EXHIBIT 10.39
CTC MEDIA, INC.
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (the "AGREEMENT"), dated as of May 12,
2006, is entered into by and among CTC Media, Inc., a Delaware
corporation (the
"COMPANY"); MTG Broadcasting AB, a Swedish limited liability
company ("MTG");
Alfa Capital Holdings (Cyprus) Limited, a Cypriot limited liability
company
("ALFA CYPRUS"); Jaystone Limited, a Cypriot limited liability
company
("JAYSTONE" and, together with Alfa Cyprus, "ALFA"); Cavendish
Nominees Limited,
a Guernsey limited liability company ("CAVENDISH"); and Sector
Investment
Holding Company Limited, a Guernsey limited liability company
("SECTOR" and,
together with Cavendish, "BARING"). Subject to the provisions
hereof, this
Agreement supersedes and replaces in its entirety the Stockholders'
Agreement of
the Company dated as of August 19, 2003 (as amended through the
time of
effectiveness of this Agreement, the "PRIOR AGREEMENT"). MTG, Alfa
and Baring
are referred to herein as the "STOCKHOLDERS".
INTRODUCTION
WHEREAS, the Company, the Stockholders and certain other
stockholders
of the Company are parties to the Prior Agreement; and
WHEREAS, the Prior Agreement may be terminated with the written
consent
of the Company and Stockholders (as defined in the Prior Agreement)
holding, in
the aggregate, at least 83% of the Shares (as defined in the Prior
Agreement)
then outstanding; and
WHEREAS, the Stockholders hold, in the aggregate, at least 83% of
the
Shares (as defined in the Prior Agreement) outstanding on the date
hereof; and
WHEREAS, in connection with and conditional upon the closing of the
Company's initial underwritten public offering of its Common Stock
pursuant to
an effective registration statement on Form S-1 and the listing of
its Common
Stock on Nasdaq (the "IPO"), the Company and the Stockholders wish
to terminate
the Prior Agreement and to provide for certain new arrangements
among them with
respect to voting, elections to the Board of Directors of the
Company (the
"BOARD"), approval of material transactions, restrictions on
purchases of
capital stock of the Company, rights of first offer,
non-competition
restrictions, and other matters, in the manner set forth below; and
WHEREAS, capitalized terms used herein and not otherwise defined
herein
shall have the meanings assigned to such terms in Section 8.1
(Definitions)
below;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other valuable consideration, receipt of which is
hereby
acknowledged, the parties hereto agree as follows:
AGREEMENTS
1. BOARD OF DIRECTORS
1.1
Board Composition.
(a) In any and all elections of members of the Board, each
Stockholder
shall vote or cause to be voted all Shares owned by it, or over
which it has
voting control, and otherwise use its respective best efforts, so
as to fix the
number of members of the Board at nine (9) and, subject to the
provisions of
paragraph (b) below, to elect:
(i) three (3) members of the Board designated by MTG, one of whom
shall serve as a Co-Chairman of the Board for so long as MTG has
the right under
paragraph (b) below to designate at least one (1) member of the
Board;
(ii) three (3) members of the Board designated by Alfa, one of whom
shall serve as a Co-Chairman of the Board for so long as Alfa has
the right
under paragraph (b) below to designate at least one (1) member of
the Board; and
(iii) three (3) additional members of the Board (the "INDEPENDENT
DIRECTORS") designated by a simple majority of the entire Board as
then
constituted, each of whom shall be `independent' for audit
committee purposes
under the applicable rules and regulations of the Securities and
Exchange
Commission and the Marketplace Rules, and at least one of whom
shall be a
`Financial Expert' within the meaning of the applicable rules and
regulations of
the Securities and Exchange Commission and the Marketplace Rules.
