MediaNews Group, Inc. Shareholders? Agreement

Exhibit 10.2

MediaNews Group, Inc.
Shareholders’ Agreement

     THIS SHAREHOLDERS’ AGREEMENT (this “ Agreement ”) is made effective as of October 19, 2007 (the “ Effective Date ”), by and among The Singleton Family Voting Trust for MediaNews Group, Inc. (the “ Singleton Family Voting Trust ”) by Howell E. Begle Jr., Trustee, The Singleton Family Irrevocable Trust (the “ Singleton Family Irrevocable Trust ”) by Howell E. Begle, Jr. and Patricia Robinson, Trustees, The Singleton Family Revocable Trust (the “ Singleton Family Revocable Trust ”) by William Dean Singleton and Howell E. Begle, Jr., Trustees (the Singleton Family Voting Trust, the Singleton Family Irrevocable Trust and the Singleton Family Revocable Trust being sometimes collectively referred to herein as the “ Singleton Shareholders ”), The Scudder Family Voting Trust for MediaNews Group, Inc. (the “ Scudder Family Voting Trust ”) by, Jean L. Scudder, Trustee, The Jean L. Scudder Irrevocable Trust (the “ Jean L. Scudder Irrevocable Trust ”) by Amy Trunnell, Trustee, the Scudder Family 1987 Trust (the “ Scudder Family 1987 Trust ”) by Jean L. Scudder, Trustee, Charles Scudder individually, Jean L. Scudder individually, Carolyn Miller, individually, and as Trustee under The Jennifer Miller Revocable Trust and The Katherine Miller Revocable Trust, and Elizabeth H. Difani, individually, and as Trustee under The Miguel Difani Irrevocable Trust, The Chipeta Difani Irrevocable Trust, and The Katya Difani Revocable Trust (the Scudder Family Voting Trust, the Jean L. Scudder Irrevocable Trust, the Scudder Family 1987 Trust, Charles Scudder individually, Jean L. Scudder individually, Carolyn Miller, individually, and as Trustee under The Jennifer Miller Revocable Trust and The Katherine Miller Revocable Trust, and Elizabeth H. Difani, individually, and as Trustee under The Miguel Difani Irrevocable Trust, The Chipeta Difani Irrevocable Trust, and The Katya Difani Revocable Trust, being sometimes collectively

referred to herein as the “ Scudder Shareholders ”), Joseph J. Lodovic, IV, The Hearst Corporation, a Delaware corporation (“ Hearst ”), and MediaNews Group, Inc., a Delaware corporation (“ MNG ” or the “ Company ”).

     WHEREAS, the current equitable ownership of the Class A Common Stock, par value $0.001 per share (the “ Class A Common Stock ”), of MNG by Singleton Shareholders, Scudder Shareholders and Joseph J. Lodovic, IV is as follows:

The Singleton Family Revocable Trust			254,858.9900			Shares of Class A Common Stock
The Singleton Family Irrevocable Trust			786,426.5100			Shares of Class A Common Stock
Joseph J. Lodovic, IV			58,199.0000			Shares of Class A Common Stock
Jean L. Scudder, Individually			185,817.3750			Shares of Class A Common Stock
Charles Scudder, Individually			260,321.3750			Shares of Class A Common Stock
Jean L. Scudder, as Trustee for Kurt Miller and Gabriel Difani under The Scudder Family 1987 Trust			123,743.7450			Shares of Class A Common Stock
Amy Trunnell, as Trustee for Benjamin Fulmer and Nina Fulmer under The Jean L. Scudder Irrevocable Trust			74,504.0000			Shares of Class A Common Stock
Elizabeth H. Difani, Individually			86,773.7917			Shares of Class A Common Stock
Elizabeth H. Difani, as Trustee under The Miguel Difani Irrevocable Trust, The Chipeta Difani Irrevocable Trust, and The Katya Difani Revocable Trust			112,305.6658			Shares of Class A Common Stock
Carolyn Miller, Individually			59,275.1825			Shares of Class A Common Stock
Carolyn Miller, as Trustee under The Jennifer Miller Revocable Trust and The Katherine Miller Revocable Trust			118,550.3650			Shares of Class A Common Stock

