Transferee, as the case may be, at least five days
prior to such closing date. In connection with such closing, the Company, Mr.
Otten, any Stockholder or any Permitted Transferee, as the case may be, shall
provide such closing certificates and other closing deliveries provided in the
transaction giving rise to the rights specified in Section 4.05.
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.01. Restrictive Legend. Each certificate
representing the Series B Preferred or Conversion Stock shall, except as
otherwise provided in this Article V, be stamped or otherwise imprinted with
legends substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE.
THE SECURITY REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND CERTAIN RESTRICTIONS ON VOTING CONTAINED
IN THE STOCKHOLDERS' AGREEMENT, DATED AUGUST 6, 1999, AS THE SAME MAY
BE AMENDED, AMONG THE COMPANY AND CERTAIN STOCKHOLDERS LISTED ON THE
SIGNATURE PAGES THEREOF.
A certificate shall not bear the Securities Act legend or the legend regarding
this Agreement, as the case may be, if in the opinion of counsel satisfactory to
the Company (it being agreed that Shearman & Sterling shall be satisfactory) the
securities being sold thereby may be publicly sold without registration under
the Securities Act or may be sold without being subject to the restrictions on
sale specified in Article IV.
SECTION 5.02. Notice of Proposed Transfer. Prior to any
proposed Transfer of any shares of Registrable Stock (other than under the
circumstances described in Section 5.03, 5.04 or 5.05), permitted under Article
IV, the holder thereof shall give written notice to the Company of its intention
to effect such Transfer. Each such notice shall describe the manner of the
proposed Transfer and, if known, the identity of the proposed transferee and, if
requested by the Company, shall be accompanied by an opinion of counsel
satisfactory to the Company to the effect that the proposed Transfer may be
effected without registration under the Securities Act, whereupon the holder of
such stock shall be entitled to Transfer such stock in accordance with the terms
of its notice, subject in any event to the restrictions in Article IV; provided,
however, that no such opinion of counsel shall be required for a Transfer to one
or more Permitted Transferees subject in any event to the restrictions in
Article IV. Each certificate representing Registrable Stock transferred as above
provided shall bear the legends set forth in Section 5.01, except that such
certificate shall not bear such legends if (i) such Transfer is in accordance
with the provisions of Rule 144 of the Securities Act (or any other rule
permitting public sale without registration under the Securities Act, but not
Rule 144A) or (ii) the opinion of counsel referred to above is to the further
effect that the transferee and any subsequent transferee (other than an
Affiliate of the Company) would be entitled to Transfer such securities in a
public sale without registration under the Securities Act. The restrictions
provided for in this Section 5.02 shall not apply to securities that are not
required to bear the legends prescribed by Section 5.01 in accordance with the
provisions of Section 5.01.
SECTION 5.03. Request for Registration. (a) Subject to the
provisions of Article IV, at any time after August 6, 2000, one or more Holders
of Registrable Stock (the "Initiating Holders") may request in a written notice
(which notice shall state the number of shares of Registrable Stock to be so
registered and the intended method of distribution) that the Company file a
registration statement under the Securities Act (or a similar document pursuant
to any other statute then in effect corresponding to the Securities Act)
covering the registration of any or all Registrable Stock held by such
Initiating Holders in the manner specified in such notice; provided, however,
that there must be included in such registration at least 10% of the Registrable
Stock issued (or any lesser percentage if the anticipated aggregate offering
price would exceed $25 million). Following receipt of any notice under this
Section 5.03, the Company shall (x) within 30 days notify all other Holders of
such request in writing and (y) use its best efforts to cause to be registered
under the Securities Act all Registrable Stock that the Initiating Holders and
such other Holders have, within ten days after the Company has given such
notice, requested be registered in accordance with the manner of disposition
specified in such notice by the Initiating Holders.
(b) If the Initiating Holders intend to have the Registrable
Stock distributed by means of an underwritten offering, the Company shall
include such information in the written notice referred to in clause (x) of
paragraph (a) above. In such event, the right of any Holder to include its
Registrable Stock in such registration shall be conditioned upon such Holder's
participation in such underwritten offering and the inclusion of such Holder's
Registrable Stock in the underwritten offering (unless otherwise mutually agreed
by a majority in interest of the Initiating Holders and such Holder) to the
extent provided below. All Holders proposing to distribute Registrable Stock
through such underwritten offering shall enter into an underwriting agreement in
customary form with the underwriter or underwriters. Such underwriter or
underwriters shall be selected by a majority in interest of the Initiating
Holders and shall be approved by the Company, which approval shall not be
unreasonably withheld.
