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Exhibit 10.40
Execution Copy
MANAGEMENT LOCK-UP AND VOTING AGREEMENT
MANAGEMENT LOCK-UP AND VOTING AGREEMENT dated as of April 9, 1997
among each of the persons named on Schedule I hereto (individually, a
"Management Stockholders' and collectively, the "Management Stockholder"),
SOURCE MEDIA, INC. (the "Company"), NORTHSTAR HIGH TOTAL RETURN FUND
("Northstar") and each of the investors named on Schedule II attached hereto
(collectively, the "Pecks Investors" and, together with Northstar, individually,
a "Note Purchaser" and collectively, the "Note Purchasers").
The Note Purchasers have entered into an Amended and Restated Note
Agreement, dated as of the date hereof (the "Note Agreement") with the Company
and IT Network, Inc., a wholly-owned subsidiary of the Company ("IT;" and,
together with the Company, the "Note Sellers") pursuant to which, among other
things, each of the Note Purchasers have advanced funds to the Note Sellers in
consideration for the issuance to the Note Sellers of certain secured promissory
notes of the Note Sellers. Except as otherwise defined herein, all capitalized
terms herein used will have the meanings ascribed thereto in the Note Agreement.
As a condition precedent to the Note Purchasers entering into the
Note Agreement with the Note Sellers and consummating the transactions
contemplated thereby, and as an inducement to the Note Purchasers so to do, each
of the Management Stockholders has entered into this Management Lock-Up and
Voting Agreement governing certain matters with respect to the Management Shares
(as hereinafter defined) owned by the Management Stockholders.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
SECTION 1. Restrictions on Transfers of Management Shares. Each
Management Stockholder agrees that for the period (the "Restricted Period")
commencing on the date hereof and ending on the date that all of the obligations
of whatever kind and nature of each of the Note Sellers under the Note
Agreement, the Notes and the 1997 Security Documents have been paid and
indefeasibly satisfied in full, such Management Stockholder will not, directly
or indirectly, sell, transfer, assign, pledge, charge, mortgage, encumber,
contract to sell, grant any option to purchase or otherwise dispose of or shift
the economic effect of holding (each of the foregoing actions being hereinafter
called a "Disposition") such Management Shares owned by such Management
Stockholder so that, after giving effect to any and all Dispositions during the
Restricted Period, such Management Stockholder
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owns of record and beneficially fewer than 90% of the greatest number of
Management Shares at any time so owned by such Management Stockholder during the
Restricted Period other than as noted on Schedule III - Exceptions to Lock-Up.
Notwithstanding the foregoing each Management Stockholder may carry
out a Disposition of Management Shares owned by such Management Stockholder
during the Restricted Period:
(a) with the prior written consent of the Required
Holders; or
(b) if such Management Stockholder is a natural person, (i)
by will or the laws of descent and distribution or (ii)
by way of transfer or gift to such Management
Stockholder's spouse or lineal descendants or (ii) to a
trust created for the benefit of any one or more of the
foregoing; provided however that any such transferee
shall, as a condition to such transfer, agree in writing
to be bound by all of the provisions of this Agreement
to the same extent as if such transferee were the
Management Stockholder transferring such shares; or
(c) if such Management Stockholder's Management Shares are
held in a trust by way of distribution to one or more
individual beneficiaries under said trust, in which
event each such transferee shall be bound by all of the
provisions of this Agreement to the same extent as if
such transferees were the Management Stockholders and
shall agree in writing to be so bound.
Any Disposition in contravention of the provisions of this Agreement
shall be null and void and shall not be given effect on the stock transfer
records of the Company.
For purposes of this Agreement, the term "Management Shares" shall
include all shares of Common Stock or any and all rights to acquire shares of
Common Stock now owned or hereafter acquired by a Management Stockholder,
including, without limitation, shares of Common Stock described on Schedule I
hereto as being subject to an option or other right of purchase and shares of
Common Stock acquired by way of stock dividend, stock split, subdivision or
shares of any securities of the Company issued in respect of or in exchange for
shares of Common Stock.
Notwithstanding anything to the contrary contained herein, a
Management Stockholder shall cease to be bound by the
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terms of this Agreement at such time, and only for so long as, such Management
Stockholder ceases entirely to render any services to the Company or any of its
Affiliates, whether as a director, officer, employee, consultant or otherwise.
SECTION 2. Election of the Pecks Investors Designee. For so long as
the number of shares of Common Stock owned of record and beneficially by the
Pecks Investors or any Affiliates of the Pecks Investors is not fewer than
250,000 (appropriately adjusted to reflect stock splits and dividends and stock
combinations after the date hereof and treating for purposes of this Section 2
shares of Common Stock issuable upon exercise of any Warrants held by the Pecks
Investors or any Affiliates of the Pecks Investors as being owned of record and
beneficially by such Pecks Investors or such Affiliates), each Management
Stockholder shall vote all Management Shares owned of record or beneficially by
such Management Stockholder or any other shares of Common Stock which at the
time such Management Stockholder has the right (by proxy or otherwise) to vote
(whether such vote (hereinafter "Vote" or, correlatively, "Voting") is cast at
any regular or special meeting of stockholders of the Company or by an action by
written consent signed by such Management Stockholder) in favor of, and
otherwise shall use its best efforts and take all steps necessary and
appropriate and legally within such Management Stockholder's power to cause, the
election of each Pecks Investor Designee (and each replacement thereof proposed
by the Pecks Investors) to the Board of Directors of the Company. Such steps on
the part of each Management Stockholder shall include, but not be limited to,
Voting all Management Shares owned of record or beneficially by such Management
Stockholder in favor of all amendments to the Company's certificate of
incorporation and by-laws as may be necessary to give effect to the provision of
this Section 2.
SECTION 3. Representations and Warranties. Each Management
Stockholder represents and warrants to each Note Purchaser as follows:
(a) The execution, delivery and performance of this Agreement by
such Management Stockholder will not violate any provision of law, any order of
any court or other agency of government, or any provision of any indenture,
agreement or other instrument to which such Management Stockholder or any of
such Management Stockholder's properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or result in
the creation or imposition of any hen, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of such Management Stockholder.
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(b) This Agreement has been duly executed and delivered by such
Management Stockholder and constitutes the legal, valid and binding obligation
of such Management Stockholder, enforceable against such Management Stockholder
in accordance with its terms.
(c) Each Management Stockholder owns, as of the date hereof, of
record and beneficially, that number (and no more) of shares of Common Stock set
opposite his name on Schedule I hereto, free and clear of any and all liens,
pledges, security interests, claims, charges or other encumbrances of any kind
whatsoever, except as so noted on Schedule I hereto.
SECTION 4. Legend on Stock Certificates. Each certificate
representing shares of Common Stock held by any Management Stockholder shall
bear the following legend until such time as the securities represented thereby
are no longer subject to the provisions hereof-
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A LOCK-UP AND VOTING AGREEMENT, DATED AS OF
APRIL 9, 1997, BY AND AMONG SOURCE MEDIA, INC. (THE "COMPANY"),
CERTAIN STOCKHOLDERS OF THE COMPANY AND THE OTHER PARTIES NAMED
THEREIN. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED BY STOCKHOLDERS AT NO COST BY WRITTEN REQUEST MADE
BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE COMPANY."
The Company covenants that it shall keep a copy of this Agreement on
file at the address listed below for the purpose of furnishing copies to the
holders of record of shares of Common Stock.
SECTION 5. Severability. If any part of this Agreement is held by a
court of competent jurisdiction to be invalid, illegible or incapable of being
enforced in whole or in part by reason of any rule of law or public policy, such
part shall be deemed to be severed from the remainder of this Agreement for the
purpose only of the particular legal proceedings in question and all other
covenants and provisions of this Agreement shall in every other respect continue
in full force and effect and no covenant or provision shall be deemed dependent
upon any other covenant or provision.
SECTION 6. Notices. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient and received if contained
in a written instrument delivered in person or by nationally recognized
overnight courier or duly sent by first class certified mail, postage prepaid,
or by telecopy addressed to such party at the address or telecopy number set
forth below:
(1) if to any of the Pecks Investors, to them at their addresses
set forth on Schedule II hereto, as the case may be;
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with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
One Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
(2) if to Northstar, to:
Northstar Investment Management
Two ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇ Dial
with a copy to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(3) if to the Company, to:
Source Media, Inc.
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▇▇▇▇▇ ▇▇▇▇
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Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & Knight
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
(4) If to any Management Stockholders, to them at their addresses
set forth on Schedule I hereto, as the case may be;
or, in any case, at such other address or telecopy number as shall have been
furnished in writing by such party to the other parties hereto. All such
notices, requests, consents and other communications shall be deemed to have
been received (a) in the case of personal or courier delivery, on the date of
such delivery, (b) in the case of mailing, on the fifth business day following
the date of such mailing and (c) in the case of telecopy, when received.
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SECTION 7. Entire Agreement, Modifications. This Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and may not be amended or modified nor any provisions waived
except in a writing signed by the Company and by each of the Management
Stockholders who shall, at such time, be holders of Common Stock.
