EXECUTION COPY
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Exhibit 4.4
WRC MEDIA INC.
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PREFERRED STOCKHOLDERS AGREEMENT
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DATED AS OF NOVEMBER 17, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE I
INFORMATION, VOTING AND OBSERVATION RIGHTS
SECTION 1.01. Financial and Business Information..............................2
SECTION 1.02. Amendments to Charters; Other Actions...........................4
SECTION 1.03. Board Designees.................................................5
SECTION 1.04. Approval Right..................................................7
SECTION 1.05. Remedies........................................................8
ARTICLE II
REGISTRATION AND EXCHANGE RIGHTS
SECTION 2.01. Required Registration...........................................9
SECTION 2.02. Incidental Registration........................................13
SECTION 2.03. Registration Procedures........................................15
SECTION 2.04. Reasonable Investigation.......................................21
SECTION 2.05. Registration Expenses..........................................23
SECTION 2.06. Indemnification; Contribution..................................23
SECTION 2.07. Holdback Agreements; Registration
Rights to Others.............................................28
SECTION 2.08. Other Registration of Capital Stock............................29
SECTION 2.09. Availability of Information....................................29
SECTION 2.10. Parent Preferred Stock Exchange Rights.........................30
SECTION 2.11. Warrant Registration Rights....................................32
ARTICLE III
RESTRICTIONS ON TRANSFER,
TERMINATION AND OTHER AGREEMENTS
SECTION 3.01. Restrictions on Transfer to Transferees........................33
SECTION 3.02. Cooperation by the Parent and the
Companies....................................................34
SECTION 3.03. Legending of Certificates......................................34
SECTION 3.04. Securities Act Restrictions; Legend............................34
SECTION 3.05. Termination of Restrictions....................................35
ARTICLE IV
DEFINED TERMS
SECTION 4.01. Terms Defined..................................................36
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SECTION 4.02. "Best Efforts".................................................46
SECTION 4.03. Section Headings and Table of Contents
and Construction.............................................46
SECTION 4.04. GOVERNING LAW..................................................46
ARTICLE V
SECTION 5.01. Registered Exchange Offer......................................57
SECTION 5.02. Shelf Registration.............................................59
SECTION 5.03. Certain Matters................................................60
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Parent and Company Activities..................................61
SECTION 6.02. Communications.................................................62
SECTION 6.03. Reproduction of Documents......................................63
SECTION 6.04. Survival.......................................................64
SECTION 6.05. Successors and Assigns.........................................64
SECTION 6.06. Amendments and Waivers.........................................65
SECTION 6.07. Expenses.......................................................65
SECTION 6.08. Waiver of Jury Trial; Consent to
Jurisdiction; etc............................................66
SECTION 6.09. Indemnification................................................69
SECTION 6.10. Entire Agreement...............................................69
SECTION 6.11. Execution in Counterpart.......................................70
Annex 1 - Names and Addresses of Purchasers
Annex 2 - Address of Initial Stockholder
Exhibit A - Form of Transferee Undertaking
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PREFERRED STOCKHOLDERS AGREEMENT
PREFERRED STOCKHOLDERS AGREEMENT (as the same may hereafter be
amended, supplemented or modified, this "Agreement"), dated as of
November 17, 1999, among WRC MEDIA INC., a Delaware corporation
(together with its successors and permitted assigns, the
"Parent"); JLC Learning Corporation, a Delaware corporation
(together with its successors and permitted assigns, "JLC");
Weekly Reader Corporation, a Delaware corporation (together with
its successor and permitted assigns, "WRC" and, together with JLC,
the "Companies"); SGC PARTNERS II LLC (together with its
successors and permitted assigns, "SGC"); EAC III L.L.C., a
Delaware limited liability company (together with its successors
and permitted assigns, the "Initial Stockholder"); Ripplewood
Partners L.P., a Delaware limited partnership (together with is
successors and permitted assigns, "Ripplewood Partners"), for
purposes of Section 2.13(g) only; THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY, a Wisconsin corporation (together with its
successors and permitted assigns, "NML"); ARES LEVERAGED
INVESTMENT FUND, L.P., a Delaware limited partnership, ARES
LEVERAGED INVESTMENT FUND II, L.P., a Delaware limited partnership
(together, with their respective successors and permitted assigns,
the "Ares Funds"); TCW/CRESCENT MEZZANINE PARTNERS II, L.P., a
Delaware limited partnership, TCW/CRESCENT MEZZANINE TRUST II, a
Delaware business trust, SHARED OPPORTUNITY FUND IIB, LLC, a
Delaware limited liability company, TCW SHARED OPPORTUNITY FUND
III, L.P., a Delaware limited liability company, TCW LEVERAGED
INCOME TRUST II, L.P., a Delaware limited partnership, TCW
LEVERAGED INCOME TRUST, L.P., a Delaware limited partnership;
(collectively, with their respective successors and permitted
assigns, the "TCW Funds" and, collectively with NML, the Ares
Funds and the TCW Funds, the "Other Purchasers") and the other
persons party
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hereto (each other person, together with their successors and
permitted assigns, a "DLJMB Entity", collectively, the "DLJMB
Entities" and, together with the Other Purchasers, the
"Purchasers").
RECITALS
WHEREAS pursuant to a Preferred Stock and Warrants
Subscription Agreement (the "Subscription Agreement") dated as of November 17,
1999, among the Parent, the Companies and the Purchasers, the Purchasers agreed,
among other things, to purchase an aggregate of 3,000,000 shares of 15% Senior
Exchangeable Preferred Stock due 2011, par value $0.01 per share, of the Parent
(the "Parent Preferred Stock"), an aggregate of 1,495 warrants to purchase
shares of the common stock of JLC (the "JLC Warrants") and an aggregate of
422,874 warrants to purchase shares of the common stock of WRC (the "WRC
Warrants" and, together with the JLC Warrants, the "Warrants");
WHEREAS the Parent, the Companies, the Purchasers and the
Initial Stockholder wish to define certain of their respective rights and
obligations with regard to the Parent Preferred Stock and the Warrants; and
WHEREAS the execution and delivery of this Agreement by the
Parent, the Companies and the Initial Stockholder is a condition to the
performance by the Purchasers of their obligations under the Subscription
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises herein contained, the Parent, the Companies, SGC (with respect
to Section 1.02(i), 1.03(a)(i) 1.05, 3.01, 6.02, 6.05, 6.08, 6.10 and 6.11
only), the Initial Stockholder and the Purchasers mutually agree as follows:
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ARTICLE I
INFORMATION, VOTING AND OBSERVATION RIGHTS
SECTION 1.01. FINANCIAL AND BUSINESS INFORMATION.
The Parent shall deliver to each holder of any Purchaser
Shares or Parent Preferred Stock:
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as practicable
after the end of each quarterly fiscal period in each fiscal year of
the Parent or the relevant Company, as applicable (other than the last
quarterly fiscal period of each such fiscal year), and in any event
within 50 days thereafter:
(i) a balance sheet as at the end of such
quarter; and
(ii) an income statement and statement of cash flow
for such quarter, and, in the case of the second and third
fiscal quarters of the Parent, the comparable information for
the portion of the fiscal year ending with such quarter and a
comparison to relevant budget amounts for such quarter;
for the Parent and the Subsidiaries (on a consolidated basis) and for
each Company, setting forth in each case, in comparative form, the
financial statement for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and certified
as complete and correct by a Senior Financial Officer; PROVIDED that,
should the Parent become subject to or agree with any Person to comply
with the provisions of Section 13 of the Exchange Act, delivery of
copies of the Parent's Quarterly Report on Form 10-Q filed with the SEC
within 45 days after the end of such quarterly fiscal period shall be
deemed to satisfy the requirements of this Section 1.01(a) with respect
to the consolidated financial statements of the Parent and its
Subsidiaries, but the Parent shall continue to deliver the financial
statements required by this Section 1.01(a) with respect to a Company
for so long as the DLJMB Entities shall hold any Purchaser Shares or
any shares of Exchange Preferred Stock of such Company.
(b) ANNUAL FINANCIAL STATEMENTS. As soon as practicable after
the end of each fiscal year of the Parent, and in any event within 95
days thereafter:
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(i) a consolidated balance sheet as at the
end of such year; and
(ii) a consolidated income statement and statement of
cash flows for such year;
for the Parent and the Subsidiaries, together with the notes thereto,
setting forth in each case, in comparative form, the financial
statement for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied by:
(A) an audit report thereon of independent certified
public accountants of recognized national standing, which
report shall state that such financial statements fairly
present in all material respects the consolidated financial
condition of the Parent as at such date and the consolidated
results of its operations and cash flows for such period in
conformity with GAAP; and
(B) a certification by a Senior Financial Officer
that such financial statements are complete and correct;
PROVIDED that, should the Parent become subject to or agree with any
Person to comply with the provisions of section 13 of the Exchange Act,
the delivery of the Parent's Annual Report on Form 10-K for such fiscal
year filed with the SEC within 90 days after the end of such fiscal
year shall be deemed to satisfy the requirements of this Section
1.01(b).
(c) SEC AND OTHER REPORTS. Promptly upon their becoming
available:
(i) each financial statement, report, notice or proxy
statement sent by the Parent or any Subsidiary to stockholders
generally;
(ii) each regular or periodic report (including,
without limitation, each Form 10-K, Form 10-Q and Form 8-K),
any registration statement which shall have become effective,
(other than any registration statement on Form S-4 or S-8 or
any successor forms thereto) and each final prospectus and all
amendments thereto (other than any prospectus or amendment
relating to a registration statement on Form S-4 or S-8 or any
successor forms thereto) filed by the Parent or any Subsidiary
with the SEC or on a publicly
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available basis with any securities exchange
(including, without limitation, any electronic
stock quotation system); and
(iii) all press releases and other statements made
available by the Parent or any Subsidiary to the public
concerning material developments in the business of the Parent
or the Subsidiaries.
(d) RULE 144A. After the Public Market Date, promptly upon the
reasonable request of any holder of Parent Preferred Stock or Purchaser
Shares, information required to permit the holder to comply with 17
C.F.R. ss.230.144A, as amended from time to time, in connection with a
transfer of any Parent Preferred Stock or Purchaser Shares, as the case
may be.
(e) REQUESTED INFORMATION. Prior to the Public Market Date,
with reasonable promptness, such other data and information as from
time to time may be reasonably requested by any holder of Parent
Preferred Stock or Purchaser Shares.
SECTION 1.02. AMENDMENTS TO CHARTERS; OTHER
ACTIONS. The Initial Stockholder and Parent shall not cause
or permit, and SGC, with respect to clause (i), shall not
approve:
(i) any amendment to any Charter as in effect on
the Closing Date;
(ii) any reorganization, transfer of substantial assets,
consolidation, merger, dissolution, liquidation, issuance or sale of
Securities of the Parent, either Company or any other Subsidiary; or
(iii) any other voluntary action;
in each case that is intended to avoid, or would have the effect of avoiding,
the observance or performance of any of the terms to be observed or performed
hereunder by the Parent, the Companies or the Initial Stockholder, but shall at
all times in good faith assist in the carrying out of all the provisions of this
Agreement and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the holders of Parent Preferred
Stock and Purchaser Shares against impairment. The previous sentence shall not
be construed to prohibit any Reorganization Transaction consummated in
compliance with the terms of this Agreement.
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SECTION 1.03. BOARD DESIGNEES. (a) (i) For so long as any of
the DLJMB Entities shall hold any Parent Preferred Stock or Purchaser Shares,
the Initial Stockholder and SGC shall vote all of their shares of common stock
of the Parent, at each regular or special meeting of the shareholders of the
Parent called for the purpose of filling positions on the Board of Directors, or
in any written consent executed in lieu of such a meeting of shareholders, and
shall take all actions necessary, to ensure the election to the Board of
Directors of one individual designated by DLJMB (the "DLJMB Designee").
(ii) For so long as any DLJMB Entity shall hold any Parent
Preferred Stock or Purchaser Shares, the Parent shall take all actions necessary
to ensure the election to the board of directors of JLC of one individual
designated by DLJMB (the "DLJMB JLC Subsidiary Designee"). For so long as any
DLJMB Entity shall hold any Parent Preferred Stock or Purchaser Shares, the
Parent shall take all actions necessary to ensure the election to the board of
directors of WRC of one individual designated by DLJMB (the "DLJMB WRC
Subsidiary Designee" and, together with the DLJMB JLC Subsidiary Designee, the
"DLJMB Subsidiary Designees").
(b) (i) The Parent will take all actions necessary to cause
the DLJMB Designee to be appointed to the compensation committee, the audit
committee and the executive committee of the Board of Directors, to each of the
boards of directors or other similar managing bodies of each Subsidiary (this
right not being in addition to any right under Section 1.03(a)(ii)) and to the
compensation committee, the audit committee and the executive committee of each
such board of directors (this right not being in addition to any right under
Section 1.03(b)(ii)). For so long as DLJMB has the right to appoint a DLJMB
Designee, neither the Board of Directors nor the board of directors of any
Subsidiary shall generally delegate its authority to conduct the business of the
Parent, either Company or any other Subsidiary, as applicable, to a committee of
such Board of Directors or board of directors; PROVIDED, that the foregoing
shall not prohibit delegation of authority to a committee for a specific purpose
(other than in connection with a Reorganization Transaction).
(ii) The Parent will take all actions necessary to cause the
DLJMB JLC Subsidiary Designee to be appointed to the compensation committee, the
audit committee and the executive committee of the board of directors of JLC.
The Parent will take all actions necessary to cause the DLJMB WRC Subsidiary
Designee to be appointed to the compensation committee, the audit committee and
the executive committee
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of the board of directors of WRC. For so long as DLJMB has the right to appoint
a DLJMB JLC Subsidiary Designee, the board of directors of JLC shall not
generally delegate its authority to conduct the business of JLC to a committee
of such board of directors and for so long as DLJMB has the right to appoint a
DLJMB WRC Subsidiary Designee the board of directors of WRC shall not generally
delegate its authority to conduct the business of WRC to a committee of such
board of directors; PROVIDED, that the foregoing shall not prohibit delegation
of authority to a committee for a specific purpose (other than in connection
with a Reorganization Transaction).
(c) If a DLJMB Designee or DLJMB Subsidiary Designee shall
cease to serve as a director of the Parent or one of the Companies, as
applicable, for any reason, the vacancy resulting thereby shall be filled by
another person designated by DLJMB. Once serving on the Board of Directors or
the board of directors of JLC or WRC, as applicable, a DLJMB Designee or DLJMB
Subsidiary Designee shall not be removed from office without the consent of
DLJMB. In the event that a DLJMB Designee or DLJMB Subsidiary Designee is unable
to attend a meeting of the Board of Directors or the board of directors of JLC
or WRC, as applicable, DLJMB may designate a representative to attend such
meeting as a non-voting observer only.
(d) The Parent shall obtain and cause to be maintained in
effect so long as a DLJMB Designee or DLJMB Subsidiary Designee is serving on
the Board of Directors or board of directors of JLC or WRC, as applicable, with
financially sound insurers, a policy of directors' and officers' liability
insurance covering each of the members of the Board of Directors or board of
directors of JLC or WRC, as applicable (including, without limitation, each
DLJMB Designee and DLJMB Subsidiary Designee) in an amount of at least
$5,000,000 per occurrence.
(e) The Charter and the by-laws of the Parent and other
organizational documents of the Parent and each Subsidiary shall at all times,
to the fullest extent permitted by law, provide for indemnification of,
advancement of expenses to, and limitation of the personal liability of, the
members of the Board of Directors and the members of the boards of directors or
other similar managing bodies of each of the Subsidiaries and such other
persons, if any, who, pursuant to a provision of such Charter, by-laws or other
organizational documents, exercise or perform any of the powers or duties
otherwise conferred or imposed upon members of the Board of Directors or the
boards of directors or other similar managing bodies of each
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Subsidiary. Such provisions may not be amended, repealed or otherwise modified
in any manner adverse to any member of the Board of Directors or any member of
the boards of directors or other similar managing bodies of any of the
Subsidiaries, until at least six years following the date on which DLJMB is
entitled to nominate a DLJMB Designee or DLJMB Subsidiary Designee.
(f) The Board of Directors shall meet in person at least
quarterly, and shall meet at such other times as called by any two directors.
SECTION 1.04. APPROVAL RIGHT. Without the
written approval of the DLJMB Entities, the Parent shall
not, and shall not cause or permit any Subsidiary to,
undertake any of the following:
(a) the expansion of the Board of Directors, or of the board
of directors of either of the Companies, to consist of greater than 14
directors;
(b) prior to the issuance of the Exchange Preferred Stock, the
creation or authorization of any class of stock by either Company, or
the issuance of any shares, that would rank prior to, or on a parity
with, the Exchange Preferred Stock, when issued, with respect to
dividends or upon liquidation, dissolution, winding up or otherwise, or
the increase of the authorized number of shares of any such class, or
the reclassification of any authorized stock of either Company into any
such prior or parity shares or the creation, authorization or issuance
of any obligation or security convertible into or evidencing the right
to purchase any such prior or parity shares;
(c) the entry into or amendment of any transaction or
arrangement (excluding compensation and benefit arrangements of
employees in the ordinary course of business) between the Parent or any
Subsidiary, on the one hand, and any Affiliate (other than a
Subsidiary) of the Parent, or any partner, shareholder, director or
officer of the Parent or any such Affiliate, including any entity
affiliated with Ripplewood, on the other hand, such approval not to be
unreasonably withheld or delayed; or
(d) the amendment, modification or replacement, in any
material respect, of:
(i) the Management Agreement, dated as of
November 17, 1999, between JLC and Ripplewood; or
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(ii) the Management Agreement, dated as of November
17, 1999 between WRC and Ripplewood.