(b) In addition to the rights of MTG and Alfa to designate members
of
the Board pursuant to Section 1.1(a) hereof, any Stockholder shall
have the
right to designate one or more members of the Board; provided that
the right of
any Stockholder to designate one or more members of the Board
(including such
rights of MTG and Alfa provided pursuant to Section 1.1(a) hereof)
shall be
subject to adjustment if the percentage of Shares held by such
Stockholder
reaches, exceeds or falls below the following thresholds:
(i) for so long as it holds at least twenty percent (20%) of the
Shares then outstanding, such Stockholder shall have the right to
designate
three (3) members of the Board;
(ii) for so long as it holds less than twenty percent (20%) but at
least fifteen percent (15%) of the Shares then outstanding, such
Stockholder
shall have the right to designate two (2) members of the Board;
(iii) for so long as it holds less than fifteen percent (15%) but
more than ten percent (10%) of the Shares then outstanding, such
Stockholder
shall have the right to designate one (1) member of the Board; and
(iv) for so long as it holds ten percent (10%) or less of the
Shares then
outstanding, such Stockholder shall not have a right hereunder to
designate any
member of the Board.
(c) Notwithstanding the foregoing, in no event shall the aggregate
number of members of the Board to be designated by the Stockholders
pursuant to
the provisions hereof exceed six (6). In the event that, pursuant
to the
provisions of paragraph (b), the Stockholders would have or acquire
rights to
designate, in the aggregate, more than six (6) members of the
Board, then such
rights of designation shall only be exercisable in respect of a
total of six (6)
members of the Board, with such rights apportioned among the
Stockholders in
order of priority reflecting the date on which each such
Stockholder initially
attained the ownership of Shares in an amount sufficient to afford
such
Stockholder the right to designate one or more members of the Board
under this
Agreement.
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(d) In the event that the ownership of Shares held by a Stockholder
shall fall below a threshold set out in paragraph (b) above, such
Stockholder
shall cause one or more members of the Board designated by such
Stockholder to
resign such that, following such resignations, such Stockholder
shall have the
appropriate level of representation on the Board given its then
current
ownership of Shares. The vacancy or vacancies created by such
resignations shall
be filled by a designee of the next Stockholder or Stockholders
entitled to
designate one or more members of the Board in accordance with
paragraph (b)
above, if any. If there is no other such Stockholder and the
Stockholders
collectively shall have the right to designate fewer than four (4)
members of
the Board in accordance with paragraph (b) above, the vacancy or
vacancies (in
the event of a resignation) or other nominees for election (in the
event of an
election at an annual meeting) shall be filled by one or more
additional members
of the Board designated by a simple majority of the entire Board as
then
constituted such that the Board would, following the election of
such additional
members, comprise not more than seven (7) individuals; provided
that such
designee(s) shall not be an officer, director or employee of any
Stockholder or
any Affiliate of a Stockholder or beneficially own, directly or
indirectly, five
percent (5%) or more of the outstanding capital stock of any such
Person.
(e) The Stockholders shall not vote to remove any member of the
Board
unless the Stockholders are instructed by the Stockholder that
designated such
Director to remove such Director.
(f) Except as provided in paragraph (e) above, the designating
Stockholder shall have the exclusive right to appoint its
designee(s) and to
remove its designee(s), as well as the exclusive right to fill
vacancies created
by reason of the death, removal or resignation thereof between
annual meetings
of stockholders (other than any resignation required by paragraph
(d) above).
(g) If members of the Board are to be elected at a meeting of
stockholders, the Company shall provide the Stockholders with at
least fifteen
(15) Business Days' prior written notice of any intended mailing of
a notice to
stockholders for a meeting at which members of the Board are to be
elected. Each
Stockholder that has a right to designate a member or members of
the Board
hereunder for election at such meeting of stockholders shall give
written notice
to the Company and the other Stockholders, no later than ten (10)
Business Days
after such Company notice, of the person(s) designated by it
pursuant to
paragraphs (a) and (b) above as nominee(s) for election as
member(s) of the
Board. The Company agrees that it will, to the extent permitted by
applicable
laws and the Marketplace Rules as in effect from time to time,
nominate and
recommend for election as members of the Board, and each of the
Stockholders
agrees to cause its designees on the Board to cause the nomination
of, only the
individuals designated, or to be designated, pursuant to paragraphs
(a) and (b)
above and this paragraph (g). If any Stockholder that has a right
to designate a
member or members of the Board shall fail to give notice to the
Company as
provided above, the designees of such Stockholder(s) then serving
as member(s)
of the Board shall be deemed to be the designee(s) for re-election.