     (Each such shareholder is referred to herein as a “ Class A Shareholder ”);

     WHEREAS, the Class A Shareholders listed above now own, legally and beneficially, 2,120,776 shares of Class A Common Stock, representing 93.1% of the issued and outstanding shares of Class A Common Stock;

     WHEREAS, the Scudder Shareholders, the Singleton Shareholders, Joseph J. Lodovic, IV and the Company have previously entered into the Amended and Restated MediaNews Group, Inc. Shareholders Agreement, effective as of January 31, 2000, amended and restated as of March 16, 2004 and amended as of June 30, 2005 (the “ Prior Shareholders’ Agreement ”);

     WHEREAS, concurrently with the execution and delivery of this Agreement, Hearst is purchasing from the Company 100 shares of Class C Common Stock, par value $0.001 per share (the “ Class C Common Stock ”), of MNG, pursuant to the Stock Purchase Agreement, dated as of August 4, 2006 (the “ Stock Purchase Agreement ”), by and between the Company and Hearst (Hearst and each Hearst Permitted Transferee (as defined in Section 3.03 hereof) of Class C Common Stock that executes a written acknowledgement that such Hearst Permitted Transferee is bound hereby is referred to herein as a “ Class C Shareholder ” and, collectively with the Class A Shareholders, the “ Shareholders ”);

     WHEREAS, the parties hereto desire to enter into this Agreement in order to provide a continuing framework for their relationship as (in the case of the Class A Shareholders) legal and beneficial owners of Class A Common Stock and (in the case of the Class C Shareholders) legal and beneficial owners of Class C Common Stock, and to further define their mutual obligations (and in connection therewith, to terminate the Prior Shareholders’ Agreement); and

     WHEREAS, certain capitalized terms used in this Agreement are defined in Section 9.15 below;

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, the parties hereto mutually agree as follows:

1. PROPOSED ACTIVITIES OF MNG

     1.01 Newspaper Publishing Business . Except as unanimously authorized by MNG’s Board of Directors and approved by Hearst, MNG will engage only in the business of owning and holding the securities or assets of companies that are in the business of publishing and distributing newspapers or are engaged in advertising or media based business.

2. RESTRICTIONS UPON SALE OR TRANSFER OF STOCK

     2.01 Generally . During the term of this Agreement, none of the Singleton Shareholders, the Scudder Shareholders, Hearst nor any other Person that is a party to or otherwise bound by the terms of this Agreement shall at any time sell, transfer, assign, pledge, give away or otherwise dispose of, alienate, or encumber in any manner whatsoever (each, a “ Transfer ”) any interest in, any shares of, or any interest in any voting trust certificates relating to, Class A Common Stock, Class C Common Stock or any other class, now or hereafter authorized, of capital stock of MNG (any such stock or interest in any voting trust certificate relating thereto being hereinafter referred to as “ Stock ”) beneficially owned by any of them, other than as hereinafter expressly provided in Sections 3, 4 and 5 of this Agreement, and any attempt to Transfer any Stock (or interest therein) in violation of this Agreement shall be void and of no effect and shall not be recognized or recorded in the stock transfer books of MNG.

     2.02 Additional Restrictions . Until the earlier of (i) the date on which none of the Company’s 6 7/8% Senior Subordinated Notes due October 1, 2013 and its 6 3/8% Senior Subordinated Notes due April 1, 2014 is outstanding, or (ii) the date on which MNG’s Leverage

Ratio, as such term is defined in the Indenture dated January 26, 2004 by and between the Company and The Bank of New York as Trustee, is less than 3:1, and except as otherwise provided in Section 3 or 4 hereof, no Person who is a party to or who is otherwise bound by the terms of this Agreement shall Transfer, in any manner whatsoever, any Stock (or interest therein) beneficially owned by it unless all shares of Stock of the Company then outstanding owned by the Shareholders are Transferred by the holders thereof in a single transaction or series of related transactions on the same terms.