SECTION 1.05. REMEDIES. The Parent, the Initial Stockholder,
SGC and the Purchasers agree that the remedies of the Purchasers at law in
respect of any breach by the Initial Stockholder, SGC, or the Parent, as
applicable, of their obligations pursuant to Article I would be inadequate and
that, upon any finding by any court of competent jurisdiction that the Initial
Stockholder, SGC or the Parent, as applicable, has breached any such obligation,
the Purchasers which are holders of Preferred Stock or Purchaser Shares shall be
entitled to, and the Parent, SGC and the Initial Stockholder agree that they
will not contest, upon any such finding of any such breach, the award of
specific performance and injunctive relief in favor of such Purchasers and
compelling the Parent, SGC and the Initial Stockholder, as applicable, to comply
with such obligations.
ARTICLE II
REGISTRATION AND EXCHANGE RIGHTS
SECTION 2.01. REQUIRED REGISTRATION. (a) FILING OF
REGISTRATION STATEMENT. Subject to Section 2.01(f), the Parent will, upon
the written request of the DLJMB Entities or the Initial Stockholder (the
Person so requesting, the "Initiating Holder") given at any time after (x) in
the case of Registrable Securities that are Parent Preferred Stock, 210 days
after the date of the closing of the sale by the Parent of its Senior
Subordinated Notes due 2009; PROVIDED, that the DLJMB Entities shall not be
entitled to give such request at any time that the Parent is required to
maintain an effective shelf registration statement for the Parent Preferred
Stock pursuant to the terms of this Agreement or (y) in the case of
Registrable Securities other than Parent Preferred Stock, the earlier to
occur of (A) six months after the Initial Public Offering Date or (B) four
years after the date of this Agreement, requesting that the Parent effect the
registration (which, with respect to Registrable Securities that are Warrants
shall, at the option of the DLJMB Entities as Initiating Holder, include a
shelf registration statement covering the common stock for which such
Warrants are exercisable) under the Securities Act of all or part of such
Initiating Holder's Registrable Securities and specifying the Registrable
Securities to be sold and the intended method of disposition thereof,
promptly give written notice of such requested registration to all holders of
Registrable Securities, and thereupon will
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use its best efforts to effect the registration (the "Required Registration")
under the Securities Act of:
(i) the Registrable Securities that the Parent has
been so requested to register by the Initiating Holder;
and
(ii) subject to Section 2.01(d), all other Registrable
Securities that the Parent has been requested to register by the
holders thereof by written request given to the Parent by holders which
have the right to request such registration within 30 days after the
giving of such written notice by the Parent (which request shall
specify the Registrable Securities to be sold and the intended method
of disposition of such Registrable Securities);
all to the extent required to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the Registrable Securities of the
Initiating Holder so to be registered.
(b) TIME FOR FILING AND EFFECTIVENESS. On or before the date
which is 90 days after the request for such registration, the Parent shall file,
or cause to be filed, with the SEC all documents and materials necessary to
effect the Required Registration with respect to all Registrable Securities to
be so registered, and shall use its best efforts to cause such Required
Registration to become effective as promptly as practicable after the filing
thereof, but in no event later than the day which is 180 days after the request
for such registration; PROVIDED, that the Parent may delay filing or effecting
any Required Registration or suspend any effective registration statement for
not more than an aggregate of 60 days in any 12 month period if in the good
faith judgment of the Board of Directors such Required Registration or
registration statement being filed, effected or effective, as applicable, at
such time would impair or interfere with in any material respect any
contemplated financing, acquisition, disposition, corporate reorganization or
other similar, material, corporate transaction or development involving the
Parent or any Subsidiary or any of its or their Affiliates or would require
premature disclosure thereof.
(c) SELECTION OF UNDERWRITERS. If Registrable Securities that
the Parent has been requested to register pursuant to a Required Registration
are to be disposed of in an underwritten public offering, the underwriters
(including, without limitation, the lead and managing underwriters) of such
offering shall be one or more
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underwriting firms of recognized standing selected by the Initiating Holder and
reasonably acceptable to the Parent (it being agreed by the parties that
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation shall be acceptable to the
Parent). For the avoidance of doubt, the holders of Registrable Securities other
than the Initiating Holder shall have no right to select the underwriters of any
Required Registration.
(d) PRIORITY ON REQUIRED REGISTRATIONS. If the managing
underwriter shall advise the Parent in writing (with a copy to each holder of
Registrable Securities requesting sale) that, in such underwriter's opinion, the
number of Registrable Securities requested to be included in such Required
Registration exceeds the number that can be sold in such offering within the
price range acceptable to the Initiating Holder that the Initiating Holder shall
furnish to such underwriter upon request (such writing to state the basis of
such opinion and the approximate number of Registrable Securities that may be
included in such offering without such effect), the Parent will include in such
Required Registration, to the extent of the number of Registrable Securities
that the Parent is so advised by the managing underwriter can be sold in such
offering:
(i) FIRST, Registrable Securities requested to be sold by the
Initiating Holder; PROVIDED, HOWEVER, that if the Initial Stockholder
is the Initiating Holder then Registrable Securities requested to be
sold by the Purchasers shall be included with the Registrable
Securities requested to be sold by the Initial Stockholder (PRO RATA
based on the number of Registrable Securities requested to be sold by
the Initial Stockholder and the DLJMB Entities; and PROVIDED, HOWEVER,
that with respect to any such registration, to the extent that SGC
holds Securities of the same class as the Registrable Securities being
sold by the Initial Stockholder and SGC has requested pursuant to the
Amended and Restated Stockholders Agreement, dated as of November 17,
1999, among the Initial Stockholder, SGC and the Parent, any of such
Securities to be included in such registration, the Registrable
Securities requested to be sold by the Purchasers shall be included pro
rata based on the number of Registrable Securities requested be sold by
the Initial Stockholder, the DLJMB Entities and SGC);
(ii) SECOND, subject to the first proviso in Section
2.01(d)(i), Registrable Securities requested to be sold by the holders
thereof other than the Initiating Holder (pro rata based on the number
of
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Registrable Securities so requested to be sold by such
holders); and
(iii) THIRD, all other Securities proposed to be registered by
the Parent and any Other Stockholders, in such proportions as the
Parent and such Other Stockholders shall agree.
(e) WHEN REQUIRED REGISTRATION IS DEEMED EFFECTED. A Required
Registration pursuant to this Section 2.01 shall not be deemed to have been
effected for purposes of Section 2.01(f) hereof if:
(i) in the case of registration statements other than shelf
registration statements under clause (B) of Section 2.01(a) (which
shall be kept continuously effective until all of the underlying
Warrants have been exercised for Capital Stock or expire), the
registration statement related thereto does not become effective and
remain effective for a period of at least 180 days (not counting any
days during which a stop order or a suspension pursuant to Section
2.01(b) was in effect with respect to such registration statement)
after the date such registration statement becomes effective; PROVIDED,
HOWEVER, that the Parent shall have no obligation to keep effective
such registration statement at any time after all Registrable
Securities included in such offering have been sold;
(ii) the Initiating Holder withdraws its request for
registration in its entirety at any time because the Initiating Holder
reasonably believes that the registration statement or any prospectus
related thereto contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements made therein (in the case of any
prospectus, in light of the circumstances under which they were made)
not misleading, notified the Parent of such fact and requested that the
Parent correct such alleged misstatement or omission, and the Parent
has refused to correct such alleged misstatement or omission;
(iii) any customary conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection
with such Required Registration are not satisfied, other than by reason
of any breach by any holder of any Registrable Securities that were to
have been registered and sold of its obligations thereunder or
hereunder; or
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(iv) if, after it has become effective, such registration is
interfered with for any reason by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or any
court, and the result of such interference is to prevent the Initiating
Holder from disposing of at least 75% of the Registrable Securities
included in such registration pursuant to Section 2.01(a) in accordance
with the intended methods of distribution.
(f) LIMITATION ON NUMBER AND SIZE OF REQUIRED REGISTRATIONS.
The Parent shall be required to effect only two Required Registrations
requested by the DLJMB Entities, as Initiating Holder, with respect to
the Parent Preferred Stock and two Required Registrations requested by
the DLJMB Entities, as Initiating Holder, with respect to the Purchaser
Shares, pursuant to this Section 2.01 that are deemed to have been
effected under Section 2.01(e). The Parent shall be required to effect
any number of Required Registrations requested by the Initial
Stockholder pursuant to this Section 2.01. The Parent shall not be
required to effect any Required Registration pursuant to this Section
2.01 during the period starting with the date of the decision by the
Board of Directors to register shares of Common Stock on behalf of the
Parent (provided that a registration statement is filed within 30 days
of such decision and becomes effective within 120 days of such filing)
or the receipt by the Parent of a request for a Required Registration
and ending on a date 180 days following the effective date of a
registration statement related to a Required Registration or an
Incidental Xxxxxxxxxxxx. The Parent shall also not be required to
effect any Required Registration unless either:
(i) the gross aggregate offering price of all
Securities to be included in such Required Registration
(including, without limitation, Securities offered by the
holders of Registrable Securities, the Parent and any Other
Stockholders proposed to be registered under such Required
Registration) shall exceed $30,000,000; or
(ii) such Required Registration includes all
Registrable Securities held by the Initiating Holder of the
class and issuer of such Registrable Securities proposed to be
sold in such Required
Registration.
14
SECTION 2.02. INCIDENTAL REGISTRATION. (a) FILING OF
REGISTRATION STATEMENT. If the Parent or either Company at any time proposes to
register any of its Capital Stock or Rights (an "Incidental Registration") under
the Securities Act (other than pursuant to Section 2.01 or pursuant to a
registration statement on Form S-4 or Form S-8 or any successor forms thereto),
for sale in a Public Offering, including, without limitation, in connection with
its initial Public Offering, it will each such time give prompt written notice
to all holders of Registrable Securities of its intention to do so, which notice
shall be given to all such holders at least 20 Business Days prior to the date
that a registration statement relating to such registration is proposed to be
filed with the SEC. Upon the written request of any such holder to include its
Registrable Securities issued by the Parent or such Company, as the case may be,
under such registration statement (which request shall be made within 10
Business Days after the receipt of any such notice and shall specify the
Registrable Securities intended to be disposed of by such holder), the Parent
will use its best efforts to effect the registration of all Registrable
Securities that the Parent has been so requested to register by such holder
(which, with respect to Registrable Securities requested to be included in such
Incidental Registration which are Warrants, shall, at the option of the DLJMB
Entities, include a shelf registration statement covering the common stock for
which such Warrants are exercisable); PROVIDED, HOWEVER, that if, at any time
after giving written notice of its intention to register any Capital Stock or
Rights and prior to the effective date of the registration statement filed in
connection with such registration, the Parent or the applicable Company shall
determine for any reason not to register such Capital Stock or Rights, the
Parent or the applicable Company may, at its election, give written notice of
such determination to each such holder and, thereupon, shall be relieved of its
obligation to register any Registrable Securities of such holders in connection
with such registration.
(b) SELECTION OF UNDERWRITERS. Notice of the Parent's or the
applicable Company's intention to register such Capital Stock or Rights shall
designate the proposed underwriters of such offering (which shall be one or more
underwriting firms of established reputation reasonably acceptable to the
Requisite Holders) and shall contain the Parent's or the applicable Company's
agreement to use its best efforts, if requested to do so, to arrange for such
underwriters to include in such underwriting the Registrable Securities that the
Parent or the applicable Company has been so requested to register pursuant to
this Section 2.02, it being understood that such holders of Registrable
15
Securities shall have no right to select different underwriters for the
disposition of their Registrable Securities.
(c) PRIORITY ON INCIDENTAL REGISTRATIONS. If the managing
underwriter shall advise the Parent or the applicable Company in writing
(with a copy to each holder of Registrable Securities requesting sale) that,
in such underwriter's opinion, the number of Registrable Securities requested
to be included in such Incidental Registration by such holders of Registrable
Securities exceeds the number that can be sold in such offering within a
price range acceptable to the Parent or the applicable Company (such writing
to state the basis of such opinion and the approximate number of Registrable
Securities that may be included in such offering without such effect), the
Parent or the applicable Company will include in such Incidental
Registration, to the extent of the number of Registrable Securities that the
Parent or the applicable Company is so advised by the managing underwriter
can be sold in such offering:
(i) in the case of any registration initiated by the Parent or
any Company for the purpose of selling Capital Stock or Rights for its
own account:
(A) FIRST, Securities that the Parent or the
applicable Company proposes to issue and sell for its own
account; and
(B) SECOND, Registrable Securities requested to be
sold by the holders of Registrable Securities pursuant to this
Section 2.02 and all Securities proposed to be registered by
the Other Stockholders which have the right to request such
registration, pro rata among such holders on the basis of the
number of Securities requested to be so registered by such
holders; and
(ii) in the case of a registration initiated by any Other
Stockholder pursuant to demand or required registration rights in favor
of such Other Stockholder and provided to such Other Stockholder in
compliance with Section 2.07(b):
(A) FIRST, Securities requested to be sold by the
Other Stockholders requesting such Incidental
Registration;
(B) SECOND, Registrable Securities requested to be
sold by the holders of Registrable
16
Securities pursuant to this Section 2.02 and all Securities
proposed to be registered by Other Stockholders which have the
right to request such registration other than those requesting
such Incidental Registration, PRO RATA among such holders on
the basis of the number of Securities requested to be so
registered by such holders; and
(C) THIRD, Securities that the Parent or either
Company proposes to issue and sell for its own account.