(c) Notwithstanding any provision of this Agreement to the contrary,
(i) the Company shall not be required to effect a registration
pursuant to this Section 5.03 during the period starting with the date
which is 30 days prior to the date of the initial public filing by the
Company of, and ending on a date that is 120 days following the
effective date of, a registration statement pertaining to a public
offering of securities for the account of the Company or on behalf of
the selling stockholders under any other registration rights agreement
that the Holders have been entitled to join pursuant to Section 5.04;
provided, however, that the Company shall actively employ in good faith
all reasonable efforts to cause such registration statement to become
effective as promptly as practicable;
(ii) if (A)(i) the Company is in possession of material
nonpublic information relating to the Company or any of its
Subsidiaries and (ii) the Company determines in good faith that public
disclosure of such material nonpublic information would not be in the
best interests of the Company and its stockholders, (B)(i) the Company
has made a public announcement relating to an acquisition or business
combination transaction that includes the Company and/or one or more of
its Subsidiaries that is material to the Company and its Subsidiaries
taken as a whole and (ii) the Company determines in good faith that (x)
offers and sales of Registrable Stock pursuant to any registration
statement prior to the consummation of such transaction (or such
earlier date as the Company shall determine) is not in the best
interests of the Company and its stockholders or (y) it would be
impracticable at the time to obtain any financial statements relating
to such acquisition or business combination transaction that would be
required to be set forth in a registration statement or (C) the Company
shall furnish to such Holders a certificate signed by the president of
the Company stating that in the good faith opinion of the Board such
registration would interfere with any material transaction or
financing, confidential negotiations, including, without limitation,
negotiations relating to an acquisition or business combination
transaction, or business activities then being pursued by the Company
or any of its Subsidiaries, then, in any such case, the Company's
obligation to use all reasonable efforts to file a registration
statement shall be deferred, or the effectiveness of any registration
statement may be suspended, in each case for a period not to exceed 120
days; provided, however, that the Company may not delay the filing or
suspend the effectiveness of any registration statement under this
Section 5.03(ii) on more than one occasion in any consecutive
twelve-month period;
(iii) the Company shall not be required to effect a
registration pursuant to this Section 5.03 if the Registrable Stock
requested by all Holders to be registered pursuant to such registration
are included in, and eligible for sale under, a Shelf Registration (as
defined below); and
(iv) the Company shall not be required to effect a
registration pursuant to this Section 5.03 more than one time in any
consecutive twelve-month period.
(d) With respect to any registration pursuant to this Section
5.03, the Company may include in such registration any of its primary securities
sold on its own behalf or securities being offered by ING pursuant to the ING
Registration Rights Agreement. If, in the opinion of the managing underwriter
(or, in the case of a non-underwritten offering, in the opinion of the Company),
the total amount of all securities to be registered, including Registrable
Stock, will exceed the maximum amount of the Company's securities which can be
marketed (i) at a price reasonably related to the then current market value of
such securities, and (ii) without otherwise materially and adversely affecting
the entire offering, then subject to the registration rights of the holders of
the Senior Preferred Stock and ING, the Company securities and Registrable Stock
to be included in such registration shall be included in the order as set forth
in clauses (1) and (2) below:
(1) In any registration pursuant to this Section 5.03 where
the Stockholders are the Initiating Holders:
(A) first, any securities of the Initiating Holders;
(B) second, any securities offered by the Company; and
(C) third, other Holders requesting registration of
Registrable Stock in proportion (as nearly as
practicable) to the amount of Registrable Stock
requested to be included by such Holder at the
time of filing the registration statement.
(2) In any registration pursuant to this Section 5.03 where Mr. Otten
is the Initiating Holder:
(A) first, any securities of the Company; and
(B) second, any securities of Holders requesting
registration of Registrable Stock, in proportion (as
nearly as practicable) to the amount of Registrable
Stock requested to be included by such Holder at the
time of filing the registration;
Notwithstanding clause (2) above, but subject to the registration rights of the
holders of the Senior Preferred Stock and ING, Mr. Otten, his estate or the
Otten Permitted Transferees, as the case may be, shall have priority over the
Company and each other Holder in selling any and all of their shares of
Registrable Stock on one occasion within two years following Mr. Otten's (1)
termination or resignation from the office of chief executive officer of the
Company or (2) death.