3. PERMITTED TRANSFERS AMONG RELATED PARTIES

     3.01 Class A Permitted Transferees . During the term of this Agreement, any Class A Shareholder may at any time sell to MNG all or any portion of such Shareholder’s interest in shares of Stock, for such consideration as such Shareholder and MNG shall mutually determine appropriate, and any of the Class A Shareholders may at any time Transfer by inter vivos gift, testamentary bequest, or otherwise, for such consideration, if any, as such Person shall, in its, his or her sole discretion, determine appropriate (and without the prior consent of any other Shareholder), all or a portion of such Shareholder’s interest in shares of Stock to a family member of such Shareholder (i.e., spouse, parents, siblings, children, any descendants of the foregoing or any spouses of any of the foregoing) or to a trust for the benefit of such family member(s) or in the case of a trust, to its grantor or to its beneficiaries, provided that the Person or trustee of any trust to whom such shares are Transferred shall, together with its, his or her successors, assigns, distributees, legatees, personal representatives, any receiver or trustee in bankruptcy or trust beneficiaries, take such Stock subject to and be bound by all of the terms and conditions of this Agreement, including, without limitation, the provisions of this Section 3 and of Sections 2, 4, 5, 6 and 7 hereof, and further provided that the transferee shall execute and

deliver to MNG a written acknowledgment of the foregoing, whereupon (i) a new certificate shall be issued representing the shares of Stock Transferred and bearing the restrictive legend set forth in Section 6.01 hereof and (ii) the transferee shall be deemed to be a “Class A Shareholder” for all purposes of this Agreement, and shall have all the rights and obligations of a Class A Shareholder hereunder.

     3.02 Agreement of the Trustees . Each of the Trustees acknowledges that he or she has only bare legal title to the Stock beneficially owned by the Singleton Shareholders and the Scudder Shareholders, respectively, and he or she agrees with all parties hereto that he or she shall promptly take all action necessary and appropriate to effect the transfer of title to any Stock that is permitted or required to be Transferred by the Singleton Shareholders or the Scudder Shareholders, as the case may be, pursuant to the provisions of this Section 3 or under Section 4 or 5. Each such Trustee further agrees that he or she shall not have the power to transfer title to any of the Stock owned of record by him except pursuant to a transfer permitted or required to be made by the Singleton Shareholders or Scudder Shareholders under this Section 3 or under Section 4 or 5. All of the provisions of this Section 3.02 shall be binding upon all successors and assigns of each such Trustee.

     3.03 Hearst Permitted Transferees . During the term of this Agreement, Hearst may at any time sell to MNG all or any portion of Hearst’s interest in shares of Stock for such consideration as Hearst and MNG shall mutually determine appropriate, and Hearst may at any time Transfer, for such consideration, if any, as Hearst shall, in its sole discretion, determine appropriate (and without the prior consent of any other Shareholder), all or a portion of Hearst’s interest in Stock to one or more Affiliates of Hearst (each, a “ Hearst Permitted Transferee ”), provided that (i) the Person to whom such Stock is Transferred shall, together with its successors

and assigns, or any receiver or trustee in bankruptcy, take such Stock subject to and be bound by all of the terms and conditions of this Agreement, including, without limitation, the provisions of this Section 3 and of Sections 2, 4, 5, 6 and 7 hereof and (ii) such transferee shall execute and deliver to MNG a written acknowledgment of the foregoing, whereupon (x) a new certificate shall be issued representing the shares of Stock Transferred and bearing the restrictive legend set forth in Section 6.01 hereof, and (y) the transferee shall be deemed a “Class C Shareholder” for all purposes of this Agreement, and shall have all the rights and obligations of a Class C Shareholder hereunder. Any Transfer by Hearst, directly or indirectly, of a profit or voting interest in a Hearst Permitted Transferee that owns Stock shall be treated as a Transfer of Stock by Hearst hereunder.