SECTION 2.03. REGISTRATION PROCEDURES. The Parent will use its
best efforts to effect each Registration, and to cooperate with the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof as quickly as practicable, and the Parent will, or will cause the
applicable Company to, as expeditiously as reasonably possible:
(a) subject, in the case of an Incidental Registration, to the
proviso to Section 2.02(a), prepare and file with the SEC the
registration statement and use its best efforts to cause the
Registration to become effective; PROVIDED, HOWEVER, that:
(i) before filing any original registration
statement, the Parent will furnish to the holders of the
Registrable Securities covered by such registration statement,
their counsel, and the underwriters, if any, and their
counsel, copies of reasonably complete drafts of all such
documents proposed to be filed at least 15 days prior thereto,
which drafts will be subject to the reasonable review, within
such 15 day period, of such holders, their counsel and the
underwriters; and
(ii) within a reasonable time (giving effect to the
nature of such document and, in the case of any amendment or
supplement, the extent of the changes thereto) before filing
any amendment to any registration statement or any prospectus
or supplement thereto, the Parent will furnish to the holders
of the Registrable Securities covered by such registration
statement or prospectus, their counsel, and the underwriters,
if any, and their counsel, copies of all such documents
proposed to be filed, which documents will be subject to the
17
reasonable review, within such period, of such
holders, their counsel and the underwriters;
and the Parent will not file any registration statement or amendment
thereto or any prospectus or any supplement thereto (including, without
limitation, such documents incorporated by reference) to which the
Requisite Holders shall reasonably object within the applicable review
period (the reasonableness of any such objection by any holder or its
counsel to be viewed, in the case of an Incidental Registration, in
light of the potential liability of such holder in respect of
misstatements in and omissions from the registration statement or
prospectus and the holder's potential obligations under Section 2.06);
(b) subject, in the case of an Incidental Registration, to the
proviso to Section 2.02(a), prepare and file with the SEC such
amendments and post-effective amendments to any registration statement
and any prospectus used in connection therewith as may be necessary to
keep such registration statement continuously effective until, with
respect to any registration statement other than a shelf registration
statement under clause (B) of ss.2.01(a) (which shall be kept
continuously effective until all of the underlying Warrants have been
exercised for Capital Stock or expire) the earlier of:
(i) such time as all Registrable Securities
registered thereby have been disposed of in accordance with
the intended method of distribution; and
(ii) the date 180 days after the date such
registration statement become effective;
(but in any event not before the expiration of any longer period
required under any amendment to the Securities Act, including the rules
and regulations promulgated thereunder) and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement; and
cause the prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act;
(c) furnish to each holder of Registrable Securities included
in such Registration and the underwriter or underwriters, if any,
without charge, at
18
least one signed copy of the registration statement and any
post-effective amendment thereto, upon request, and such number of
conformed copies thereof and such number of copies of the prospectus
(including, without limitation, each preliminary prospectus and each
prospectus filed under Rule 424 under the Securities Act), any
amendments or supplements thereto and any documents incorporated by
reference therein, as such holder or underwriter may reasonably request
in order to facilitate the disposition of the Registrable Securities
being sold by such holder (it being understood that the Parent consents
to the use of the prospectus and any amendment or supplement thereto by
each holder of Registrable Securities covered by such registration
statement and the underwriter or underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by the
prospectus or any amendment or supplement thereto);
(d) notify each holder of the Registrable Securities of any
stop order or other order suspending the effectiveness of any
registration statement, issued or threatened by the SEC in connection
therewith, and use all reasonable efforts to attempt to prevent the
entry of such stop order or to remove it or obtain withdrawal of it at
the earliest possible moment if entered;
(e) if requested by the managing underwriter or underwriters,
if any, or any holder of Registrable Securities in connection with any
sale pursuant to a registration statement, promptly incorporate in a
prospectus supplement or post-effective amendment such information
relating to such underwriting as the managing underwriter or
underwriters, if any, or such holder reasonably requests to be included
therein; and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being notified of
the matters incorporated in such prospectus supplement or
post-effective amendment;
(f) on or prior to the date on which a Registration is
declared effective, use its best efforts to register or qualify, and
cooperate with the holders of Registrable Securities included in such
Registration, the underwriter or underwriters, if any, and their
counsel, in connection with the registration or qualification of the
Registrable Securities covered by such Registration for offer and sale
under the securities or "blue sky" laws of each state and other
jurisdiction of the United States as any such holder or
19
the managing underwriter, if any, reasonably requests in writing; use
its best efforts to keep each such registration or qualification
effective, including, without limitation, through new filings, or
amendments or renewals, during the period such registration statement
is effective (in the case of an Incidental Registration) or required to
be kept effective (in the case of a Required Registration); and to do
all other acts or things necessary or advisable to enable the
disposition in all such jurisdictions reasonably requested of the
Registrable Securities covered by such Registration; PROVIDED, HOWEVER,
that the Parent will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to
take any action which would subject it to taxation or general service
of process in any such jurisdiction where it is not then so subject;
(g) in connection with any sale pursuant to a Registration,
cooperate with the holders of Registrable Securities and the managing
underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing Securities to be sold under such Registration,
and enable such Securities to be in such denominations and registered
in such names as the managing underwriter or underwriters, if any, or
such holders may request;
(h) use its best efforts to cause the Registrable Securities
to be registered with or approved by such other governmental agencies
or authorities within the United States and having jurisdiction over
the Parent or any Subsidiary as may reasonably be necessary to enable
each holder thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registrable Securities;
(i) enter into underwriting agreements in customary form and
take such other customary actions as are reasonably necessary in order
to expedite or facilitate the disposition of such Registrable
Securities;
(j) use its best efforts to obtain:
(i) at the time of effectiveness of each
Registration, a "comfort letter" from the Parent's independent
certified public accountants covering such matters of the type
customarily covered by "cold comfort letters" as the
underwriters (in an
20
underwritten offering) or the Requisite Holders
(in a nonunderwritten offering) reasonably
request; and
(ii) at the time of any underwritten sale pursuant to
the registration statement, a "bring-down comfort letter",
dated as of the date of such sale, from the Parent's
independent certified public accountants covering such matters
of the type customarily covered by comfort letters as the
underwriters (in an underwritten offering) or the Requisite
Holders (in a nonunderwritten offering) reasonably request;
(k) use its best efforts to obtain, at the time of
effectiveness of each Registration and at the time of any sale pursuant
to each Registration, an opinion or opinions, favorable to the
underwriters (in an underwritten offering) or the Requisite Holders (in
a nonunderwritten offering) as they may reasonably request, from
counsel for the Parent in customary form;
(l) promptly notify each seller of Registrable Securities
covered by such Registration, upon discovery that the prospectus
included in such Registration, 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, in light of the circumstances under which they were made, not
misleading, and promptly prepare, file with the SEC and furnish to such
seller or 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 or prospective 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, in light of the
circumstances under which they were made, not misleading;
(m) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to its security holders (as contemplated by Section 11(a)
under the Securities Act) an earnings statement satisfying the
provisions of Rule 158 under the Securities Act no later than 90 days
after the end of the 12-month period beginning with the first month of
the Parent's first fiscal quarter commencing after the effective date
of the registration
21
statement, which statement shall cover said 12-month
period;
(n) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by each Registration
from and after a date not later than the effective date of such
Registration; and
(o) use its best efforts to cause all Registrable Securities
that are common stock covered by each Registration to be listed subject
to notice of issuance, prior to the date of first sale of such
Registrable Securities pursuant to such Registration, on each
securities exchange on which the common stock of the issuer of the
Registrable Securities is then listed; and, if the common stock is not
so listed, to use its best efforts to cause all such Registrable
Securities covered by each Registration to be designated as National
Market System Securities, if the common stock of the issuer of the
Registrable Securities is so designated (and, if the common stock of
the issuer of the Registrable Securities is listed on the NASDAQ
National Market or the NASDAQ SmallCap Market, to cause all such
Registrable Securities covered by each Registration to be so listed);
and, if the common stock of the issuer of the Registrable Securities is
not so designated, to arrange for at least two market makers to
register with the NASD as such with respect to such Registrable
Securities.
The Parent may require each holder of Registrable Securities that will be
included in such Registration to furnish the Parent with such information in
respect of such holder of its Registrable Securities that will be included in
such Registration as the Parent may reasonably request in writing and as is
required by applicable laws or regulations. If a holder of Registrable
Securities fails to provide such information, the Parent shall be entitled to
exclude the Registrable Securities of such holder from any Registration
thereunder. If the offering of the Registrable Securities is to be underwritten,
the Parent may require that the holders of the Registrable Securities
participating in such Registration Statement enter into a reasonable
underwriting agreement in customary form; PROVIDED, HOWEVER, that the holders of
the Registrable Securities shall not be required to make any representation,
warranty or covenant other than customary representations and warranties
concerning the due authority of such holder of Registrable Securities to sell
such Registrable Securities and execute and deliver such underwriting agreement,
the holder's good title to the Registrable Securities and the warranties implied
in
22
connection with such transfer under Section 8-108(a) of the Uniform Commercial
Code of the State of New York, and shall not be required to provide any
indemnity or contribution rights to any underwriter on terms any more favorable
than those provided for in Section 2.06.
SECTION 2.04. REASONABLE INVESTIGATION. The
Parent shall:
(a) give the holders of Registrable Securities, their
underwriters, if any, and their respective counsel and accountants the
opportunity to participate in the preparation of the registration
statement, each prospectus included therein or filed with the SEC and
each amendment thereof or supplement thereto;
(b) give each such holder and underwriter reasonable
opportunities to discuss the business of each of the Parent and its
Subsidiaries with its officers, counsel and the independent public
accountants who have certified its financial statements;
(c) make available for inspection by any holder of Registrable
Securities included in any Registration, any underwriter participating
in any disposition pursuant to any Registration, and any attorney,
accountant or other agent retained by any such holder or underwriter,
all financial and other records, pertinent corporate documents and
Properties of each of the Parent and its Subsidiaries; and
(d) cause each of the Parent's and its Subsidiaries' officers,
directors and employees to supply all information reasonably requested
by any such Person in connection with such Registration;
in each such case, as shall be reasonably necessary (in light of the potential
liability of such holder or underwriter in respect of misstatements in and
omissions from the registration statement or prospectus and any holder's
obligations under Section 2.06) to enable it to conduct a "reasonable
investigation" within the meaning of the Section 11(b)(3) of the Securities Act
and to satisfy the requirement of reasonable care imposed by Section 12(a)(2) of
the Securities Act.
The Parent agrees to include in the registration statement and
each amendment thereto, and in each preliminary prospectus, prospectus or
prospectus supplement, all material information requested to be included by any
23
holder of Registrable Securities or underwriter, in each case, to the extent
required to be contained therein or necessary to correct any misstatement of
fact or necessary to make any statement contained therein, in light of the
circumstances under which it was made, not misleading. Each holder of
Registrable Securities agrees to keep confidential and not disclose (other than
in connection with disclosure by the Parent pursuant to the foregoing sentence)
to any Person (other than its officers, directors, employees and trustees who
need to know such information and other than any attorney, agent, adviser or
accountant who makes the agreement set forth in this paragraph) any information
the Company reasonably determines to be confidential and so notifies in writing
such holder, unless:
(i) the release of such information is necessary to avoid or
correct a misstatement of a fact or omission of a fact required to be
stated in any such registration statement or any amendment thereto, or
in any preliminary prospectus, prospectus or prospectus supplement, or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading;
(ii) the release of such records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction;
(iii) such disclosure is requested by any governmental
authority or self-regulatory organization having or alleging
jurisdiction over such holder of Registrable Securities, and either
such governmental authority or self-regulatory organization agrees to
maintain the confidentiality of such information or such holder gives
the Parent reasonable advance written notice of such intended
disclosure, so as to permit the Parent to seek a protective order or
similar relief;
(iv) the Parent otherwise consents; or
(v) such information becomes generally available to the public
other than through a breach of this Agreement by such holder.
SECTION 2.05. REGISTRATION EXPENSES. The Parent
will pay all Registration Expenses in connection with each
Registration of Registrable Securities, including, without
limitation, any such registration not effected by the Parent
or either Company.
24
SECTION 2.06. INDEMNIFICATION; CONTRIBUTION. (a)
INDEMNIFICATION BY THE PARENT. In connection with any registration statement or
any offering of Securities pursuant thereto, the Parent shall indemnify, to the
fullest extent permitted by law, each holder of Registrable Securities, its
Affiliates, officers, directors, partners, employees, trustees and agents, if
any, and each Person, if any, who controls such holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, against all
losses, claims, damages, liabilities (or proceedings in respect thereof) and
expenses (under the Securities Act or common law or otherwise), joint or
several, resulting from any violation by the Parent or either Company of the
provisions of the Securities Act or the Exchange Act or any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus (and as amended or supplemented if amended or
supplemented) or any preliminary prospectus or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of any prospectus, in
light of the circumstances under which they were made) not misleading, except to
the extent that such losses, claims, damages, liabilities (or proceedings in
respect thereof) or expenses are caused by any such untrue statement or alleged
untrue statement contained in or by any omission or alleged omission from
information concerning any holder furnished in writing to the Parent or any
Company, as applicable, by such holder expressly for use therein. If the
offering pursuant to any registration statement provided for under this Article
IV is made through underwriters, no action or failure to act on the part of such
underwriters (whether or not such underwriter is an Affiliate of any holder of
Registrable Securities) shall affect the obligations of the Parent to indemnify
any holder of Registrable Securities or any other Person pursuant to the
preceding sentence. If the offering pursuant to any registration statement
provided for under this Section 4 is made through underwriters, the Parent
agrees, to the extent required by such underwriters, to enter into an
underwriting or other agreement providing for indemnity of such underwriters,
their officers, directors and agents, if any, and each Person, if any, who
controls such underwriters within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as hereinbefore
provided with respect to the indemnification of the holders of Registrable
Securities; PROVIDED, HOWEVER, that the Parent shall not be required to
indemnify any such underwriter, or any officer or director of such underwriter
or any Person who controls such underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of
25
the Exchange Act, to the extent that the loss, claim, damage, liability (or
proceedings in respect thereof) or expense for which indemnification is claimed
results from such underwriter's failure to send or give a copy of an amended or
supplemented final prospectus to the Person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of Registrable Securities to such Person if
such statement or omission was corrected in such amended or supplemented final
prospectus prior to such written confirmation and the underwriter was provided
with such amended or supplemented final prospectus.
(b) INDEMNIFICATION FOR CONTROLLING PERSON LIABILITY. In
addition to the indemnification provided for in Section 2.06(a), the Parent
shall indemnify each holder of Registrable Securities, its Affiliates, officers,
directors, partners, employees, trustees and agents, if any, and each Person, if
any, who controls such holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, against all losses, claims, damages,
liabilities (or proceedings in respect thereof) and expenses, joint or several,
in each case, under the Securities Act, the Exchange Act, common law or
otherwise, resulting from:
(i) any violation by the Parent or any Company of
the provisions of the Securities Act or the Exchange
Act;
(ii) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or amendment
thereto or prospectus (and as amended or supplemented if amended or
supplemented) or any preliminary prospectus or caused by any omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case
of any prospectus, in light of the circumstances under which they were
made) not misleading, whether or not, in each such case, the
registration statement or amendment thereto or prospectus (or amendment
or supplement thereto) or preliminary prospectus related or relates to
any offering or sale of Registrable Securities by any holder; and
(iii) any other untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state a material
fact necessary to make the statements in any document issued or
delivered to any purchaser or potential purchaser or filed with the SEC
26
pursuant to Section 13 or Section 15(d) of the Exchange Act (in light
of the circumstances under which they were made) not misleading, in
each case, in connection with any offering or sale of Securities of the
Parent by any Person, whether or not such Securities offered or sold
are or were registered or required to be registered under the
Securities Act;
in each such case, to the extent that such losses, claims, damages, liabilities
(or proceedings in respect thereof) and expenses, joint or several, are alleged
to result from or exist by virtue of the fact that any holder of Registrable
Securities controls or is alleged to control (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) the Parent or any
Subsidiary, whether such claim or allegation arises under Section 15 of the
Securities Act or Section 20 of the Exchange Act or otherwise; PROVIDED,
HOWEVER, that such indemnification shall not extend to losses, claims, damages,
liabilities (or proceedings in respect thereof) or expenses caused by any untrue
statement or alleged untrue statement contained in or by any omission or alleged
omission from information furnished in writing to the Parent or any Company by
such holder expressly for use therein, or from any such information provided by
an underwriter selected by the holders or any of them.
(c) INDEMNIFICATION BY THE HOLDERS. In connection with any
registration statement in which a holder of Registrable Securities is
participating, each such holder, severally and not jointly, shall indemnify, to
the fullest extent permitted by law, the Parent, each underwriter (if the
underwriter so requires) and their respective officers, directors and agents, if
any, and each Person, if any, who controls the Parent or such underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against any losses, claims, damages, liabilities (or proceedings in respect
thereof) and expenses resulting from any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission of a material
fact required to be stated in the registration statement or prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein (in the case of any prospectus, in
light of the circumstances under which they were made) not misleading, but only
to the extent that such untrue statement is contained in or such omission is
from information so concerning a holder furnished in writing by such holder
expressly for use therein; PROVIDED, HOWEVER, that such holder's obligations
hereunder shall be limited to an amount equal to the proceeds to such holder of
the
27
Registrable Securities sold pursuant to such registration statement.
(d) CONTROL OF DEFENSE. Any Person entitled to indemnification
under the provisions of this Section 2.06 shall give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(the failure of any indemnified party so to notify the indemnifying party shall
not relieve the indemnifying party of its obligations hereunder except to the
extent that the indemnifying party is materially prejudiced by such failure to
notify) and unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, permit such indemnifying party to assume the defense of such
claim, with counsel reasonably satisfactory to the indemnified party; and if
such defense is so assumed, such indemnifying party shall not enter into any
settlement without the consent of the indemnified party; and any underwriting
agreement entered into with respect to any registration statement provided for
under this Article II shall so provide. In the event an indemnifying party shall
not be entitled, or elects not, to assume the defense of a claim, such
indemnifying party shall be obligated to pay the fees and expenses of only one
counsel or firm of counsel for all parties indemnified by such indemnifying
party in respect of such claim, unless in the reasonable judgment of any such
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties in respect to such claim (in
which case the indemnifying party shall pay the fees and expenses of an
additional counsel for the indemnified party).
(e) CONTRIBUTION. If for any reason the foregoing indemnity is
unavailable, then the indemnifying party, in lieu of indemnifying the
indemnified party, shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other; or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified
party than the amount hereinafter calculated, in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and
28
the indemnified party on the other but also the relative fault of the
indemnifying party and the indemnified party as well as any other
relevant equitable considerations.
Notwithstanding the foregoing, no holder of Registrable Securities shall be
required to contribute any amount in excess of the amount such holder would have
been required to pay to an indemnified party if the indemnity under Section
2.06(c) hereof was available. 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. The obligation of any Person to contribute pursuant to this
Section 2.06 shall be several and not joint.
(f) TIMING OF PAYMENTS. An indemnifying party shall make
payments of all amounts required to be made pursuant to the foregoing provisions
of this Section 2.06 to or for the account of the indemnified party from time to
time promptly upon receipt of bills or invoices relating thereto or when
otherwise due or payable. Without limiting the generality of the foregoing, each
indemnifying party, as an interim measure during the pendency of any claim,
action, investigation, inquiry or proceeding arising our of or based upon any
matter or subject for which indemnity (or contribution in lieu thereof) may be
available to any indemnified party under this Section 2.06, will promptly
reimburse each indemnified party, as often as invoiced therefor (but in no event
more often than monthly) for all reasonable legal or other expenses incurred in
connection with the investigation or defense of any such claim, action,
investigation, inquiry or proceeding, notwithstanding the absence of any
judicial determination as to the propriety or enforceability of the indemnifying
party's obligation to reimburse the indemnified party for such expenses and
notwithstanding the possibility that the obligations to pay such expenses might
later have been held to be improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement is held to be improper, the
indemnified party agrees to promptly return the amount so advanced to the
indemnifying party.