(h) For purposes of this Section 1.1, in determining the number of
Shares held by a Stockholder, only Shares outstanding shall be
included and any
Share Equivalent that has not then been exercised, converted or
exchanged shall
be excluded regardless of the application of the beneficial
ownership rules of
Rule 13d-3 of the Securities Exchange Act of 1934, as amended.
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1.2 Co-Chairmen. For so long as each of MTG and Alfa holds more
than ten percent (10%) of the Shares then outstanding and therefore
has a right
to designate a Co-Chairman pursuant to Section 1.1 (Board
Composition), such
Co-Chairmen shall serve by rotation as the Chairman of individual
meetings of
the Board on a meeting-by-meeting basis. In the event that MTG or
Alfa does not
hold more than ten percent (10%) of the Shares then outstanding,
the other party
shall have the right to designate the sole Chairman; provided that
such other
party continues to hold at least twenty percent (20%) of the Shares
then
outstanding. If such other party does not hold at least twenty
percent (20%) of
the Shares then outstanding but holds more than ten percent (10%)
of the Shares
then outstanding, such other party shall have the right to
designate a
Co-Chairman, and the Board, acting by a simple majority of the
entire Board as
then constituted, shall designate a member of the Board to serve as
second
Co-Chairman. If neither MTG nor Alfa holds more than ten percent
(10%) of the
Shares then outstanding, the Board, acting by a simple majority of
the entire
Board as then constituted, shall designate a member of the Board to
serve as
sole Chairman. Notwithstanding the foregoing, in the event that MTG
or Alfa
shall, in accordance with this Agreement, hold more than fifty
percent (50%) of
the Shares then outstanding at any time, then one of the members of
the Board
designated by such party shall serve as sole Chairman.
1.3 No Revocation. The voting agreements contained herein are
coupled with an interest and may not be revoked, except by an
amendment or
modification effected in accordance with Section 8.16 (Amendments
and Waivers)
or a termination effected in accordance with Section 8.3
(Termination).
1.4 Compliance with Rules. The Stockholders and the Company agree
that they will amend this Agreement from time to time, as
necessary, in order
for the Company to remain in compliance with the Marketplace Rules
and any other
applicable law, rule or regulation; provided that the foregoing
provisions of
this Section 1.4 shall not require any Stockholder to agree to any
such
amendment if such amendment would adversely affect the rights of
any Stockholder
vis-a-vis the Company or the other Stockholders.
1.5 Restrictive Legend. All certificates and instruments
representing Shares or Share Equivalents owned or hereafter
acquired by the
Stockholders or any transferee or pledgee of the Stockholders bound
by this
Agreement shall have affixed thereto a legend substantially in the
following
form:
"The securities represented by this [certificate/instrument]
are subject to certain voting agreements, transfer
restrictions and right of first offer provisions as set forth
in a Stockholders' Agreement, as amended from time to time, by
and among the registered owner of this certificate, the
Company and certain other stockholders of the Company, a copy
of which is available for inspection at the offices of the
Company."
2.
DISCLOSURES OF INTERESTS; APPROVAL OF MATERIAL TRANSACTIONS
2.1 Disclosure. The Stockholders agree to cause their respective
Director designee(s) to disclose to the Board the material facts of
any
relationship giving rise to a direct or indirect financial interest
(as defined
below) in a matter to be considered by the Board (any such
Director, for such
purpose, an "INTERESTED DIRECTOR") and, if requested by a simple
majority of the
disinterested Directors, shall cause such Interested Director not
to participate
in Board discussions on such matter or to vote on such matter,
including,
without limitation, discussions relating to and/or votes on
proposed Material
Transactions (as defined below). Any such matter shall be approved
by a simple
majority of the disinterested
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Directors, even if such disinterested Directors are less than a
quorum. A
"DIRECT OR INDIRECT FINANCIAL INTEREST" means, with respect to any
Director, a
financial benefit to (a) such Director, (b) any Affiliate of such
Director, (c)
such Director's employer or any of its Controlling Persons or
Affiliates or (d)
the Stockholder that has designated such Director or any of its
Controlling
Persons or Affiliates, in each case, that does not derive solely
from such
Person's interest as a stockholder of the Company.