4. TRANSFER OF STOCK WITH CONSENT OF BOARD AND HEARST

     4.01 Transfer by Consent . During the term of this Agreement any Shareholder may at any time Transfer, with or without consideration, all or any part of his, her or its Stock free and clear of any restrictions or limitations in this Agreement, but only with the express prior consent of both (i) the Board of Directors of MNG, which consent may be granted or withheld in the sole and absolute discretion of the Board of Directors of MNG, and (ii) Hearst, which consent may be granted or withheld in the sole and absolute discretion of Hearst.

5. COMPANY’S AND SHAREHOLDERS’ OPTIONS TO PURCHASE STOCK

     5.01 Option to Purchase . Subject to the restrictions set forth in Section 2.02 hereof, should any Shareholder (for purposes of this Section 5, a “ Selling Shareholder ”) desire to Transfer rights in all or any part of the Selling Shareholder’s Stock in a transaction not otherwise permitted under Section 3 or 4 hereof, whether the Selling Shareholder desires to initiate a

Transfer or is responding affirmatively to an offer to purchase, before doing so the Selling Shareholder shall first permit (i) the Company and thereafter (ii) the Shareholders (other than the Selling Shareholder and Hearst or any Hearst Permitted Transferee) (the “ Remaining Shareholders ”) to exercise an option to purchase the shares of Stock which the Selling Shareholder desires to Transfer in accordance with the provisions of this Section 5.

     (a) Subject to the restrictions set forth in Section 2.02 above, a Shareholder may solicit third parties to purchase its Stock prior to offering the same to the Company and the Remaining Shareholders, but no Transfer to a third party may be consummated until such Stock has been offered to (i) the Company and thereafter, (ii) the Remaining Shareholders in accordance with this Agreement.

     5.02 Required Notice . Upon deciding to Transfer all or any rights in all or any part of his, her or its Stock, whether the Selling Shareholder desires to initiate a Transfer or is responding affirmatively to an offer to purchase, except for Transfers expressly authorized pursuant to Sections 3 and 4 of this Agreement, the Selling Shareholder shall simultaneously notify the Company and the Remaining Shareholders of the intended Transfer. Such notice (the “ Transfer Notice ”) shall contain a complete description of the proposed transaction, including the identity of any proposed Transferee, the “ Purchase Price ” (as such term is defined in Section 5.04 hereof) offered by the Selling Shareholder or proposed by a bona fide third party transferee and all other material terms of such disposition. The Transfer Notice shall also specify whether the Selling Shareholder is only willing to Transfer all of his, her or its Stock, or is willing to Transfer only a portion thereof, and such specifications shall control the scope of any option to purchase thereunder.

     5.03 Scope and Priority of Company’s and Remaining Shareholders’ Options .

     (a) Upon receipt of a Transfer Notice from a Selling Shareholder pursuant to Section 5.02, the Company shall thereupon have the first option to purchase all (but not less than all) of such shares of Stock tendered at the Purchase Price. Such option to purchase must be exercised by the Company within thirty (30) days after receipt of the Transfer Notice. Any exercise of such option to purchase Stock by the Company shall be made by notice in writing to the Selling Shareholder, with a copy to all other Shareholders, mailed within such thirty (30) day period. If the Company elects not to exercise such option to purchase it shall so notify in writing the Selling Shareholder, with a copy to all other Shareholders, (the “ Non-Exercise Notice ”) mailed within such thirty (30) day period.