(g) SURVIVAL. The indemnity and contribution agreements
contained in this Section 2.06 shall remain in full force and effect regardless
of any investigation made by or on behalf of a participating holder of
Registrable Securities, its officers, directors, agents or any Person, if any,
who controls such holder as aforesaid, and shall survive the transfer of such
Securities by such holder.
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SECTION 2.07. HOLDBACK AGREEMENTS; REGISTRATION RIGHTS TO
OTHERS. (a) In connection with each underwritten sale of Registrable Securities,
the Parent agrees, and each holder of Registrable Securities by acquisition of
such Registrable Securities severally and not jointly agrees, to enter into
customary holdback agreements for a period not to exceed 180 days concerning the
sale or distribution of Registrable Securities, except, in the case of any
holder of Registrable Securities, such holder shall only be required to make
such agreement to the extent that the Parent, the Initial Stockholder and SGC
(so long as it owns more than 3% of the common stock of Parent) shall make
similar agreements.
(b) If the Parent or any Company shall at any time after the
date hereof provide to any holder of any of its Securities rights with respect
to the registration of such Securities under the Securities Act:
(i) such rights shall not be in conflict with or adversely
affect any of the rights provided in this Article II to the Purchasers;
and
(ii) if such rights are provided on terms or conditions more
favorable to such holder than the terms and conditions provided in this
Article II or if rights (including, without limitation, rights to
demand or request a registration of similar Securities of the Parent or
either Company) in addition to those granted pursuant to this Article
II are provided, the Parent or the applicable Company, as applicable,
will provide or cause to be provided (by way of amendment to this
Article II or otherwise) such additional more favorable terms or
conditions to the Purchasers, so long as at such time, the Purchasers
have not disposed of more than 66-2/3% of the aggregate number of
Securities of the Parent or the relevant Company, as the case may be,
originally acquired by the Purchasers.
SECTION 2.08. OTHER REGISTRATION OF CAPITAL STOCK. If any
shares of common stock or preferred stock of either of the Companies required to
be reserved for purposes of exercise of Warrants or conversion or exchange of
any class of preferred stock of the Parent or common stock of either of the
Companies into any other class of preferred stock or common stock of the Parent
or either of the Companies require registration with or approval of any
governmental authority under any Federal or state law (other than the Securities
Act) before such shares may be issued upon conversion or exchange, the Parent
will, at its expense and as expeditiously as possible, use its best efforts to
30
cause such shares to be duly registered or approved, as the
case may be.
SECTION 2.09. AVAILABILITY OF INFORMATION. At any time that
any class of Capital Stock of the Parent or of either of the Companies is
registered under Section 12(b) or Section 12(g) of the Exchange Act, the
Parent or the relevant Company, as the case may be, will comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act (whether
or not it shall be required to do so pursuant to such Sections) and will
comply with all other public information reporting requirements of the SEC
from time to time in effect. In addition, the Parent or the relevant
Company, as the case may be, if the Capital Stock of such Person is so
registered, shall:
(a) at all times after the Initial Public Offering Date, file
such reports and information, and shall make available to the public
and to the holders of Parent Preferred Stock and Purchaser Shares such
information, as shall be necessary to permit such holders to offer and
sell Registrable Securities pursuant to the provisions of Rule 144
promulgated under the Securities Act; and
(b) undertake to make available, and make available, the
information concerning the Parent and the relevant Company, as the case
may be, provided for by Rule 144A(d)(4).
The Parent and the relevant Company, as the case may be, if the Capital Stock of
such Person is so registered, will also cooperate with each such holder in
supplying such information as may be necessary for such holder to complete and
file any information reporting forms presently or hereafter required by the SEC
as a condition to the availability of an exemption from the registration
provisions of the Securities Act in connection with the sale of any Parent
Preferred Stock or Purchaser Shares. The Parent and the relevant Company, as the
case may be, if the Capital Stock of such Person is so registered, will furnish
to each such holder, promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available generally by the Parent or the relevant Company, as the case may be,
to its stockholders, and copies of all regular and periodic reports and all
registration statements and prospectuses (other than any registration statement
on Form S-4 or S-8 or any successor forms thereto or any prospectus relating to
a registration statement on such forms) filed by the Parent or
31
the relevant Company, as the case may be, with any
securities exchange or with the SEC.
SECTION 2.10. PARENT PREFERRED STOCK EXCHANGE RIGHTS. (a) (i)
Subject to the provisions of this Section 2.10, the DLJMB Entities, at their
option, may at any time on any Business Day cause the Companies to exchange all,
but not less than all, outstanding shares of Parent Preferred Stock held by all
of the Purchasers for an equal number of shares of preferred stock of the
Companies of identical type and liquidation preference and having identical
terms and conditions as the Parent Preferred Stock, but no further exchange
rights, except that the issuer of such preferred stock shall be the applicable
Company (the "Exchange Preferred Stock"). Dividends on Parent Preferred Stock
exchanged for Exchange Preferred Stock which have accrued but have not been paid
as of the date of exchange (including the date of exchange determined pursuant
to Section 2.10(a)(ii), the "Exchange Date") shall be deemed to have accrued on
the Exchange Preferred Stock in equivalent amounts. The DLJMB Entities shall
have the right, in their sole discretion, to elect the number of shares of
Exchange Preferred Stock to be issued by each Company (which shares shall be
issued in the same proportion to each Purchaser); PROVIDED, HOWEVER, that the
total number of shares of Exchange Preferred Stock issued to the Purchasers by
the Companies shall be equal to the total number of shares of the Parent
Preferred Stock so exchanged.
(ii) Subject to the provisions of this Section 2.10, the
Parent, at its option but only in connection with the Reorganization
Transaction, may distribute an equal number of shares of the WRC Preferred Stock
to the holders of Parent Preferred Stock in exchange for all, but not less than
all outstanding shares of Parent Preferred Stock. Dividends on Parent Preferred
Stock exchanged for WRC Preferred Stock which have accrued but have not been
paid as of the Exchange Date shall be deemed to have accrued on the WRC
Preferred Stock in equivalent amounts.
(b) (i) In the event of an exchange of the Parent Preferred
Stock pursuant to Section 2.10(a), notice of such exchange specifying the
Exchange Date therefor shall be given (x) if at the option of the DLJMB
Entities, to the Parent, the Other Purchasers and the applicable Company not
less than 30 days nor more than 60 days prior to the Exchange Date or (y) if at
the option of the Parent, to the holders of Parent Preferred Stock not less than
20 days nor more than 60 days prior to the Exchange Date.
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(ii) Notice having been given as aforesaid, from and after the
applicable Exchange Date (unless default shall be made by the applicable Company
in issuing Exchange Preferred Stock or by the Parent in distributing WRC
Preferred Stock, as applicable, in exchange for Parent Preferred Stock),
dividends on Parent Preferred Stock shall cease to accrue, and all rights of the
holders thereof as stockholders of the Parent (except the right to receive from
the applicable Company the Exchange Preferred Stock or from the Parent, the WRC
Preferred Stock, as applicable, and other than any rights, accrued or otherwise,
arising from non-compliance by the Parent with the terms of this Agreement)
shall cease. In the case of an exchange pursuant to the Section 2.10(a)(i), upon
surrender to the applicable Company in accordance with said notice of the
certificates for the Parent Preferred Stock (properly endorsed or assigned for
transfer) the applicable Company shall issue the Exchange Preferred Stock and
deliver to the applicable holder certificates therefor registered in the name of
such holder. In the case of an exchange pursuant to Section 2.10(a)(ii), upon
surrender to the Parent in accordance with said notice of the certificates for
the Parent Preferred Stock (properly endorsed or assigned for transfer) WRC
shall issue the WRC Preferred Stock and the Parent shall distribute to the
applicable holder certificates therefor registered in the name of such holder.
(iii) The exchange shall be deemed to have been effected
immediately after the close of business on the Exchange Date, and the holders in
whose names the Exchange Preferred Stock or the WRC Preferred Stock shall be
issuable upon such exchange shall be deemed to have become the holders of record
of the Exchange Preferred Stock or the WRC Preferred Stock represented thereby
at such time on the Exchange Date.
(iv) Prior to the issuance and delivery of the Exchange
Preferred Stock by the applicable Company, the applicable Company shall comply
with all applicable Federal and state laws and regulations which require action
to be taken by it with respect to such issuance and delivery (it being
understood that neither of the Companies nor the Parent shall be required by
reason of this Section 2.10(b)(iv) to file a registration statement covering
such shares with the SEC). Prior to the issuance of the WRC Preferred Stock by
WRC and delivery thereof by the Parent, WRC and the Parent shall comply with all
applicable Federal and state laws and regulations which require action to be
taken by them with respect to such issuance and delivery (it being understood
that neither WRC nor the Parent shall be required by reason of this
33
Section 2.10(b)(iv) to file a registration statement covering such shares with
the SEC).
(v) From and after the Exchange Date, all references in this
Agreement to the Parent shall be construed as references to the applicable
Company, all references in this Agreement to Parent Preferred Stock shall be
construed as references to Exchange Preferred Stock or WRC Preferred Stock, as
applicable, and the applicable Company shall assume all of the obligations of
the Parent hereunder and the holders shall be subject to any transfer and other
restrictions applicable in the case of the Parent Preferred Stock.
(c) The Company issuing the Exchange Preferred Stock or the
WRC Preferred Stock will pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issuance or delivery of certificates
evidencing the Exchange Preferred Stock or the WRC Preferred Stock other than
those resulting from transfers to third parties.
(d) For the avoidance of doubt, the Parent agrees that the
limitations on those events which may constitute a "Reorganization Transaction"
for purposes hereof are intended to be additional protections for the benefit of
the Purchasers (and any Affiliates thereof to whom shares of Parent Preferred
Stock are transferred) that are supplemental to the provisions of the
Certificate of Designations with respect to the Parent Preferred Stock (the
"Certificate of Designations").
SECTION 2.11. WARRANT REGISTRATION RIGHTS. The Purchasers
shall have registration rights with respect to the Warrants as provided in
Sections 2.01 (except that only the DLJMB Entities may be an "Initiating Holder"
thereunder), 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08 and 2.09, provided that
such Sections shall be read in accordance with the following:
(i) "Parent" shall mean (I) with respect to Registrable Securities
consisting of or exercisable for common stock of WRC, WRC or (II) with respect
to Registrable Securities consisting of or exercisable for common stock of JLC,
JLC;
(ii) "Other Stockholders" shall mean all holders of securities of WRC
or JLC, as applicable, other than the Purchasers; and
(iii) any shelf registration statement filed with respect to the
Warrants pursuant to Section 2.01(a) or
34
Section 2.02(a) shall be kept continuously effective until all such Warrants
have been exercised for Capital Stock in accordance with the terms thereof or
expire.
SECTION 2.12. INITIAL PUBLIC OFFERING OF PARENT. If an initial
public offering of shares of common stock of the Parent shall occur, then any
Purchaser shall have the right to, and the Parent shall, exchange all, but not
less than all, of such Purchasers' Warrants and shares of common stock, if any,
obtained upon exercise of the Warrants for shares of common stock of the Parent
having an aggregate fair market value equal to the Fair Market Value of the
exchanged shares.
SECTION 2.13. TAG-ALONG RIGHTS. (a) COMPANY TAG-ALONG RIGHTS.
If Parent proposes to transfer (other than transfers (i) in a Public Offering,
(ii) to Ripplewood Partners or any Affiliate of Ripplewood Partners, (iii) to
any shareholder, partner, member or employee of Ripplewood Partners or any
Affiliate of Ripplewood Partners, (iv) to any employee of Parent, the Companies
or any of their Subsidiaries or (v) in connection with the pledge of shares of
common stock of either Company in accordance with the terms of the Pledge
Agreement), a number of shares of common stock of either Company equal to or
exceeding, on the date of the proposed transfer, 25% of the outstanding shares
of common stock of such Company in a single transaction or in a series of
related transactions (a "Tag-Along Sale"), each Purchaser may, at its option,
elect to exercise its rights under this Section 2.13. In the event of a
Tag-Along Sale, Parent shall deliver to each Purchaser a written notice of the
terms and conditions of such Tag-Along Sale (a "Tag-Along Notice") and offer
each Purchaser the opportunity to participate in such Tag-Along Sale on the same
terms and conditions, subject to the same agreements and for the same per share
consideration as Parent. The Tag-Along Notice shall identify the number and type
of shares of common stock of the applicable Company held by such Purchaser
subject to the offer (a "Tag-Along Offer"), the per share consideration at which
the Tag-Along Sale is proposed to be made, all other material terms and
conditions of the Tag-Along Sale (and shall include the form of the proposed
agreement, if any) and the date on which the Tag-Along Sale is proposed to be
consummated. From the date of the Tag-Along Notice until the date that is ten
days thereafter (the "Tag-Along Notice Period"), each Purchaser shall have the
right (a "Tag-Along Right"), exercisable by written notice delivered to Parent,
to request that Parent include in the Tag-Along Sale the number of shares of
common stock of the applicable Company held by such Tagging Person as is
specified in such notice
35
(each Purchaser so requesting, a "Tagging Person"); PROVIDED that, if the
aggregate number of shares of common stock of the applicable Company proposed to
be sold by Parent and all Tagging Persons in the Tag-Along Sale exceeds the
number of shares of common stock of the applicable Company which can be sold on
the terms and conditions set forth in the Tag-Along Notice, then (x) only the
Tag-Along Portion of common stock of the applicable Company of each Tagging
Person and Parent shall be sold pursuant to the Tag-Along Offer and (y) Parent
shall also be entitled to sell such additional shares of common stock of the
applicable Company as is permitted by Section 2.13(d).
(b) CLOSING OF TAG-ALONG SALE. If any Tagging Person exercises
its Tag-Along Right hereunder with respect to a Tag-Along Sale, on the closing
date for such Tag-Along Sale such Tagging Person shall deliver (i) to the
purchaser specified in the Tag-Along Notice for such Tag-Along Sale a
certificate or certificates representing the shares of common stock of the
applicable Company which it has elected to sell (net of any reduction pursuant
to Section 2.13(a)), together with appropriate instruments of transfer duly
endorsed in blank, against payment by such purchaser of the aggregate
consideration payable for such shares at the per share consideration specified
in such Tag-Along Notice, and (ii) to Parent or the applicable Company all
costs, expenses and other amounts to be paid by such Tagging Person in
connection with such Tag-Along Sale pursuant to Section 2.13(i).
(c) NON-PARTICIPANTS. If at the termination of the Tag-Along
Notice Period any Tagging Person shall not have delivered written notice to
Parent of its election to participate in the Tag-Along Sale, such Tagging Person
will have waived its Tag-Along Right with respect to such Tag-Along Sale.
(d) CERTAIN ALLOCATIONS. If any Tagging Person (i) declines to
exercise or waives its Tag-Along Right with respect to any Tag-Along Sale or
(ii) elects to exercise its Tag-Along Right with respect to less than its
Tag-Along Portion with respect to any Tag-Along Sale, Parent shall be entitled
to transfer in such Tag-Along Sale, in addition to its Tag-Along Portion with
respect to such Tag-Along Sale, a number of shares of common stock of the
applicable Company equal to the number of shares of common stock of the
applicable Company constituting the portion of such Tagging Person's Tag-Along
Portion with respect to which such Tagging Person's Tag-Along Right was not
exercised.
36
(e) PERMITTED SALE. Parent and any Tagging Person who
exercises its Tag-Along Right with respect to a proposed Tag-Along Sale pursuant
to this Section 2.13 may sell the shares of common stock of the applicable
Company subject to the Tag-Along Offer with respect to such Tag-Along Sale on
the terms and conditions set forth in such Tag-Along Notice within 120 days of
the date on which the Tag-Along Rights with respect to such Tag-Along Sale shall
have been waived, exercised or expire.
(f) SALE OF COMMON STOCK OF PARENT. If the Initial Stockholder
proposes to transfer (other than transfers (i) in a Public Offering, (ii) to
Ripplewood Partners or any Affiliate of Ripplewood Partners, (iii) to any
shareholder, partner, member or employee of Ripplewood Partners or any Affiliate
of Ripplewood Partners, (iv) to any employee of the Initial Stockholder, Parent,
the Companies or any of their Subsidiaries or (v) to any member of the Initial
Stockholder or any Affiliate of any such member) a number of shares of common
stock of Parent equal to or exceeding, on the date of the proposed transfer, 25%
of the Aggregate Ownership of the Initial Stockholder in Parent in a single
transaction or in a series of related transactions, the provisions of this
Section 2.13 shall apply to such transfer (regardless of whether such Purchaser
owns any common stock of Parent) in accordance with its terms except that the
percentage of the Purchaser's shares of common stock of a Company that it has
the right to sell and the consideration to be paid therefor shall be determined
in good faith by the Board of Directors on a basis that shall, as nearly as
reasonably practicable, provide such Purchaser economic treatment comparable to
that which it would have been provided under Section 2.13(a) in the event of the
transfer of an economically equivalent portion of shares of common stock of such
Company.