(e) The Company shall not be obligated to effect and pay for
more than four registrations of the Stockholders (two of which may be Shelf
Registrations requested pursuant to Section 5.05) and three registrations of Mr.
Otten (one of which may be a Shelf Registration requested pursuant to Section
5.05) pursuant to this Section 5.03; provided, however, that a registration
requested by any Holder pursuant to this Section 5.03 shall not be deemed to
have been effected for purposes of this Section 5.03(e) unless (i) it has been
declared effective by the SEC, (ii) it has remained effective for the period set
forth in Section 5.06(a), (iii) the offering of Registrable Stock pursuant to
such registration is not subject to any stop order, injunction or other order or
requirement of the SEC (other than any such stop order, injunction, or other
requirement of the SEC prompted by any act or omission of Holders of Registrable
Stock) and (iv) such Holder was permitted to include in such registration at
least one-half of the Registrable Stock requested by it or him, as the case may
be, to be included in such registration.
SECTION 5.04. Incidental Registration. (a) Subject to Section
5.09 and to the registration rights of the holders of the Senior Preferred Stock
and ING, if at any time the Company determines that it shall file a registration
statement under the Securities Act for the registration of Common Stock (other
than a registration statement on a Form S-4 or S-8 or an offering of securities
solely to the Company's existing stockholders) on any form that would also
permit the registration of the Registrable Stock and such filing is to be on its
behalf or on behalf of selling holders of its securities for the general
registration of Common Stock to be sold for cash, the Company shall each such
time promptly give the Holders written notice of such determination setting
forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than 15 days from the date of such
notice, and advising the Holders of their right to have Registrable Stock
included in such registration. In the case of a registration statement to be
filed on behalf of selling holders of its securities, the Company shall also
indicate in such notice whether it will be registering securities on its own
behalf as part of such registration statement. Upon the written request of any
Holder received by the Company not later than 15 days after the date of the
Company's notice (which request shall state the number of Registrable Shares to
be so registered and the intended method of distribution), the Company shall,
subject to Section 5.04(b) below, use all reasonable efforts to cause to be
registered under the Securities Act all of the Registrable Stock that each such
Holder has so requested to be registered; provided, however, that the Company
shall have the right to postpone or withdraw any registration effected pursuant
to this Section 5.04 without obligation or liability to such Holder.
(b) If, in the opinion of the managing underwriter (or, in the
case of a non-underwritten offering, in the opinion of the Company), the total
amount of such securities to be so registered, including such Registrable Stock,
will exceed the maximum amount of the Company's securities which can be marketed
(i) at a price reasonably related to the then current market value of such
securities and (ii) without otherwise materially and adversely affecting the
entire offering, then subject to the registration rights of the holders of the
Senior Preferred Stock and ING, the Company securities and Registrable Stock to
be included in such registration shall be included in the following order:
(A) first, any securities of the Company;
(B) second, any Registrable Stock of the Stockholders or the Stockholder
Permitted Transferees; and
(C) third, any Registrable Stock of Mr. Otten or the Otten Permitted
Transferees or any other stockholder hereafter granted incidental
registration rights in proportion (as nearly as practicable) to the
amount of Registrable Stock requested to be included by Mr. Otten, the
Otten Permitted Transferees or such stockholders at the time of the
filing of the registration statement.
SECTION 5.05. Shelf Registration. (a) An Initiating Holder
may use registration rights granted pursuant to Section 5.03, subject to the
limitations of paragraphs (d) and (e) of Section 5.03, to request that the
Company file a "shelf" registration statement pursuant to Rule 415 under the
Securities Act or any successor rule (the "Shelf Registration") with respect to
the Registrable Stock. The Company shall (i) use all reasonable efforts to have
the Shelf Registration filed within 30 days of such request and declared
effective as soon as reasonably practicable following such request and (ii)
subject to Section 5.03(c)(iii), use all reasonable efforts to keep the Shelf
Registration continuously effective from the date that such Shelf Registration
is declared effective until at least the earlier of such time as (A) all such
Registrable Stock has been sold thereunder or (B) the second anniversary of such
effective date in order to permit the prospectus forming a part thereof to be
usable by Holders during such period.