     (b) If the Company fails to exercise its option to purchase all of the Selling Shareholder’s Stock in accordance with Section 5.03(a) above, then upon receipt of a notice (the “ Second Transfer Notice ”) from a Selling Shareholder that the Company has failed to exercise its option to purchase pursuant to Section 5.03(a) above, or that the Company has notified the Selling Shareholder that it has elected not to exercise such option to purchase, the Remaining Shareholders shall thereupon have an option to purchase all of such shares tendered at the Purchase Price (pro rata based on each of the Remaining Shareholders’ ownership of Class A Common Stock). This option to purchase must be exercised by the Remaining Shareholders within thirty (30) days after receipt by the Remaining Shareholders of the Second Transfer Notice. If any Remaining Shareholder fails to exercise his option to purchase shares, or exercises such option to purchase less than all the shares available to him, then the other Remaining Shareholders shall have a period of thirty (30) days following the initial thirty (30) day period to acquire all or any part of such offered shares which are left (pro rata based on each

of the other Remaining Shareholders’ ownership of Class A Common Stock). Any exercise of such option to purchase Stock by the Remaining Shareholder(s) shall be made by notice in writing to the Selling Shareholder, with a copy to all other Remaining Shareholders, mailed within such thirty (30) day period (or, if not all shares of the Selling Shareholder are acquired during such first period, then by notice mailed within the ten (10) day period following).

     (c) Any notice given pursuant to this Section 5 shall be given as provided in Section 9.01 of this Agreement.

     5.04 Purchase Price .

     (a) If the purchase price (the “ Purchase Price ”) set forth in the Transfer Notice is a bona fide all cash offer, then the Purchase Price shall be such all cash offer.

     (b) If all or any part of the Purchase Price set forth in the Transfer Notice is non-cash consideration, then the value attributable to such non-cash consideration shall be based on the Fair Market Value thereof determined pursuant to the provisions of Section 5.05 hereof. The time periods for exercise of options to purchase set forth in Sections 5.03(a) and (b) hereof shall be tolled until such time as the Fair Market Value of a non-cash offer has been determined in accordance with the provisions of Section 5.05 hereof.

     (c) As used in this Agreement, “ Fair Market Value ” of non-cash consideration shall mean the amount that would be paid therefor by a willing buyer to a willing seller, both knowledgeable in the relevant industry.

     5.05 Determination of Fair Market Value .

     (a) If all or any part of the Purchase Price specified in the Transfer Notice is a non-cash offer, then the Selling Shareholder and the Company may mutually agree as to the Fair Market Value of the non-cash offer. If the Selling Shareholder and the Company are unable to agree on

such value within thirty (30) days after the Company and the Remaining Shareholders receive the Transfer Notice, then in such event, Fair Market Value shall be established as hereinafter provided by two independent qualified appraisers knowledgeable in the newspaper publishing industry, one to be appointed by the Selling Shareholder and the other to be appointed by majority vote of the Remaining Shareholders (irrespective of whether the Company shall exercise the option granted to it under Section 5.03 of this Agreement).

     (b) The two independent appraisers shall be appointed within thirty (30) days after receipt by the Company and Remaining Shareholders of the Transfer Notice. If either the Selling Shareholder or the Remaining Shareholders fails to appoint an appraiser within this time period, then its right to do so shall lapse, and the appraisal made by the one independent appraiser who is timely appointed shall be the Fair Market Value. If two appraisals are made, and if the higher appraisal does not exceed 110% of the lower, Fair Market Value will be the average of the two. If the two appraisals are further apart, a third appraiser will be selected within thirty (30) days by the first two appraisers, and the Fair Market Value will be deemed to be the average of the third appraisal and the one of the first two appraisals which is closer to the third. All appraisals shall be made within thirty (30) days of appointment of an appraiser and written notice of the results of such appraisal shall be given to the parties within such time. The Selling Shareholder shall pay the fee of the appraiser selected by it, and the Remaining Shareholders (irrespective of whether the Company shall exercise the option granted to it under Section 5.03 of this Agreement) shall pay the fee of the appraiser selected by them (in proportion to their respective ownership interests in the Company) with the fee of any third appraiser to be divided equally among the Selling Shareholder and the Remaining Shareholders.