(g) SALE OF COMMON STOCK OF THE INITIAL STOCKHOLDER. If
Ripplewood Partners proposes to directly or indirectly transfer (other than
transfers (i) in a Public Offering, (ii) to Ripplewood Partners or any Affiliate
of Ripplewood Partners, (iii) to any shareholder, partner, member or employee of
Ripplewood Partners or any Affiliate of Ripplewood Partners, (iv) to any
employee of Ripplewood Partners, EAC IV L.L.C., the Initial Stockholder, Parent,
the Companies or any of their Subsidiaries or (v) to any member of the Initial
Stockholder or any Affiliate of any such member) a membership interest in the
Initial Stockholder equal to or exceeding, on the date of the proposed transfer,
25% of Ripplewood Partners' Aggregate Ownership in the Initial Stockholder in a
single transaction or in a series of related transactions, the provisions of
37
this Section 2.13 shall apply to such transfer (regardless of whether such
Purchaser owns any membership interests in the Initial Stockholder) in
accordance with its terms except that the percentage of the Purchaser's shares
of common stock of a Company that it has the right to sell and the consideration
to be paid therefor shall be determined in good faith by the Board of Directors
on a basis that shall, as nearly as reasonably practicable, provide such
Purchaser economic treatment comparable to that which it would have been
provided under Section 2.13(a) in the event of transfer of an economically
equivalent portion of shares of common stock of such Company.
(h) CERTAIN OTHER MATTERS. For purposes of this Section 2.13
and all definitions used in this Section 2.13, a Right to acquire one share of
common stock of either Company shall constitute one share of common stock of
such Company and a Person shall be deemed to own a share of common stock if such
Person has a Right to acquire such share whether or not such Right is
exercisable at such time; PROVIDED that any payments to be made to any Purchaser
in connection with the exercise of any Tag-Along Right with respect to any Right
shall be reduced by an amount equal to the then applicable exercise price of
such Right.
(i) EXPENSE OF SALE. All out-of-pocket costs and expenses
incurred by the Purchasers in connection with a Tag-Along Sale (including,
without limitation, fees and disbursement of any counsel retained by the
Purchasers) shall be paid by the Purchasers. All direct selling expenses,
discounts or commissions of brokers paid to any Person on a per share basis in
connection with such Tag-Along Sale shall be paid ratably by the Purchasers and
the Parent (in proportion to each Purchaser's and the Parent's Tag-Along
Portion). All other fees and expenses in connection with such Tag-Along Sale
shall be paid by the applicable Company.
SECTION 2.14. DRAG-ALONG RIGHTS. (a) If, at any time prior to
the Public Market Date, Parent (i) proposes to transfer in a Bona Fide Sale not
less than 90% of its aggregate ownership of the outstanding common stock of
either Company and (ii) holds or is otherwise entitled to vote a majority of the
Voting Stock of such Company before giving effect to such transfer (a
"Drag-Along Sale"), then Parent may at its option require all, but not less than
all, of the Purchasers to sell in such Drag-Along Sale their respective
Drag-Along Portions of the shares of common stock of such Company then held by
the respective Purchasers ("Drag-Along Rights"). Parent shall provide written
notice of such Drag-Along Sale to each Purchaser (a "Drag-Along
38
Notice") not later than the 10th day prior to the proposed Drag-Along Sale. The
Drag-Along Notice shall identify, with respect to the Drag-Along Sale, the
transferee, the number of shares of common stock of the applicable Company to be
sold, the consideration for which a transfer is proposed to be made, which shall
also be stated on a per share basis (the "Drag-Along Sale Price"), the date on
which such Drag-Along Sale is proposed to be consummated and, in reasonable
detail, all other material terms and conditions of such Drag-Along Sale.
(b) Subject to this Section 2.14, each Purchaser shall be
required to participate in the Drag-Along Sale on the terms and conditions set
forth in the Drag-Along Notice, so long as such terms and conditions constitute
a Bona Fide Sale, and to transfer the Drag-Along Portion of its shares of common
stock of the applicable Company as set forth below. The price payable per share
in such Drag-Along Sale to each Purchaser shall be the Drag-Along Sale Price.
(c) Parent shall have a period of 90 days from the date of
receipt of the Drag-Along Notice to consummate the Drag-Along Sale on the terms
and conditions set forth in such Drag-Along Notice, so long as such terms and
conditions constitute a Bona Fide Sale.
(d) On the closing date for a Drag-Along Sale, each Purchaser
shall deliver to the purchaser specified in the Drag-Along Notice for such
Drag-Along Sale a certificate or certificates representing such Purchaser's
Drag-Along Portion of the common stock of the Company, together with appropriate
instruments of transfer duly endorsed in blank, against payment by such
purchaser of the total purchase price for such shares at the Drag-Along Sale
Price per share.
(e) All expenses and costs of any Drag-Along Sale, including
the fees of one counsel to the Purchasers related to such sale, shall be for the
account of and paid by the applicable Company; PROVIDED that, in the event of
any Drag-Along Sale required by the Agent pursuant to the Pledge Agreement,
Parent, each Purchaser and the Company shall bear and pay for its own respective
expenses and costs, including the fees of its respective counsel, in connection
with such Drag-Along Sale.
(f) For purposes of this Section 2.14 and all definitions used
in this Section 2.14, a Right to acquire one share of common stock of either
Company shall constitute one share of common stock of such Company and a Person
shall be deemed to own a share of common stock if such Person has
39
a Right to acquire such share whether or not such Right is exercisable at such
time; PROVIDED that any payments to be made to any Purchaser in connection with
the exercise of any Drag-Along Sale with respect to any Right shall be reduced
by an amount equal to the then applicable exercise price of such Right.
(g) If, at any time prior to the Public Market Date, the
Initial Stockholder (i) proposes to transfer in a Bona Fide Sale not less than
90% of its aggregate ownership of the outstanding common stock of Parent and
(ii) holds or is otherwise entitled to vote a majority of the Voting Stock of
Parent before giving effect to such transfer, then the provisions of this
Section 2.14 shall apply to such transfer (regardless of whether such Purchaser
owns any common stock of Parent) in accordance with its terms except that the
percentage of the Purchaser's shares of common stock of a Company that it has
the obligation to sell and the consideration to be paid therefor shall be
determined in good faith by the Board of Directors on a basis that shall, as
nearly as reasonably practicable, provide such Purchaser economic treatment
comparable to that which it would have been provided under Section 2.14(a) in
the event of the transfer of an economically equivalent portion of shares of
common stock of such Company.
ARTICLE III
RESTRICTIONS ON TRANSFER,
TERMINATION AND OTHER AGREEMENTS
SECTION 3.01. RESTRICTIONS ON TRANSFER TO TRANSFEREES. (a)
GENERALLY. Subject to the restrictions of Section 1.04(b) and the terms of the
Parent Preferred Stock and other than issuances of Exchange Preferred Stock
pursuant to Section 2.10 and issuances of Capital Stock pursuant to an exercise
of the Warrants, the Parent and the Companies shall neither issue nor sell any
additional shares of Capital Stock or Rights (other than in a Public Offering)
to any purchaser unless such purchaser shall have acknowledged that such
purchaser has notice of the provisions of this Agreement and is an "Other
Stockholder" as defined herein and such purchaser shall have agreed, in writing,
to be bound by each of the terms and provisions of this Agreement applicable to
an "Other Stockholder" pursuant to an undertaking substantially in the form set
forth as Exhibit A hereto. No other party hereto shall sell, assign, transfer or
otherwise dispose of any Capital Stock of the Parent or any Company or any
Rights to any transferee unless such transferee shall have assumed in writing
all of the obligations of its transferor imposed by this Agreement with
40
respect to such Capital Stock and Rights and shall have agreed to be bound by
each of the terms and provisions of this Agreement to which such transferor was
bound with respect to such Capital Stock and Rights pursuant to an undertaking
substantially in the form set forth as Exhibit A hereto.
(b) RESTRICTIONS ON TRANSFERS BY PURCHASERS. Each of the
Purchasers agrees that it will not transfer any Capital Stock or Rights of the
Parent or either Company it holds at any time prior to the Initial Public
Offering Date to any Person that is an Adverse Party; PROVIDED, HOWEVER, that
this Section 3.01(b) shall not prohibit or restrict transfers of Capital Stock
or Rights pursuant to Rule 144 or Rule 144A (or any successor provision) under
the Securities Act.
SECTION 3.02. COOPERATION BY THE PARENT AND THE COMPANIES. (a)
The Parent and the Companies shall refuse to register any transfer of any of its
Capital Stock or Rights to any transferee unless the Parent shall have received
from the prospective transferee a written agreement to be bound by the
provisions of this Agreement if required by Section 3.01 hereof, and such other
evidence as the Parent may reasonably require to establish compliance with such
Section 3.01. The Parent and the Companies shall be protected in, and shall have
no liability to any Other Stockholder for, and no such holder shall assert any
claim against the Parent or either Company for, failing to register any transfer
of any of its Capital Stock or Rights if such transfer is not in compliance with
the provisions of this Agreement.
(b) Each of the Parent and the Companies shall use its
reasonable best efforts to assist the DLJMB Entities in the sale by the DLJMB
Entities of the Parent Preferred Stock and the Purchaser Shares held by such
entities.
SECTION 3.03. LEGENDING OF CERTIFICATES. Each
certificate representing any Capital Stock or Rights shall
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS OF A STOCKHOLDERS AGREEMENT, DATED AS OF NOVEMBER 17, 1999, THE
PROVISIONS OF WHICH ARE INCORPORATED HEREIN BY REFERENCE. SUCH
STOCKHOLDERS AGREEMENT PROVIDES, AMONG OTHER THINGS, THAT THIS SECURITY
MAY NOT BE SOLD OR TRANSFERRED TO ANY PERSON WHO HAS NOT EXPRESSLY
ASSUMED THE OBLIGATIONS OF SUCH AGREEMENT AND CONTAINS, AMONG OTHER
PROVISIONS,
41
PROVISIONS WHICH LIMIT THE TRANSFER OF THIS
SECURITY. A COPY OF SUCH STOCKHOLDERS AGREEMENT IS
AVAILABLE FROM THE SECRETARY OF [INSERT NAME OF
APPLICABLE COMPANY] UPON REQUEST."
SECTION 3.04. SECURITIES ACT RESTRICTIONS; LEGEND. The Parent
shall not register any transfer of Capital Stock or Rights if it has reason to
believe that such transfer is being requested in violation of the registration
requirements of Section 5 of the Securities Act. Except as otherwise permitted
by Section 3.05 hereof, each certificate representing a share of Capital Stock
or a Right shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED OR SOLD EXCEPT IN A TRANSACTION REGISTERED UNDER SUCH ACT OR
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT."
SECTION 3.05. TERMINATION OF RESTRICTIONS. Each and all of the
provisions of this Agreement (other than Section 2.05, Section 2.06, Section
2.09 and Section 6.09) shall terminate immediately as to any Capital Stock or
Rights (but this Agreement shall remain in force with respect to any remaining
Capital Stock or Rights):
(a) when such Capital Stock or Rights have been effectively
registered under the Securities Act and disposed of in accordance with
the registration statement covering such Capital Stock or Rights; or
(b) when they shall have been distributed to the public
pursuant to Rule 144 or Rule 144A (or any successor provision) under
the Securities Act; or
(c) when they shall have been otherwise transferred (except
for transfers in connection with the Exchange Offer) and subsequent
disposition of them shall not require registration or qualification
under the Securities Act or any similar state law then in force.
Notwithstanding anything to the contrary contained in Section 3.05(b) or (c),
shares of Capital Stock or Rights distributed or transferred thereunder shall,
until the Public Market Date, remain subject to the provisions of Section 2.14.
Whenever such restrictions shall terminate as to any Capital Stock or Rights,
the holder thereof shall be
42
entitled to receive from the Parent or the applicable Companies, without
expenses (other than transfer taxes, if any), new Capital Stock or Rights of
like tenor not bearing the applicable legends set forth in Section 3.03 or
Section 3.04 hereof.
ARTICLE IV
DEFINED TERMS
SECTION 4.01. TERMS DEFINED. As used herein, the
following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:
"Adverse Party" means any Person whose ownership interest in
either of the Companies or the Parent would be reasonably expected to be
detrimental to the interest of either of the Companies or the Parent (including,
without limitation, any of their Subsidiaries), including, without limitation, a
competitor of either of the Companies or the Parent (including, without
limitation, any of their Subsidiaries); PROVIDED, HOWEVER, that:
(a) no Person described in Rule 501(a)(1) under
the Securities Act; and
(b) no dealer registered under Section 15 of the Exchange Act
or investment adviser registered under the Investment Advisers Act of
1940, as amended, which, in either case, owns or invests on a
discretionary basis at least $10,000,000 in securities of unaffiliated
issuers;
shall be an "Adverse Party" unless such Person is controlled by, controls or is
under common control with a competitor of either of the Companies or the Parent
(including, without limitation, any of their Subsidiaries). As used in this
definition, "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise.
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such Person; provided,
that with respect to the Parent and its Subsidiaries only:
43
(a) no Subsidiary, Purchaser or any Affiliate of a
Purchaser shall be an Affiliate of the Parent or any
Subsidiary;
(b) neither the "Purchaser" pursuant to the Amended and
Restated Stockholders Agreement, dated as of November 17, 1999, among
the Parent, SGC and the Initial Stockholder, nor any Affiliate of such
"Purchaser" shall be an Affiliate of the Parent or any
Subsidiary;
(c) any Person other than those specified in clauses (a) and
(b) of this definition that beneficially owns or holds 10% or more of
any class of the Voting Stock of the Parent shall be an Affiliate of
the Parent or any Subsidiary; and
(d) any Person other than those specified in clauses (a) and
(b) of this definition, 10% or more of the Voting Stock (or in the case
of a Person that is not a corporation, 10% or more of the equity
interest) of which is beneficially owned or held by the Parent or a
Subsidiary shall be an Affiliate of the Parent or any Subsidiary.
As used in this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" has the meaning set forth in the
introductory paragraph hereof.
"Aggregate Ownership" means, with respect to shares of common
stock or membership interests of any entity owned by any Person or group of
Persons, the total number of shares of common stock or membership interests, as
applicable, of such entity "beneficially owned" (as such term is defined in Rule
13d-3 under the Exchange Act, but without regard to the restrictions contained
in Rule 13d-3(d) thereunder) (without duplication) by such Person or group of
Persons as of the date of such calculation, calculated on a Fully Diluted basis
and taking into account any stock or membership interest dividend, split or
reverse split.
"Board of Directors" means the board of directors of the
Parent or any committee thereof that, in the instance, shall have the lawful
power to exercise the power and authority of such board of directors.
44
"Bona Fide Sale" means a sale in which (i) the sale by each
Purchaser would be on the same terms and conditions and for the same type of
consideration as is to be received by Parent, (ii) the consideration to be paid
to each Purchaser in connection with such transaction consists solely of cash,
Freely Tradeable Securities or cash and Freely Tradeable Securities, (iii) no
Purchaser shall be required to make any representations or warranties (except as
to its title to and authority to convey the shares of common stock to be sold by
it and the warranties implied in connection with such transfer under Section
8-108(a) of the Uniform Commercial Code of the State of Delaware) and (iv) the
prospective purchaser is purchasing in an arm's-length transaction from Parent
and is not an Affiliate of Parent, either Company, the Initial Stockholder or
Ripplewood Partners.
"Broker-Dealer" means any broker or dealer
registered under the Exchange Act.
"Business Day" means a day other than a Saturday, a Sunday or
a day on which banks in the State of New York are required or permitted by law
to be closed.
"Capital Stock" means:
(a) with respect to any corporation, any class of
preferred, common or other capital stock;
(b) with respect to any partnership, any limited, general or
other partnership interests; and
(c) with respect to any limited liability company, membership
interests or units or any similar interests;
or, in each such case or in the case of any other Person, all share capital or
similar equity interest of a Person.
"Certificate of Designations" has the meaning set
forth in Section 2.10(d).
"Charter" means, with respect to the Parent, the Certificate
of Incorporation of the Parent, as filed with the Secretary of State of the
State of Delaware on May 12, 1999, as amended and filed with the Secretary of
State of the State of Delaware on October 28, 1999, as amended and filed with
the Secretary of State of the State of Delaware on November 16, 1999 and as
thereafter amended in compliance with the provisions thereof and hereof; with
respect to JLC, the Certificate of Incorporation of JLC, as filed with the
Secretary of State of the State of Delaware on May 12, 1999,
45
and as amended and filed with the Secretary of State of the State of Delaware on
November 16, 1999 and as thereafter amended in compliance with the provisions
thereof and hereof; and with respect to WRC, the Certificate of Incorporation of
WRC, as filed with the Secretary of State of the State of Delaware on November
28, 1990, and as amended and filed with the Secretary of State of Delaware on
November 16, 1999 and as thereafter amended in compliance with the provisions
thereof and hereof.
"Closing Date" means the day upon which the Parent Preferred
Stock and Warrants are sold to the Purchasers under the Subscription Agreement.
"Companies" has the meaning set forth in the
introductory paragraph hereto.