2.2
Approval of Material Transactions.
(a) Subject to the provisions of applicable law and any
applicable securities exchange listing requirements, any two
Directors other
than an Interested Director (the "INITIATING DIRECTORS") shall have
the right to
subject any proposed resolution of the Board (a "PROPOSED
RESOLUTION") that, if
adopted by the Board, would authorize, direct or instruct
management of the
Company to negotiate, enter into or consummate a Material
Transaction (as
defined below), to the reconciliation procedure set forth in this
Section 2.2
(the "RECONCILIATION PROCEDURE").
(b) If the agenda for any meeting of the Board (each a
"RELEVANT BOARD MEETING") contains any item for review by the Board
the subject
matter of which may lead the Board to adopt a Proposed Resolution,
then the
Company shall identify such agenda item as a Material Transaction
in the
materials accompanying the agenda. To initiate the Reconciliation
Procedure, the
Initiating Directors must notify the Company and each of the other
Directors
present at the Relevant Board Meeting no later than the
commencement of the
Relevant Board Meeting (the "INITIATION NOTIFICATION").
(c) If at any meeting of the Board, an item is raised for
review by the Board that is not on the agenda and the subject
matter of which
may lead the Board to adopt a Proposed Resolution, then the members
of the Board
shall discuss such item only if at least two Directors designated
by each of MTG
and Alfa (but only for so long as each, as the case may be, is
entitled to
designate at least two members of the Board), and at least two
Independent
Directors, are present (in person or by teleconference) at such
meeting. In the
event any such item is raised and discussed, the Initiating
Directors can
initiate the Reconciliation Procedure by notifying the Company and
each of the
other Directors present at the meeting upon commencement of such
discussion.
(d) Upon receipt by the Company and each of the
Directors or,
in the case of a Reconciliation
Procedure
initiated under the foregoing clause
(c), the Directors present at such meeting (other than the
Initiating Directors)
of the
Initiation
Notification,
the Board shall
refrain
from
adopting
any
Proposed Resolution which is the subject of the Reconciliation
Procedure until a
date that is at least
forty-five
(45)
calendar days after the delivery of the
Initiation
Notification (the
"RECONCILIATION
TERMINATION
DATE"),
unless the
Initiating
Directors
have
agreed in
writing
that the
Board may adopt
such
Proposed Resolution within a period of less than forty-five (45)
calendar days.
(e) At any time after the delivery of the Initiation
Notification and at least twenty (20) calendar days prior to the
expiration of
the Reconciliation Termination Date, the Initiating Directors may
demand that
the Company convene a special meeting of the Board (a "SPECIAL
MEETING") for
further consideration of the Material Transaction by delivering
written
notification to the Company requesting that the Company convene
such Special
Meeting (the "SPECIAL MEETING NOTIFICATION"). The Initiating
Directors may, in
the Special Meeting Notification, request that the Company retain a
Special
Consultant (as defined below) to review a Material Transaction of
the type
described in clause (i) or (ii) of paragraph (k) below in
accordance with
Section 2.2(i).
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.
(f) Upon receipt of a Special Meeting Notification, the Company
shall undertake to (i) convene a Special Meeting as soon as
practically possible
and in any event prior to the Reconciliation Termination Date, and
(ii) if
requested by the Initiating Directors, retain a Special Consultant
to review the
Material Transaction and present its views on the Material
Transaction at such
Special Meeting.
(g) At any time after the Reconciliation Termination Date, any
Director may move for the adoption of the Proposed Resolution that
is the
subject matter of the Reconciliation Procedure. Such Proposed
Resolution must be
approved and adopted by at least a simple majority of the Directors
present at
such meeting or, if the simple majority of the disinterested
Directors have
requested that the Interested Directors not participate in the vote
on such
Proposed Resolution, by at least a simply majority of the
disinterested
Directors.
(h) With respect to any single Material Transaction, only one
Reconciliation Procedure may be initiated.
(i) Upon demand from the Initiating Directors, a special
consultant (a "SPECIAL CONSULTANT") shall be selected and engaged
by the Company
to review any Material Transaction. Any such Special Consultant
shall be
independent from and in no way affiliated with any Stockholder. The
Company
shall determine the scope of work to be performed by the Special
Consultant and
the compensation to be paid for the services of the Special
Consultant. The
Stockholders hereby agree that (A) if such Material Transaction was
not
previously reviewed by an independent professional consultant
approved by the
Board or the Initiating Directors demanding the engagement of the
Special
Consultant are all Independent Directors, the Company shall be
responsible for
any fees charged by the Special Consultant, and (B) in all other
instances fifty
percent (50%) of the costs related to the review of the Material
Transaction by
the Special Consultant shall be borne by the Company and fifty
percent (50%)
shall be reimbursed by the Stockholder(s) that designated the
Initiating
Directors initiating the Reconciliation Procedure and demanding the
review of
the proposed Material Transaction by such Special Consultant, such
reimbursement
to be split equally between or among such Stockholders if there is
more than one
such Stockholder.
(j) Notwithstanding the foregoing, the procedures set forth in
this Section 2.2 shall be applicable only to extent that the Board
shall have
concluded in good faith, after receiving advice from its outside
counsel, that
such action is consistent with the discharge of its fiduciary
duties to the
stockholders of the Company.
(k) For the purposes of this Section 2.2, "MATERIAL
TRANSACTION" shall mean any of the following:
(i) a transaction or series of related transactions
involving a value reasonably likely to exceed 10% of the Company's
consolidated
total assets (as indicated in the most recent audited or unaudited
financial
statements filed with the Securities and Exchange Commission);
(ii) other than in connection with a compensatory
equity/option plan approved by the Board, the issuance in one or a
series of
related issuances of a number of Shares and/or Share Equivalents
with voting
power, or which upon full conversion, exercise or exchange would
have voting
power, exceeding 10% of the aggregate voting power of the Shares
outstanding
immediately prior to such proposed issuance; or
(iii) the appointment of a new Chief Executive Officer of
the Company.
6
3.
PURCHASE RESTRICTIONS
3.1 Standstill. Without the prior written consent of each of the
other Stockholders, each of MTG and Alfa agrees, and agrees to
cause its
respective Affiliates, not to directly or indirectly acquire
beneficial
ownership of any additional Shares or Share Equivalents, in open
market
purchases or otherwise (including, without limitation, through the
acquisition
of ownership or control of another Stockholder or a Controlling
Person of
another Stockholder), to the extent that the acquisition of such
additional
Shares or Share Equivalents would result in such party (together
with its
Related Parties) beneficially owning Shares representing, with
respect to MTG,
more than forty percent (40%) or, with respect to Alfa, thirty
percent (30%) of
the then outstanding Shares; provided, however, that no such
consent shall be
required for any acquisition of additional Shares or Share
Equivalents by MTG or
Alfa pursuant to the Right of First Offer set forth in Section 4
(Right of First
Offer) below.
3.2 Tender Offer Requirement. Without limiting the provisions of
Section 3.1 (Standstill) above, no Stockholder shall, nor shall it
permit any of
its Affiliates, individually or together with any of such
Stockholder's Related
Parties, to, in any manner, directly or indirectly acquire
beneficial ownership
of any Shares (including, without limitation, through the
acquisition of
ownership or control of another Stockholder or a Controlling Person
of another
Stockholder) if, after giving effect thereto, such Stockholder
(together with
its Related Parties) would beneficially own, in the aggregate,
fifty percent
(50%) or more of the then outstanding Shares, unless such Shares
are acquired by
such Stockholder and/or one of its Related Parties pursuant to a
Tender Offer;
provided that, if at any time (i) a Third Party Investor makes a
bona fide
tender offer to purchase such percentage of the Shares that, when
aggregated
with any Shares then owned by such Third Party Investor and its
Related Parties,
would equal more than fifty percent (50%) of the then outstanding
Shares, and a
Stockholder or any of its Related Parties thereafter makes a Tender
Offer during
the period in which the tender offer made by such Third Party
Investor is still
in effect, or (ii) a Third Party Investor makes a bona fide tender
offer during
the period in which a Tender Offer made by a Stockholder or any of
its Related
Parties is still in effect, then the requirement in the definition
of "Tender
Offer" that the Tender Offer made by such Stockholder be accepted
by
stockholders of the Company holding a simple majority of the then
outstanding
Shares (excluding any Shares held by such Stockholder and its
Related Parties)
shall not apply; provided, further, however, that the restriction
on acquisition
of Shares provided in this Section 3.2 shall not apply to any
acquisition of
additional Shares by MTG or Alfa pursuant to the Right of First
Offer set forth
in Section 4 (Right of First Offer) below.
4.
RIGHT OF FIRST OFFER
4.1 Procedures. Each Stockholder that, together with its
Affiliates, beneficially owns fifteen percent (15%) or more of the
Shares then
outstanding (each, a "MAJOR STOCKHOLDER") shall have a right of
first offer in
respect of any Shares and/or Share Equivalents offered for sale by
any other
Major Stockholder on the terms set forth below:
(a) If a Major Stockholder desires to sell any or all of its
Shares and/or Share Equivalents (a "SELLING STOCKHOLDER"), it shall
give each
other Major Stockholder (each, a "FIRST OFFEREE") and the Company
written notice
of the proposed sale, including the number of Shares and/or Share
Equivalents to
be sold and the cash price per Share at, and any other conditions,
on which such
Selling Stockholder is willing to sell such Shares or Share
Equivalents.
7
(b) The First Offerees may, within twenty-five (25) calendar
days of receipt of such notice, give written notice to the Selling
Stockholder
and the Company of their intent, collectively, to purchase, or to
designate
Affiliates to purchase, such Shares at the proposed price and on
the proposed
conditions (an "ACCEPTANCE"); provided that, unless agreed
otherwise by the
Selling Stockholder, any Acceptance must provide for the purchase
of all Shares
and Share Equivalents initially offered by the Selling Stockholder.
(c) If the First Offerees deliver an Acceptance, the First
Offerees and the Selling Stockholder shall complete such purchase
within twenty
(20) Business Days of receipt of the Acceptance (or, if regulatory
approval of
the purchase is required, within five (5) Business Days of receipt
of such
approval, if later).
(d) If the First Offerees do not deliver an Acceptance, the
Selling Stockholder shall be free during the ninety
(90)-calendar-day period
following the date of its initial notice of its proposed sale to
sell the number
of Shares and Share Equivalents (but, in each case, not less) it
initially
proposed to sell to a party that is not a Related Party of the
Selling
Stockholder for an amount of aggregate consideration equal to or in
excess of
the aggregate cash price initially proposed by the Selling
Stockholder. Any
non-cash consideration to be received by the Selling Stockholder
shall be valued
at its fair market value as determined by an internationally
recognized
investment bank chosen by agreement of the Selling Stockholder and
the First
Offerees. The Selling Stockholder shall pay the cost and expense of
such
investment bank.
(e) If there is more than one First Offeree, the First Offerees
shall coordinate their response and any Acceptance delivered shall
represent the
collective decision of the First Offerees and the First Offerees
shall have the
right, unless otherwise agreed between the First Offerees, to share
in any
purchase under this Section 4.1 pro rata based on the number of
Shares
beneficially owned by each such First Offeree compared with the
aggregate number
of Shares then beneficially owned by all First Offerees (unless one
of the First
Offerees determines not to participate in such purchase or
otherwise does not
coordinate its response), in which case the remaining First
Offeree(s) shall
have the right to purchase all such Shares and/or Share
Equivalents, on a pro
rata basis, if applicable).
4.2
Transfers Not Subject to Right of First Offer.
(a) Any Major Stockholder may Transfer Shares to an Affiliate
or Permitted Transferee of such Major Stockholder without
compliance with
Section 4.1 (Procedures) hereof, provided that such Major
Stockholder and
transferee comply with Section 8.6(b) hereof (Significant
Transfers; Affiliate
Acquisitions; Pledges).
(b) The provisions of Section 4.1 (Procedures) hereof shall not
apply to any Transfer by a Major Stockholder of a number of Shares
and Share
Equivalents that, together with all prior Transfers of Shares and
Share
Equivalents (assuming, in each case, full conversion, exchange
and/or