SECTION 8. Counterparts. This Agreement may be executed in any
number of Counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
SECTION 9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
SOURCE MEDIA, INC.
By:__________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Chief Financial Officer
and Treasurer
NORTHSTAR HIGH TOTAL RETURN FUND
By:__________________________
▇▇▇▇▇▇ ▇▇▇ Dial
Vice President
DELAWARE STATE EMPLOYEES'
RETIREMENT FUND
By: Pecks Management Partners Ltd.,
its Investment Advisor
By:__________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Director
DECLARATION OF TRUST FOR DEFINED
BENEFIT PLAN OF ZENECA HOLDINGS INC.
By: Pecks Management Partners Ltd.,
its Investment Advisor
By:__________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Director
DECLARATION OF TRUST FOR DEFINED
BENEFIT PLAN OF ICI AMERICAN HOLDINGS INC.
By: Pecks Management Partners Ltd.,
its Investment Advisor
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By:__________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Director
▇.▇. ▇▇▇▇▇▇▇▇▇ FAMILY FOUNDATION
By: Pecks Management Partners Ltd.,
its Investment Advisor
By:__________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Director
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MANAGEMENT STOCKHOLDERS
By:_________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:_________________________________________
▇▇▇▇ ▇. ▇▇▇▇
By:_________________________________________
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By:_________________________________________
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By:_________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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SCHEDULE I
MANAGEMENT STOCKHOLDERS
Options to
Purchase
Common
Rights to Stock Common
Common Purchase Exercisable Stock
Stock Common within Beneficially
Owned Stock 60 days Owned
----- --------- ----------- ------------
(1)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (2) 641,635 98,930 3,834 744,399
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇ (3) 193,965 24,687 3,377 224,045
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 467,437 -- 3,377 470,814
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 28,702 -- 32,943 61,645
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ (4) 152,369 2,927 -- 155,296
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(1) Stock which may be purchased pursuant to that certain Stock Purchase and
Rights Agreement dated September 1, 1994 ("SPRA"). Stock may be purchased until
September 1, 1997 at a per share price of approximately $8.35 per share.
(2) Excludes approximately 608,635 shares of common stock as to which ▇▇. ▇▇▇▇▇▇
may, until September 1, 1997, exercise voting control on all matters presented
to the stockholders of the Company, other than matters with respect to which the
stockholders of the Company have dissenters' rights, pursuant to the SPRA. In
addition, ▇▇. ▇▇▇▇▇▇ has pledged certain of his shares as collateral against a
margin loan.
(3) ▇▇. ▇▇▇▇ has pledged certain of his shares as collateral against a note
dated June 30, 1993, given by ▇▇. ▇▇▇▇ to IT Network, Inc., as such note has
been amended, and as collateral against a margin loan.
(4) ▇▇. ▇▇▇▇▇ has pledged certain of her shares as collateral against a
margin loan.
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SCHEDULE II
PECKS INVESTORS
DELAWARE STATE EMPLOYEES' RETIREMENT FUND
c/o Pecks Management Partners, Ltd.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
DECLARATION OF TRUST FOR DEFINED
BENEFIT PLAN OF ZENECA HOLDINGS INC.
c/o Pecks Management Partners, Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
DECLARATION OF TRUST FOR DEFINED
BENEFIT PLAN OF ICI AMERICAN HOLDINGS INC.
c/o Pecks Management Partners, Ltd.
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Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇▇▇ FAMILY FOUNDATION
c/o Pecks Management Partners, Ltd.
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▇▇▇▇▇ ▇▇▇
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Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇
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EXCEPTIONS TO LOCK-UP
A. For any of the Management Stockholders, Management Shares purchased after
the date of the Closing (as such term is defined in the Note Agreement)
and simultaneously pledged solely to secure a non-recourse note the
proceeds of which had been used solely to purchase the Management Shares
pledged;
B. For ▇▇. ▇▇▇▇ those certain Management Shares pledged as collateral against
a note dated June 30, 1993 given by ▇▇. ▇▇▇▇ to IT Network, Inc., as such
note has been amended, and as collateral against a margin loan;
C. For ▇▇. ▇▇▇▇▇▇, those certain Management Shares pledged as collateral
against a margin loan;
D. For ▇▇. ▇▇▇▇▇, those certain Management Shares pledged as collateral
against a margin loan;
E. For ▇▇. ▇▇▇▇, ▇▇. ▇▇▇▇ and ▇▇. ▇▇▇▇▇, the greater of (i) 30,000 Management
Shares or (ii) up to 10% of the greatest number of his/her respective
Management Shares at any time so owned by him/her during the Restricted
Period.
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