"Consummate" means, with respect to an Exchange Offer, the
occurrence of (a) the filing and effectiveness under the Act of the Exchange
Offer Registration Statement relating to the New Preferred Stock to be issued in
the Exchange Offer, (b) the maintenance of such Exchange Offer Registration
Statement continuously effective and the keeping of the Exchange Offer open for
a period not less than the period required pursuant to Section 5.01(b) hereof
and (c) the delivery by the Parent to the holders of the Senior Preferred Stock
that number of shares of New Preferred Stock equal to the number of shares of
Senior Preferred Stock then outstanding, which shares of New Preferred Stock
shall have the same Liquidation Value as the shares of Senior Preferred Stock so
tendered by the holders thereof pursuant to the Exchange Offer.
"Consummation Deadline" shall have the meaning given such term
in Section 5.01(b).
"DLJMB" means DLJ Merchant Banking II, L.P., together with its
successors and permitted assigns.
"DLJMB Designee" has the meaning set forth in
Section 1.03(a)(i).
"DLJMB Subsidiary Designee" has the meaning set
forth in Section 1.03(a)(ii).
"DLJMB Entities" has the meaning set forth in the
introductory paragraph.
"DLJMB JLC Subsidiary Designee" has the meaning
set forth in Section 1.03(a)(ii).
46
"DLJMB WRC Subsidiary Designee" has the meaning
set forth in Section 1.03(a)(ii).
"Drag-Along Portion" means, with respect to any Purchaser, the
number of shares of common stock of the applicable Company beneficially owned by
such Purchaser on a Fully-Diluted basis (but without duplication) multiplied by
a fraction, the numerator of which is the number of shares of common stock of
such Company proposed to be sold by Parent and the denominator of which is the
total number of shares of common stock of such Company owned by Parent.
"Effectiveness Target Date" means the Exchange
Offer Effectiveness Target Date or the Shelf Registration
Effectiveness Target Date, as applicable.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Exchange Date" has the meaning set forth in
Section 2.10(a).
"Exchange Offer" means the issuance by the Parent of a number
of shares of New Preferred Stock equal to the number of shares of Senior
Preferred Stock then outstanding, which shares of New Preferred Stock shall have
the same Liquidation Value as the shares of Senior Preferred Stock so exchanged.
"Exchange Offer Effectiveness Target Date" shall have the
meaning given such term in Section 5.01(a).
"Exchange Offer Filing Deadline" shall have the meaning given
such term in Section 5.01(a).
"Exchange Offer Registration Period" shall have the meaning
given such term in Section 5.01(b).
"Exchange Offer Registration Statement" means the
Registration Statement relating to the Exchange Offer,
including the related Prospectus.
"Exchange Preferred Stock" has the meaning set
forth in Section 2.10.
"Fair Market Value" means the fair market value of a Security,
determined by the Board of Directors, giving due consideration to such factors
as it deems appropriate, including the earnings and certain other financial and
operating information of the Parent and its subsidiaries in
47
recent periods, its potential value and that of its subsidiaries as a whole, its
future prospects and that of its subsidiaries and the industries in which they
compete, its history and management and that of its subsidiaries, the general
condition of the securities markets and the fair market value of securities of
privately owned companies (with transfer restrictions) engaged in businesses
similar to the Parent and its subsidiaries. The Fair Market Value, as determined
by the Board of Directors in good faith shall be binding and conclusive upon all
parties hereto.
"Filing Deadline" means the Exchange Offer Filing
Deadline or the Shelf Registration Filing Deadline, as
applicable.
"Freely Tradeable Securities" means Securities:
(a) which are of a class:
(i) of Securities issued or fully guaranteed by the
United States of America or any agency thereof and entitled to
the full faith and credit of the United States of America, for
which price quotations are routinely quoted and for which, in
the reasonable opinion of the Purchasers, there is a ready
liquid market; or
(ii) both registered pursuant to either Section 12(b)
or Section 12(g) of the Exchange Act and either listed on a
national securities exchange or on the NASDAQ National Market;
and
(b) which may be resold in the public markets by the
Purchasers without requirement of further registration under the
Securities Act (excluding the impact of Rule 145 under the Securities
Act, if applicable).
"Fully Diluted" means, with respect to common stock and
without duplication, all outstanding shares of common stock and all shares of
common stock issuable in respect of securities convertible into or exchangeable
for shares of common stock, stock appreciation rights, options, warrants
(including the Warrants) and other rights to purchase or subscribe for shares of
common stock or securities convertible into or exchangeable for shares of common
stock; PROVIDED that, to the extent that any of the foregoing stock appreciation
rights, options, warrants or other rights to purchase or subscribe for shares of
common stock are subject to vesting, such shares subject to vesting
48
shall be included in the definition of "Fully Diluted" only upon and to the
extent of such vesting.
"GAAP" means accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date hereof.
"Incidental Registration" has the meaning set
forth in Section 2.02.
"Initial Public Offering Date" means the first date upon which
common stock of the Parent or any of its Subsidiaries shall have been issued or
sold pursuant to an underwritten public offering (whether on a firm commitment
basis or a best efforts basis if such best efforts are successful) thereof
pursuant to an effective registration statement filed with the SEC pursuant to
the Securities Act (an "Initial Public Offering").
"Initial Stockholder" has the meaning set forth in
the introductory paragraph.
"Issuable Share" means and includes at any time,
(a) a share of issued and outstanding common stock
of either Company; and
(b) a Right (including, without limitation, a Warrant), and
(without duplication) all shares of common stock of either Company
issuable upon exercise of such Right, in each case at such time.
For purposes of this definition of "Issuable Share", a Right to acquire one
share of common stock of either Company shall constitute one Issuable Share, and
a Person shall be deemed to own an Issuable Share if such Person has a Right to
acquire such share whether or not such Right is exercisable at such time.
"JLC" has the meaning set forth in the
introductory paragraph.
"JLC Warrants" has the meaning set forth in the
first whereas clause.
49
"NASD" means the National Association of
Securities Dealers, Inc.
"NASDAQ" means the NASDAQ Stock Market, Inc., a
subsidiary of the NASD.
"NASDAQ National Market" has the meaning ascribed
thereto in Rule 4200(r) of the NASDAQ.
"NASDAQ SmallCap Market" has the meaning ascribed
thereto in Rule 4200(t) of the NASDAQ.
"New Preferred Stock" means the Parent's new Senior Preferred
Stock Due 2011, of identical type and having identical terms as the Senior
Preferred Stock, to be issued (i) in the Exchange Offer or (ii) as contemplated
by Section 5.02.
"NML" has the meaning set forth in the
introductory paragraph.
"Notes Registration Rights Agreement" means that certain
Registration Rights Agreement dated as of the date hereof between the Parent,
each of the Companies and those entities listed on the signature pages thereto
relating to the 12 3/4% Senior Subordinated Notes Due 2009.
"Other Stockholders" means and includes, at any time, all
holders of Issuable Shares or shares of common stock of the Parent at such time
(other than the holders of Purchaser Shares and SGC and including, without
limitation, the Initial Stockholder), other than holders of shares sold in any
Public Offering and other than holders of shares as to which the provisions of
this Agreement (other than those specified in Section 3.05) have terminated
pursuant to Section 3.05.
"Other Purchasers" has the meaning set forth in
the introductory paragraph.
"Parent" has the meaning set forth in the
introductory paragraph.
"Parent Preferred Stock" has the meaning set forth
in the second whereas clause.
"Person" means an individual, partnership, corporation,
limited liability company, trust, unincorporated organization, or a government
or agency or political subdivision thereof.
50
"Pledge Agreement" means the Security and Pledge Agreement
dated as of November 17, 1999 among Parent, the Companies, certain other
Subsidiaries of Parent and Bank of America, N.A., as Administrative Agent (the
"Agent").
"Preferred Stock" means and includes all Capital Stock of the
Parent of any class which is preferred, as to payment of dividends, payment upon
a liquidation or dissolution of the Parent or both over the common stock of the
Parent, including, without limitation, the Parent Preferred Stock.
"Property" means any and all interests in any kind of property
or asset whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Prospectus" means the prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
"Public Market Date" means the first day upon which at least
35% (by number of shares) of the common stock of the Parent or any Subsidiary
then outstanding shall have been sold in one or more Public Offerings, resulting
in common stock of the Parent or any Subsidiary with an aggregate market value
of not less than $25,000,000 having been sold in all Public Offerings.
"Public Offering" shall mean, with respect to any shares of
Capital Stock of the Parent or either Company, as applicable, any sale in a
transaction registered under Section 5 of the Securities Act.
"Purchaser" has the meaning set forth in the
introductory paragraph.
"Purchaser Shares" means the following, without
duplication:
(a) shares of common stock of either Company that have been
issued upon the exercise of any Warrant; and
(b) shares of common stock of either Company that are issuable
upon the exercise of any outstanding Warrants.
For purposes of this definition of "Purchaser
Shares", a Right to acquire one share of common stock of
51
either Company shall constitute one Purchaser Share, and a Person shall be
deemed to own a Purchaser Share if such Person has a Right to acquire such
Purchaser Share whether or not such Right is exercisable at such time.
"Registrable Securities" means, at any time, in the case of
the Initial Stockholder, all shares of Capital Stock of the Parent or either
Company and, in the case of the Purchasers, all Purchaser Shares, the Exchange
Preferred Stock and the Parent Preferred Stock; PROVIDED, HOWEVER, that, such
Purchaser Shares, the Exchange Preferred Stock and Parent Preferred Stock shall
cease to be Registrable Securities:
(a) when a registration statement with respect to the sale of
such Securities shall have become effective under the Securities Act
and such Securities shall have been disposed of in accordance with the
registration statement covering such Securities;
(b) when such Securities shall have been distributed to the
public pursuant to Rule 144 (or any successor provision) under the
Securities Act;
(c) when such Securities shall have been otherwise transferred
(except to Affiliates of the transferor) and subsequent disposition of
them shall not require registration or qualification under the
Securities Act or any similar state law then in force; or
(d) when such Securities shall have ceased to be outstanding
or issuable upon exercise of any Warrants or other Rights (it being
understood that the Securities for which such Warrants or Rights were
exercisable shall continue to be Registrable Securities, unless
otherwise provided in paragraphs (a)-(c) of this definition).
"Registration" means and includes each Required
Registration and each Incidental Registration.
"Registration Expenses" means all expenses incident to the
Parent's or any Company's performance of or compliance with Section 2.01 through
Section 2.04, inclusive, including, without limitation:
(a) all registration and filing fees;
(b) fees and expenses of compliance with securities or blue
sky laws (including, without limitation, reasonable fees and
disbursements of
52
counsel in connection with blue sky qualifications of
the Registrable Securities);
(c) all printing expenses, including, without limitation,
expenses of printing certificates for the Registrable Securities in a
form eligible for deposit with The Depository Trust Company;
(d) messenger and delivery expenses;
(e) internal expenses of the Parent (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties);
(f) fees and disbursements of counsel for the Parent and the
Companies and its independent certified public accountants (including,
without limitation, the expenses of any management review, cold comfort
letters or any special audits required by or incident to such
performance and compliance);
(g) securities act liability insurance (if the Parent or any
Company elects to obtain such insurance);
(h) the reasonable fees and expenses of any special experts
retained by the Parent or any Company in connection with such
registration;
(i) fees and expenses of other Persons retained by the Parent
or any Company;
(j) fees and expenses of one counsel for holders
of Registrable Securities, selected by the Requisite
Holders;
(k) fees and expenses in connection with any review of
underwriting arrangements by the NASD including, without limitation,
fees and expenses of any "qualified independent underwriter"; and
(l) fees and disbursements of underwriters customarily paid by
issuers;
but not including any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities or any other selling expenses, discounts,
commissions or transfer taxes, if any, incurred in connection with the sale of
Registrable Securities, which shall be severally payable by the holders thereof.
53
"Registration Statement" means any registration statement of
the Parent relating to (a) an offering of New Preferred Stock pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
"Reorganization Transaction" means a reorganization completed
in connection with an Initial Public Offering pursuant to which the Parent shall
transfer, or cause to be transferred, all or substantially all its assets
(including, without limitation, all the capital stock and debt securities of WRC
held by the Parent) to WRC in exchange for the assumption by WRC of all or
substantially all the liabilities of the Parent, the issuance to the Parent by
WRC of new common stock and WRC Preferred Stock, and, at the option of Parent,
the distribution of (x) the WRC Preferred Stock to the holders of the Parent
Preferred Stock in exchange for the Parent Preferred Stock pursuant to Section
2.10(a) and/or (y) an equivalent number of shares of the new common stock of WRC
to certain holders of the Parent's common stock in exchange for the shares of
the Parent's common stock held by such holders; PROVIDED, HOWEVER, that (i) the
assets and liabilities of WRC immediately subsequent to such Reorganization
Transaction shall be substantially identical (including, without limitation, in
type, amount and contingency) to the assets and liabilities of the Parent
immediately prior to such Reorganization Transaction, in each case on a
consolidated basis, (ii) after giving effect to the Reorganization Transaction,
the overall economic position of a holder of WRC Preferred Stock with respect to
its investment in WRC (and relative to other creditors, lenders and equity
holders of WRC) shall not be worse than, immediately prior to such
Reorganization Transaction, the overall economic position of a holder of Parent
Preferred Stock with respect to the investment by that holder in the Parent (and
relative to other creditors, lenders and equity holders of Parent); and (iii)
WRC shall have delivered to the holders of the Parent Preferred Stock an opinion
of outside counsel to WRC from a firm that is reasonably acceptable to such
holders that (A) the Reorganization Transaction should qualify as a
reorganization under Section 368(a) of the Code and (B) there should be no
adverse tax consequences (other than insignificant tax consequences) to the
holders of Parent Preferred Stock or to WRC that result from, are caused by, or
are incurred by such holder or WRC that result from, are
54
caused by, or are incurred by such holder or WRC in connection with, the
consummation of the Reorganization Transaction.
"Required Holders" means, at any time, the Purchasers holding
at least 90% of the aggregate Parent Preferred Stock and Purchaser Shares then
held by the Purchasers. For purposes of this definition, holders of Warrants at
any time shall be deemed to be holders of the common stock of the applicable
Company that is at such time issuable upon exercise in full of such Warrants,
whether or not such holders are then entitled so to exercise such Warrants
pursuant to the terms thereof.
"Required Registration" has the meaning set forth
in Section 2.01(a).
"Requisite Holders" means:
(a) with respect to any registration or proposed registration
of Registrable Securities pursuant to Section 2.01, the Initiating
Holder; and
(b) with respect to any registration or proposed registration
of Registrable Securities pursuant to Section 2.02, any holder or
holders (other than the Parent, any Subsidiary or any Affiliate of the
Parent) holding at least 90% of the shares of Registrable Securities
(excluding any shares of Registrable Securities directly or indirectly
held by the Parent, any Subsidiary or any Affiliate of the Parent) to
be so registered.
"Right" means and includes:
(a) any warrants (including, without limitation, the
Warrants), rights or other options exercisable into common stock of
either Company; and
(b) any conversion or exchange privilege or right pursuant to
any Security (including, without limitation, any share of Capital
Stock) which is convertible or exchangeable into common stock of either
Company.
"Ripplewood" means Ripplewood Holdings L.L.C., a Delaware
limited liability company, together with its successors and permitted assigns.
"Rule 144" means Rule 144 promulgated under the
Act.
55
"SEC" means, at any time, the Securities and Exchange
Commission or any other Federal agency at such time administering the Securities
Act.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Security" means "security" as defined by
Section 2(1) of the Securities Act.
"Senior Financial Officer" means any one of the chief
financial officer, the treasurer, the controller and the principal accounting
officer of the Parent, or any officer of the Parent acting in such capacity.
"SGC" has the meaning set forth in the
introductory paragraph.
"Shelf Registration Effectiveness Target Date" shall have the
meaning given such term in Section 5.02(a).
"Shelf Registration Filing Deadline" shall have the meaning
given such term in Section 5.02(a).
"Shelf Registration Statement" shall have the meaning given
such term in Section 5.02.
"Subscription Agreement" has the meaning set forth
in the first whereas clause.
"Subsidiary" means, as to any Person, any other Person the
financial position and results of operations of which would be properly
consolidated with those of the first Person in accordance with GAAP. The term
"Subsidiary", as used herein without reference to any Person, shall mean a
Subsidiary of the Parent.
"Tag-Along Portion" means the number of shares of common stock
owned (or, without duplication, acquirable under the Rights) by the Tagging
Person or Parent, as the case may be, multiplied by a fraction, the numerator of
which is the number of shares of common stock proposed to be sold in the
Tag-Along Sale pursuant to Section 2.13, and the denominator of which is the
aggregate number of shares of common stock on a Fully Diluted basis owned by all
stockholders.
"Transfer Restricted Securities" means each (A) share of
Senior Preferred Stock, until the earliest to occur of (i) the date on which
such share of Senior Preferred
56
Stock is exchanged in the Exchange Offer for a share of New Preferred Stock
which is entitled to be resold to the public by the holder thereof (other than a
Broker-Dealer) without complying with the prospectus delivery requirements of
the Act, (ii) the date on which such share of Senior Preferred Stock has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued shares of New Preferred Stock), or (iii) the
date on which such share of Senior Preferred Stock is distributed to the public
pursuant to Rule 144 under the Act and each (B) share of New Preferred Stock
held by a Broker-Dealer until the date on which such share of New Preferred
Stock is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).