     5.06 Failure To Exercise . If the Remaining Shareholders fail to exercise their option to purchase the Selling Shareholder’s Stock, the Selling Shareholder shall be free to dispose of such Stock prior to the later of (i) the last day of the ninety (90) day period commencing the sixth business day after the expiration of the Remaining Shareholders’ option and (ii) the fifth business day following receipt of regulatory approval to consummate such Transfer (the “ Disposal Period ”), but not below the Purchase Price offered to the Remaining Shareholders, and not to a different transferee than specified in the Transfer Notice (if any transferee was so specified), or in a materially different manner or on materially different terms. If the Stock is not disposed of within the Disposal Period then this right shall lapse and the Selling Shareholder must thereafter recommence the offering process to the Company and the Remaining Shareholders if he subsequently wishes to dispose of his shares. Any Person to whom the Stock of the Selling Shareholder is Transferred, following the Remaining Shareholders’ failure to exercise its/their option to purchase, shall take such Stock subject to and be bound by all of the terms and conditions and restrictions imposed by this Agreement for so long as Shareholders (other than the transferee and its transferees) hold more than 10% of outstanding Common Stock, including, without limitation, the provisions of this Section 5 and of Sections 2, 3, 4, 6 and 7 hereof, provided that the transferee shall execute and deliver to MNG a written acknowledgment of the foregoing, whereupon (i) a new certificate shall be issued representing the shares of Stock Transferred and bearing the restrictive legend set forth in Section 6.01 hereof and (ii) such transferee shall be deemed to be a “Class A Shareholder” for all purposes of this Agreement, and shall have all the rights and obligations of a Class A Shareholder hereunder.

     5.07 Payment of Purchase Price .

     (a) The purchaser of any Stock under this Section 5 shall pay the Purchase Price by a wire transfer of immediately available federal funds to a bank account designated by the Selling Shareholder upon a date mutually selected by the Selling Shareholder and the purchaser which is not more than ninety (90) days after the determination of the Purchase Price as hereinbefore provided (such date being herein referred to as the “ Closing Date ”).

     Upon receipt of the Purchase Price on the Closing Date, all interest of the Selling Shareholder in the Stock being sold shall terminate, and the Selling Shareholder shall cease to have any further rights as a Shareholder in the Stock being sold.

     On the Closing Date, the Selling Shareholder shall deliver to the purchaser a certificate or certificates duly endorsed for transfer representing all of the Stock being sold on that date by the Selling Shareholder.

     (b) Notwithstanding paragraph (a), in the case of a sale by Selling Shareholders of Class A Common Stock (in one transaction or a series of related transactions) representing less than fifty percent (50%) of the outstanding Class A Common Stock, the purchaser shall have the option of paying not less than ten percent (10%) of the total Purchase Price in cash on the Closing Date, and giving the Selling Stockholders the purchaser’s promissory note for the balance of the Purchase Price in not more than 120 equal monthly installments of principal.

     Simple interest on the unpaid principal balance of the Purchase Price shall accrue from the Closing Date and shall be payable monthly at the base rate of interest established by Bank of America, N.A., as such rate may change from time to time, but in no event less than the minimum rate of interest that is required under the Internal Revenue Code and the regulations thereunder to avoid the imputation of a higher rate. The first installment of principal and interest

shall be due on the first day of the first calendar month following the Closing Date, and such installments shall continue on the first day of each month thereafter until the entire principal balance together with interest thereon have been paid, but in any case for a period of not more than ten (10) years from the date of the first installment.

     The purchaser’s promissory note shall provide that such note shall be payable in full (i) upon the sale of all or substantially all of the assets used by MNG or its direct or indirect Subsidiaries in the operation of their business, (ii) upon the sale of fifty percent (50%) or more of the then outstanding Stock of MNG within any 180 day period, or (iii) upon the offering of any equity securities by MNG or any Subsidiary of MNG for sale to the public after the date hereof. As used in this paragraph, the term “sale” includes an exchange of assets or Stock for assets or stock, whether or not gain or loss attributable to such transaction is recognized for federal income tax purposes. However, the term “sale” shall not include any transaction by which the Stock or assets of MNG become owned by any parties to this Agreement or any transferee permitted under Section 3 hereof or any corporation or other entity that is wholly owned by one or more of the parties to this Agreement.

     If the purchaser elects such option, in order to secure the performance by the purchaser of the obligations under his or its promissory note, the purchaser shall place the stock certificate or certificates representing the Stock purchased in escrow with such Person as shall be mutually acceptable to the purchaser and seller, as escrow agent (the “ Escrow Agent ”), with stock powers duly endorsed in blank, as security for the payment of the unpaid principal balance and interest on the purchaser’s promissory note. The Escrow Agent may require the purchaser and seller to execute and deliver an escrow agreement more fully outlining the obligations of the Escrow Agent and otherwise containing terms and conditions typically found in escrow agreements in

commercial transactions and not inconsistent with this Agreement. The promissory note given by each purchaser shall provide that upon default in payment of any installment of principal or interest if such default shall continue for more than thirty (30) days after written notice of default has been given to the purchaser by the holder of the note, the holder of the note at that time may inform the Escrow Agent in writing of the default, and thereupon, the Escrow Agent shall deliver the stock certificates and accompanying stock powers to the holder of the promissory note. Upon such delivery (1) all obligations of the Escrow Agent to all of the parties hereunder shall cease and (2) the holder of the promissory note shall be entitled to pursue whatever remedies it may have in law or equity against the purchaser.

     Voting and dividend rights (other than the rights to any liquidating dividend) with respect to the pledged Stock shall be vested in the purchaser while such Stock is held in escrow and until there has been a default in payment of interest or principal with respect to the promissory note.

     All Stock pledged hereunder and all the accompanying stock powers shall be returned to the purchaser upon full satisfaction of the promissory note.

     In addition to the provisions for payment contained above in this Section, the purchaser, at its sole option, may prepay any amount of principal or interest due on the purchaser’s promissory note at any time, without penalty. Any prepayment shall be applied against the remaining principal installments due under the note to the Selling Shareholder in the inverse order in which such installments fall due. Any prepayment shall be applied first to pay any interest that is in arrears, and then shall be applied to reduce the entire principal balance before any prepayment is applied to interest that is not in arrears.

     5.08 Drag-Along Rights

     (a) If Scudder Shareholders and Singleton Shareholders propose to Transfer Common Stock that constitutes a majority of outstanding Common Stock in a Transfer to which the purchase rights in Section 5.01 applies and such Shareholders are Selling Shareholders (a “ Majority Sale ”), and neither the Company nor the Shareholders other than the Selling Shareholders have exercised purchase rights set forth in Section 5.01 of this Agreement, then the Selling Shareholders shall have the option to require each other Shareholder (a “ Draggable Shareholder ”), to Transfer to the proposed transferee specified in the Notice described in Section 5.02 of this Agreement on the same terms and conditions described therein that percentage of such Draggable Shareholder’s shares of Common Stock equal to the average percentage of shares of Common Stock of all Selling Shareholders being sold in the Majority Sale (the “ Drag-Along Rights ”), in connection with the proposed Transfer by the Selling Shareholders of their shares of Common Stock to such transferee. In connection with such Transfer, no Draggable Shareholder shall be required to give any representations or warranties or indemnities other than with respect to itself, its title to the Common Stock and the transfer of such title to the transferee free and clear of all security interest, encumbrances, claims, liens or charges of any kind (this sentence not being intended to limit a Draggable Shareholder’s responsi