(b) Subject to Section 5.03(c)(iii), the Company shall
supplement or amend the Shelf Registration, (i) as required by the registration
form utilized by the Company or by the instructions applicable to such
registration form or by the Securities Act, (ii) to include in such Shelf
Registration any additional securities that become Registrable Stock by
operation of the definition thereof and (iii) following the written request of
an Initiating Holder pursuant to Section 5.05(c), to cover offers and sales of
all or a part of the Registrable Stock by means of an underwriting. The Company
shall furnish to the Holders of the Registrable Stock to which the Shelf
Registration relates copies of any such supplement or amendment sufficiently in
advance (but in no event less than five Business Days in advance) of its use or
filing with the SEC to allow the Holders a meaningful opportunity to comment
thereon.
(c) The Holders may, at their election and upon written notice
by an Initiating Holder to the Company, subject to the limitations set forth in
Section 5.03(c)(iii), effect offers and sales under the Shelf Registration by
means of one or more underwritten offerings, in which case the provisions of
Section 5.03(b) shall apply to any such underwritten distribution of securities
under the Shelf Registration and such underwriting shall, if sales of
Registrable Stock pursuant thereto shall have closed, be regarded as the
exercise of one of the registration rights contemplated by Section 5.03.
SECTION 5.06. Obligations of the Company. Whenever required
under Sections 5.03 and 5.05 to use all reasonable efforts to effect the
registration and sale of any Registrable Stock under the Securities Act, the
Company shall:
(a) prepare and file with the SEC a registration statement
with respect to such Registrable Stock (which shall be filed in no
event later than 90 days after written notice requesting a registration
statement under Section 5.03 or 5.05 has been received) and use all
reasonable efforts to cause such registration statement to become and
remain effective for the period of the distribution contemplated
thereby determined as provided hereafter; provided, however, that the
Company shall not be required to keep any Registration Statement (other
than the Shelf Registration) effective more than 120 days;
(b) 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 comply with the provisions
of the Securities Act with respect to the disposition of all
Registrable Stock covered by such registration statement;
(c) furnish to the Holders such reasonable numbers of copies
of the registration statement and the prospectus included therein
(including each preliminary prospectus and any amendments or
supplements thereto) in conformity with the requirements of the
Securities Act, any exhibits filed therewith and such other documents
and information as they may reasonably request;
(d) use all reasonable efforts to register or qualify the
Registrable Stock covered by such registration statement under such
other securities or "blue sky" laws of such jurisdiction within the
United States and Puerto Rico as shall be reasonably appropriate for
the distribution of the Registrable Stock covered by the registration
statement; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business in or to file a general consent to service of process in any
jurisdiction wherein it would not, but for the requirements of this
paragraph (except that the Company will use all reasonable efforts to
register or qualify Registrable Stock in such additional jurisdictions
as the Holder may request subject to the foregoing proviso and at the
Holder's own expense), be obligated to do so; and provided further that
the Company shall not be required to qualify such Registrable Stock in
any jurisdiction in which the securities regulatory authority requires
that any Holder submit any shares of its Registrable Stock to the
terms, provisions and restrictions of any escrow, lockup or similar
agreement(s) for consent to sell Registrable Stock in such jurisdiction
unless such Holder agrees to do so;
(e) promptly notify each Holder for whom such Registrable
Stock is covered by such registration statement, 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, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under
which they were made, and at the request of any such Holder promptly
prepare and furnish to such Holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. In the event the Company
shall give such notice, the Company shall extend the period during
which such Registration Statement shall be maintained effective as
provided in Section 5.06(a) (or, in the case of the Shelf Registration,
Section 5.05(a)) by the number of days during the period from and
including the date of the giving of such notice to the date when the
Company shall make available to the Holders such supplemented or
amended prospectus;
(f) furnish, at the request of any Holder requesting
registration of Registrable Stock pursuant to Section 5.03 or 5.05, if
the method of distribution is by means of an underwriting, on the date
that the Shares of Registrable Stock are delivered to the underwriters
for sale pursuant to such registration or, if such Registrable Stock is
not being sold through underwriters, on the date that the registration
statement with respect to such shares of Registrable Stock becomes
effective, (1) a signed opinion, dated on or about such date, of the
independent legal counsel representing the Company for the purpose of
such registration, addressed to the underwriters, if any, and if such
Registrable Stock is not being sold through underwriters, then to the
Holders making such request, as to such matters as such underwriters or
the Holders holding a majority of the Registrable Stock included in
such registration, as the case may be, may reasonably request and as
would be customary in such a transaction, and (2) letters dated on or
about such date and the date the offering is priced from the
independent certified public accountants of the Company, addressed to
the underwriters, if any, and if such Registrable Stock is not being
sold through underwriters, then to the Holders making such request and,
if such accountants refuse to deliver such letters to such Holders,
then to the Company (i) stating that they are independent certified
public accountants within the meaning of the Securities Act and that,
in the opinion of such accountants, the financial statements and other
financial data of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereto, comply as to
form in all material respects with the applicable accounting
requirements of the Securities Act and (ii) covering such other
financial matters (including information as to the period ending not
more than five Business Days prior to the date of such letters) with
respect to the registration in respect of which such letter is being
given as such underwriters or the Holders holding a majority of the
Registrable Stock included in such registration, as the case may be,
may reasonably request and as would be customary in such a transaction;
(g) enter into customary agreements (including if the method
of distribution is by means of an underwriting, an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Stock to be so included in the registration
statement;
(h) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
securityholders, as soon as reasonably practicable, but not later than
18 months after the effective date of the registration statement, an
earnings statement covering the period of at least 12 months beginning
with the first full month after the effective date of such registration
statement, which earnings statements shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder; and
(i) use all reasonable efforts to list the Registrable Stock
covered by such registration statement with any U.S. nationally
recognized securities exchange on which the Common Stock is then
listed.
For purposes of Sections 5.06(a) and 5.06(b), the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby and six months after the effective
date thereof.
SECTION 5.07. Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Article V of this Agreement that the Holders shall furnish to the Company such
information regarding themselves, the Registrable Stock held by them, and the
intended method of disposition of such securities as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.
SECTION 5.08. Expenses of Registration. All expenses incurred
in connection with each registration pursuant to Sections 5.03, 5.04 and 5.05 of
this Agreement, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incidental to such performance and compliance), fees of the National Association
of Securities Dealers, Inc. or listing fees, messenger and delivery expenses,
all fees and expenses of complying with state securities or "blue sky" laws, and
fees and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders (which counsel, subject to
the registration rights of holders of the Senior Preferred Stock and ING, shall
be selected by the Holders holding a majority in interest of the Registrable
Stock being registered), shall be paid by the Company; provided, however, that
if a registration request pursuant to Section 5.03 or 5.05 is subsequently
withdrawn by the Holders the Company shall not be required to pay any expenses
of such registration proceeding, and such withdrawing Holders shall bear such
expenses. The Holders shall bear and pay the underwriting commissions and
discounts applicable to securities offered for their account and the fees and
disbursements of any additional counsel in connection with any registrations,
filings and qualifications made pursuant to this Agreement.
SECTION 5.09. Underwriting Requirements. In connection with
any underwritten offering, the Company shall not be required under Section 5.04
to include shares of Registrable Stock in such underwritten offering unless the
Holders of such shares of Registrable Stock accept the terms of the underwriting
of such offering that have been reasonably agreed upon between the Company and
the underwriters selected by the Stockholders.
SECTION 5.10. Indemnification. In the event any Registrable
Stock is included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Holder,
such Holder's directors and officers, agents of such Holder, each
person who participates in the offering of such Registrable Stock,
including underwriters (as defined in the Securities Act), and each
Person, if any, who controls such Holder or participating person within
the meaning of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which they may become subject
under the Securities Act, the Exchange Act, state securities or "blue
sky" laws or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are
based on any untrue or alleged untrue statement of any material fact
contained in such registration statement on the effective date thereof
(including any prospectus filed under Rule 424 under the Securities Act
or any amendments or supplements thereto) or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse each such Holder, such
Holder's directors and officers, agents, such participating person or
controlling person for any legal or other expenses reasonably incurred
by them (but not in excess of expenses incurred in respect of one
counsel for Mr. Otten and any Otten Permitted Transferee and one
counsel for the Stockholders and any Stockholder Permitted Transferee,
as the case may be, all of them unless there is an actual conflict of
interest between any indemnified parties, which indemnified parties may
be represented by separate counsel) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 5.10(a)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Company; provided further that the Company shall not be
liable to any Holder, such Holder's directors and officers, agents,
participating person or controlling person in any such case for any
such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in connection with such
registration statement, preliminary prospectus, final prospectus or
amendments or supplements thereto, in reliance upon and in conformity
with written information furnished expressly for use in connection with
such registration by any such Holder, such Holder's directors and
officers, agents, participating person or controlling person. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any such Holder, such Holder's
directors and officers, agents, participating person or controlling
person, and shall survive the Transfer of such securities by such
Holder.
(b) Each Holder requesting or joining in a registration
severally and not jointly shall indemnify and hold harmless the
Company, each of its directors and officers, each Person, if any, who
controls the Company within the meaning of the Securities Act, and each
agent and any underwriter for the Company (within the meaning of the
Securities Act) against any losses, claims, damages or liabilities,
joint or several, to which the Company or any such director, officer,
controlling person, agent or underwriter may become subject, under the
Securities Act, Exchange Act, state securities or "blue sky" laws or
otherwise, insofar as such losses, claims, damages or liabilities (or
proceedings in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in such registration statement on the effective date thereof
(including any prospectus filed under Rule 424 under the Securities Act
or any amendments or supplements thereto) or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such registration statement,
preliminary or final prospectus, or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished
by or on behalf of such Holder expressly for use in connection with
such registration; and each such Holder shall reimburse any legal or
other expenses reasonably incurred by the Company or any such director,
officer, controlling person, agent or underwriter (but not in excess of
expenses incurred in respect of one counsel for all of them unless
there is an actual conflict of interest between any indemnified parties
which indemnified parties may be represented by separate counsel) in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 5.10(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of such Holder; and
provided further that the liability of each Holder hereunder shall be
limited to the proportion of any such loss, claim, damage, liability or
expense which is equal to the proportion that the net proceeds from the
sale of the Shares sold by such Holder under such registration
statement bears to the total net proceeds from the sale of all
securities sold thereunder, but not in any event to exceed the net
proceeds received by such Holder from the sale of Registrable Stock
covered by such registration statement.
(c) Promptly after receipt by an indemnified party under this
Section 5.10 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 5.10, notify the
indemnifying party in writing of the commencement thereof and the
indemnifying party shall have the right to participate in and assume
the defense thereof with counsel selected by the indemnifying party and
reasonably satisfactory to the indemnified party; provided, however,
that an indemnified party shall have the right to retain its own
counsel, with all fees and expenses thereof to be paid by such
indemnified party, and to be apprised of all progress in any proceeding
the defense of which has been assumed by the indemnifying party. The
failure to notify an indemnifying party promptly of the commencement of
any such action shall not relieve the indemnifying party from any
liability in respect of such action which it may have to such
indemnified party on account of the indemnity contained in this Section
5.10, unless (and only to the extent) the indemnifying party was
prejudiced by such failure, and in no event shall such failure relieve
the indemnifying party from any other liability which it may have to
such indemnified party. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
claim or pending or threatened proceeding in respect of which the
indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party
from all liability arising out of such claim or proceeding.
(d) To the extent any indemnification by an indemnifying party
is prohibited or limited by applicable law, the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
the indemnified party in connection with the actions which resulted in
such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by
reference to, among other things, whether or not any action in
question, including any untrue or alleged untrue statement of material
fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party
or indemnified party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages or liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.10(d) were determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
SECTION 5.11. Lockup. Each Holder shall, in connection with
any registration of the Company's securities, upon the request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
agree in writing not to effect any sale, disposition or distribution of any
Registrable Stock (other than (i) the Registrable Stock included in such
registration or (ii) as permitted by clause (B) of Section 4.02(a)), without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time from 60 days prior to the effective date of such
registration to such time as the Company or the underwriters may specify;
provided, however, that (x) all Executives and Directors shall also have agreed
not to effect any sale, disposition or distribution of any Registrable Stock
under the circumstances and pursuant to the terms set forth in this Section 5.11
and (y) in no event shall the Holders be required to not effect any sale,
disposition or distribution for longer than 180 days after the Registration
Statement becomes effective pursuant to this Section 5.11.
SECTION 5.12. Transfer of Registration Rights. Subject to
Article IV, the registration rights of the Stockholders or Mr. Otten under this
Agreement with respect to any Registrable Stock may be transferred to any
Permitted Transferee of such Registrable Stock; provided, however, that (i) the
Stockholders and Mr. Otten shall give the Company written notice at or prior to
the time of such Transfer stating the name and address of the Permitted
Transferee and identifying the securities with respect to which the rights under
this Agreement are being transferred; (ii) such Permitted Transferee shall agree
in writing, in form and substance reasonable satisfactory to the Company, to be
bound as a Holder by the provisions of this Agreement; and (iii) immediately
following such Transfer, the further disposition of such securities by such
Permitted Transferee is restricted under the Securities Act. Except as set forth
in this Section 5.12, no Transfer of Registrable Stock shall cause such
Registrable Stock to lose such status.
SECTION 5.13. Rule 144 Information. Subject to Article IV,
and with a view to making available the benefits of certain rules and
regulations of the SEC which may at any time permit the sale of the Registrable
Stock to the public without registration, at all times after 90 days after any
Shelf Registration Statement covering a public offering of securities of the
Company under the Securities Act shall have become effective, the Company agrees
to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and
(c) furnish to each Holder of Registrable Stock forthwith upon
request a written statement by the Company as to its compliance with
the reporting requirements of such Rule 144 and of the Securities Act
and the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by
the Company as such Holder may reasonably request in availing itself of
any rule or regulation of the SEC allowing such Holder to sell any
Registrable Stock without registration.
ARTICLE VI
FURNISHING OF INFORMATION
SECTION 6.01. Furnishing of Information. For so long as the
Stockholders, on the one hand, and Mr. Otten, on the other hand, Beneficially
Own at least 5% of the outstanding shares of Common Stock (on a Fully Diluted
Basis):
(a) The Company will furnish or make available to the
Stockholders and/or Mr. Otten, as the case may be, its annual reports
to stockholders and any quarterly or other financial reports and
information furnished by it to stockholders pursuant to the
requirements of the Exchange Act.
(b) If the Company is not required to furnish annual or
quarterly reports to its stockholders pursuant to the Exchange Act, it
shall furnish to the Stockholders and/or Mr. Otten, as the case may be,
its financial statements, including any notes thereto (and with respect
to annual reports, an auditors' report by a nationally recognized firm
of independent certified public accountants), a "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and such other information which the Company would
otherwise be required to include in annual and quarterly reports filed
under the Exchange Act.
(c) The Company shall, at any reasonable time and from time to
time, permit the Stockholders and/or Mr. Otten, as the case may be, or
any agent or representative thereof, to examine and make copies of and
abstracts from the records and books of account of the Company, and to
discuss the records, finances and accounts of the Company with any of
its officers, Directors and with their independent certified public
accountants.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. Waiver. The parties hereto may agree to (a)
extend the time for the performance of any of the obligations or other acts of
other parties, (b) waive any inaccuracies in the representations and warranties
of other parties contained herein or in any document delivered by other parties
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of other parties contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the parties to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights. Oak Hill shall have all authority to act on behalf of the
other Stockholders under this Section 7.01.
SECTION 7.02. Expenses; Attorneys' Fees. (a) Except as
otherwise specified in this Agreement, all costs and expenses, including,
without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
(b) A party in breach of this Agreement shall, on demand,
indemnify and hold harmless the other parties for and against all reasonable
out-of-pocket expenses, including legal fees, incurred by such other party by
reason of the enforcement and protection of its rights under this Agreement. The
payment of such expenses is in addition to any other relief to which such other
party may be entitled.
SECTION 7.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by telecopy, by e-mail or by registered
or certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 7.03):
(a) if to the Company or Mr. Otten,
American Skiing Company
Sunday River Road
Bethel, ME 04217
Telecopy: (207) 824-5110
Attention: Leslie B. Otten
Christopher E. Howard
with copies (which shall not constitute notice to the Company or Mr. Otten) to:
Pierce Atwood
One Monument Square
Portland, ME 04101
Telecopy: (207) 791-1350
Attention: David J. Champoux, Esq.
(e-mail: dchampoux@pierceatwood.com)
and
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022-6069
Telecopy: (212) 848-7179
Attention: Robert Evans III, Esq.
(e-mail: revans@shearman.com)
Peter D. Lyons, Esq.
(e-mail: plyons@shearman.com)
(b) if to the Stockholders,
Oak Hill Capital Partners, L.P.
201 Main Street
Fort Worth, Texas 76102
Attention: Ray Pinson
and
Oak Hill Capital Management, Inc.
Park Avenue Tower
65 East 55th Street
New York, NY 10022
Telecopy: 212-754-5685
Attention: Steven B. Gruber
Bradford E. Bernstein
with a copy (which shall not constitute notice to the Stockholders) to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Telecopy: (212) 373-2377
Attention: Matthew Nimetz, Esq.
SECTION 7.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement. No party to this Agreement
shall be deemed to be the draftsman of this Agreement.
SECTION 7.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 7.06. Entire Agreement. This Agreement, together with
the Voting Agreement, constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements
and undertakings, both written and oral, between the parties with respect to the
subject matter hereof.
SECTION 7.07. Assignment. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, with respect to the Company, any successor corporation;
provided, however, other than as contemplated by the Delaware Reincorporation or
any other merger involving the Company, no party hereto shall assign or delegate
any of the rights or obligations created under this Agreement without the prior
written consent of the other parties, except to Affiliates of Oak Hill or to Oak
Hill Securities Fund, L.P.; provided, however, that no such assignment shall
release Oak Hill or any of the other Stockholders from any of their obligations
hereunder. Oak Hill shall have all authority to act on behalf of the other
Stockholders under this Section 7.07.
SECTION 7.08. No Third Party Beneficiaries. Except for the
provisions of Article V relating to indemnified parties, this Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 7.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
parties hereto or (b) by a waiver in accordance with Section 7.01. Oak Hill
shall have all authority to act on behalf of the other Stockholders under this
Section 7.09.
SECTION 7.10. Governing Law; Forum. (a) Prior to the Delaware
Reincorporation, this Agreement shall be governed by, and construed in
accordance with, the laws of the State of Maine and (b) on or after the
occurrence of the Delaware Reincorporation, this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, in each
case, as applicable to contracts executed in and to be performed entirely in
that state and without regard to any applicable conflicts of law principles. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any State or federal court in Maine (if such action or
proceeding is commenced prior to the Delaware Reincorporation) or in Delaware
(if such action or proceeding is commenced after the Delaware Reincorporation).
Each of the parties to this Agreement (a) consents to submit itself to the
personal jurisdiction of any Maine or Delaware State or federal court, as the
case may be, in the event that any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
in relation to this Agreement or any of the other transactions contemplated by
this Agreement in any court other than any Maine or Delaware State or federal
court, as the case may be.
SECTION 7.11. Effect of Delaware Reincorporation. This
agreement shall continue in full force and effect notwithstanding any actions
taken in connection with the Delaware Reincorporation.
SECTION 7.12. Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 7.13. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
AMERICAN SKIING COMPANY
By: /s/ Leslie B. Otten
Name: Leslie B. Otten
Title: As President
LESLIE B. OTTEN
/s/ Leslie B. Otten
CONSENTED TO AND ACKNOWLEDGED BY:
ING US CAPITAL LLC,
AS PLEDGEE OF SHARES
OF CLASS A COMMON
STOCK AND COMMON STOCK
BENEFICIALLY OWNED BY
LESLIE B. OTTEN
By: /s/ Robert L. Fellows
Name: Robert L. Fellows
Title: Director
OAK HILL CAPITAL PARTNERS, L.P.
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
Name: Steven B. Gruber
Title: Managing Member
OAK HILL CAPITAL MANAGEMENT
PARTNERS, L.P.
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
Name: Steven B. Gruber
Title: Vice President
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.,
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By: /s/ Glenn R. August
Name: Glenn R. August
Title: President
OHCP SKI, L.P.
By: Oak Hill Capital Partners, L.P.
its general partner
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
Name: Steven B. Gruber
Title: Vice President
ANNEX A
STOCKHOLDERS
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Jurisdiction and
Name Type of Organization
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Oak Hill Capital Partners, L.P. Delaware L.P.
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Oak Hill Capital Management Partners, L.P. Delaware L.P.
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Oak Hill Securities Fund, L.P. Delaware L.P.
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OHCP SKI, L.P. Delaware L.P.
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