"Voting Stock" means, with respect to any Person, any Capital
Stock of such Person whose holders are entitled under ordinary circumstances to
vote for the election of directors, managers, trustees, the managing partner or
other individuals fulfilling similar duties with respect to such Person
(irrespective of whether at the time Capital Stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency); PROVIDED, HOWEVER, that Purchaser Shares shall be deemed not to be
Voting Stock.
"Warrants" has the meaning set forth in the first
whereas clause.
"Warrant Certificate" means any certificate
representing a Warrant.
"WRC" has the meaning set forth in the
introductory paragraph.
"WRC Preferred Stock" means the preferred stock of WRC that is
issued by WRC to the Parent in the Reorganization Transaction, which shall be of
identical type and liquidation preference and have identical terms and
conditions as the Parent Preferred Stock, except that the issuer of the WRC
Preferred Stock shall be WRC and such stock shall have no further exchange
rights, except as provided in the certificate of designation filed with respect
to the WRC Preferred Stock.
"WRC Warrants" has the meaning set forth in the
first whereas clause.
57
SECTION 4.02. "BEST EFFORTS". Where any
provision contained in Section 2.02 through Section 2.09 of
this Agreement requires any Person to use its "best
efforts", such term shall be construed to mean the
reasonable best efforts of such Person.
SECTION 4.03. SECTION HEADINGS AND TABLE OF CONTENTS AND
CONSTRUCTION. (a) SECTION HEADINGS AND TABLE OF CONTENTS, ETC. The titles of the
Articles and Sections of this Agreement and the Table of Contents of this
Agreement appear as a matter of convenience only, do not constitute a part
hereof and shall not affect the construction hereof. The words "herein",
"hereof", "hereunder" and "hereto" refer to this Agreement as a whole and not to
any particular Article or Section or other subdivision. References to Articles
or Sections are, unless otherwise specified, references to Articles or Sections,
as the case may be, of this Agreement. References to Annexes and Exhibits are,
unless otherwise specified, references to Annexes and Exhibits, as the case may
be, attached to this Agreement.
(b) CONSTRUCTION. Each covenant contained herein shall be
construed (absent an express contrary provision herein) as being independent of
each other covenant contained herein, and compliance with any one covenant shall
not (absent such an express contrary provision) be deemed to excuse compliance
with one or more other covenants.
SECTION 4.04. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THE DELAWARE GENERAL CORPORATION LAW IS
MANDATORILY APPLICABLE.
ARTICLE V
SECTION 5.01. REGISTERED EXCHANGE OFFER. (a) Unless the
Exchange Offer shall not be permitted by applicable law or rules, regulations or
policies of the SEC, the Parent shall (i) cause the Exchange Offer Registration
Statement to be filed with the SEC no later than 90 days after the date hereof
(such 90th day being the "Exchange Offer Filing Deadline"), (ii) use their
respective best efforts to cause such Exchange Offer Registration Statement to
become effective as promptly as possible, but in no event later than 210 days
after the date hereof (such 210th day being the "Exchange Offer Effectiveness
Target Date"), (iii) in connection with the foregoing, (A) file all
pre-effective amendments to such Exchange Offer Registration Statement as
58
may be necessary in order to cause it to become effective, (B) file, if
applicable a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of the
New Preferred Stock to be made under the Blue Sky laws of such jurisdictions as
are necessary to permit Consummation of the Exchange Offer; PROVIDED, THAT the
Parent shall not be required to register or qualify as a foreign corporation
where it is not now so qualified or to take any action that would subject it to
the service of process in suits or to taxation in any jurisdiction where it is
not now so subject, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, use its best efforts to commence and Consummate the
Exchange Offer. The Exchange Offer Registration Statement shall be on the
appropriate form permitting (i) registration of the New Preferred Stock to be
offered in exchange for the Senior Preferred Stock that are Transfer Restricted
Securities and (ii) resales of New Preferred Stock by Broker-Dealers that
tendered into the Exchange Offer Senior Preferred Stock that such Broker-Dealer
acquired for its own account as a result of market making activities or other
trading activities (other than Senior Preferred Stock acquired directly from
parent or any Affiliate thereof) as contemplated by Section 5.01(c) below.
(b) The Parent shall use its best efforts to cause the
Exchange Offer Registration Statement to be effective continuously, and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer (the "Exchange Offer Registration Period"); PROVIDED, THAT, in no
event shall such period be less than 20 Business Days. The Parent shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities, other than the New Preferred Stock and the Senior
Subordinated Notes to be issued by Parent and the Companies in connection with
the Transactions (as defined in the Purchase Agreement), shall be included in
the Exchange Offer Registration Statement. The Parent shall use its best efforts
to cause the Exchange Offer to be Consummated on or prior to 30 Business Days,
or longer if required by the Federal securities laws, after the Exchange Offer
Registration Statement has become effective (such 30th Business Day, or such
later date if required by the Federal Securities laws, being the "Consummation
Deadline").
(c) The Parent shall include a "Plan of Distribution" section
in the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein
59
that any Broker-Dealer who holds Transfer Restricted Securities that were
acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Senior Preferred Stock
acquired directly from the Parent or any Affiliate of the Parent) may exchange
such Transfer Restricted Securities pursuant to the Exchange Offer; PROVIDED,
THAT, such Broker-Dealer may be deemed to be an "underwriter" within the meaning
of the Act and must, therefore, deliver a prospectus meeting the requirements of
the Act in connection with its initial sale of any shares of New Preferred Stock
received by such Broker-Dealer in the Exchange Offer and the Parent shall permit
the use of the Prospectus contained in the Exchange Offer Registration Statement
by such Broker-Dealer to satisfy such prospectus delivery requirement. Such
"Plan of Distribution" section shall also contain all other information with
respect to such sales by such Broker-Dealers that the SEC may require in order
to permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
SEC as a result of a change in policy, rules or regulation after the date of
this Agreement. See the Shearman & Xxxxxxxx no-action letter (available July 2,
1993).
To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
New Preferred Stock by Broker-Dealers, the Parent agrees to use its best efforts
to keep the Exchange Offer Registration Statement continuously effective,
supplemented, amended and current as required by and subject to the provisions
of and in conformity with the requirements of this Agreement, the Act and the
policies, rules and regulations of the SEC as announced from time to time, for a
period of one year from the Consummation Deadline or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration
Statement have been sold pursuant thereto (the "Applicable Period"). The Parent
shall provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealers, as promptly as practicable upon request, and in no event later
than two Business Days after such request, at any time during such period.
SECTION 5.02 SHELF REGISTRATION (a) SHELF REGISTRATION. If the Exchange
Offer is not permitted by applicable law or rules, regulations or policies of
the SEC, then the Parent shall (x) use its best efforts to cause to be filed, on
or prior to 45 days after the date on which the Parent determines that the
Exchange Offer Registration
60
Statement cannot be filed (such date, the "Shelf Registration Filing Deadline"),
a shelf registration statement pursuant to Rule 415 under the Act (which may be
an amendment to the Exchange Offer Registration Statement (the "Shelf
Registration Statement")), relating to all Transfer Restricted Securities, and
(y) use its best efforts to cause such Shelf Registration Statement to become
effective on or prior to 90 days after the Shelf Registration Filing Deadline
(such 90th day the "Shelf Registration Effectiveness Target Date").
If, after the Parent has filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 5.01(a), the Parent is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law or
rules, regulations or policies of the SEC, then the filing of the Exchange Offer
Registration Statement shall be deemed to satisfy the requirements of Section
5.02(a)(x); PROVIDED, THAT, in such event, the Parent shall be obligated to use
its best efforts to cause such Shelf Registration Statement to become effective
by the later of (i) the Shelf Registration Effectiveness Target Date and (ii)
the 90th day after publication of the change in the applicable Federal law or
rules, regulations or policies of the SEC.
To the extent necessary to ensure that the Shelf Registration
Statement is available for sales of Transfer Restricted Securities by the
holders thereof entitled to the benefit of this Section 5.02(a), the Parent
shall use its best efforts to keep any Shelf Registration Statement required by
this Section 5.02(a) continuously effective, supplemented amended and current
and in conformity with the requirements of this Agreement, the act and the
policies, rules and regulations of the SEC as announced from time to time, for a
period ending on the earlier of: (i) two years following the date hereof, or
such shorter period as will terminate when all Transfer Restricted Securities
covered by such Shelf Registration Statement have been sold pursuant thereto and
(ii) the date on which the Senior Preferred Stock become eligible for resale
without volume restrictions pursuant to Rule 144 under the act (the "Shelf
Registration Period").
SECTION 5.03 CERTAIN MATTERS. (a) GENERAL PROVISIONS. The provisions of
this Agreement relating to registration shall apply, as nearly as may be, to any
such Exchange Offer and Shelf Registration Statement. In addition, to the extent
relevant, the provisions, limitations and procedures set forth in the Notes
Registration Rights Agreement with respect to an Exchange
61
Offer and a Shelf Registration Statement shall apply to any such Exchange Offer
or Shelf Registration Statement hereunder, MUTATIS MUTANDIS; PROVIDED, THAT, to
the extent that analogous procedures that would be appropriate for any
Registration Statement are set forth in this agreement, such provisions shall
apply to such Registration Statement in lieu of the comparable provisions of the
Notes Registration Rights Agreement (e.g. Section 2.01(b) hereof with respect to
"blackout periods" shall apply in lieu of Section 4(c) of the Notes Registration
Rights Agreement).
(b) In the event an exchange, pursuant to Section 2.10(a) or
Section 2.10(b) has occurred, all references in this Article V to Parent shall
be deemed a reference to the applicable Company and all references to Senior
Preferred Stock shall be deemed a reference to the Exchange Preferred Stock or
the WRC Preferred Stock, as applicable.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. PARENT AND COMPANY ACTIVITIES. In the event that
the Parent shall propose to effect the Reorganization Transaction in accordance
with the terms hereof, each Purchaser hereby:
(i) agrees to cooperate with the Parent in connection
therewith and with any transactions incidental and reasonably necessary
thereto;
(ii) agrees to vote all shares of common stock of the Parent
and the Companies or Preferred Stock and Rights and any other
Securities held by such Purchaser (including, without limitation,
shares or Rights or other securities acquired after the date hereof) in
the same manner as the shares of common stock of the Parent and the
Companies held by the Initial Stockholder are voted on (a) all matters
relating to the Reorganization Transaction (so long as the actions that
would be taken as a result of such vote are consistent with the
requirements of a Reorganization Transaction) at any annual or special
meeting of shareholders or by written consent in lieu of a meeting and
(b) any resolution proposed by the Board of Directors of the Parent to,
in connection with the Reorganization Transaction, convert the Parent
into a Delaware limited liability company pursuant
62
to Section 266 of Title 8 of the Delaware Code (or any successor
provision) and thereafter to be taxed as a partnership for federal
income tax purposes that is presented for approval at any annual or
special meeting of shareholders or by written consent in lieu of a
meeting (so long as such Purchaser will not have, or be required to
receive, any Securities or ownership interest in any such limited
liability company, other than any transitory ownership of any such
Securities or any such interest that does not result in the recognition
of unrelated business taxable income from Parent or cause the Purchaser
to be engaged in a United States trade or business);
(iii) irrevocably constitutes and appoints the Initial
Stockholder its proxy to vote all of the shares of common stock of the
Parent and the Companies or Preferred Stock and Rights and any other
Securities held by such Purchaser in the same manner as the shares of
common stock of the Parent and the Companies held by the Initial
Stockholder are voted on (a) all matters relating to the Reorganization
Transaction (so long as the actions taken as a result of such vote are
consistent with the requirements of a Reorganization Transaction) at
any annual or special meeting of shareholders or by written consent in
lieu of a meeting and (b) any resolution proposed by the Board of
Directors of the Parent to, in connection with the Reorganization
Transaction, convert the Parent into a Delaware limited liability
company pursuant to Section 266 of Title 8 of the Delaware Code (or any
successor provision) and thereafter to be taxed as a partnership for
federal income tax purposes that is presented for approval at any
annual or special meeting of shareholders or by written consent in lieu
of a meeting (so long as such Purchaser will not have, or be required
to receive, any Securities or ownership interest in any such limited
liability company, other than any transitory ownership of any such
Securities or any such interest that does not result in the recognition
of unrelated business taxable income from Parent or cause the Purchaser
to be engaged in a United States trade or business).
SECTION 6.02. COMMUNICATIONS. (a) METHOD; ADDRESS. All communications
hereunder shall be in writing and shall be delivered either by nationwide
overnight
63
courier or by facsimile transmission (confirmed by delivery by nationwide
overnight courier sent on the day of the sending of such facsimile
transmission). Communications to the Parent or the Companies shall be addressed
to:
WRC Media Inc.
In care of Ripplewood Holdings L.L.C.
Xxx Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
or at such other address of which the Parent shall have notified the parties
hereto. Communications to the holders of the Parent Preferred Stock and the
Purchaser Shares shall be addressed as set forth on Annex 1, or at such other
address of which such holder shall have notified the Parent. Communications to
the Initial Stockholder shall be addressed as set forth on Annex 2, or at such
other address of which the Initial Stockholder shall have notified the Parent
and each holder of Parent Preferred Stock or Purchaser Shares. Communications to
any Other Stockholders shall be delivered to such Other Stockholders at the
address of the Parent as provided herein, and the Parent shall promptly deliver
such communications to the Other Stockholders at the addresses set forth in the
register of the holders of the Common Stock in the manner set forth in this
Section 6.02.
(b) WHEN GIVEN. Any communication addressed and delivered as
herein provided shall be deemed to be received when actually delivered to the
address of the addressee (whether or not delivery is accepted) or received by
the telecopy machine of the recipient. Any communication not so addressed and
delivered shall be ineffective.
(c) SERVICE OF PROCESS. Notwithstanding the foregoing
provisions of this Section 6.02, service of process in any suit, action or
proceeding arising out of or relating to this Agreement or any document,
agreement or transaction contemplated hereby, or any action or proceeding to
execute or otherwise enforce any judgment in respect of any breach hereunder or
under any document or agreement contemplated hereby, shall be delivered in the
manner provided in Section 6.08(c).
SECTION 6.03. REPRODUCTION OF DOCUMENTS. This Agreement and
all documents relating hereto, including, without limitation, consents, waivers
and modifications that may hereafter be executed, documents received by
Purchasers at the closing of the purchase of Parent Preferred Stock and Warrants
(except the Warrant Certificates and the certificates representing the shares of
the Parent Preferred Stock), and financial statements, certificates and other
64
information previously or hereafter furnished to any party may be reproduced by
the any party by any photographic, photostatic, microfilm, micro-card, miniature
photographic, digital or other similar process, and the Purchasers may destroy
any original document so reproduced. Any such reproduction shall be as
admissible into evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by the Parent, the Initial Stockholder
or the Purchasers in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be as
admissible into evidence as the original itself. Nothing in this Section 6.03
shall prohibit any party hereto from contesting the accuracy or validity of any
such reproduction.
SECTION 6.04. SURVIVAL. All warranties, representations,
certifications and covenants made by the Parent and the Companies herein, in the
Subscription Agreement or in any certificate or other instrument delivered by
the Parent or either Company or on behalf of the Parent or the Companies
hereunder shall be considered to have been relied upon by the applicable
Purchasers to whom such representations or certificates were made or covenants
given and shall survive the delivery to the Purchasers of the Parent Preferred
Stock and Warrants, regardless of any investigation made by the Purchasers or on
their behalf. All statements in any certificate or other instrument delivered by
or on behalf of the Parent or either Company pursuant to the terms hereof shall
constitute warranties and representations by the Parent or such Company, as
applicable, hereunder. All payment and indemnity obligations of the Parent and
either Company hereunder (including, without limitation, reimbursement
obligations in respect of costs, expenses and fees of or incurred by the
Purchasers) shall survive the termination hereof.
SECTION 6.05. SUCCESSORS AND ASSIGNS. Subject to Section 3.05,
this Agreement shall inure to the benefit of and be binding upon the successors
and permitted assigns of each of the parties hereto. The provisions hereof are
intended to be for the benefit of the Purchasers and their successors and
permitted assigns, and shall be enforceable by them whether or not an express
assignment of rights hereunder shall have been made by a Purchaser or its
successor or permitted assign.
SECTION 6.06. AMENDMENTS AND WAIVERS. (a) The
provisions of Article I and Article VI hereof, and of any
term defined in Article IV hereof as used in any such
65
Section, may be amended, modified or supplemented, and compliance with any such
Section hereof waived, only by a writing duly executed by or on behalf of the
Required Holders and the Parent;
(b) the provisions of Article II hereof, and of any term
defined in Article IV hereof as used in Article II hereof, may be amended,
modified or supplemented only by a writing duly executed by or on behalf of the
Required Holders and the Parent; PROVIDED HOWEVER, that compliance by the Parent
with the provisions of Article II hereof, with respect to any particular
registration, may be waived by the Requisite Holders; and PROVIDED FURTHER that
no amendment, modification or supplement of the provisions of Section 2.01(d) or
Section 2.02(c) hereof which adversely affect the rights of the Initial
Stockholder shall be made without the consent of the Initial Stockholder;
(c) the provisions of Article III hereof, and of any term
defined in Article IV hereof as used in any such Article, may be amended,
modified or supplemented, and compliance with such Section hereof waived, only
by a writing duly executed by or on behalf of the Required Holders, the Initial
Stockholder and the Parent; and
(d) notwithstanding the foregoing, no provision of this
Agreement may be amended in such manner as to adversely and differently affect
any Other Purchaser's rights hereunder without the consent of such Other
Purchaser.
SECTION 6.06. EXPENSES. (a) AMENDMENTS AND WAIVERS. The Parent
shall pay when billed the reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by the holders of the Purchaser
Shares and the Parent Preferred Stock in connection with the consideration,
negotiation, preparation or execution of any amendments, waivers, consents and
other similar agreements with respect to this Agreement (whether or not any such
amendments, waivers, consents or other similar agreements are executed).
(b) RESTRUCTURING AND WORKOUT, INSPECTIONS. At any time
when the Parent and the holders of the Parent Preferred Stock or Purchaser
Shares are conducting restructuring or workout negotiations in respect
hereof, or if the Parent or any Company shall be in violation in any material
respect of any of its agreements hereunder, the Parent shall pay when billed
the reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and the fees of professional advisors)
66
incurred by the holders of the Parent Preferred Stock and Purchaser Shares in
connection with the assessment, analysis or enforcement of any rights or
remedies that are or may be available to the holders of the Parent Preferred
Stock and Purchaser Shares.
SECTION 6.07. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION;
ETC. (a) WAIVER OF JURY TRIAL. THE PARTIES HERETO VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF
THE DOCUMENTS, AGREEMENTS OR TRANSAC TIONS CONTEMPLATED HEREBY.
(b) CONSENT TO JURISDICTION. ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OF THE DOCUMENTS,
AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION OR PROCEEDING TO
EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH UNDER THIS
AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY MAY BE BROUGHT BY
SUCH PARTY IN ANY FEDERAL DISTRICT COURT LOCATED IN NEW YORK CITY, NEW YORK, OR
ANY NEW YORK STATE COURT LOCATED IN NEW YORK CITY, NEW YORK AS SUCH PARTY MAY IN
ITS SOLE DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE NON-EX CLUSIVE
IN PERSONAM JURISDICTION OF EACH SUCH COURT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT IN ANY PROCEEDING BEFORE ANY
TRIBUNAL, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, ANY CLAIM THAT IT IS NOT
SUBJECT TO THE IN PERSONAM JURISDICTION OF ANY SUCH COURT. IN ADDITION, EACH OF
THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
DOCUMENT, AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY BROUGHT IN ANY SUCH
COURT, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY AGREES
THAT PROCESS PERSONALLY SERVED OR SERVED BY U.S. REGISTERED MAIL AT THE
ADDRESSES PROVIDED HEREIN FOR NOTICES SHALL CONSTITUTE, TO THE EXTENT PERMITTED
BY LAW, ADEQUATE SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT, AGREEMENT OR TRANSACTION
CONTEMPLATED HEREBY, OR ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE
ANY JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER OR UNDER ANY DOCUMENT OR
AGREEMENT CONTEMPLATED HEREBY. RECEIPT OF
67
PROCESS SO SERVED SHALL BE CONCLUSIVELY PRESUMED AS EVIDENCED BY A DELIVERY
RECEIPT FURNISHED BY THE UNITED STATES POSTAL SERVICE OR ANY COMMERCIAL DELIVERY
SERVICE.
(d) OTHER FORUMS. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO
LIMIT THE ABILITY OF ANY HOLDER OF PURCHASER SHARES OR PARENT PREFERRED STOCK TO
SERVE ANY WRITS, PROCESS OR SUMMONSES IN ANY MANNER PERMITTED BY APPLICABLE LAW
OR TO OBTAIN JURISDICTION OVER THE COMPANY OR THE INITIAL STOCKHOLDER IN SUCH
OTHER JURISDICTION, AND IN SUCH OTHER MANNER, AS MAY BE PERMITTED BY APPLICABLE
LAW.
SECTION 6.09. INDEMNIFICATION. From and at all times after the
date of this Agreement, and in addition to all of the other rights and remedies
of any holder of the Parent Preferred Stock and the Purchaser Shares against the
Parent, the Parent agrees to indemnify and hold harmless each such holder and
each of its directors, trustees, officers, employees, agents, investment
advisors and Affiliates against any and all claims, losses, damages,
liabilities, costs and expenses of any kind or nature whatsoever (including,
without limitation, reasonable attorneys' fees, costs and expenses), incurred by
or asserted against such holder or any such director, trustee, officer,
employee, agent, investment advisor or Affiliate, from and after the date
hereof, whether direct or indirect, as a result of or arising from or in any way
relating to any suit, action or proceeding (including, without limitation, any
inquiry or investigation) by any Person, whether threatened or initiated,
asserting a claim for any legal or equitable remedy against any Person under any
statute or regulation, including, without limitation, any Federal or state
securities laws, or under any common law or equitable cause or otherwise,
arising from or in connection with the negotiation, preparation, execution,
performance or enforcement of this Agreement or any transactions contemplated
herein or hereunder, whether or not such holder or any such director, trustee,
officer, employee, agent, investment advisor or Affiliate is a party to any such
action, proceeding, suit or the target of any such inquiry or investigation;
PROVIDED, HOWEVER, that no indemnified party shall have the right to be
indemnified hereunder for any liability to the extent such liability results
from the willful misconduct or gross negligence of such indemnified party or
breach by such indemnified party of its own obligations under this Agreement or
any other agreement with the Parent or the Companies. All of the foregoing
losses, damages, liabilities, costs and expenses shall be payable as and when
incurred upon demand by each such holder. Without limiting the generality of the
foregoing, each holder of Parent Preferred Stock and the Purchaser Shares shall
be
68
entitled to collect, and the Parent shall be obligated to advance to each holder
of Parent Preferred Stock and the Purchaser Shares and such directors, trustees,
officers, employees, agents, investment advisors and Affiliates, to the fullest
extent permitted by applicable law, all expenses (including, without limitation,
reasonable fees and disbursements of counsel) attendant to defending against any
such claims, losses, damages, liabilities, costs and expenses when and as
incurred, regardless of whether any judicial determination of entitlement to
such indemnity has been made, until or unless a final judicial determination
that such indemnified party is not entitled to such indemnity as a result of the
willful misconduct or gross negligence of such indemnified party or breach by
such indemnified party, in which case, such indemnified party shall promptly
repay to the Parent, with interest at the applicable statutory rate applicable
to judgments in the relevant jurisdiction, all amounts so advanced by the
Parent. The obligations of the Parent and the rights of the holders of Parent
Preferred Stock and the Purchaser Shares under this Section 6.09 shall survive
the termination of this Agreement.
SECTION 6.10. ENTIRE AGREEMENT. This Agreement, the
Subscription Agreement, together with all exhibits and schedules thereto and
hereto, and the Certificate of Designations constitute the final written
expression of all of the terms hereof and is a complete and exclusive statement
of those terms.
SECTION 6.11. EXECUTION IN COUNTERPART. This Agreement may be
executed in one or more counterparts and shall be effective when at least one
counterpart shall have been executed by each party hereto, and each set of
counterparts that, collectively, show execution by each party hereto shall
constitute one duplicate original.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered, all as of the date and year first
above written.
WRC MEDIA INC.,
by /s/ XXXXXXX XXXXXX
----------------------
Name: Xxxxxxx Xxxxxx
Title: Secretary
JLC LEARNING CORPORATION,
by /s/ XXXXXXX XXXXXX
----------------------
Name: Xxxxxxx Xxxxxx
Title: Secretary
WEEKLY READER CORPORATION,
by /s/ XXXXXXX XXXXXX
----------------------
Name: Xxxxxxx Xxxxxx
Title: Secretary
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY,
by /s/ XXXXXXX X.XXXXXX
----------------------
Name: Xxxxxxx X. Xxxxxx
Title: Its Authorized
Representative
EAC III L.L.C.,
by EAC IV L.L.C., its
Managing Member,
by Ripplewood Partners,
L.P., its sole member
by Ripplewood Holdings
L.L.C., its general partner
by /s/ XXXXXX X. XXXXX
--------------------------
Name: Xxxxx X. Xxxxx
Title:
DLJ MERCHANT BANKING PARTNERS
II, L.P., a Delaware Limited
Partnership,
by DLJ Merchant Banking
II, Inc., as managing
general partner,
by /s/ XXXXXXX X. XXXXXX
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title:
DLJ MERCHANT BANKING PARTNERS
II-A, L.P., a Delaware Limited
Partnership,
by DLJ Merchant Banking
II, Inc. as managing
general partner,
by /s/ XXXXXXX X. XXXXXX
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title:
DLJ OFFSHORE PARTNERS II,
C.V., a Netherlands Antilles
Limited Partnership,
by DLJ Merchant Banking
II, Inc., as managing
general partner,
by /s/ XXXXXX X. XXXXXX
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title:
DLJ DIVERSIFIED PARTNERS,
L.P., a Delaware Limited
Partnership,
by DLJ Diversified
Partners, Inc., as
managing general
partner,
by /s/ XXXXX XXXXXXXXXXX
--------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Attorney-in-Fact
DLJ DIVERSIFIED PARTNERS-A,
L.P., a Delaware Limited
Partnership,
by DLJ Diversified
Partners, Inc., as
managing general
partner,
by /s/ XXXXX XXXXXXXXXXX
--------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Attorney-in-Fact
DLJ MILLENNIUM PARTNERS, L.P.,
a Delaware Limited
Partnership,
by DLJ Merchant Banking
II, Inc., as managing
general partner,
by /s/ XXXXXXX X. XXXXXX
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title:
DLJ MILLENNIUM PARTNERS-A, L.P., a
Delaware Limited Partnership,
by DLJ Merchant Banking II,
Inc., as managing general
partner,
by /s/ XXXXXXX X. XXXXXX
--------------------------
Name: Xxxxxx X. Xxxxxx
Title:
DLJMB FUNDING II, INC., a Delaware
corporation,
by /s/ XXXXX XXXXXXXXXXX
--------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Attorney-in-Fact
DLJ FIRST ESC, L.P., a Delaware
Limited Partnership,
by DLJ LBO Plans Management
Corporation, as general
partner,
by /s/ XXXXX XXXXXXXXXXX
----------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Attorney-in-Fact
DLJ EAB PARTNERS, L.P., a Delaware
Limited Partnership,
By DLJ LBO Plans Management
Corporation, as general
partner,
by /s/ XXXXX XXXXXXXXXXX
---------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Attorney-in-Fact
DLJ ESC II L.P., a Delaware Limited
Partnership,
by DLJ LBO Plans Management
Corporation, as general
partner,
by /s/ XXXXX XXXXXXXXXXX
---------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Attorney-in-Fact
SGC PARTNERS II L.L.C., with
respect to Section 1.02(i), Section
1.03(a)(i), 1.05, 3.01, 6.02, 6.05,
6.08, 6.10 and 6.11 only,
by /s/ X. XXXXX XXXXXX
-------------------------
Name: X. Xxxxx Xxxxxx
Title: Managing Director
ARES LEVERAGED INVESTMENT FUND,
L.P., a Delaware Limited
Partnership,
by ARES Management L.P., as
general partner,
by /s/ XXXX XXXXXXX
---------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
ARES LEVERAGED INVESTMENT FUND II,
L.P., a Delaware Limited
Partnership,
by ARES Management II, L.P., as
general partner,
by /s/ XXXX XXXXXXX
---------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
TCW/CRESCENT MEZZANINE PARTNERS II,
L.P., a Delaware Limited
Partnership,
TCW/CRESCENT MEZZANINE TRUST II,
by TCW/Xxxxxxxx Xxxxxxxxx XX,
L.P., its general partner or
managing owner,
by TCW/Crescent Mezzanine,
L.L.C., its general partner,
by
-----------------------------
Name:
Title:
SHARED OPPORTUNITY FUND IIB,
L.L.C., a Delaware Limited
Liability Company,
by TCW Asset Management
Company, as investor
advisor,
by
----------------------------
Name:
Title:
by
----------------------------
Name:
Title:
TCW SHARED OPPORTUNITY FUND III,
L.P., a Delaware Limited
Partnership,
by TCW Asset Management Company,
as investor advisor,
by
---------------------------
Name:
Title:
by
----------------------------
Name:
Title:
TCW LEVERAGED INCOME TRUST II,
L.P., a Delaware Limited
Partnership,
by TCW (LINCII), L.P., as
general partner,
by TCW Advisors (Bermuda), Ltd.,
as general partner,
by
----------------------------
Name:
Title:
by TCW Investment Management
Company, as investment
advisor,
by
----------------------------
Name:
Title:
TCW LEVERAGED INCOME TRUST, L.P., a
Delaware Limited Partnership,
by TCW Investment
Management Company, as
investment advisor,
by
-----------------------------
Name:
Title:
by TCW Advisors (Bermuda), Ltd.,
as general partner,
by
-----------------------------
Name:
Title:
RIPPLEWOOD PARTNERS, L.P.,
by Ripplewood Holdings L.L.C.,
its general partner
by /s/ XXXXXX XXXXX
-----------------------------
Name: Xxxxxx Xxxxx
Title: Treasurer
ANNEX 1
Name and Address of Purchasers
Northwestern Mutual Life Insurance Company
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention of: Xxxxxxx Xxxxxxx
Fax: 000-000-0000
with a copy of all notices to:
Xxxxxxx Xxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention of: Xxxx X. Xxxxxxxxxxx, Esq.
Fax: 000-000-0000
DLJ Merchant Banking Partners II, L.P.,
In care of DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ Merchant Banking Partners II-A, L.P.
In care of DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ Offshore Partners II, C.V.,
In care of DLJ Merchant Banking, II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ Diversified Partners, L.P.,
In care of DLJ Merchant Banking, II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ Diversified Partners-A, L.P.,
In care of DLJ Merchant Banking, II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ Millennium Partners, L.P.,
In care of DLJ Merchant Banking, II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ Millennium Partners-A, L.P.
In care of DLJ Merchant Banking, II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJMB Funding II, Inc.,
In care of DLJ Merchant Banking, II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ First Esc L.P.,
In care of DLJ Merchant Banking, II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ EAB Partners, L.P.
In care of DLJ Merchant Banking, II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ ESC II L.P.
In care of DLJ Merchant Banking, II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
ARES LEVERAGED INVESTMENT FUND, L.P.
In care of Ares Leveraged Investment Fund, L.P.
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Fax: 000-000-0000
ARES LEVERAGED INVESTMENT FUND II, L.P.
In care of Ares Leveraged Investment Fund II, L.P.
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Fax: 000-000-0000
TCW/CRESCENT MEZZANINE PARTNERS II, L.P.
In care of TCW/Crescent Mezzanine, L.L.C.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx-Xxxx Xxxxxx
Fax: 000-000-0000
SHARED OPPORTUNITY FUND 11B, L.L.C.
In care of TCW/Crescent Mezzanine, L.L.C.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx-Xxxx Xxxxxx
Fax: 000-000-0000
TCW SHARED OPPORTUNITY FUND III, L.P.
In care of TCW/Crescent Mezzanine, L.L.C.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx-Xxxx Xxxxxx
Fax: 000-000-0000
TCW LEVERAGED INCOME TRUST II, L.P.
In care of TCW/Crescent Mezzanine, L.L.C.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx-Xxxx Xxxxxx
Fax: 000-000-0000
TCW LEVERAGED INCOME TRUST, L.P.
In care of TCW/Crescent Mezzanine, L.L.C.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx-Xxxx Xxxxxx
Fax: 000-000-0000
with a copy of all notices (other than notices to NML)
to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Fax: 000-000-0000
ANNEX 2
Address of Initial Stockholder
EAC III L.L.C.
In care of Ripplewood Partners, L.P.
Xxx Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
EXHIBIT A
FORM OF TRANSFEREE UNDERTAKING
[Letterhead of Transferee]
[Dated ________]
WRC Media Inc.
c/o Ripplewood Partners, L.P.
Xxx Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Re: WRC Media Inc. (the "Parent") Issuable Shares
Ladies and Gentlemen:
Pursuant to Section 3.01 of that certain Preferred
Stockholders Agreement, dated as of November 17, 1999 (as amended, the
"Stockholders Agreement") among the Parent, JLC (as defined therein), WRC (as
defined therein), the Purchasers (as defined therein), SGC (as defined therein)
and the Initial Stockholder (as defined therein), ________ [name of transferee]
(the "Transferee"), as owner and holder of ________ shares of ________ [type of
Issuable Shares], hereby confirms and agrees that it has assumed and is subject
to the obligations of a [Purchaser] [Initial Stockholder] [Other Stockholder],
as provided in the Stockholders Agreement.
The address where notices and communications pursuant to
Section 5.02 of the Stockholders Agreement can be delivered to the Transferee is
as follows:
[Transferee]
IN WITNESS WHEREOF, the Transferee executes and
delivers this agreement, as of the date and year first above
written.
[TRANSFEREE],
by
-------------------------
Name:
Title: