Exhibit 10.1
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT, dated as of March 21, 2002, among Loews
Cineplex Entertainment Corporation, a Delaware corporation (the "Company"),
1363880 Ontario Inc., a corporation organized and existing under the laws of
Ontario Canada ("Onex Cinema"), and OCM Cinema Holdings, LLC, a Delaware limited
liability company ("OCM").
WHEREAS, on the date of this Agreement, pursuant to a Plan of
Reorganization (the "Plan of Reorganization") under Chapter 11 of the United
States Bankruptcy Code, OCM is acquiring 40,000 shares of the Class A Common
Stock, $0.01 par value per share, of the Company (the "Class A Shares") and Onex
Cinema is acquiring 60,000 shares of the Class B Common Stock, $0.01 par value
per share, of the Company (the "Class B Shares").
WHEREAS, the Company, OCM and Onex Cinema each desire to enter into
this Agreement to provide for certain restrictions on the transfer of the shares
of the capital stock and other securities of the Company held by OCM and Onex
Cinema from time to time, and to set forth certain other agreements concerning
the governance of the Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
definitions:
1.1 "Acceptance Notice" has the meaning given thereto in Section 3.3(b)
of this Agreement.
1.2 "Accessible EBITDA" means, the sum of the (i) consolidated EBITDA
of the Company and its direct and indirect wholly-owned Subsidiaries and (ii)
the Percentage EBITDA Amount of each Partially Owned Person (excluding for such
purposes the Percentage EBITDA Amount of any Partially Owned Person in which the
Company owns, directly or indirectly (computed in a manner consistent with the
definition of Partially Owned Person), less than a majority of the voting
securities of such Person).
1.3 "Accessible Enterprise Value" means, as of either Subsequent
Anniversary Date, the product of (A) five and (B) the Accessible EBITDA of the
Company for the 12 completed calendar months immediately preceding such date.
1.4 "Accessible Equity Value" means, as of either Subsequent
Anniversary Date, (A) the Accessible Enterprise Value, minus (B) the Accessible
Indebtedness.
1.5 "Accessible Equity Value Per Share" means, as of either Subsequent
Anniversary Date, an amount per Share equal to the quotient of (A) the
Accessible Equity Value as of such date, plus an amount equal to the exercise,
conversion or exchange price (to the extent payable in
cash or other property) payable with respect to any Common Stock Equivalents
(other than any Common Stock Equivalents omitted from the definition of Fully
Diluted Shares under the following proviso) and (B) the number of Fully Diluted
Shares outstanding as of such date, provided, that, for the purposes of this
definition, the term "Fully Diluted Shares" shall not give effect to the
exercise, conversion or exchange of any Common Stock Equivalent if, after
eliminating any Indebtedness represented by such Common Stock Equivalent and
assuming receipt by the Company of any exercise, conversion or exchange price
thereunder payable in cash or other property, giving effect to the exercise,
conversion or exchange of such Common Stock Equivalent would increase the
Accessible Equity Value Per Share.
1.6 "Accessible Indebtedness" means, as of either Subsequent
Anniversary Date, the sum of (i) the consolidated Indebtedness of the Company
and its direct and indirect wholly-owned Subsidiaries and (ii) the Percentage
Indebtedness Amount of each Partially Owned Person (excluding for such purposes
the Percentage Indebtedness Amount of any Partially Owned Person in which the
Company owns, directly or indirectly (computed in a manner consistent with the
definition of Partially Owned Person), less than a majority of the voting
securities of such Person).
1.7 "Accountant" has the meaning given thereto in Section 3.6(a)(iii)
of this Agreement.
1.8 "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.
1.9 "Affiliated Transactions" has the meaning given thereto in Section
2.3 of this Agreement.
1.10 "Agreement" means this Stockholders Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
1.11 "Attributable EBITDA" for any period means the excess of (i) the
sum of (A) the consolidated EBITDA of the Company and its direct and indirect
wholly-owned Subsidiaries and (B) the Percentage EBITDA Amount of each Partially
Owned Person over (ii) any intercompany items that would be eliminated if all of
such Persons were included in a consolidated financial statement, including any
cash distributions paid to the Company or any Partially Owned Person by any
Partially Owned Person, if and to the extent such cash distributions are
duplicative of amounts reflected in the consolidated EBITDA of the Company and
its direct and indirect wholly-owned Subsidiaries or the Percentage EBITDA
Amount of such Partially Owned Person.
1.12 "Attributable Enterprise Value" means, as of either Subsequent
Anniversary Date, the product of (i) five and (ii) the Attributable EBITDA of
the Company for the 12 completed calendar months immediately preceding such
date.
1.13 "Attributable Equity Value" means, as of either Subsequent
Anniversary Date, (i) the Attributable Enterprise Value, minus (ii) the
Attributable Indebtedness.
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1.14 "Attributable Indebtedness" means as of any Subsequent Anniversary
Date the sum of (A) the consolidated Indebtedness of the Company and its direct
and indirect wholly-owned Subsidiaries and (B) the Percentage Indebtedness
Amount of all Partially Owned Persons.
1.15 "Automatic Conversion Event" has the meaning given thereto in
Section 2.4 of this Agreement.
1.16 "Bankruptcy Code" means the United States Bankruptcy Code, as
amended from time to time, and any successor statute.
1.17 "Board" means the Board of Directors of the Company.
1.18 "Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in New
York City or in Xxxxxxx, Xxxxxxx, Xxxxxx.
1.19 "Buyer(s)" has the meaning given thereto in Section 3.4(a) of this
Agreement.
1.20 "Change of Control Transaction" means a sale, merger, tender offer
or other business combination transaction involving the Company in which the
stockholders of the Company (immediately prior to the consummation of such
business combination transaction), assuming conversion of the Class B Shares, do
not (immediately following the consummation of such business combination
transaction) own a majority of the outstanding voting securities of the
surviving Person.
1.21 "Class A Shares" has the meaning given thereto in the first
WHEREAS clause of this Agreement.
1.22 "Class B Shares" has the meaning given thereto in the first
WHEREAS clause of this Agreement.
1.23 "Common Stock" means Class A Shares, Class B Shares and any other
common stock of the Company that may be authorized.
1.24 "Common Stock Equivalent" means the right to acquire Common Stock
or other Shares, whether or not immediately exercisable, exchangeable,
convertible or the like, whether evidenced by an option, warrant, convertible or
exchangeable security or other security, instrument or agreement.
1.25 "Company" has the meaning given thereto in the introductory
paragraph of this Agreement.
1.26 "Company Asset Sale" means a sale of all or substantially all of
the assets of the Company determined on a consolidated basis that is approved by
the Board.
1.27 "Control" (including with correlative meaning, the terms
"Controlling", "Controlled by" and "under common Control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the
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management policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Onex shall be deemed to "Control" all
Persons "Controlled" by Xxxxxx X. Xxxxxxxx, as long as Xx. Xxxxxxxx "Controls"
Onex.
1.28 "Designated Investment Bank" has the meaning given thereto in
Section 2.3 of this Agreement.
1.29 "Dispute Notice" has the meaning given thereto in Section
3.6(a)(iii) of this Agreement.
1.30 "Disqualified Purchaser" means any Person to whom the Board
reasonably objects due to such Person's past business practices or the past
business practices of any of such Person's Affiliates or any of their respective
officers, directors or Persons holding similar positions (which are not in
accordance with ethical, generally acceptable and responsible business
practices) or such Person's general reputation in the business community (or the
general reputation in the business community of any of such Person's Affiliates
or any of their respective officers, directors or Persons holding comparable
positions (which reputation has a non-favorable element which gives the Board
reasonable concern).
1.31 "Drag-Along Notice" has the meaning given thereto in Section
3.5(b) of this Agreement.
1.32 "Drag-Along Right" has the meaning given thereto in Section
3.5(a)(i) of this Agreement.
1.33 "Drag-Along Sale" has the meaning given thereto in Section 3.5(a)
of this Agreement.
1.34 "Drag-Along Securities" has the meaning given thereto in Section
3.5(a)(i) of this Agreement.
1.35 "Drag-Along Stockholders" has the meaning given thereto in Section
3.5(a) of this Agreement.
1.36 "Drag-Along Transferee" has the meaning given thereto in Section
3.5(a)(i) of this Agreement.
1.37 "EBITDA" means, with respect to any Person for any period, such
Person's earnings before interest, income taxes, depreciation and amortization,
loss on sale/disposal of theaters and, in the case of the Company,
reorganization costs (i.e., costs incurred by the Company in connection with, or
related to, the Plan of Reorganization) for such period (such components to be
determined in accordance with United States generally accepted accounting
principles to the extent applicable, consistent with the most recent audited
financial statements of such Person).
1.38 "Excess Offered Securities" has the meaning given thereto in
Section 3.3(b) of this Agreement.
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1.39 "Excess Offeree" has the meaning given thereto in Section 3.3(b)
of this Agreement.
1.40 "Excess Participation Securities" has the meaning given thereto in
Section 4.3 of this Agreement.
1.41 "Excess Participation Security Stockholder" has the meaning given
thereto in Section 4.3 of this Agreement.
1.42 "Excluded Stockholder" has the meaning given thereto in Section
4.4(b) of this Agreement..
1.43 "Exercise Notice" has the meaning given thereto in Section 4.3 of
this Agreement.
1.44 "First Anniversary Date" has the meaning given thereto in Section
3.6(a)(i) of this Agreement.
1.45 "Fully-Diluted Shares" means, as of any date of determination, the
total number of Shares issued and outstanding as of such date (calculated
assuming exercise of all outstanding Common Stock Equivalents to their fullest
extent).
1.46 "Indebtedness" means, with respect to any Person as of a
particular date, the consolidated indebtedness for repayment of money borrowed
of such Person and for obligations of such Persons under leases and similar
arrangements required to be capitalized under United States generally accepted
accounting principles and required under United States generally accepted
accounting principles to be shown as indebtedness on the financial statements of
such Person and, in cases in which Indebtedness is being determined in
connection with Accessible Indebtedness (or any related definition) or
Attributable Indebtedness (or any related definition), as the case may be, the
aggregate liquidation preference or redemption price (whichever is greater) of
any outstanding shares of preferred stock (or similar equity interests) of such
Person that are non-convertible or that are convertible and are excluded from
assumed conversion by the proviso to the definition of (i) Accessible Equity
Value Per Share or (ii) Oaktree Purchase Price, as applicable.
1.47 "Independent Third Party" means a Person that is not Onex, Onex
Cinema, a member of the Onex Group, Oaktree, OCM, a member of the Oaktree Group,
another Stockholder or a member of any other Stockholder Group or an Affiliate
of any of the foregoing.
1.48 "Ineligible Purchaser" means any Person whom the Board reasonably
determines is engaged to any substantial extent, directly or through
Subsidiaries, in the business of owning, operating or managing movie theaters,
or distributing or exhibiting motion pictures, in any country or other
jurisdiction in the world in which the Company or its Subsidiaries is then
engaged in any such business and has material operations that compete in any of
the same geographic markets in which such Person engages in any such business.
1.49 "Initial Public Offering" means the first firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act covering the offer and sale of the Common Stock to the
public.
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1.50 "Non-Qualifying Drag-Along Sale" has the meaning given thereto in
Section 3.5(a)(iv) of this Agreement.
1.51 "Notice of Offer" has the meaning given thereto in Section 3.3(a)
of this Agreement.
1.52 "Oaktree" means Oaktree Capital Management, LLC, as general
partner and/or investment manager of certain accounts and funds it manages.
1.53 "Oaktree Group" means Oaktree, OCM, and their respective
Affiliates, and the Persons listed on Exhibit A for which Oaktree Capital acts
as investment manager or general partner and other funds and accounts managed by
Oaktree as of the date hereof.
1.54 "Oaktree Purchase Price" means, as of either Subsequent
Anniversary Date, an amount per Share equal to the quotient of (A) the
Attributable Equity Value as of such date, plus an amount equal to the exercise,
conversion or exchange price (to the extent payable in cash or other property)
payable with respect to any Common Stock Equivalents (other than any Common
Stock Equivalents omitted from the definition of Fully Diluted Shares under the
following proviso) and (B) the number of Fully Diluted Shares outstanding as of
such date, provided, that, for the purposes of this definition, the term "Fully
Diluted Shares" shall not give effect to the exercise, conversion or exchange of
any Common Stock Equivalent if, after eliminating any Indebtedness represented
by such Common Stock Equivalent and assuming receipt by the Company of any
exercise, conversion or exchange price thereunder payable in cash or other
property, giving effect to the exercise, conversion or exchange of such Common
Stock Equivalent would increase the Oaktree Purchase Price.
1.55 "OCM" has the meaning given thereto in the first paragraph of this
Agreement.
1.56 "Offer Period" has the meaning given thereto in Section 3.3(b) of
this Agreement.
1.57 "Offered Securities" has the meaning given thereto in Section
3.3(a) of this Agreement.
1.58 "Offerees" has the meaning given thereto in Section 3.3(a) of this
Agreement.
1.59 "Offering Stockholders" has the meaning given thereto in Section
3.4(a) of this Agreement.
1.60 "Onex" means Onex Corporation, a corporation organized and
existing under the laws of Ontario, Canada.
1.61 "Onex Cinema" has the meaning given thereto in the first clause of
this Agreement.
1.62 "Onex Group" means Onex, Onex Cinema and any of their respective
Affiliates.
1.63 "Other Securities" has the meaning given thereto in Section 4.4(d)
of this Agreement.
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1.64 "Partially Owned Person" means each Subsidiary of the Company
(other than direct or indirect wholly-owned Subsidiaries of the Company), joint
ventures and other Persons in which the Company has a direct or indirect equity
interest. For the calculation of amounts with respect to a Partially Owned
Person under this Agreement, such amounts shall be determined on an
unconsolidated entity basis only. For purposes of determining the percentage of
equity interests indirectly owned by the Company in any Partially Owned Person,
the percentage of the equity interests owned by the Company shall take into
account minority interests of interposed Persons (for example, if the Company
owns 70% of the equity interests in "A" and "A" owns 50% of the equity interests
in "B", then the Company owns 35% of the equity interests in "B").
1.65 "Participation Notice" has the meaning given thereto in Section
3.4(b)(i) of this Agreement.
1.66 "Participation Securities" has the meaning given thereto in
Section 4.1 of this Agreement.
1.67 "Percentage EBITDA Amount" means, with respect to each Partially
Owned Person, a portion of such Partially Owned Person's EBITDA equal to the
product of (i) the percentage of the equity interests in such Person directly or
indirectly owned by the Company and (ii) the EBITDA of such Partially Owned
Person.
1.68 "Percentage Indebtedness Amount" means, with respect to each
Partially Owned Person, a portion of such Partially Owned Person's Indebtedness
equal to the product of (i) the percentage of the equity interests in such
Person directly or indirectly owned by the Company and (ii) the Indebtedness of
such Partially Owned Person.
1.69 "Person" shall be construed broadly, and shall include, without
limitation, an individual, a partnership, an investment fund, a limited
liability company, a corporation, an association, a trust, a joint venture, a
joint stock company, an unincorporated organization, a governmental entity or
any department, agency or political subdivision thereof, and any other entity of
whatever nature.
1.70 "Plan of Reorganization" has the meaning given thereto in the
first WHEREAS clause of this Agreement.
1.71 "Preemptive Notice" has the meaning given thereto in Section 4.2
of this Agreement.
1.72 "Pricing Notice" has the meaning given thereto in Section
3.6(a)(iii) of this Agreement.
1.73 "Pro Rata Share" has the meaning given thereto in Section 3.3(b)
of this Agreement.
1.74 "Purchaser Identification Notice" has the meaning given thereto in
Section 3.3(e) of this Agreement.
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1.75 "Purchaser(s)" has the meaning given thereto in Section 3.3(b) of
this Agreement.
1.76 "Put Shares" has the meaning given thereto in Section 3.6(a)(ii)
of this Agreement.
1.77 "Realization Event" has the meaning given thereto in Section
3.6(a)(iii) of this Agreement.
1.78 "Related Persons" has the meaning given thereto in Section 2.3 of
this Agreement.
1.79 "Securities Act" means the U.S. Securities Act of 1933, as the
same may be amended or supplemented from time to time, or any successor statute,
and the rules and regulations thereunder, as the same are from time to time in
effect.
1.80 "Seller(s)" has the meaning given thereto in Section 3.3(a) of
this Agreement.
1.81 "Selling Stockholders" has the meaning given thereto in Section
3.5(a) of this Agreement.
1.82 "Shares" means, collectively, (i) the Class A Shares, (ii) the
Class B Shares and (iii) all shares of capital stock or other securities of the
Company or any other Person which any Stockholder acquires in respect of such
Stockholder's Class A Shares or Class B Shares, whether upon conversion thereof,
in connection with any stock split, stock dividend, exchange, merger,
reclassification, recapitalization, consolidation, reorganization or other
transaction to which the Company is party, or otherwise.
1.83 "Statutory Drag-Along Sale" has the meaning given thereto in
Section 3.5(i) of this Agreement.
1.84 "Stockholder Group" means the Oaktree Group or the Onex Group or,
with respect to any Stockholder that is not a member of the Onex Group or
Oaktree Group, such Stockholder together with its Affiliates, as the context
dictates.
1.85 "Stockholder Joinder" has the meaning given thereto in Section
3.3(e) of this Agreement.
1.86 "Stockholder Participation Securities" has the meaning given
thereto in Section 4.1 of this Agreement.
1.87 "Stockholders" means, collectively, OCM, Onex Cinema and any other
Person who from time to time becomes a Stockholder pursuant to Section 3.2 or by
executing a Stockholder Joinder, as required or permitted by an applicable
provision hereof.
1.88 "Subsequent Anniversary Date" has the meaning given thereto in
Section 3.6(a)(ii) of this Agreement.
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1.89 "Subsidiary" means, with respect to any Person, any corporation or
other Person of which securities or interests having the power to elect a
majority of the corporation's or other Person's Board of Directors or other
governing body or otherwise to direct the management of such corporation or
other Person (other than securities or interests having that power only upon the
happening of a contingency that has not occurred) are held by such Person or one
or more of its Subsidiaries.
1.90 "Tag-Along Notice" has the meaning given thereto in Section 3.4(a)
of this Agreement.
1.91 "Tag-Along Right" has the meaning given thereto in Section 3.4(a)
of this Agreement.
1.92 "Tag-Along Sale" has the meaning given thereto in Section 3.4(a)
of this Agreement.
1.93 "Tag-Along Securities" has the meaning given thereto in Section
3.4(b)(ii)(C) of this Agreement.
1.94 "Tag-Along Stockholder" has the meaning given thereto in Section
3.4(a) of this Agreement.
1.95 "Third Party Participation Securities" has the meaning set forth
in Section 4.1.
1.96 "Transfer" (or any variation thereof used herein) means the direct
or indirect sale, transfer, conveyance, assignment, gift, pledge, hypothecation
or other encumbrance, or any other disposal (whether with or without
consideration and whether voluntary or involuntary or by operation of law) of
any interest in any Shares or Common Stock Equivalents, or the entry into any
contract, option or other arrangement with respect to any of the foregoing.
1.97 "Unavailable EBITDA Amount" means, as of either Subsequent
Anniversary Date, an amount per Share equal to the difference between (i) the
Oaktree Purchase Price and (B) the Accessible Equity Value Per Share, in each
case, as of such date of determination.
1.98 "Withdrawal Notice" has the meaning given thereto in Section
3.4(b)(iv)(C) of this Agreement.
SECTION 2. CORPORATE GOVERNANCE MATTERS.
At all times prior to the Initial Public Offering, except with respect
to Section 2.4 (which shall survive an Initial Public Offering):
2.1 Board of Directors. Each Stockholder shall vote all of such
Stockholder's Shares and all of such Stockholder's other voting securities of
the Company (in person or by proxy) at any annual or special meeting of the
stockholders of the Company (or pursuant to any written consent to be executed
in lieu of any such meeting), and each Stockholder and the Company shall take
all such other actions as may be reasonably necessary, including without
limitation, causing the Company to call a special meeting of its stockholders or
to circulate for execution a
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written consent in lieu thereof, or calling a special meeting of the Board or
circulating a written consent in lieu thereof, in each case, in order to give
the fullest effect possible to the provisions of this Section 2.1.
(a) Election of Directors.
(i) The number of directors that constitutes the
entire Board shall be 11. Such directors shall be elected as
follows:
(A) Four individuals designated by OCM shall
be elected as directors (the initial designees of OCM
shall be as set forth on Schedule 1 hereto);
(B) Six individuals designated by Onex
Cinema shall be elected as directors (the initial
designees of Onex Cinema shall be as set forth on
Schedule 1 hereto); and
(C) One individual who shall be the
individual who from time to time serves as the Chief
Executive Officer of the Company.
(ii) The number of directors of the Company that Onex
Cinema or OCM (as applicable) has the right to designate
pursuant to this Section 2.1 will be reduced by 50% (the
number so reduced shall, if not zero or an integer, be rounded
up to the nearest integer) when the Onex Group (in the case of
Onex Cinema's right to designate directors) or the Oaktree
Group (in the case of OCM's right to designate directors)
holds less than 50% of the number of Shares held by such
Stockholder Group as of the date hereof (including, Shares
underlying Common Stock Equivalents held thereby as of the
date hereof). The right of Onex Cinema or OCM (as applicable)
to designate a director or directors pursuant to Section 2.1
will terminate when the Onex Group (in the case of Onex
Cinema's right to designate directors) or the Oaktree Group
(in the case of OCM's right to designate directors) holds less
than 25% of the number of Shares held by such Stockholder
Group as of the date hereof (including Shares underlying
Common Stock Equivalents held thereby as of the date hereof).
(b) Committee and Subsidiary Boards. For so long as Onex
Cinema retains the right to designate directors under Section 2.1, Onex Cinema
shall be entitled to designate at least one member of each committee of the
Board, at least one member of the board of directors (or similar governing body)
of each Subsidiary of the Company and at least one member of each committee of
the board of directors (or similar governing body) of each Subsidiary of the
Company. For so long as OCM retains the right to designate directors under
Section 2.1, OCM shall be entitled to designate at least one member of each
committee of the Board, at least one member of the board of directors (or
similar governing body) of each Subsidiary of the Company and at least one
member of each committee of the board of directors (or similar governing body)
of each Subsidiary of the Company. Any individual designated by Onex Cinema or
OCM to be a member of a committee of the Board or of the board of directors (or
similar governing body) of a Subsidiary of the Company must be a director of the
Company or a director of such Subsidiary
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(as applicable). With respect to Subsidiaries of the Company, the agreements of
the parties in this clause (b) are subject to any legal or contractual
restrictions in effect from time to time that make compliance with such
agreements impracticable, which shall be applied uniformly to the greatest
extent reasonably practicable to both Onex Cinema and OCM.
(c) Removal of Directors. Each Stockholder entitled to
designate any director or committee member shall at all times have the right to
require that their respective director or committee member designees under this
Section 2.1 be removed for any reason whatsoever (or no reason), whether with or
without cause. If a Stockholder entitled to designate a director or committee
member notifies the other Stockholders and the Company that it desires to remove
one or more of its director or committee member designees, the Stockholders
shall use their respective best efforts (including, but not limited to, voting
all of such Stockholder's Shares so as to remove such director or committee
member) to cause the removal of such director or committee member designee(s) to
occur as promptly as practicable following the date such notice is given. Unless
the relevant Stockholder entitled to designate the respective director or
committee member shall give such notice to the other Stockholders and the
Company regarding removal of such director or committee member designee(s), no
Stockholder shall take any action to remove a director or committee member
designated under this Section 2.1 by any other Stockholder (other than for
cause).
(d) Vacancies of Directors. If a vacancy is created on the
Board, any committee of the Board, the board of directors or similar governing
body of a Subsidiary of the Company or any committee thereof, in each case, by
reason of the death, incapacity, removal (including under Section 2.1(c) above)
or resignation of any director designated by a Stockholder under this Section
2.1, then such Stockholder shall be entitled to designate an individual to fill
such vacancy. At any time a vacancy exists on the Board, any committee of the
Board, the board of directors or similar governing body of a Subsidiary of the
Company or any committee thereof, in each case, due to the death, incapacity,
removal or resignation of a director who was appointed under this Section 2.1,
the Stockholders shall use their respective best efforts (including, but not
limited to, voting all of such Stockholder's Shares so as to elect such director
or committee member) to cause the election of such director's replacement in
accordance with this Section 2.1(d) to occur as promptly as practicable
following the date such vacancy occurs.
(e) Effect of Automatic Conversion Event. Following an
Automatic Conversion Event, Sections 2.1(a)(i) and (ii) shall no longer be
applicable and shall be null and void. Thereafter, Onex Cinema and Oaktree shall
each from time to time be entitled to designate a number of directors of the
Company equal to the product of (i) the total number of directors that may from
time to time constitute the entire Board, minus one such director and (ii) a
fraction, the numerator of which is the number of Fully-Diluted Shares owned by
the Onex Group (in the case of the Onex Group's right to designate a director)
or the Oaktree Group (in the case of the Oaktree Group's right to designate a
director), and the denominator of which shall be the number of Fully-Diluted
Shares held by all members of the Onex Group and the Oaktree Group, together,
rounded up or down to the nearest whole number of directors or to zero (as
applicable), and the individual who from time to time serves as the Chief
Executive Officer of the Company shall be elected as a director of the Company.
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2.2 Certain Oaktree Approval Matters.
(a) At any time prior to an Automatic Conversion Event, as
long as OCM is entitled to and does designate at least one director of the
Company under Section 2.1 of this Agreement, the Company shall not take any of
the following actions without the approval of OCM:
(i) amend or otherwise modify the Company's
certificate of incorporation or by-laws, other than any
amendment or modification thereto which the Board determines
to be necessary, appropriate or desirable in connection with
an Initial Public Offering;
(ii) commence the voluntary liquidation, winding-up
or dissolution of the Company, other than in connection with a
Company Asset Sale, or authorize the commencement of a
voluntary proceeding with respect to the Company under the
Bankruptcy Code;
(iii) engage or permit a Subsidiary of the Company to
engage in any line of business other than the business of
owning, operating and managing movie theaters and selling
products and services at such theaters, and selling such other
products and services and engaging in such other activities as
are reasonably related or ancillary thereto or to the motion
pictures shown at such movie theaters;
(iv) increase or decrease the number of directors
that constitutes the entire Board; or
(v) issue Class B Shares to any Person or Persons,
other than in connection with stock dividends, stock splits
and similar events with respect to Class B Shares outstanding
on the date hereof or hereafter issued in compliance with this
Section 2.2(a)(v).
(b) The Onex Group and the Oaktree Group hereby agree that any
proposed action of the Company (or its Subsidiaries) that, if taken by a
publicly-held corporation similar in size to the Company would customarily be
considered by such company's board of directors, will be considered by and
require the approval of the Board.
2.3 Affiliate Transactions. At any time prior to an Automatic
Conversion Event, without limiting the generality of Section 2.2(b) above, any
transaction or series of related transactions to which the Company, any of its
Subsidiaries or any Partially Owned Person which is Controlled by the Company is
a party, with or for the benefit of any member of the Onex Group or any
executive officer of Onex or director of Onex who is also an employee of Onex
(or spouse, siblings, children or grandchildren of any such executive officer or
employee director) (all such Persons, collectively, "Related Persons")
("Affiliated Transactions"), must be on arm's length terms, at least as
favorable to the Company, such Subsidiary or such Partially Owned Person (as
applicable) as the terms that could be obtained from a Person that is not a
Related Person. Further, in the case of any Affiliated Transaction with a value
of $3,000,000 or more, (i) such Affiliated Transaction must be approved as being
on arms length terms by at least one director of the Company designated by OCM
pursuant to this Agreement or, at any time that
12
OCM is not entitled to or has not designated a director of the Company pursuant
to this Agreement, by OCM, or (ii) the Board must have received an opinion from
a Designated Investment Bank that such Affiliated Transaction is on arm's length
terms at least as favorable to the Company, such Subsidiary or such Partially
Owned Person (as applicable) as the terms that could be obtained from a Person
that is not a Related Person. For the purposes of this Section 2.3, a
transaction shall not be deemed to be "for the benefit of" any Related Person if
such transaction is between the Company, on the one hand, and a Person (other
than such Related Person) that is not Controlled by such Related Person. As used
in this Section 2.3, a "Designated Investment Bank" means a major nationally
recognized investment banking firm mutually agreed upon by OCM and Onex Cinema
or, failing such agreement, a major nationally recognized investment banking
firm selected by Onex Cinema from three major nationally recognized investment
banking firms proposed to Onex Cinema for such selection by OCM. If the Company
is a party to any transaction with or for the benefit of any member of the Onex
Group that is in accordance with the provisions of this Agreement, such
transaction shall not constitute an Affiliated Transaction for the purposes
hereof.
2.4 Onex Group Conversion of Class B Shares; Transfer of Class B
Shares.
(a) If following the date of this Agreement, the Onex Group
shall at any time own, in the aggregate, a number of Relevant Shares that is
less than the number of Relevant Shares owned by the Oaktree Group, in the
aggregate (such occurrence, an "Automatic Conversion Event"), then at such time,
the Onex Group shall immediately convert all Class B Shares held by members of
the Onex Group, if any, into Class A Shares and the Company shall take all
actions necessary and appropriate in connection therewith. For the purposes of
this Agreement, "Relevant Shares" means, (i) with respect to the Onex Group, any
Shares (excluding any Shares underlying Common Stock Equivalents) owned by any
member of the Onex Group as of the date of this Agreement, any Shares acquired
by any member of the Onex Group after the date hereof from the Company in a
transaction in which such Shares were Participation Securities and the
preemptive rights provided under Section 4 of this Agreement were made available
with respect thereto, and any Shares issued with respect to, in exchange for or
in substitution of any of the foregoing Shares in a transaction of the type
contemplated by Section 8.4 hereof and (ii) with respect to the Oaktree Group,
any Shares (excluding Shares underlying Common Stock Equivalents (other than
Shares acquired upon the exercise of Common Stock Equivalents owned by a member
of the Oaktree Group as of the date hereof)) owned by any member of the Oaktree
Group as of the date hereof, any Shares acquired by any member of the Oaktree
Group after the date hereof from the Company in a transaction in which such
Shares were Participation Securities and the preemptive rights provided under
Section 4 of this Agreement were available with respect thereto, and any Shares
issued with respect to, in exchange for or in substitution of any of the
foregoing Shares in a transaction of a type contemplated by Section 8.4 hereof.
From and after an Automatic Conversion Event, the members of the Onex Group
shall not vote any Class B Shares owned by them.
(b) Other than a Transfer to another member of the Onex Group
who becomes bound by this Agreement as contemplated by Section 3.2(a) or Section
3.2(b)(i), each member of the Onex Group hereby agrees to convert Class B Shares
into Class A Shares prior to any Transfer thereof unless both of the following
conditions are satisfied at the time of Transfer (1) the members of the Oaktree
Group, in the aggregate, cease to own at least 10% of the Shares
13
outstanding, and (2) the Initial Public Offering has been consummated. Any such
Transfer must comply with the applicable provisions of this Agreement,
including, without limitation, Section 3 hereof).
SECTION 3. TRANSFER OF SHARES.
3.1 Legends.
(a) The certificates evidencing all Shares and Common Stock
Equivalents acquired by the Stockholders will bear the following
legends reflecting the restrictions on the Transfer of such securities
contained in this Agreement:
"THE TRANSFER AND VOTING OF ANY OF THE SECURITIES EVIDENCED
HEREBY ARE SUBJECT TO THE TERMS OF THAT CERTAIN STOCKHOLDERS
AGREEMENT, DATED AS OF MARCH 21, 2002, BY AND AMONG LOEWS
CINEPLEX ENTERTAINMENT CORPORATION (THE "COMPANY"), 1363880
ONTARIO INC. AND OCM CINEMA HOLDINGS, LLC. A COPY OF SUCH
STOCKHOLDERS AGREEMENT HAS BEEN FILED WITH THE SECRETARY OF
THE COMPANY AND IS AVAILABLE UPON REQUEST. THE COMPANY WILL
NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF
THE COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN
COMPLIANCE WITH THE TERMS OF THE STOCKHOLDERS AGREEMENT."
"THE SECURITIES COVERED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND
MAY NOT BE OFFERED OR SOLD OR OTHERWISE DISPOSED OF ABSENT
REGISTRATION OF THE SECURITIES UNDER THE SECURITIES ACT OR IN
A TRANSACTION WHICH QUALIFIES AS A TRANSACTION VALIDLY EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT."
(b) The certificates evidencing the Shares and Common Stock
Equivalents acquired by the Stockholders shall also bear any legend required
under any applicable state securities laws.
(c) Absent an effective registration statement under the
Securities Act covering the Transfer of the Shares or Common Stock Equivalents
held by a Stockholder, no Stockholder shall Transfer any Shares or Common Stock
Equivalents unless such Transfer is exempt from the registration and prospectus
delivery requirements of the Securities Act and has
14
been registered or qualified under (or is exempt from the registration and
qualification requirements of) any applicable state securities laws.
(d) Each Stockholder consents to the Company making a notation
on its records or giving instructions to any transfer agent for the Shares or
Common Stock Equivalents in order to implement the restrictions on Transfer set
forth in this Section 3.1.
3.2 Resale of Securities.
(a) Restrictions on Transfer. Prior to the earlier to occur of
either (i) an Initial Public Offering or (ii) the first anniversary of the date
of this Agreement, no Stockholder shall Transfer or permit the Transfer of any
Shares or Common Stock Equivalents held by it on the date of this Agreement or
hereafter acquired by such Stockholder, other than to a member of the Oaktree
Group or the Onex Group.
(b) Joinder Agreement. It shall be a condition precedent to
any Transfer by any Stockholder permitted by Section 3.2(a) that such Transferee
execute a written joinder agreement in substantially the form attached as Annex
A hereto under which such Transferee agrees to become a party to this Agreement
and to be subject to, and bound by the terms, conditions and restrictions hereof
as a member of the Onex Group or Oaktree Group (as applicable). Following the
earlier to occur of an Initial Public Offering and the first anniversary of the
date of this Agreement,
(i) if any Stockholder Transfers Shares or Common
Stock Equivalents to a Stockholder that is a member of the
Onex Group, then such member of the Onex Group, if not already
a party to this Agreement, shall, as a condition to such
Transfer, execute and deliver to the Company a joinder
agreement, in substantially the form attached as Annex A to
this Agreement, agreeing to be bound by the terms, provisions,
conditions and restrictions of, and enjoy the same rights
under, this Agreement as a member of the Onex Group hereunder;
(ii) if any Stockholder Transfers Shares or Common
Stock Equivalents to a Stockholder that is a member of the
Oaktree Group, then such member of the Oaktree Group, if not
already a party to this Agreement, shall, as a condition to
such Transfer, execute and deliver to the Company a joinder
agreement, in substantially the form attached as Annex A to
this Agreement, agreeing to be bound by the terms, provisions,
conditions and restrictions of, and enjoy the same rights
under, this Agreement as a member of the Oaktree Group
hereunder and
(iii) if any Stockholder transfers Shares or Common
Stock Equivalents to a Stockholder or member of a Stockholder
Group, in each case, that is not a member of the Onex Group or
Oaktree Group, if such Person is not already a party to this
Agreement, then such Person shall, as a condition to such
Transfer, execute a Stockholder Joinder.
(c) Ineffectiveness of Prohibited Transfers. Any Transfer or
purported Transfer made in violation of this Agreement (including, without
limitation, Section 2.4(b)
15
hereof and this Section 3) shall be null and void ab initio, and shall be of no
force and effect. Each Stockholder shall notify the Company in writing five days
in advance of any attempted Transfer, and the Company shall not recognize any
Transfer made in violation of this Section 3. Each Stockholder hereby consents
in advance to a "stop-transfer" order with respect to its Shares and/or Common
Stock Equivalents being made on the books of the Company or given to any
transfer agent for the Shares and Common Stock Equivalents, in the event of any
attempted Transfer in violation of this Agreement (including, without
limitation, Section 2.4(b) hereof and this Section 3).
(d) Indirect Transfer. At any time prior to the consummation
of an Initial Public Offering, (i) Onex shall not (A) suffer or permit any
member of the Onex Group to cease to be Controlled by Onex as long as such
member holds any Shares or Common Stock Equivalents, or (B) permit any Person
(other than a member of the Onex Group) who does not own an interest in Onex
Cinema as of the date hereof to acquire an interest in Onex Cinema after the
date hereof and (ii) Oaktree shall not (A) suffer or permit any member of the
Oaktree Group (other than a fund or account managed by Oaktree) to cease to be
Controlled by Oaktree as long as such member holds any Shares or Common Stock
Equivalents or (B) permit any Person (other than a member of the Oaktree Group)
who does not own an interest in OCM as of the date hereof to acquire an interest
in OCM after the date hereof.
3.3 Right of First Offer.
(a) Offer by Seller(s). If at any time after the date which is
20 Business Days prior to the first anniversary of the date of this Agreement,
subject to Section 3.3(f), one or more Stockholders (each, a "Seller") wishes to
sell any or all of the Shares and/or Common Stock Equivalents held by such
Seller to any Person that is not a Stockholder or a member of a Stockholder
Group, the Seller shall promptly notify the Company and all Stockholders that
are not part of the Seller's Stockholder Group (such Stockholders, the
"Offerees") in writing of the Seller's desire to Transfer such Shares or Common
Stock Equivalents (the "Notice of Offer"). The Notice of Offer shall (x)
identify all of the Shares or Common Stock Equivalents proposed to be sold, (y)
state the proposed purchase price per Share or Common Stock Equivalents and the
other material terms and conditions of such sale and (z) contain and be deemed
to constitute an irrevocable offer by the Seller to sell to the Offerees the
Shares and/or Common Stock Equivalents which are the subject of the Notice of
Offer (the "Offered Securities") on the terms and subject to the conditions and
time periods set forth in this Section 3.3. For the purposes of this Agreement,
an Offeree's "Pro Rata Share" means, at any time, the number of Fully Diluted
Shares owned by such Offeree as of the date of determination, divided by the
number of Fully Diluted Shares owned by all Offerees as of such date, expressed
as a percentage.
(b) Acceptance of Offer. If any Offeree wishes to purchase
Offered Securities, such Offeree shall, within 20 Business Days following
receipt of the Notice of Offer ("Offer Period"), deliver to the Seller(s) and
the Company a written notice (an "Acceptance Notice"), stating that such Offeree
(the "Purchaser") is willing to purchase all or a portion of the Offeree's Pro
Rata Share of the Offered Securities (and, if such Purchaser so desires, an
additional amount of Excess Offered Securities as contemplated below), and such
written notice shall constitute an irrevocable commitment by such Offeree to
purchase such number of Offered Securities on the terms and subject to the
conditions set forth in this Section 3.3. Further, any
16
Offeree may specify in its Acceptance Notice any number of the Offered
Securities in addition to its Pro Rata Share of Offered Securities that such
Offeree would be willing to purchase if and to the extent any Offered Securities
are not the subject of a timely Acceptance Notice delivered by other Offerees
hereunder (any such Offered Securities being referred to as, "Excess Offered
Securities") because one or more Offerees does not deliver a timely Acceptance
Notice or delivers a timely Acceptance Notice that covers less than all of such
Offeree's Pro Rata Share of Offered Securities. First, each Offeree shall be
permitted to purchase up to such Offeree's Pro Rata Share of Offered Securities
(as elected in such Offeree's Acceptance Notice). Thereafter, if there exist
Excess Offered Securities and one or more Offeree (each, an "Excess Offeree")
has delivered an Acceptance Notice which indicates, from the number of Offered
Securities covered thereby, that such Excess Offeree would be willing to
purchase all or a portion of such Excess Offered Securities, then such Excess
Offered Securities shall be allocated to such Excess Offerees pro rata based
upon the proportion that the number of Fully Diluted Shares owned by each such
Excess Offeree bears to the number of Fully Diluted Shares owned by all such
Excess Offerees; provided, that no Excess Offeree shall purchase by operation of
the allocation procedure contemplated by this sentence a number of Offered
Securities, in the aggregate, that is greater than the number of Offered
Securities covered by the Acceptance Notice delivered thereby. The allocation
procedure contemplated by the immediately preceding sentence shall be applied
repeatedly until all Excess Offered Securities are allocated to Excess Offerees
that have delivered Acceptance Notices entitling them to purchase such Excess
Offered Securities, or until no Excess Offeree is entitled to purchase such
Excess Offered Securities based on the number of Offered Securities covered by
their Acceptance Notices. The failure of any Offeree to deliver a timely
Acceptance Notice shall be deemed to be a waiver of such Offeree's rights to
purchase Offered Securities pursuant to this Section 3.3; provided, that any
Offeree may waive its rights to purchase Offered Securities pursuant to this
Section 3.3 prior to the expiration of the Offer Period by giving written notice
to such effect to the Seller(s), with a copy to the Company.
(c) Purchase Price for Offered Securities. The purchase price
per Share or Common Stock Equivalent for the Offered Securities shall be the
price per Share or Common Stock Equivalent stated in the Notice of Offer, which
price shall be paid in cash.
(d) Closing of Purchase of Offered Securities. The closing of
the purchase of Offered Securities shall take place at the principal offices of
the Company or at such other location as the Purchaser(s) and Seller(s) may
mutually agree. Such closing shall take place as promptly as practicable, but in
no event more than 10 days after the expiration of the Offer Period. At the
closing, the purchase price for the Offered Securities shall be paid by the
Purchaser(s) to the Seller(s) against delivery by the Seller(s) to the
Purchaser(s) of the certificates evidencing the Offered Securities to be
conveyed, duly endorsed or accompanied by stock powers or other appropriate
instruments of Transfer duly executed in blank, free and clear of all liens,
encumbrances, security interests, adverse claims or other restrictions (other
than those created by this Agreement).
(e) Sale by Seller(s). If the Offer Notice shall be duly
given, and if the Offerees have not elected within the Offer Period to purchase
all Offered Securities, then the Seller(s) shall be free, for a period of 180
days from the expiration of the Offer Period to sell (or to enter into a
definitive agreement to sell) the Offered Securities as to which no election was
made, to any Person or Persons other than an Ineligible Purchaser or a
Disqualified Purchaser for
17
cash at a price per Share or Common Stock Equivalent (as applicable) that is
equal to or greater than the price therefor set forth in the Notice of Offer.
Before selling (or entering into a definitive agreement to sell) any Offered
Securities to any Person as otherwise permitted by the immediately preceding
sentence, the Seller(s) shall, no later than the date which is 10 Business Days
prior to the date of such sale (or the date of execution of such definitive
agreement), deliver a written notice (the "Purchaser Identification Notice") to
the Company identifying the Person that is the proposed Transferee of such
Offered Securities, including, if such Person is not a natural person, a list of
all Persons that Control such proposed Transferee and a list of such Person's
and any such Controlling Persons' principal executive officers. It shall be a
condition precedent to the consummation of any Transfer of Offered Securities
under this Section 3.3(e) that the Transferee agree, pursuant to a written
agreement in substantially the form attached as Annex B hereto (a "Stockholder
Joinder") to be bound by and subject to the terms, conditions and restrictions
of this Agreement as a Stockholder (but not a member of the Onex Group or
Oaktree Group). If the Seller(s) (i) fail to Transfer Offered Securities under
this Section 3.3(e) within the 180-day period referred to above, or (ii) enter
into a definitive agreement to do so within the 180-day period referred to above
and fail to consummate the closing thereunder within 90 days after the date of
entry into such agreement, then any Transfer by the Seller(s) of such Offered
Securities shall again be subject to compliance with the right of first offer
set forth in this Section 3.3.
In order to prohibit a Transfer to a Company Competitor or a
Disqualified Purchaser, the Company must deliver to the Seller(s) a written
notice that a proposed Transferee of Offered Securities has been determined by
the Company to be a Competitor or Disqualified Purchaser (as applicable) within
ten Business Days of receipt by the Company of a Purchaser Identification
Notice. Failure of the Company to deliver such written notice within such ten
Business Day period shall be deemed a determination by the Company that the
proposed Transferee is not a an Ineligible Purchaser or a Disqualified
Purchaser.
(f) Exempted Transfers. The provisions of this Section 3.3
(and Section 3.4) shall not apply to Transfers in connection with an Initial
Public Offering or at any time after an Initial Public Offering, or to Transfers
pursuant to the exercise of the Tag-Along Right under Section 3.4 or a
Drag-Along Sale with respect to which the Drag-Along Right is exercised under
Section 3.5 (other than a Non-Qualifying Drag-Along Sale).
3.4 Tag-Along Right.
(a) Grant of Tag-Along Right. If one or more members of a
Stockholder Group (the "Offering Stockholders") at any time intend to Transfer
Shares and/or Common Stock Equivalents (a "Tag-Along Sale") in a transaction to
which Section 3.3 applies (other than a Drag-Along Sale in which Drag-Along
Rights are exercised), then such Offering Stockholder(s) shall, following
compliance with Section 3.3 and at least 20 Business Days prior to the Closing
of the Tag-Along Sale, deliver written notice (a "Tag-Along Notice") thereof to
the Stockholders which are not members of the Offering Stockholder's Stockholder
Group (each such Stockholder, a "Tag-Along Stockholder") setting forth in
reasonable detail the material terms and conditions associated with such
proposed Tag-Along Sale, including, without limitation, (i) to the extent then
known, the identity of the proposed Transferee(s) (the "Buyer(s)"), (ii) the
proposed purchase price per Share and/or the proposed purchase price for
18
each type of Common Stock Equivalent and the terms and conditions of such sale,
(iii) the aggregate number of Shares and the aggregate number of each type of
Common Stock Equivalent proposed to be Transferred in the Tag-Along Sale and
(iv) the aggregate number of Shares and/or the aggregate number of each type of
Common Stock Equivalent with respect to which each Tag-Along Stockholder can
exercise the tag-along right (the "Tag-Along Right") provided in this Section
3.4 (determined under Section 3.4(b)(ii) below). The Company shall cooperate
with any Offering Stockholders in the preparation of a Tag-Along Notice, and
shall provide to any Offering Stockholder such information as it may reasonably
request for the purposes of completing the Tag-Along Notice.
(b) Exercise of Tag-Along Right.
(i) Within 10 days following the date the Tag-Along
Notice is delivered, a Tag-Along Stockholder may deliver
written notice (a "Participation Notice") to the Offering
Stockholders notifying them that such Tag-Along Stockholder
elects to participate in the Tag-Along Sale, on the terms and
subject to the conditions set forth in this Section 3.4.
(ii) (A) If a Tag-Along Stockholder delivers a timely
Participation Notice, the Tag-Along Stockholder will
be permitted to sell to the Buyer(s) in the Tag-Along
Sale up to a number of Shares and/or up to a number
of each type of Common Stock Equivalent that is the
subject of the Tag-Along Sale, in each case, equal to
the product of (1) the aggregate number of Shares or
of such type of Common Stock Equivalent (as
applicable) proposed to be Transferred to the
Buyer(s) in the Tag-Along Sale and (2) a fraction,
the numerator of which is the number of Shares or of
such type of Common Stock Equivalent (as applicable)
held by such Tag-Along Stockholder, and the
denominator of which is the total number of Shares or
of such type of Common Stock Equivalent (as
applicable) held by all Stockholders together, in
each case, determined as of the date the Tag-Along
Notice is delivered.
(B) For avoidance of doubt, if the
securities that the Offering Stockholders are
Transferring to the Buyer(s) in a Tag-Along Sale
consist of either (1) Shares and one or more types of
Common Stock Equivalents or (2) more than one type of
Common Stock Equivalent, then the right of the
Tag-Along Stockholders to sell securities in such
Tag-Along Sale under this Section 3.4 shall be
exercisable as to such Shares and/or types of Common
Stock Equivalents only in the same proportion as such
types of securities are being sold by the Offering
Stockholders, and the calculation set forth in
Section 3.4(b)(ii)(A) shall be performed
independently as to each such type of security. For
purposes of the foregoing, there shall be no
distinction between the Class A Shares and the Class
B Shares.
(C) The maximum aggregate number of Shares
and/or of each type of Common Stock Equivalent which
each Tag-Along Stockholder is
19
permitted to sell in a Tag-Along Sale under this
Section 3.4 are referred to herein collectively as
such Tag-Along Stockholder's "Tag-Along Securities".
(iii) With respect to any Shares or Common Stock
Equivalents of a Tag-Along Stockholder that are the
subject of a timely Participation Notice, such
Tag-Along Stockholder shall be irrevocably bound to
Transfer such Shares or Common Stock Equivalents to
the Buyer(s) upon the terms and conditions set forth
in the Tag-Along Notice conditioned only upon the
closing of the Tag-Along Sale.
(iv) (A) The Transfer of Shares and/or Common Stock
Equivalents to the Buyer(s) in the Tag-Along Sale by
the Tag-Along Stockholders shall be at the same price
and for the same type and amount of consideration per
Share (without distinction as between Class A Shares
and Class B Shares) or type of Common Stock
Equivalent, and on the same terms and conditions, as
are associated with the Transfer by the Offering
Stockholders.
(B) If the Offering Stockholders have
delivered a Tag-Along Notice, they shall promptly
notify the Tag-Along Stockholders in writing if the
Offering Stockholders agree with the Buyer(s) in the
proposed Tag-Along Sale, prior to both the delivery
by any Tag-Along Stockholders of a Participation
Notice, and the lapse of the 10-day period following
the date of delivery of the Tag-Along Notice, to any
change to the price per Share or the price per Common
Stock Equivalent to be paid by the Buyer(s) therein
or otherwise materially modify the terms and
conditions of the Tag-Along Sale from those set forth
in the Tag-Along Notice, and the Tag-Along Notice
shall be deemed to have been amended for all purposes
of this Agreement to include such modified price or
terms and conditions. If the Offering Stockholders
have delivered a Tag-Along Notice, and the Offering
Stockholders thereafter agree with the Buyer(s) in
the proposed Tag-Along Sale, after the delivery by
any Tag-Along Stockholders of a Participation Notice
or, if no Participation Notice is delivered,
following the expiration of the 10-day period
following the delivery of the Tag-Along Notice, to
reduce the price per Share or Common Stock Equivalent
in, or to modify in a manner favorable to the
Buyer(s) any of the other material terms and
conditions of, the Tag-Along Sale from those set
forth in the Tag-Along Notice, then the Offering
Stockholders shall be required to deliver a new
Tag-Along Notice with respect to, and otherwise
comply with the provisions of this Section 3.4 in
connection with, such modified Tag-Along Sale;
provided, that for such purposes, (x) the 20 Business
Day period referred to in the first sentence of
Section 3.4 (a) shall be deemed to be a five Business
Day period and (y) the 10-day period referred to in
the first sentence of Section 3.4(b)(i) shall be
deemed to be a five day period.
20
(C) Notwithstanding anything to the contrary
herein, subject to compliance with the provisions
hereof, nothing herein shall be deemed or construed
to restrict the ability of the Offering Stockholders
to determine in their sole and absolute discretion at
any time (1) whether to consummate or decline to
proceed with the Tag-Along Sale and/or (2) to amend,
supplement or otherwise modify any of the terms and
conditions (including the price per Share or of any
type of Common Stock Equivalent) associated with the
Tag-Along Sale. If the Offering Stockholders deliver
a Tag-Along Notice, at any time before the closing of
the related Tag-Along Sale, the Offering Stockholders
shall be entitled, in their sole and absolute
discretion and whether or not any Tag-Along
Stockholders have delivered a Participation Notice,
to give written notice (a "Withdrawal Notice") to the
Tag-Along Stockholders electing to withdraw the
Tag-Along Notice and not to proceed with the proposed
Tag-Along Sale. If the Offering Stockholders deliver
a Withdrawal Notice, any previously delivered
Participation Notice by any Tag-Along Stockholder and
the related exercise by such Tag-Along Stockholders
of their Tag-Along Right shall automatically be
deemed to be revoked.
(c) Sale Where No Tag-Along Exercise. If one or more Tag-Along
Stockholders does not give a timely Participation Notice with respect to all or
any portion of its Tag-Along Securities, then, subject to Section 3.4(b)(iv)(B),
the Offering Stockholders may transfer up to the number of Shares and/or Common
Stock Equivalents that were the subject of the Tag-Along Notice but which were
not the subject of timely Participation Notices for a period of 60 days
following the expiration of the 10 day period immediately following the delivery
of the Tag-Along Notice, on terms and conditions substantially equivalent to
those set forth in the Tag-Along Notice.
(d) Certain Covenants Concerning Tag-Along Sale. In connection
with any Tag-Along Sale in which Tag-Along Stockholders have elected to
participate pursuant to this Section 3.4, such participating Tag-Along
Stockholders shall take such actions as may be reasonably requested by the
Offering Stockholders as desirable or necessary to facilitate the consummation
of the Tag-Along Sale, including, without limitation, the execution and delivery
of such agreements and other documents, and the taking of such actions, as may
be reasonably necessary to (i) provide representations and warranties,
covenants, indemnities, and escrow arrangements relating to the Tag-Along Sale,
to the extent that the same are being provided by the Offering Stockholders and
(ii) effect the allocation and distribution of the aggregate net consideration
payable to the Offering Stockholders and the participating Tag-Along
Stockholders upon the closing of the Tag-Along Sale. Any representations,
warranties and indemnities to be provided by a Tag-Along Stockholder (other than
those relating to such Stockholder's existence, capacity, authorization,
execution and delivery and title to securities) shall be several in nature, and
such Person's liability in connection therewith shall be on a pro rata basis,
based upon the proportion that the aggregate gross proceeds received by such
Tag-Along Stockholder in the Tag-Along Sale for its Shares and/or Common Stock
Equivalents bears to the aggregate gross proceeds received by all Persons
selling Shares and/or Common Stock Equivalents therein.
21
(e) Closing of Tag-Along Sale. At or prior to the closing of
the Tag-Along Sale, each participating Tag-Along Stockholder shall deliver to
the Buyer(s) certificates evidencing the Tag-Along Securities to be conveyed by
Tag-Along Stockholder, duly endorsed or accompanied by stock powers or other
appropriate instruments of transfer duly executed in blank, free and clear of
all liens, encumbrances, security interests, adverse claims or other
restrictions (other than those created by this Agreement), against payment of
the purchase price therefor.
(f) Treatment of Shares Sold Buyer(s) in Tag-Along Sale. It
shall be a condition precedent to the closing of any Tag-Along Sale that each
Buyer execute and deliver to Onex Cinema, OCM and the Company a Stockholder
Joinder duly executed by such Buyer.
3.5 Drag-Along Right; Company Asset Sales.
(a) Grant of Drag-Along Right. If at any time prior to the
occurrence of an Automatic Conversion Event, one or more members of the Onex
Group, individually or together (the "Selling Stockholders"), wish, in one or a
series of related transactions, to Transfer Shares and/or Common Stock
Equivalents held by them to an Independent Third Party or group of Independent
Third Parties in a bona fide arm's length transaction, whether by way of merger,
consolidation, sale of securities, exchange of securities or any other type of
business combination transaction (a "Drag-Along Sale"), then:
(i) the Selling Stockholders shall be entitled to
exercise the right (the "Drag-Along Right") provided in this
Section 3.5 to require each other Stockholder that is not a
member of the Onex Group (the "Drag-Along Stockholders") to
Transfer at the closing of such Drag-Along Sale to the
proposed Transferee (the "Drag-Along Transferee") Shares
and/or Common Stock Equivalents constituting the same
proportion of the Fully Diluted Shares then held by such
Stockholder as the Selling Stockholders are Transferring of
their Fully Diluted Shares (the "Drag-Along Securities");
(ii) the Drag-Along Stockholders shall receive the
same type and amount of consideration per Share (without
distinction as between Class A Shares and Class B Shares) and
the same type and amount of consideration for each type of
Common Stock Equivalent, in each case, as is paid or delivered
by the Drag-Along Transferee in the Drag-Along Sale to the
Selling Stockholders;
(iii) without limiting Section 3.5(a)(ii) above, any
and all consideration received by the Drag-Along Stockholders
must be in the form of cash or readily marketable securities
of U.S. issuers or readily marketable securities of one or
more non-U.S. issuers; the securities of each such non-U.S.
issuer must be listed or quoted on a U.S. stock exchange or
automatic quotation system or a major international stock
exchange or automatic quotation system, and each such non-U.S.
issuer must have a total market capitalization equal to the
equivalent of US$500,000,000 or more;
22
(iv) before delivering a Drag-Along Notice in
connection with a Drag-Along Sale that involves the Transfer
of less than 50% of the Fully-Diluted Shares then held by the
members of the Onex Group in the aggregate (any such Transfer,
a "Non-Qualifying Drag-Along Sale"), the Selling Stockholders
must first comply with Section 3.3 hereunder with respect to
the Shares and/or Common Stock Equivalents proposed to be
Transferred in such Drag-Along Sale by the Selling
Stockholders;
(v) the Drag-Along Stockholders shall otherwise
participate in the Drag-Along Sale on the same terms and
conditions as the Selling Stockholders, subject to Section
3.5(d) below;
(vi) No consideration or fees shall be paid or
provided to the Selling Stockholders or any of their
respective Affiliates or Related Persons in any manner
(including, without limitation, in connection with a
non-compete agreement, consulting arrangement or any other
agreement, arrangement or understanding) in connection with a
Drag-Along Sale, that would cause the Selling Stockholders or
any of their respective Affiliates or Related Persons to
receive a benefit (of any kind, in any form and/or at any
time) not available to the Drag-Along Stockholders on a
proportionate basis; and
(vii) All definitive agreements, whether written or
oral, between the Selling Stockholders or any of their
respective Affiliates or Related Persons, on the one hand, and
the Drag-Along Transferee or any of its Affiliates, on the
other hand, governing or relating to, or otherwise in
connection with a Drag-Along Sale shall be disclosed in
writing to the Selling Stockholders prior to any such party
entering into any such definitive agreements governing or
relating to, or otherwise in connection with such Drag-Along
Sale.
(b) Exercise of Drag-Along Right. To exercise the Drag-Along
Right, the Onex Group shall give Drag-Along Stockholders a written notice of
exercise (a "Drag-Along Notice") setting forth (i) to the extent then known, the
identity of the Drag-Along Transferee, (ii) the proposed type and amount of
consideration and the terms of payment associated with the Drag-Along Sale,
(iii) the number of Shares and the number of each type of Common Stock
Equivalent that each Drag-Along Stockholder will be required to Transfer in the
Drag-Along Sale as Drag-Along Securities, and (iv) the other material terms and
conditions of the Drag-Along Sale. Thereafter, the Drag-Along Stockholders shall
be obligated to Transfer the Drag-Along Securities to the Drag-Along Transferee
at the closing of the Drag-Along Sale, conditioned only upon the closing of the
Drag-Along Sale, and to otherwise comply with the provisions of this Section 3.5
in connection with the Drag-Along Sale.
(c) Drag-Along Stockholder Approval of Drag-Along Sale;
Company Asset Sales; Etc. The Drag-Along Stockholders shall consent to, and
shall raise no objections against a Drag-Along Sale or Company Asset Sale
effected in accordance with this Section 3.5. If any Company Asset Sale
requires, or the Drag-Along Sale is structured as a merger or consolidation of
the Company or other type business combination transaction which requires,
approval of the stockholders of the Company and/or if dissenters rights,
appraisal rights or similar rights may be
23
available, in connection with such Company Asset Sale or Drag-Along Sale, then
each Drag-Along Stockholder shall vote all Shares and other voting securities of
the Company held thereby to approve such merger, consolidation or other
transaction or Company Asset Sale, and shall waive any such dissenters rights,
appraisal rights or similar rights in connection with such merger or
consolidation or other transaction or Company Asset Sale.
(d) Agreements in Drag-Along Sale. In connection with any
Drag-Along Sale the Drag-Along Stockholders shall take such actions as may be
reasonably requested by the Onex Group as desirable or necessary to facilitate
the consummation of the Drag-Along Sale, including, without limitation, the
execution and delivery of such agreements and other documents, and the taking of
such actions, as may be reasonably necessary to (i) provide representations and
warranties, covenants, indemnities, and escrow arrangements relating to the
Drag-Along Sale, to the extent that the same are being provided by the Selling
Stockholders and (ii) effect the allocation and distribution of the aggregate
net consideration payable to the Selling Stockholders and the Drag-Along
Stockholders upon the closing of the Drag-Along Sale. Any representations,
warranties and indemnities to be provided by a Drag-Along Stockholder (other
than those relating to such Stockholder's existence, capacity, authorization,
execution and delivery and title to securities) shall be several in nature, and
such member's liability in connection therewith shall be on a pro rata basis,
based upon the proportion that the aggregate gross proceeds received by such
person in the Drag-Along Sale for its Shares and/or Common Stock Equivalents
bears to the aggregate gross proceeds received by all Persons selling Shares
and/or Common Stock Equivalents therein.
(e) Composition of Drag-Along Securities. Notwithstanding
anything to the contrary herein, if the Selling Stockholders exercise the
Drag-Along Right, the Selling Stockholders shall be entitled to require the
Drag-Along Stockholders to exercise, exchange or convert any Common Stock
Equivalents held by them into Shares, in connection with the closing of the
Drag-Along Sale and the sale of Drag-Along Securities to the Drag-Along
Transferee. If the securities that the Selling Stockholders are Transferring to
the Buyer(s) in a Drag-Along Sale in which the Onex Group is selling less than
all of its Fully Diluted Shares consist of either (1) Shares and one or more
types of Common Stock Equivalents or (2) more than one type of Common Stock
Equivalent, then the Drag-Along Securities of the Drag-Along Stockholders shall
include each such type of security in the same proportions as they are included
in the securities being sold by the Selling Stockholders in such Drag-Along
Sale.
(f) Purchaser Representative for Drag-Along Sale. If the
Selling Stockholders or their representatives enter into any negotiation or
transaction for which Regulation D under the Securities Act (or any similar rule
or regulation then in effect) may be available with respect to such negotiation
or transaction (including a merger, consolidation or other reorganization), each
Drag-Along Stockholder who is not an accredited investor (as such term is
defined in Rule 501 under the Securities Act) will, at the request of the
Selling Stockholders, appoint a purchaser representative (as such term is
defined in Rule 501 under the Securities Act) reasonably acceptable to the
Selling Stockholders.
(g) Alternative Consideration to Avoid Registration, Etc.
Notwithstanding anything to the contrary herein, in the event that all or a
portion of the purchase price to be paid by the Drag-Along Transferee in the
Drag-Along Sale consists of securities, and the sale of such
24
securities to the Drag-Along Stockholders (other than OCM or any member of the
Oaktree Group that is an Accredited Investor (as defined in Regulation D under
the Securities Act)) would require either a registration under the Securities
Act or the preparation of a disclosure document under Regulation D under the
Securities Act (or any successor regulation) or a similar provision of any state
securities laws, then, at the option of the Selling Stockholders, the Drag-Along
Stockholders (other than OCM or any member of the Oaktree Group that is an
Accredited Investor (as defined in Regulation D under the Securities Act)) may
receive, in lieu of such securities, the fair market value of such securities in
cash, as determined in good faith by the Board.
(h) Closing of Drag-Along Sale. At or prior to the closing of
a Drag-Along Sale, the Drag-Along Stockholders shall deliver to the Drag-Along
Transferee certificates representing the Drag-Along Securities to be conveyed,
duly endorsed or accompanied by stock powers or other appropriate instruments of
transfer duly executed in blank, free and clear of all liens, encumbrances,
security interests, adverse claims or other restrictions (other than those
created by this Agreement), against delivery by the Drag-Along Transferee of the
consideration for the Drag-Along Securities.
(i) The Onex Group shall not without exercising the Drag-Along
Right cause the Company to consummate a Change of Control Transaction that is
structured as a sale, merger, tender offer, consolidation or other business
combination or sale of all or substantially all the assets of the Company,
capable of being approved by the members of the Onex Group in their capacity as
stockholders of the Company without the approval of any other holder of Common
Stock (any of the foregoing, a "Statutory Drag-Along Sale"), unless such
Statutory Drag-Along Sale (x) is approved by the holders of a majority of the
outstanding shares of Common Stock held Persons other than the Onex Group or (y)
is in connection with a bona fide arm's length transaction with an Independent
Third Party or group of Independent Third Parties and would, if conducted as a
Drag-Along Sale, comply with Sections 3.5(a)(ii),(iii), (iv), (v), (vi) and
(vii) hereof.
(j) No Stockholder shall effect a Tag-Along Sale other than in
such a manner that such Tag-Along Sale would, if it were a Drag-Along Sale and
such Stockholder were a Selling Stockholder, comply with Sections 3.5(a)(ii),
(v), (vi) and (vii) hereof.
3.6 Oaktree Put Right.
Whether or not the "put" rights granted to the Oaktree Group under this
Section 3.6(a) shall be available with respect to any particular Shares held by
a member of the Oaktree Group shall be determined in accordance with Section
3.6(b) hereof, and all references in this Section 3.6(a) to "Shares" of a member
of the Oaktree Group shall constitute only references to Shares identified in
such Section 3.6(b).
(a) (1) During the 45-day period from and after the first
anniversary of the date of this Agreement (the "First
Anniversary Date"), the Oaktree Group shall have the right to
require the Onex Group to purchase an aggregate of 40,000
Shares owned by the Oaktree Group at a price equal to $2,345
per Share, in accordance with the second paragraph of Section
3.6(a)(ii) below.
25
(ii) During the 45-day period from and after each of
the third and fifth anniversaries of the date of this
Agreement (each, a "Subsequent Anniversary Date"), each member
of the Oaktree Group shall have the right to require the Onex
Group to purchase the Shares identified in the immediately
following paragraph of this Section 3.6(a)(ii) (the "Put
Shares") at a price per Put Share equal to the Oaktree
Purchase Price (subject to deferral of the payment of any
Unavailable EBITDA Amount as provided below).
Each member of the Oaktree Group other than OCM
shall, in connection with any exercise of the "put" right
granted under Section 3.6(a) be required to exercise such
"put" right as to all but not less than all of the Shares held
by such Person at the time of exercise (including all Shares
then capable of being acquired upon the exercise of Common
Stock Equivalents held thereby). OCM shall, in connection with
any exercise of the "put" right granted under Section 3.6(a)
be required to exercise such "put" right as to all but not
less than all of the Shares owned by OCM at the time of
exercise for the benefit of, or on behalf of any Person who
owns an interest in OCM (including all such Shares then
capable of being acquired upon the exercise of Common Stock
Equivalents owned by OCM for the benefit of, or on behalf of
any such Person). For avoidance of doubt and by way of example
only, if at the time of exercise of the "put" right granted
under this Section 3.6(a), OCM owns 100 Shares and the
outstanding interests in OCM owned by Persons for the benefit
of which or on behalf of which OCM owns Shares are owned by
four Persons (such interests in OCM allocated 35%, 25%, 30%
and 10% among such Persons), then OCM shall be entitled to
exercise such "put" right as to 35 Shares, 25 Shares, 30
Shares, 10 Shares or any sum of any of two or more of the
foregoing amounts of Shares.
(iii) In order to exercise the Oaktree Group's right
to require the purchase of Shares or Put Shares by the Onex
Group pursuant to Section 3.6(a)(i) or 3.6(a)(ii) above,
respectively, OCM, on behalf of the Oaktree Group, shall
deliver written notice of such election to Onex Cinema during
the 45-day period from and after the First Anniversary Date
(in the case of exercise under Section 3.6(a)(i)) or the
relevant Subsequent Anniversary Date (in the case of exercise
under Section 3.6(a)(ii)). Such notice shall specify the
members of the Oaktree Group from whom Shares or Put Shares
(as applicable) are to be purchased and the number of Shares
or Put Shares (as applicable) to be sold to the Onex Group
hereunder by each such member of the Oaktree Group.
The closing of the exercise by the Oaktree Group of its rights
under Section 3.6(a)(i) shall take place within the 30-day
period following receipt by Onex Cinema of the notice of such
exercise.
If OCM on behalf of the Oaktree Group delivers to Onex Cinema
a notice exercising its right pursuant to Section 3.6(a)(ii),
then as soon as practicable, but in any event within 45 days
after the date OCM delivers such notice, Onex Cinema shall
deliver to OCM on behalf of the Oaktree Group a written notice
(the "Pricing Notice") setting forth the Oaktree Purchase
Price and the calculation
26
thereof in reasonable detail, including the amount of any
Unavailable EBITDA Amount, the payment of which is to be
deferred as contemplated by this Section 3.6(a)(iii). During
the 45-day period following the delivery by Onex Cinema of the
Pricing Notice the Company shall provide OCM and its
authorized representatives with such reasonable access to the
books and records and personnel of the Company and its
Subsidiaries and, to the extent reasonably practicable, its
Partially Owned Persons, as OCM may reasonably request for the
purposes of verifying the accuracy of the Pricing Notice and
the Oaktree Purchase Price, the Unavailable EBITDA Amount and
other calculations set forth therein, and for the purpose of
otherwise participating in the dispute resolution procedure
provided in this Section 3.6(a)(iii), in each case, at
reasonable times and upon reasonable notice and subject to
such agreements regarding confidentiality and non-disclosure
in such form as the Company may reasonably request. If OCM on
behalf of the Oaktree Group does not deliver a notice (a
"Dispute Notice") to Onex Cinema within the 45-day period
following the delivery by Onex Cinema of the Pricing Notice,
which Dispute Notice sets forth the Oaktree Group's objections
to the Oaktree Purchase Price and/or Unavailable EBITDA Amount
set forth in the Pricing Notice, then upon the expiration of
such 45-day period the Pricing Notice and the Oaktree Purchase
Price and any Unavailable EBITDA Amount set forth therein
shall be conclusive and binding upon all parties to this
Agreement for all purposes.
If OCM gives a timely Dispute Notice, then OCM and Onex Cinema
shall for a period of five Business Days following the date
the Dispute Notice is delivered to Onex Cinema endeavor in
good faith to resolve any objections to, and agree upon the
final form of, the Pricing Notice and the Oaktree Purchase
Price and any Unavailable EBITDA Amount set forth therein. In
the event that Onex Cinema and OCM fail to resolve all
outstanding issues with respect to Pricing Notice within such
five Business Day period, then all remaining issues in dispute
will be submitted to a major certified public accounting firm
of national reputation mutually agreed upon by Onex Cinema and
OCM (the "Accountant") for resolution in accordance with the
terms and conditions of this Agreement not later than five
Business Days after the expiration of such five Business Days
period; provided that, if within five Business Days after the
expiration of the aforementioned five-Business Day negotiation
period the parties have failed to agree upon the selection of
the Accountant, Onex Cinema shall select a major certified
public accounting firm of national reputation from three such
firms proposed by OCM to Onex Cinema for such purpose within
five days thereafter. If issues in dispute are submitted to
the Accountant for resolution, (i) the Company will furnish to
the Accountant such work papers and other documents and
information relating to the disputed issues as the Accountant
may reasonably request and OCM and Onex Cinema will be
afforded the opportunity to present to the Accountant any
material relating to the determination and to discuss the
determination with the Accountant; (ii) the determination by
the Accountant, as set forth in a written notice which Onex
Cinema and OCM shall instruct the Accountant to deliver to
both of them within ten Business Days after the date of the
engagement of the Accountant, will be binding and conclusive
on the parties
27
for all purposes; and (iii) the Onex Group and the Oaktree
Group shall each bear 50% of the fees and expenses of the
engagement of the Accountant in connection with such
determination. As a condition to the engagement of the
Accountant, the Accountant may be required to enter into such
agreements regarding confidentiality and non-disclosure as the
Company may reasonably request.
If OCM does not deliver a Dispute Notice, then the closing of
the purchase and sale of Put Shares in connection with the
Oaktree Group's exercise of its rights under Section
3.6(a)(ii) shall occur within 30 days following the expiration
of the 45-day period following the date Onex Cinema delivers
the Pricing Notice or, if OCM delivers a written notice
waiving its right to deliver a Dispute Notice before the
expiration of such 45-day period, then within 30 days
following receipt by Onex Cinema of such written notice. If
OCM delivers a Dispute Notice, then the closing of the
purchase and sale of Put Shares in connection with the Oaktree
Group's exercise of its rights under Section 3.6(a)(ii) shall
occur as soon as practicable, but in no event later than ten
Business Days following the date on which all disputes
regarding the Pricing Notice and the Oaktree Purchase Price
and any Unavailable EBITDA Amount have been conclusively
resolved in accordance with this Section 3.6(a)(iii).
Notwithstanding anything to the contrary in the immediately
preceding paragraph, if as of the Subsequent Anniversary Date
as of which the Oaktree Group exercises its rights under
Section 3.6(a)(ii) there exists an Unavailable EBITDA Amount,
as finally determined pursuant to this Section 3.6(iii), then,
with respect to each Put Share purchased by the Onex Group,
that portion of the Oaktree Purchase Price payable with
respect to such Put Share equal to the Unavailable EBITDA
Amount will be deferred until, and paid without interest upon,
the earlier of (x) the occurrence of a Realization Event or
(y) the seventh anniversary of the date of this Agreement.
As used in this Agreement, the term "Realization Event" means
(a) an Initial Public Offering, (b) any Company Asset Sale or
sale by the Onex Group of equity securities of the Company,
(c) the declaration and payment of a dividend by the Company,
(d) a Change of Control Transaction or (e) any issuance of
additional equity of the Company, which in any of the cases
identified in clauses (a) through (e) results in the payment
to the Onex Group of net proceeds (whether in the form of cash
or other property) in an amount not less than the aggregate
Unavailable EBITDA Amount as to which the Onex Group has
deferred payment to the Oaktree Group as provided herein.
At the closing of any purchase of Shares or Put Shares by the
Onex Group upon an exercise by the Oaktree Group of its rights
under Section 3.6(a)(i) or Section 3.6(a)(ii), respectively,
the Oaktree Group shall deliver the certificates evidencing
the Shares or Put Shares to be conveyed, duly endorsed or
accompanied by stock powers or other appropriate instruments
of Transfer duly executed in blank, free and clear of all
liens, encumbrances, security interests, adverse claims of
other restrictions (other than those created by this
Agreement),
28
against payment by the Onex Group of the purchase price
therefor (excluding any portion of the Oaktree Purchase Price
deferred as provided above), determined in accordance with
this Agreement. At such closing, the Oaktree Group shall
exercise any then unexercised Common Stock Equivalents to the
extent that the underlying Shares constitute Put Shares as to
which the Oaktree Group has exercised its rights under Section
3.6(a)(ii) and sell such Put Shares received upon such
exercise to the Onex Group as provided herein.
(b) The "put" right granted to the Oaktree Group under Section
3.6(a) shall be exercisable with respect to only the following Shares of the
Oaktree Group:
(i) any Class A Shares held on the date hereof by OCM
or any other member of the Oaktree Group exercising the "put"
right with respect to those Class A Shares (including any
Class A Shares issuable upon the conversion of any Common
Stock Equivalent held thereby on the date hereof) (the
"Initial Class A Shares");
(ii) any other shares of Common Stock, as well as any
shares of the capital stock or other securities of the Company
which OCM or the member of the Oaktree Group exercising the
"put" right with respect to those shares or other securities
acquires in respect of its Initial Class A Shares, whether on
conversion thereof, in connection with any stock split, stock
dividend, exchange, merger, reclassification,
recapitalization, consolidation, reorganization or other
transaction to which the Company is a party; and
(iii) any shares of the capital stock or other
securities of any Person other than the Company, which OCM or
the member of the Oaktree Group exercising the "put" right
with respect to those shares or other securities acquires in
respect of its Initial Class A Shares (and any shares or other
securities acquired thereby under clause (b)(ii) above) in (A)
a Statutory Drag-Along Sale or (B) a Drag-Along Sale with
respect to which the Drag-Along Right is exercised; provided,
that this Section 3.6(b)(iii) shall not apply to any such
shares or other securities on any Subsequent Anniversary Date
if, the members of the Oaktree Group, in the aggregate, own
10% or less of the total number of such shares or other
securities then outstanding and such shares of other
securities are then (other than as a result of any action or
state of facts beyond acquisition and holding of such shares
or other securities (e.g., representation on the board of
directors or comparable governing body of the issuer thereof))
able to be freely Transferred by the members of the Oaktree
Group without limitation as to volume or manner of sale under
Rule 144(k) under the Securities Act or any such limitation
under any comparable provision of any foreign securities laws.
(c) The "put" right granted to the Oaktree Group under Section
3.6(a) shall, subject to Section 3.6(b), survive the termination of this
Agreement as well as any Transfer by the Onex Group of any Shares held by them.
29
SECTION 4. PREEMPTIVE RIGHTS.
4.1 Grant of Preemptive Right. Subject to Section 4.6, if the Company
authorizes the issuance or sale of any Common Stock or Common Stock Equivalents
(the "Participation Securities") to any Person, the Company shall, on the terms
and conditions of this Section 4, offer to the Stockholders the right to
purchase or subscribe for up to an aggregate number of Participation Securities
(subject to any election to purchase Excess Participation Securities as
contemplated in Section 4.3 below) equal to the product of (a) the total number
of Participation Securities to be issued or sold by the Company and (b) a
fraction, the numerator of which is the aggregate number of Fully Diluted Shares
held by such Stockholder, and the denominator of which is the aggregate number
of Fully Diluted Shares outstanding, in each case, determined as of the date of
the Preemptive Notice. For the purpose of this Section 4, "Stockholder
Participation Securities" means, with respect to any Stockholder in connection
with any proposed issuance or sale of Participation Securities by the Company,
that number of Participation Securities as to which such Stockholder is entitled
to exercise its preemptive rights hereunder, calculated under the preceding
clause (a) and clause (b) of this Section 4.1. For the purposes of this Section
4, "Third Party Participation Securities" means, in connection with any proposed
issuance or sale of Participation Securities by the Company any Participation
Securities that are not Stockholder Participation Securities.
4.2 Delivery of Preemptive Notice by Company. If the Company proposes
to issue or sell any Participation Securities in a transaction giving rise to
the preemptive rights provided for in this Section 4, at least 30 Business Days
before the proposed date of such issuance or sale, the Company shall send a
written notice (the "Preemptive Notice") to each Stockholder, setting forth (a)
the terms and conditions, rights and privileges associated with the
Participation Securities, (b) the number of Participation Securities that the
Company proposes to sell or issue, (c) the price (before any commission or
discount) at which such Participation Securities are proposed to be issued or
sold (or, in the case of an underwritten or privately placed offering in which
the price is not known at the time the Preemptive Notice is given, the method of
determining such price and an estimate thereof), (d) the other material terms of
the transaction, and (e) the aggregate number of Stockholder Participation
Securities which may be purchased by such Stockholder (determined under Section
4.1 above). Following delivery by the Company of a Preemptive Notice, the
Company shall provide such additional information as the Stockholders may
reasonably request in order to evaluate the proposed sale of the Participation
Securities.
4.3 Delivery of Exercise Notice; Waiver of Preemptive Right. At any
time within the ten Business Days following the date the Company delivers the
Preemptive Notice, a Stockholder may exercise the preemptive rights provided
under this Section 4 by delivering written notice to the Company (an "Exercise
Notice") exercising such Stockholder's preemptive rights as to all or a portion
of it's Stockholder Participation Securities; provided, that any Stockholder may
give specify in its Exercise Notice any number of Stockholder Participation
Securities of other Stockholders (in addition to such Stockholder's own
Stockholder Participation Securities) that such Stockholder would be willing to
purchase if and to the extent such other Stockholder Participation Securities
are not the subject of timely Exercise Notices delivered by other Stockholders
hereunder ("Excess Participation Securities") because one or more Stockholders
does not deliver a timely Exercise Notice or delivers a timely exercise notice
that covers a number of Participation Securities that is less than all of such
Stockholder's number
30
of Stockholder Participation Securities. If any Stockholder does not deliver a
timely Exercise Notice, such Stockholder shall be deemed to have irrevocably
waived the preemptive rights provided by this Section 4 with respect to all
Participation Securities that are the subject of the Preemptive Notice, and the
Company shall be permitted to issue such Stockholder's Stockholder Participation
Securities free from the preemptive rights provided under this Section 4.1. Each
Stockholder shall first be entitled to purchase up to its number of Stockholder
Participation Securities determined in accordance with clause (a) and clause (b)
of Section 4.1. Thereafter, if there exist Excess Participation Securities and
one or more Stockholders (each, an "Excess Participation Security Stockholder")
has delivered an Exercise Notice which indicates, based on the number of
Participation Securities covered by such Exercise Notice that such Excess
Participation Security Stockholder would be willing to purchase all or a portion
of such Excess Participation Securities, then such Excess Participation
Securities shall be allocated to such Excess Participation Security Stockholders
pro rata based upon the proportion that the number of Fully Diluted Shares owned
by each such Excess Participation Security Stockholder bears to the number of
Fully Diluted Shares owned by all Excess Participation Security Stockholders;
provided, that no such Excess Participation Security Stockholder shall purchase
by operation of the allocation procedure contemplated by this sentence, a number
of Participation Securities in the aggregate that is greater than the number of
Participation Securities covered by the Exercise Notice delivered by or on
behalf of such Excess Participation Security Stockholder. The allocation
procedure contemplated by the immediately preceding sentence shall be applied
repeatedly until all Excess Participation Securities are allocated to Excess
Participation Security Stockholders that have delivered Exercises Notices
entitling them to purchase such Excess Participation Securities, or until no
Excess Participation Security Stockholder is entitled to purchase such Excess
Participation Securities based on the number of Participation Securities covered
by its Exercise Notices.
4.4 Terms of Issuance of Sale of Participation Securities.
(a) Subject to Section 4.4(b), (c) and (d) below, the purchase
of, or subscription for Participation Securities by the Stockholders who
exercise preemptive rights under this Section 4, shall be at the same price and
on the same terms and conditions, including the date of sale or issuance, as are
applicable to the proposed issuance or sale by the Company of the Third Party
Participation Securities to other Persons.
(b) If the Company determines in good faith that the delay
occasioned by complying with the procedures contemplated by this Section 4 would
be prejudicial to the Company or its financial condition or business and
operations, then the Company may before delivering the Preemptive Notice or
after delivering the Preemptive Notice (but in such case before observing the
time periods and other procedures set forth in this Section 4), (i) issue or
sell all or any part of the Onex Group's Stockholder Participation Securities to
the Onex Group without issuing or selling all or any part the Stockholder
Participation Securities of some or all of the other Stockholders to any such
Stockholders, (ii) issue or sell all or any part the Onex Group's Stockholder
Participation Securities to the Onex Group and also issue to the Onex Group all
or any part of the Stockholder Participation Securities of some or all of the
other Stockholders, (iii) issue or sell all or any part the Oaktree Group's
Stockholder Participation Securities to the Oaktree Group without issuing or
selling all or any part the Stockholder Participation Securities of some or all
of the other Stockholders to any such Stockholders,
31
(iv) issue or sell all or any part of the Oaktree Group's Participation
Securities to the Oaktree Group and also issue to the Oaktree Group all or any
part of the Stockholder Participation Securities of some or all of the other
Stockholders or (v) issue or sell to the Oaktree Group and the Onex Group all or
any part of their respective Stockholder Participation Securities with, or
without also issuing or selling all or any part of the Stockholder Participation
Securities of some or all other Stockholders to either the Onex Group or the
Oaktree Group (or a combination of both such Stockholder Groups).
If the Company elects to issue Participation Securities to the Oaktree
Group and/or the Onex Group under this Section 4.4(b) before it delivers a
Preemptive Notice, then the Company shall deliver the Preemptive Notice to each
Stockholder to which it has not so issued or sold some or all of such
Stockholder's Participation Securities (any such Stockholder, an "Excluded
Stockholder") no later than three Business Days after the date on which the
Participation Securities are issued or sold to the Onex Group and/or the Oaktree
Group (as applicable). If at the time any Excluded Stockholder delivers a timely
Exercise Notice, the Company has not yet issued or sold some or all of the
Stockholder Participation Securities that such Excluded Stockholder is entitled
to purchase hereunder to either the Onex Group or the Oaktree Group, then such
unissued Stockholder Participation Securities shall be issued or sold by the
Company to such Excluded Stockholder as promptly as practicable, but in no event
later than five days following the date of delivery of the Exercise Notice, at
the same price, and on the same terms and conditions, as were applicable to the
issuance or sale of the Onex Group's Stockholder Participation Securities or the
Oaktree Group's Stockholder Participation Securities (as applicable) to the
members of the Onex Group or the Oaktree Group (as applicable).
(c) If at the time any Excluded Stockholder delivers a timely
Exercise Notice, the Company has issued or sold some or all of the Stockholder
Participation Securities that such Excluded Stockholder is entitled to purchase
hereunder to either the Onex Group or the Oaktree Group, then any such
Stockholder Participation Securities shall be sold by the Onex Group or Oaktree
Group (as applicable) to such Excluded Stockholder as promptly as is
practicable, but in no event later than five days following the date of delivery
of the Exercise Notice, at a price per Participation Security equal to the price
paid by the members of the Onex Group or Oaktree Group (as applicable) therefor,
plus interest on such amount from the date of purchase by the members of the
Onex Group or Oaktree Group (as applicable) through the date of sale to the
Excluded Stockholder, at a rate per annum equal to the then-effective prime
rate, as announced by Citibank N.A. At the closing of any such sale by the
members of the Onex Group or the members of the Oaktree Group (as applicable),
such Persons shall deliver to the Excluded Stockholder certificates representing
the Stockholder Participation Securities to be conveyed, duly endorsed or
accompanied by stock powers or other appropriate instruments of Transfer duly
executed in blank, free and clear of all liens, encumbrances, security
interests, adverse claims or other restrictions (other than those created by
this Agreement), against payment of the purchase price therefor calculated
hereunder.
(d) If Participation Securities issued or sold by the Company
consist of multiple types or classes of securities, then the Stockholders who
elect to exercise their preemptive right shall purchase such types or classes of
securities (whether from the Company or from the Onex Group or Oaktree Group) in
the same relative proportions as do Persons other than the Stockholders.
Further, if any Participation Securities to be issued or sold by the
32
Company are to be issued or sold by the Company as part of a unit that includes,
or otherwise together with other securities (including debt securities) of the
Company that are not Participation Securities ("Other Securities"), then any
Stockholder exercising preemptive rights provided under this Section 4 must in
connection therewith also purchase such Other Securities of the Company that are
part of such unit or otherwise being issued or sold by the Company together with
the Participation Securities, and the definitions of "Participation Securities,"
"Stockholder Participation Securities" and "Third Party Participation
Securities" shall for all purposes of this Section 4 be deemed to include any
such Other Securities of the Company.
(e) Nothing set forth in this Section 4 shall be deemed to
restrict, limit or delay the ability of the Company to consummate the issuance
and sale of Third Party Participation Securities to Persons other than the
Stockholders.
4.5 Sale by Company Absent Exercise of Preemptive Right. If, with
respect to any issuance or sale of Participation Securities in connection with
which the Company has delivered Preemptive Notices, no Stockholder has delivered
a timely Exercise Notice covering some or all Stockholder Participation
Securities that are the subject of such Preemptive Notices (after giving effect
to the allocation procedure in Section 4.3), the Company shall, unless the
Company has already done so in reliance on Section 4.4(b), have 60 days
following the expiration of the 10 day period following the date of delivery of
the Preemptive Notice in which to sell all or any part of those Stockholder
Participation Securities which Stockholders have not so elected to purchase, at
a price not less than the price (or, if applicable, the estimated price) set
forth in the Preemptive Notice, and on other terms and conditions no more
favorable to the purchaser thereof than those set forth in the Preemptive
Notice. If, at the end of such 60 day period, the Company has not completed the
sale or issuance of any such Participation Securities in accordance with the
terms provided in the Preemptive Notice, the Company shall again be obligated to
comply with the provisions of this Section 4 with respect to, and deliver a
Preemptive Notice in connection with, any proposed sale or issuance of such
Participation Securities.
4.6 Securities Excluded from Preemptive Right. The provisions of this
Section 4 and the preemptive rights contemplated hereby shall terminate and
cease to be effective upon the consummation of an Initial Public Offering and
shall not, prior to the consummation of an Initial Public Offering, apply to (i)
capital stock issued in connection with a pro rata stock dividend, stock split
or recapitalization or the like, (ii) Common Stock issued upon exercise of any
Common Stock Equivalent, (iii) shares of Common Stock and Common Stock
Equivalents issued to employees of, and consultants to, the Company and its
Subsidiaries in connection with incentive, bonus or other compensatory
arrangements approved by the Board, (iv) securities issued to the public in
connection with an Initial Public Offering or other public offering by the
Company or in connection with the issuance or exercise of warrants or shares
granted to underwriters in connection with an Initial Public Offering or any
such other public offering, (v) securities issued to Independent Third Parties
in connection with corporate or strategic partnerships or alliances approved by
the Board, (vi) securities issued to lenders or lessors, in each instance who
are Independent Third Parties in transactions approved by the Board, in
connection with financing or leasing transactions involving the Company and its
Subsidiaries and (vii) securities issued to Independent Third Parties in
connection with acquisitions approved by the Board involving the Company or its
Subsidiaries.
33
SECTION 5. FINANCIAL STATEMENTS.
Prior to an Initial Public Offering, the Company shall deliver to each
Stockholder:
(a) within 120 days after the end of each fiscal year of the
Company, consolidated balance sheets of the Company and its Subsidiaries as at
the end of such fiscal year, and consolidated statements of income and of cash
flow of the Company and its Subsidiaries for such fiscal year, accompanied by a
report thereon of independent certified public accountants; and
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year of the Company, consolidated balance sheets
of the Company and its Subsidiaries as at the end of such quarter, and
consolidated statements of income and of cash flow for such quarter.
SECTION 6. TERMINATION.
6.1 Termination of this Agreement. This Agreement shall terminate upon
the earliest to occur of (a) the dissolution, liquidation or winding up of the
Company; (b) the written agreement of Onex Cinema and OCM; (c) except with
respect to Section 2.4, the consummation of an Initial Public Offering; and (d)
the 20-year anniversary of the date hereof. Notwithstanding the foregoing, so
long as Section 2.4 of this Agreement survives, Section 1, this Section 6 and
Sections 7 and 8 shall survive any termination of this Agreement.
6.2 Effect of Termination. Upon the termination of this Agreement, the
restrictions and obligations set forth herein shall terminate and be of no
further effect, except (a) as otherwise expressly set forth herein and (b) that
such termination shall not affect any rights perfected or obligations incurred
under this Agreement prior to such termination.
6.3 Termination as to Particular Stockholder. Subject to Section 3.6(b)
and 3.6(c), as to any particular Stockholder, this Agreement shall no longer be
binding or of further force or effect as to such Stockholder as of the date such
Stockholder has Transferred all of such Stockholder's interest in any of the
Shares or Common Stock Equivalents; provided, that no such termination shall be
effective if such Stockholder is in breach of this Agreement immediately before
or after giving effect to such Transfer(s) and with respect to the members of
the Onex Group, no such Transfer(s) shall limit or otherwise mitigate their
respective obligations under Section 3.6. Notwithstanding the foregoing, so long
as any obligation under Section 3.6 survives, Section 1, this Section 6 and
Sections 7 and 8 shall survive any termination of this Agreement.
SECTION 7. APPOINTMENT OF REPRESENTATIVES.
7.1 Oaktree Group Representative. Each member of the Oaktree Group
hereby irrevocably appoints OCM as its representative and attorney-in-fact to
receive and give on such member's behalf all notices, to make on such member's
behalf all elections and determinations and to take on such member's behalf all
other actions, in each case, as may be contemplated to be so received, given,
made or taken by any member of the Oaktree Group by the provisions of this
Agreement. Each notice given to OCM under this Agreement by the Company or any
34
member of the Onex Group shall be deemed to have also been given to each other
Person who is at the time of such notice member of the Oaktree Group. In the
event Agreement calls for OCM to deliver to the Company and/or any member(s) of
the Onex Group a notice which sets forth an election of any member of the
Oaktree Group or otherwise purports to deal with or bind any member of the
Oaktree Group or any securities held thereby, the Company and/or such member(s)
of the Onex Group shall be entitled to rely conclusively for all purposes of
this Agreement on such notice as conclusive and binding as to such member of the
Oaktree Group.
7.2 Onex Group Representative. Each member of the Onex Group hereby
irrevocably appoints Onex Cinema as its representative and attorney-in-fact to
receive and give on such member's behalf all notices, to make on such member's
behalf all determinations, and to take on such member's behalf all other
actions, in each case, as may be contemplated to be so received, given, made or
taken by any member of the Onex Group by the provisions of this Agreement. Each
notice given to Onex Cinema under this Agreement by the Company or any member of
the Oaktree Group shall be deemed to have also been given to each other Person
who is at the time of such notice member of the Onex Group. In the event
Agreement calls for Onex Cinema to deliver to the Company and/or any member(s)
of the Oaktree Group a notice which sets forth an election of any member of the
Onex Group or otherwise purports to deal with or bind any member of the Onex
Group or any securities held thereby, the Company and/or such member(s) of the
Oaktree Group shall be entitled to rely conclusively for all purposes of this
Agreement on such notice as conclusive and binding as to such member of the Onex
Group.
SECTION 8. MISCELLANEOUS.
8.1 Remedies. Each of the parties hereto acknowledges and agrees that
no remedy at law would be adequate in the event of any breach of this Agreement.
Accordingly, if any dispute arises concerning the sale or other disposition of
any of the securities of the Company subject to this Agreement or concerning any
other provisions hereof or the obligations of the parties hereunder, each party
hereto agrees that, in addition to any other remedy to which they may be
entitled at law or in equity, the other parties hereto shall be entitled to a
decree of specific performance to enforce this Agreement (without bond or other
security being required unless the party seeking such remedy fails to
demonstrate to an appropriate court having jurisdiction that such party has a
likelihood of success on the merits), and each party hereto waives the defense
in any action or proceeding brought to enforce this Agreement that there exists
an adequate remedy at law. Such remedies shall be cumulative and non-exclusive
and shall be in addition to any other rights and remedies the parties may have
under this Agreement or otherwise.
8.2 No Conflicting Agreements. No Stockholder shall enter into, and
each Stockholder represents and warrants that it is not on the date hereof a
party to, any stockholders agreements, option agreements, voting agreements,
proxies or other arrangements of any kind with any Person with respect to any
Shares, Common Stock Equivalents or other securities of the Company on terms
inconsistent with the provisions of this Agreement (whether or not such
agreements or arrangements are with other Stockholders or with Persons that are
not party to this Agreement), including, without limitation, agreements or
arrangements with respect to the acquisition, Transfer or voting of any such
securities in a manner that is inconsistent with this Agreement.
35
8.3 Further Assurances. Each party hereto shall do and perform or cause
to be done and performed all such further acts and things, and shall execute and
deliver all such further agreements, certificates, instruments and documents, as
any other party hereto reasonably may request in order to carry out the
provisions of this Agreement and the consummation of the transactions
contemplated hereby.
8.4 Recapitalizations, Exchange, Etc.
(a) Subject to Section 3.6(b), the provisions of this
Agreement shall apply, to the full extent set forth herein with respect to the
Shares and the Common Stock Equivalents, to any and all shares of capital stock
of the Company, Common Stock Equivalents or other securities of the Company that
may be issued in respect of, in exchange for, or in substitution of the Shares
or Common Stock Equivalents, and shall be appropriately adjusted for any stock
dividends, splits, reverse splits, combinations, reclassifications,
recapitalizations and the like occurring after the date of this Agreement.
(b) Subject to Section 3.6(b), if, and as often as, there are
any changes in the Shares or the Common Stock Equivalents, by way of any stock
dividends, splits, reverse splits, combinations, or reclassifications, or
through merger, consolidation, reorganization or recapitalization or by any
other means occurring after the date of this Agreement, appropriate adjustment
shall be made to the provisions of this Agreement, as may be required, so that
the rights, privileges, duties and obligations hereunder shall continue with
respect to the Shares and Common Stock Equivalents as so changed.
8.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
8.6 Consent to Jurisdiction. Each party irrevocably submits to the
non-exclusive jurisdiction of (i) the courts of the State of Delaware, and (ii)
the United States District Court for the District of Delaware, for the purposes
of any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each party agrees to commence any such action,
suit or proceeding either in the United States District Court for the District
of Delaware or, if such suit, action or other proceeding may not be brought in
such court for jurisdictional reasons, in the courts of the State of Delaware.
Each party that at any time after the date hereof is not a resident of the State
of Delaware or does not maintain an agent for service of process in the State of
Delaware hereby irrevocably designates, appoints and empowers The Corporation
Trust Company, having its address at the date hereof at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx (New Castle County) U.S.A., as its agent for service of
process to receive for and on its behalf service of process in the State of
Delaware in any legal action, suit or proceeding with respect to this Agreement.
It is understood that a copy of any such process served on such process agent
shall be promptly forwarded by air mail by such process agent and the person
commencing such proceeding to the relevant party at its address specified in
Section 8.7, but the failure of the relevant party to receive such copy shall
not affect in any way the service of such process as aforesaid. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law. Each party irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or
36
proceeding arising out of this Agreement or the transactions contemplated hereby
in (A) the courts of the State of Delaware, or (B) the United States District
Court for the District of Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
8.7 Notices. All notices, consents and other communications required,
or contemplated under this Agreement shall be in writing and shall be delivered
in the manner specified herein or, in the absence of such specification, shall
be deemed to have been duly given and delivered (i) when delivered by hand, (ii)
upon confirmation of receipt by telecopy, or (iii) one day after sending by
overnight delivery service, to the respective addresses or telecopy numbers of
the parties set forth below:
(a) For notices and communications to the Company:
Loews Cineplex Entertainment Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
Telecopy: (000) 000-0000
with copies to:
Loews Cineplex Entertainment Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx, XX 00000
Attention: Xxxx Xxxxxx, CFO
Telecopy: (000) 000-0000
and
Loews Cineplex Entertainment Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx XxXxxxx
General Counsel
A copy of any notices or communications given to the Company
under this Agreement shall also be given to each of Onex Cinema and OCM in the
manner contemplated by Section 8.7(b) and (c) below.
37
(b) For notices and communications to Onex Cinema or any other
member of the Onex Group:
Onex Investment Corp.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxx
Telecopy: (000) 000-0000
with copies to:
Onex Corporation
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: Xxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
and
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(c) For notices and communications to OCM or any other member
of the Oaktree Group:
OCM Cinema Holdings, LLC
c/o Oaktree Capital Management LLC
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Telecopy: (000) 000-0000
and
Oaktree Capital Management LLC
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telecopy: (000) 000-0000
38
and
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
(d) For notices and communications to any Stockholder other
than a member of the Onex Group or Oaktree Group, in accordance with the notice
information provided by such Stockholder in its Stockholder Joinder.
By notice complying with the foregoing provisions of this Section 8.7, each
party shall have the right to change the mailing address or telecopy numbers for
future notices and communications to such party.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof, and supersedes any and
all prior written or oral agreements, contracts, negotiations, discussions,
understandings, undertakings or arrangements among the parties with respect to
such subject matter.
8.9 Amendment; Waiver. This Agreement may be amended only by a written
agreement duly executed on behalf of Onex Cinema and OCM. Any waiver of any of
the terms or conditions of this Agreement must be in writing and must be duly
executed by or on behalf of the party to be charged with such waiver (which, in
the case of any member of the Oaktree Group may be OCM on such member's behalf
and in the case of any member of the Onex Group may be Onex Cinema on such
member's behalf). The failure of a party to exercise any of its rights hereunder
or to insist upon strict adherence to any term or condition hereof on any one
occasion shall not be construed as a waiver or deprive that party of the right
thereafter to insist upon strict adherence to the terms and conditions of this
Agreement at a later date. Further, no waiver of any of the terms and conditions
of this Agreement shall be deemed to or shall constitute a waiver of any other
term of condition hereof (whether or not similar).
8.10 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
Transferees, successors, assigns, heirs and administrators; provided, that the
this Agreement and the rights hereunder may not be assigned or assumed
(including by operation of law) except as and to the extent expressly provided
herein.
8.11 Severability. It is the desire and intent of the parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
39
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
8.12 Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, (i) consents, waivers and
modifications which may hereafter be executed and (ii) documents received by
each Stockholder or the Company pursuant hereto, may be reproduced by each party
hereto by a photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and each party may destroy any original
document so reproduced. All parties hereto agree and stipulate that any such
reproduction shall be admissible in 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 each party in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
8.13 Titles; Construction. Titles and Section references are provided
herein for convenience only, and are not to serve as a basis for interpretation
or construction of this Agreement. The masculine pronoun shall include the
feminine and neuter and the singular shall include the plural, when the context
so indicates. References in this Agreement to any "Section" are references to
the relevant Sections of this Agreement. As used in this Agreement, the word
"including" is not limiting, and the word "or" is not exclusive. The words "this
Agreement", "hereto", "herein", "hereunder", "hereof", and words or phrases of
similar import refer to this Agreement as a whole, together with any and all
Schedules and Exhibits hereto, and not to any particular article, section,
subsection, paragraph, clause or other portion of this Agreement. Where specific
language is used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or restrict in any
manner the construction of the general statement to which it relates. The
language used in this Agreement shall be deemed to be the language chosen by the
parties to express their mutual intent, and no rule of strict construction shall
be applied against any party.
8.14 Counterparts and Facsimile Execution. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered (by facsimile or otherwise) to
the other party, it being understood that all parties need not sign the same
counterpart. Any counterpart or other signature hereupon delivered by facsimile
shall be deemed for all purposes as constituting good and valid execution and
delivery of this Agreement by such party. The failure of any Stockholder to
execute this Agreement does not make it invalid as against any other
Stockholder.
8.15 Expenses. The fees and expenses (including attorneys' fees and
expenses) incurred by the parties pursuant to, relating to or otherwise in
connection with the Plan of Reorganization and any transactions related thereto
shall be paid by the Company.
[Signature page follows]
40
IN WITNESS WHEREOF, the parties have caused this Stockholders Agreement
to be duly executed on their behalf as of the date first written above.
LOEWS CINEPLEX ENTERTAINMENT
CORPORATION
By: /s/ Xxxx X. XxXxxxx, Xx.
--------------------------------------------
Name: Xxxx X. XxXxxxx, Xx.
Title: Senior Vice President and General
Counsel
OCM CINEMA HOLDINGS, LLC
By: Oaktree Capital management, LLC,
its Manger
By: /s/ Xxxxxxx Xxxxx
---------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
1363880 ONTARIO INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
Solely for the purposes of Section 3.2(d) of
this Agreement
ONEX CORPORATION
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
41
OAKTREE CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxxx Xxxxx
---------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
42
SCHEDULE 1
Individuals Designated as Directors by Oaktree
XXXXXXX X. XXXXXXX
Managing Director
Oaktree Capital Management, LLC
000 Xxxxx Xxxxx Xxx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxxxxx.xxx
XXXXX X. XXXXX
President
Oaktree Capital Management, LLC
000 Xxxxx Xxxxx Xxx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (213) 000- 0000
E-mail: xxxxxx@xxxxxxxxxx.xxx
XXXXXXX XXXXX
Managing Director
Oaktree Capital Management, LLC
000 Xxxxx Xxxxx Xxx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxx@xxxxxxxxxx.xxx
XXXXXXX X. XXXXXXX
Senior Vice President
Oaktree Capital Management, LLC
000 Xxxxx Xxxxx Xxx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxxxxx.xxx
Individuals Designated as Directors by Onex Cinema
XXXXXXX A. R. XXXXXXXXX
Principal
Onex Corporation
000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX X0X 0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxxxx@xxxx.xxx
XXXXX X. XXXXXXXX
Chief Financial Officer
Onex Corporation
000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX X0X 0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxxx@xxxx.xxx
XXXXXX XXXXXX
Vice President
Onex Corporation
000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX X0X 0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxx@xxxx.xxx
XXXXXXX XXXX
Managing Director
Onex Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxx@xxxxxxxx.xxx
XXXX XXXXX
Managing Director
Onex Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxx@xxxx.xxx
XXXXXX X. XXXXXXXX
Chairman, President and Chief Executive Officer
Onex Corporation
000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX X0X 0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxxx@xxxx.xxx
Annex A
Form of
Onex Group Member/Oaktree Group Member Joinder Agreement
Reference is made to the Stockholders Agreement (as amended,
supplemented or otherwise modified from time to time, the "Stockholders
Agreement"), dated as of March 21, 2002, among Loews Cineplex Entertainment
Corporation, a Delaware corporation, 1363880 Ontario Inc., a corporation
organized and existing under the laws of Ontario, Canada, and OCM Cinema
Holdings, LLC, a Delaware limited liability company. Capitalized terms used but
not otherwise defined in this Stockholder Joinder Agreement have the respective
meanings given to them in the Stockholders Agreement.
The undersigned is a member of the [Onex Group] [Oaktree Group]. This
[Onex Group Member] [Oaktree Group Member] Joinder Agreement is being delivered
by the undersigned as required by Section __ of the Stockholders Agreement.
Substantially simultaneously with the execution and delivery of this
Stockholder Joinder Agreement, the undersigned is acquiring Shares and/or Common
Stock Equivalents from a member of the [Onex Group] [Oaktree Group] [Stockholder
other than a member of the Onex Group or the Oaktree Group]. The undersigned
hereby represents and warrants to the Company, Onex Cinema and OCM that the
undersigned is a member of [Onex Group] [Oaktree Group].
Accordingly, the undersigned, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound, hereby agrees, as of the date hereof to join in and become a
party to the Stockholders Agreement and to be bound by the terms, conditions,
restrictions and provisions of the Stockholders Agreement as a member of the
[Onex Group] [Oaktree Group] thereunder, entitled to all of the rights available
thereto and subject to all of the burdens imposed thereon.
IN WITNESS WHEREOF, the undersigned has executed this [Onex Group
Member] [Oaktree Group Member] Joinder Agreement as of the ___ day of
______________, 20__.
[ ]
By:
----------------------------------
Name:
Title:
Annex B
Form of Stockholder Joinder Agreement
Reference is made to the Stockholders Agreement (as amended,
supplemented or otherwise modified from time to time, the "Stockholders
Agreement"), dated as of March 21, 2002, among Loews Cineplex Entertainment
Corporation, a Delaware corporation, 1363880 Ontario Inc., a corporation
organized and existing under the laws of Ontario, Canada, and OCM Cinema
Holdings, LLC, a Delaware limited liability company. Capitalized terms used but
not otherwise defined in this Stockholder Joinder Agreement have the respective
meanings given to them in the Stockholders Agreement.
The undersigned is neither a member of the Onex Group nor a member of
the Oaktree Group. This Stockholder Joinder Agreement is being delivered by the
undersigned as required by Section __ of the Stockholders Agreement.
Substantially simultaneously with the execution and delivery of this
Stockholder Joinder Agreement, the undersigned is acquiring Shares and/or Common
Stock Equivalents from a Person (a "Transferee") that is a party to the
Stockholders Agreement in the capacity of a Stockholder [(and not a member of
the Onex Group or a member of the Oaktree Group)]. The undersigned hereby
represents and warrants to the Company, Onex Cinema and OCM that the undersigned
[is a member of the Stockholder Group of the Transferee] [is acquiring the
Shares and/or Common Stock Equivalents giving rise to the requirement to execute
and deliver this Stockholder Joinder Agreement in a transaction in which all of
the applicable requirements of the Stockholders Agreement have been complied
with].
Accordingly, the undersigned, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound, hereby agrees, as of the date hereof to join in and become a
party to the Stockholders Agreement and to be bound by the terms, conditions,
restrictions and provisions of the Stockholders Agreement as a Stockholder (but
not a member of the Onex Group or the Oaktree Group) thereunder [as a member of
the Stockholder Group of the Transferee], entitled to all of the rights
available thereto and subject to all of the burdens imposed thereon.
IN WITNESS WHEREOF, the undersigned has executed this Stockholder
Joinder Agreement as of the ___ day of ______________, 20__.
[ ]
By:
----------------------------------
Name:
Title:
Exhibit A
Oaktree Group Members
OCM Opportunities Fund III LP
OCM Opportunities Fund II, LP
Columbia/HCA Master Retirement Trust (Separate Account II)
Weyerhaeuser Master Retirement Trust (Gryphon Domestic VI, LLC)
1363880 ONTARIO INC.
x/x Xxxx Xxxxxxxxxxx
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
March 21, 0000
XXX Xxxxxx Holdings, LLC
c/o Oaktree Capital Management LLC
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Re: Loews Cineplex Entertainment Corporation.
----------------------------------------
Ladies and Gentlemen:
We refer to the Stockholders Agreement (as amended, supplemented or
otherwise modified from time to time, the "Stockholders Agreement"), being
entered into substantially contemporaneously with the execution and delivery of
this letter agreement, among Loews Cineplex Entertainment Corporation ("Loews"),
1363880 Ontario Inc. ("Onex Cinema") and OCM Cinema Holdings, LLC ("OCM").
Capitalized terms used but not otherwise defined in this letter agreement have
the respective meanings given to them in the Stockholders Agreement.
Onex Cinema and OCM hereby agree that as soon as practicable, but no more
than ten Business Days, after the date on which Oaktree and the other members of
the Oaktree Group receive a gross cash distribution (the "Plan Distribution")
under the Plan of Reorganization in respect of the $177.3 million principal
amount of 8 7/8% Senior Subordinated Notes (the "Notes") of the pre-reorganized
Loews held by Oaktree and the other members of the Oaktree Group (including in
respect of all accrued and unpaid interest thereon):
1. Transfer of Class A Shares. Onex Cinema shall sell to OCM 3,450
Class A Shares (the "Additional Shares") by converting a like number of
Class B Shares held by Onex Cinema into Class A Shares and selling the
Class A Shares received upon such conversion to OCM in exchange for payment
to Onex Cinema of a cash purchase price equal to 60% of the aggregate
amount of the Plan Distribution actually received by Oaktree and the other
members of the Oaktree Group.
2. Warrant Agreement and Issuance of Warrant. Onex Cinema and OCM shall
take all actions, including voting any Shares held thereby, as may be
necessary to cause Loews, concurrently with the consummation of the sale of
the Additional Shares, to authorize, execute and deliver the Warrant
Agreement in the form attached as Exhibit A hereto (the "Warrant
Agreement"), and to issue to OCM a Warrant in the form attached to the
Warrant Agreement to purchase 2,302
Class A Shares at an exercise price of $5,025 per Class A Share (the
"Oaktree Warrant"), as contemplated by the Warrant Agreement.
3. Amendments to Stockholders Agreement. Upon consummation of the
transactions described in paragraphs 1 and 2, Onex Cinema and OCM shall
cause such amendments to be made to the Stockholders Agreement as may be
necessary to provide that (A) the Additional Shares and the Oaktree
Warrant shall be considered for all purposes of the Stockholders
Agreement to have been held by OCM as of the date hereof and (B) the
Additional Shares shall be considered for all purposes of the Stockholders
Agreement not to have been owned by Onex Cinema as of the date hereof.
Onex Cinema's agreements set forth herein are subject to and made in
reliance upon OCM's representation and warranty that Oaktree Capital and the
other members of the Oaktree Group own at least $177.3 million in principal
amount of the Notes and will be entitled to receive a distribution under the
Plan of Reorganization with respect thereto and with respect to all accrued and
unpaid interest thereon.
This letter agreement may be executed in one or more counterparts, each of
which shall constitute an original, and all of which shall constitute one and
the same instrument. This letter agreement (together with the Stockholders
Agreement) sets forth and represents the entire agreement between the parties
(and their respective Affiliates) with respect to the subject matter hereof and
thereof, supersedes (together with the Stockholders Agreement) any and all prior
written or oral agreements, understandings, undertakings, negotiations and
arrangements between the parties (and their respective Affiliates) with respect
to such subject matter, and may be amended, supplemented or otherwise modified
only by a written agreement executed by the parties hereto. The failure of a
party to exercise any of its rights hereunder or to insist upon strict adherence
to any term or condition hereof on any one occasion shall not be construed as a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to the terms and conditions of this letter agreement at a later date.
Further, no waiver of any of the terms and conditions of this letter agreement
shall be deemed to or shall otherwise constitute a waiver of any other term or
condition hereof (whether or not similar).
This letter agreement shall be binding and inure to the benefit of the
parties hereto and their respective successors, assigns, heirs and
administrators; provided, that neither this letter agreement nor any rights
hereunder may be assigned by any party hereto without the prior written consent
of the other party hereto.
This letter agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and to be
performed entirely within such State, and the parties hereby agree that the
provisions of Section 8.6 of the Stockholders Agreement shall apply in
connection with any suit, action or other proceeding arising out of this letter
agreement or any transaction contemplated hereby.
All notices, demands or other communications to be given or delivered
under or by reason of this letter agreement shall be in writing, and shall be
given or delivered in the manner
2
and to the Persons set forth in Section 8.7 of the Stockholders Agreement. Any
such notices, demands or other communications shall be deemed to have been duly
given or delivered at the time determined under Section 8.7 of the Stockholders
Agreement.
Very truly yours,
1363880 ONTARIO INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: President
Accepted and agreed as of the
21st day of March 2002
OCM CINEMA HOLDINGS, LLC
By: Oaktree Capital Management, LLC,
its Manager
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
3
Exhibit A
Xxxx Xxxxxxx DRAFT 03/19/02
This WARRANT AGREEMENT, dated as of __________ __, 2002, between Loews
Cineplex Entertainment Corporation, a Delaware corporation (the "Corporation"),
and OCM Cinema Holdings, LLC, a Delaware limited liability company (the
"Holder").
The Corporation proposes to issue a Warrant, in the form of Exhibit A
(together with any Warrants issued in connection with the exchange, surrender or
exercise thereof as provided herein, the "Warrant"), which evidences the right
of the Holder to acquire shares of the Corporation's Class A Common Stock, $.01
par value per share (the "Class A Shares"), in accordance with the terms
contained herein and in the Warrant.
The parties, intending to be legally bound, hereby agree as follows:
Section 1. Warrant.
(a) Concurrently with the execution of this Agreement, the Corporation
shall issue and deliver to the Holder a Warrant to acquire 2,302 Class A Shares
(the "Warrant Shares").
(b) The Warrant shall be signed on behalf of the Corporation by the
chairman of the board of directors of the Corporation (the "Board of
Directors"), or the Corporation's president, vice president or treasurer who, in
any case, shall be duly authorized to sign.
Section 2. Registration and Registration of Transfers.
(a) The Warrant shall be registered in the name of the Holder. The
Corporation may deem and treat the Holder of the Warrant as the absolute owner
thereof (notwithstanding any notation of ownership or other writing on the
Warrant made by anyone) for the purpose of any exercise thereof, and for all
other purposes, and the Corporation shall not be affected by any notice to the
contrary, until presentation of the Warrant for registration of transfer.
(b) Subject to Section 4 hereof, the Corporation shall register the
transfer of the Warrant upon records to be maintained by it for that purpose,
upon surrender of the Warrant to the Corporation at the address referred to in
Section 11 hereof or such other place designated by the Corporation in a writing
delivered to the Holder, accompanied (if so required by the Corporation) by a
written instrument or instruments of transfer in form attached to the Warrant,
duly executed by the Holder thereof or by the duly appointed legal
representative thereof. Upon any such registration of transfer, a new Warrant
evidencing such transferred Warrant shall be issued to the transferee(s) and the
surrendered Warrant shall be canceled.
(c) Subject to Section 4 hereof, the Warrant may be exchanged at the
option of the Holder thereof, when surrendered to the Corporation at the address
referred to in Section 11 hereof or such other place designated by the
Corporation in a writing delivered to the Holder, for another Warrant or other
Warrants of like tenor and representing in the aggregate a like number of
Warrants. A Warrant surrendered for exchange shall be canceled.
Section 3. Exercise.
(a) The Warrant issued hereunder may be exercised by the Holder, in
whole or in part, at any time or from time to time during normal business hours
on any business day on or
prior to the earlier to occur of (i) 5:00 p.m. (New York City
time) on __________ __, 2007 (or if such date is not a business day, the next
business day thereafter) and (ii) the date and time of the consummation of a
consolidation or merger to which the Corporation is a party or the sale or
conveyance of the property of the Corporation as an entirety or substantially as
an entirety which, in each case, is effected in such a manner that the holders
of Class A Shares are entitled to receive cash or other property (other than
stock or other securities) with respect to or in exchange for their Class A
Shares (the date and time of the earlier to occur of such events is, the
"Expiration Date"), by surrender of the Warrant to the Corporation at the
address referred to in Section 11 hereof or such other place designated by the
Corporation in writing delivered to the Holder, accompanied by a form of Warrant
Exercise, in substantially the form attached as Exhibit A to the Warrant (or a
reasonable facsimile thereof), duly executed by the Holder and, unless the
Holder is exercising the Warrant using the "cashless exercise" provisions of
Section 3(e) below, accompanied by payment, in cash (including by wire transfer)
or by certified or official bank check payable to the order of the Corporation
in the amount obtained by multiplying (a) the number of Class A Shares
designated in such Warrant Exercise by (b) the Exercise Price (as defined
below), and the Holder shall thereupon be entitled to receive the number of duly
authorized, validly issued, fully paid and nonassessable Class A Shares
determined as provided in Section 4 hereof. The Corporation shall deliver
written notice to any Holder at least 10 business days prior to the anticipated
date of consummation of any transaction described in clause (ii) of this Section
3(a) and, at the option of such Holder, any exercise thereby of this Warrant may
be made conditional upon the occurrence of the transaction described in any such
notice, and any such exercise may be rescinded if such transaction is not
consummated. Delivery by the Corporation of the written notice contemplated by
the immediately preceding sentence in connection with any transaction described
in clause (ii) of this Section 3(a) shall be a condition to the occurrence of
the Expiration Date under such clause (ii) as a result of the consummation of
such transaction.
(b) Subject to Section 3(e) hereof, each exercise of the Warrant
under Section 3(a) hereof shall be deemed to have been effected when the
Warrant shall have been surrendered to the Corporation as provided in such
Section 3(a) accompanied by the items required by such Section 3(a) hereof, and
at such time the party in whose name any certificate for Class A Shares
shall be issuable upon such exercise as provided in Section 3(c) hereof
shall be deemed to have become the holder of record thereof.
(c) As soon as practicable after each exercise of the Warrant, in
whole or in part (but no later than five business days thereafter), the
Corporation will cause to be issued in the name of and delivered to the Holder,
the following:
(i) Certificates. A certificate or certificates for the
number of duly authorized, validly issued, fully paid and nonassessable Class
A Shares to which the Holder shall be entitled upon such exercise.
(ii) Warrant. In case such exercise is in part only, a new Warrant
of like tenor dated the date of the original Warrant, evidencing the right
to purchase the number of Class A Shares equal to the number of such Class A
Shares called for on the face of the Warrant, minus the number of such Class A
Shares designated by the Holder upon such exercise as provided in Section 3(a)
hereof, which new Warrant shall in all other respects be identical to the
Warrant.
2
(d) Any Warrant not exercised on or prior to the Expiration Date will
become null and void, and all rights thereunder and all rights in respect
thereof under this Agreement will cease as of such time.
(e) The Holder may elect, in connection with the exercise of the
Warrant under Section 3(a), to exercise the Warrant without payment of the
Exercise Price, in the manner provided in this Section 3(e). Where the Holder so
elects, the Holder shall not be required to deliver any payment to the
Corporation at the time the Holder surrenders the Warrant and executed form of
Warrant Exercise, as provided in Section 3(a) hereof. The Board of Directors
shall, as promptly as practicable after a Holder has surrendered the Warrant and
executed form of Warrant Exercise as contemplated by Section 3(a) hereof, but in
no event more than 10 days thereafter, in good faith determine the current Fair
Market Value (as defined below) of a Class A Share on the date such items are
received by the Corporation (the "Date of Determination") and cause a written
notice thereof showing the calculation thereof in reasonable detail (the
"Pricing Notice") to be delivered to the Holder that has exercised its Warrants
under this Section 3(e). During the 20-day period immediately following the
delivery of the Pricing Notice, and, if the exercising Holder delivers a Dispute
Notice, following such 20-day period, the Corporation shall provide the
exercising Holder and its authorized representatives with such reasonable access
to the books and records and personnel of the Corporation and its subsidiaries
as the Holder may reasonably request for the purposes of verifying the accuracy
of the Pricing Notice and the Fair Market Value of a Class A Share set forth
therein, and for the purpose of otherwise participating in the dispute
resolution procedure provided in this Section 3.1(e), in each case, at
reasonable times and upon reasonable notice and subject to agreements regarding
confidentiality and non-disclosure in such form as the Corporation may
reasonably request. The Holder may deliver a written notice (a "Dispute Notice")
to the Corporation within the 20-day period immediately following the date of
delivery of the Pricing Notice, objecting to the Fair Market Value determined by
the Board of Directors and setting forth in reasonable detail the basis for such
objections. If the exercising Holder does not deliver a timely Dispute Notice,
then the Fair Market Value of a Class A Share as set forth in the Pricing Notice
delivered by the Corporation shall be conclusive and binding upon all parties
for all purposes hereof. If the exercising Holder delivers a timely Dispute
Notice, then promptly, but in no event more than five days following the date of
delivery of such Dispute Notice, the Holder and the Corporation shall jointly
appoint a single appraiser (the "FMV Appraiser"), which shall be a major
nationally recognized investment banking or valuation firm. If the exercising
Holder and the Corporation fail to jointly appoint an appraiser, then the
Corporation shall appoint one appraiser which shall be a major nationally
recognized investment banking or valuation firm as the FMV Appraiser from three
such appraisers proposed to the Corporation for such purpose by the Holder. The
FMV Appraiser shall, within 30 days of appointment, separately investigate the
Fair Market Value of a Class A Share as of the Date of Determination, and shall
submit a written notice of its determination of such Fair Market Value to the
Corporation and to the exercising Holder. The FMV Appraiser shall be instructed
to determine Fair Market Value in connection with the definition set forth
below. The exercising Holder and the Corporation shall share equally the costs
and expenses of the FMV Appraiser.
The exercise of the Warrant shall be effective immediately following
the date of final determination of the Fair Market Value of a Class A Share in
accordance with this Section 3(e), at which time the Corporation shall issue to
the Holder that number of Class A Shares that has an
3
aggregate Fair Market Value equal to the difference between (i) the aggregate
Fair Market Value of the number of Class A Shares in respect of which the
Warrant has been exercised and (ii) the aggregate Exercise Price in respect of
such number of Class A Shares. Where an election under this Section 3(e) is made
by the Holder, without further payment the Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully paid and
non-assessable Class A Shares determined as provided in this Section 3(e) and
Section 4 hereof. The right specified in this Section 3(e) may be exercised by
the Holder on any business day on or prior to the Expiration Date by surrender
of the Warrant to the Corporation.
For the purposes of this Section 3(e), the "Fair Market Value" of a
Class A Share as of any date, shall be equal to the product of (i) the then fair
market value of the fully-diluted common equity of the Corporation (i.e., giving
effect to the exercise, conversion or exchange of all then issued and
outstanding Common Stock Equivalents (as defined in the Stockholders Agreement
(as defined below)) as a going concern as of such date and (ii) the percentage
of the fully-diluted common equity of the Corporation (i.e., giving effect to
the exercise, conversion or exchange of all then issued and outstanding Common
Stock Equivalents) then represented by such Class A Share, and shall be
determined without regard to any "control premium" or "minority interest
discount" that might otherwise be associated with the number of Class A Shares
with respect to which Fair Market Value is then being determined hereunder.
Section 4. Adjustment of the Exercise Price and Number of Class A Shares
Issuable.
(a) The exercise price (the "Exercise Price") and the number of Class A
Shares issuable upon the exercise of the Warrant are subject to adjustment from
time to time as set forth in this Section 4. The initial Exercise Price upon the
exercise of any Warrant will be $[4,981.50] per Class A Share.
(b) In the event any of the following, other than any of the following
which results in the occurrence of the Expiration Date as contemplated by
Section 3(a)(ii) above (each, a "Transaction"), shall occur:
(i) any reclassification or change in the outstanding Class A Shares
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination or other
transaction described in Section 4(c) hereof);
(ii) any capital reorganization, consolidation or merger to which
the Corporation is a party; or
(iii) any sale or conveyance to another corporation of the property
of the Corporation as an entirety or substantially as an entirety (other than a
sale/leaseback, mortgage or other similar financing transaction),
then, in each such case, the Warrant will, effective as of the effective date of
any such Transaction, be exercisable, upon the terms and conditions specified in
this Agreement, for the kind and amount of shares of stock and other securities
receivable upon the consummation of such
4
Transaction by a holder of the number of Class A Shares which would have been
purchasable upon exercise of the Warrant immediately prior to the consummation
of such Transaction, and in any such case, if necessary, the provisions set
forth in this Section 4 with respect to the rights and interests thereafter of
the Holder will be appropriately adjusted so as to be applicable, as nearly as
may be practicable, to any shares of stock or other securities thereafter
deliverable on the exercise of the Warrant. In connection with the foregoing,
the Corporation shall execute and deliver to the Holder at least ten business
days prior to effecting a Transaction, a certificate stating that the Holder
shall have the right thereafter to exercise the Warrant for the kind and amount
of shares of stock or other securities receivable upon the consummation of a
Transaction by a holder of the number of Class A Shares into which the Warrant
could have been exercised immediately prior to the consummation of such
Transaction, and provision shall be made therefor in the agreement, if any,
relating to such Transaction. Such certificate shall provide for adjustments
which shall be as nearly equivalent a may be practicable to the adjustments
provided for in this Section 4. The provisions of this Section 4(b) and any
equivalent thereof in any such certificate similarly shall apply to successive
Transactions.
(c) In the event the Corporation shall (i) declare a dividend, or make
a distribution, on the outstanding Class A Shares payable in Class A Shares,
(ii) subdivide or reclassify the outstanding Class A Shares into a greater
number of Class A Shares, (iii) combine or reclassify the outstanding Class A
Shares into a smaller number of Class A Shares or (iv) issue any Class A Shares
in a reclassification of the Class A Shares (other than any such event for which
an adjustment is made pursuant to another clause of this Section 4), then, and
in each such case, (A) the aggregate number of Warrant Shares for which the
Warrant is exercisable (the "Warrant Share Number") immediately prior to such
event shall be adjusted (and any other appropriate actions shall be taken by the
Corporation) so that the Holder shall be entitled to receive upon exercise of
the Warrant the number of Class A Shares that it would have owned or would have
been entitled to receive upon or by reason of any of the events described above,
had the Warrant been exercised immediately prior to the occurrence of such event
and (B) the Exercise Price payable upon the exercise of the Warrant shall be
adjusted by multiplying such Exercise Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the number of Warrant Shares
issuable upon the exercise of the Warrant immediately prior to such adjustment,
and the denominator of which shall be the number of Warrant Shares issuable
immediately thereafter. An adjustment made pursuant to this Section 4(c) shall
become effective retroactively (x) in the case of any such dividend or
distribution, to a date immediately following the close of business on the
record date for the determination of holders of Class A Shares entitled to
receive such dividend or distribution or (y) in the case of any such
subdivision, combination or reclassification, to the close of business on the
day upon which such corporate action becomes effective. Such adjustment shall be
made successively whenever any event specified above shall occur.
(d) In case the Corporation shall at any time or from time to time,
after the issuance of the Warrant but prior to the exercise thereof, distribute
to all holders of Class A Shares (including any such distribution made in
connection with a merger or consolidation in which the Corporation is the
resulting or surviving person and Class A Shares are not changed or exchanged)
cash, evidences of indebtedness of the Corporation or another issuer, securities
of the Corporation or another issuer or other assets (excluding dividends or
distributions payable in shares of capital stock of the Corporation for which
adjustment is made under Section 4(c) and regular periodic cash dividends), or
rights or warrants to subscribe for or purchase any of the foregoing, then, and
in each such case, the Holder shall be entitled to participate in any such
5
distribution based on the number of Class A Shares it would have been entitled
to receive had the Warrant been exercised immediately prior to the occurrence of
such distribution, as if the Holder were the owner of such Class A Shares at the
time of such distribution.
(e) Upon any adjustment in the Exercise Price or the number of Class A
Shares issuable upon exercise of the Warrant, the Corporation shall within a
reasonable period (not to exceed 5 business days) following any adjustment
deliver to the Holder a certificate, signed by (i) the Chief Executive Officer
of the Corporation and (ii) the Chief Financial Officer of the Corporation,
setting forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the adjusted
Exercise Price and the number of Class A Shares issuable upon exercise of the
Warrant then in effect following such adjustment.
Section 5. Restrictions of Transfers.
The Holder agrees, for itself and for each subsequent holder of the
Warrant, that such Warrant and the Class A Shares issuable upon exercise of such
Warrant may not be sold or transferred except in compliance with the Securities
Act of 1933, as amended ("Securities Act"), and the Stockholders Agreement,
dated as of March __, 2002, among the Corporation and the Holder, among others
(the "Stockholders Agreement"), and that the certificates issued to evidence the
Warrant and the Class A Shares issued under the Warrant shall bear the legend
specified in the Stockholders Agreement to the extent required thereby.
Section 6. Payment of Taxes.
The Corporation shall pay all documentary stamp taxes attributable to
the issuance of Class A Shares upon the exercise of the Warrant; provided,
however, that the Corporation will not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any Warrant
or any certificates for Class A Shares in a name other than that of the Holder
of a Warrant surrendered upon the exercise of a Warrant, and the Corporation
will not be required to issue or deliver any certificate for any Warrants or any
such Class A Shares unless and until the Holder requesting the issuance thereof
has paid to the Corporation the amount of any such tax or has produced evidence
reasonably satisfactory to the Corporation that any such tax has been paid to
the appropriate taxing authority.
Section 7. Mutilated or Missing Warrant.
In the event that the Warrant will be mutilated, lost, stolen or
destroyed, the Corporation will, at the request of the Holder thereof, issue and
deliver, in exchange and substitution for and upon cancellation of the mutilated
Warrant, or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and representing an equivalent right or
interest, but only upon receipt of evidence reasonably satisfactory to the
Corporation of such loss, theft, or destruction of such Warrant and indemnity,
if requested, also reasonably satisfactory the Corporation. Applicants for such
substitute Warrant will also comply with such other reasonable regulations and
pay such other reasonable charges as the Corporation may prescribe.
6
Section 8. Reservation of Shares.
The Corporation will at all times have authorized and reserved and
shall keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares or its authorized and issued shares held in its
treasury, for the purpose of enabling it to satisfy any obligation to issue
Class A Shares upon exercise of the Warrant, the full number of Class A Shares
deliverable upon the exercise of the Warrant. All Class A Shares that are issued
upon the exercise of Warrant shall, upon issuance, be duly authorized, validly
issued and upon issuance, be free of preemptive rights and validly issued, fully
paid and nonassessable.
Section 9. No Voting Rights.
Nothing contained in this Agreement or in any Warrant shall entitle the
Holder to any voting rights or other rights as a stockholder of the Corporation.
Section 10. Notices.
All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing, and
shall be given or delivered in the manner, to the addresses and facsimile
numbers, and to the persons or entities, set forth in the Stockholders
Agreement. Any such notices, demands or other communications shall be deemed to
have been duly given or delivered at the times determined under the Stockholders
Agreement.
Section 11. Amendments.
This Agreement supersedes all prior agreements (whether written or
oral) among the parties with respect to its subject matter, is intended as a
complete and exclusive statement of the terms of this Agreement among the
parties with respect thereto and cannot be changed or terminated orally. The
Corporation may at any time, with the prior written consent of the Holders of
Warrants representing a majority of the outstanding Warrants at such time, amend
or supplement this Agreement and each Holder of Warrants shall be bound by any
amendment or supplement so approved. Notwithstanding the immediately preceding
sentence, the prior written consent of a Holder shall be required in connection
with any amendment or supplement to this Agreement, if such amendment or
supplement would affect such Holder adversely in a manner that is different from
the manner in which it so affects the Holders of Warrants approving such
amendment or supplement as contemplated by the immediately preceding sentence.
Section 12. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Corporation will bind and inure to the benefit of its successors
and assigns hereunder. For the purposes of this Agreement, all references to the
"Holder" shall, unless the context otherwise requires, constitute references to
the Holder and to any other holder of Warrants subject to this Agreement,
whether as a transferee of the Holder or otherwise.
7
Section 13. Termination.
This Agreement will terminate at the close of business on the
Expiration Date unless the Holder has exercised the Warrant in whole or in part
on or prior to such date, in which case this Agreement will terminate only after
the obligations of the parties resulting from such exercise have been fully
performed.
Section 14. Governing Law.
This Agreement and each Warrant issued hereunder will be deemed to be a
contract made under the laws of the State of Delaware and for all purposes will
be construed in accordance with, and governed by, the internal laws of the State
of Delaware.
Section 15. Benefits of This Agreement.
Nothing in this Agreement will be construed to give to any person,
corporation or other entity other than the Corporation and the Holder any legal
or equitable right, remedy or claim under this Agreement.
Section 16. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts will together constitute but one and the same instrument.
Section 17. Captions.
The captions in this Agreement are for convenience of reference only
and shall not be given any effect in the interpretation of this Agreement.
Section 18. Jurisdiction.
Each party hereto irrevocably submits to the non-exclusive jurisdiction
of (i) the courts of the State of Delaware, and (ii) the United States District
Court for the District of Delaware, for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each party hereto agrees to commence any such action, suit or proceeding
either in the United States District Court for the District of Delaware or, if
such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the courts of the State of Delaware. Each party
hereto that at any time after the date hereof is not a resident of the State of
Delaware or does not maintain an agent for service of process in the State of
Delaware hereby irrevocably designates, appoints and empowers The Corporation
Trust Company, having its address at the date hereof at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx (New Castle County) U.S.A., as its agent for service of
process to receive for and on its behalf service of process in the State of
Delaware in any legal action, suit or proceeding with respect to this Agreement.
It is understood that a copy of any such process served on such process agent
shall be promptly forwarded by air mail by such process agent and the person
commencing such proceeding to the relevant party hereto at its address specified
in the Stockholders Agreement, but the failure of the relevant party to receive
such copy shall not affect in any way the service of
8
such process as aforesaid. Nothing in this Agreement will affect the right of
any party to this Agreement to serve process in any other manner permitted by
law. Each party hereto irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in (A) the courts of the State
of Delaware, or (B) the United States District Court for the District of
Delaware, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
Section 19. Severability.
The provisions of this Agreement are intended to be and shall be deemed
severable. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
9
IN WITNESS WHEREOF, the parties have caused this Warrant Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
LOEWS CINEPLEX ENTERTAINMENT CORPORATION
By:
------------------------------------
Name:
Title:
OCM CINEMA HOLDINGS, LLC
By: Oaktree Capital Management, LLC, its
Manager
By:
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
By:
------------------------------------
Name: Xxxxxxx X. Masurek
Title: Senior Vice President
10
EXHIBIT A
[FORM OF WARRANT]
[_________] [__], 200[_]
No. W-___ Warrant
WARRANT TO PURCHASE CLASS A COMMON STOCK, .01 PAR VALUE PER
SHARE OF LOEWS CINEPLEX ENTERTAINMENT CORPORATION
This Warrant certifies that [____________], or registered assigns
thereof, is the registered holder of [____________] Warrants (the "Warrants") to
purchase shares of Class A Common Stock, $.01 par value per share (the "Class A
Shares"), of Loews Cineplex Entertainment Corporation, a Delaware corporation
(the "Corporation"). Each Warrant evidenced hereby entitles the holder to
purchase from the Corporation on or before 5:00 p.m., New York City time, on the
Expiration Date, one fully paid and nonassessable Class A Share at the initial
Exercise Price, subject to adjustment in certain events, of $[____________] upon
surrender of this Warrant and payment of the Exercise Price at the address of
the Corporation as set out in Section 11 of the Warrant Agreement, dated as of
March [__], 2002 between the Corporation and the holder hereof, among others
(the "Warrant Agreement"), or such other place specified in a writing by the
Corporation delivered to the Holder, but only subject to the conditions set
forth herein and in the Warrant Agreement.
All capitalized terms used but not defined herein have the meanings set
forth in the Warrant Agreement.
Subject to Section 3(e) of the Warrant Agreement, payment of the
Exercise Price may be made in cash (including by wire transfer) or by certified
or official bank check payable to the order of the Corporation.
This Warrant is part of a duly authorized issue of Warrants issued
pursuant to the Warrant Agreement, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Corporation and the Holder.
The Holder of Warrants evidenced by this Warrant may exercise them by
surrendering the Warrant, with the form of Warrant Exercise set forth hereon
properly completed and executed, together with payment of the Exercise Price and
any applicable transfer taxes at the office of the Corporation. In the event
that upon any exercise of Warrants evidenced hereby, the number of Class A
Shares purchased will be less than the total number of Class A Shares
purchasable hereunder, there will be issued to the Holder hereof or the Holder's
assignee a new Warrant evidencing the number of Class A Shares not purchased.
This Warrant may be exercised without payment of the Exercise Price in the
circumstances and manner described in Section 3(e) of the Warrant Agreement.
11
The Warrant Agreement also provides that in the event of certain
reclassifications or changes in outstanding Class A Shares, certain
consolidations or mergers to which the Corporation is a party and certain sales
or conveyances of the property of the Corporation as an entirety or
substantially as an entirety, each Warrant would thereupon become exercisable
for the number of shares of stock or other securities which would have been
receivable upon such transaction by the Holder of the number of Class A Shares
which would have been purchasable upon exercise of such Warrant immediately
prior to such transactions.
The Corporation may deem and treat the Holder hereof as the absolute
owner of this Warrant (notwithstanding any notation of ownership or other
writing hereon made by anyone), for the purpose of any exercise hereof, and of
any distribution to the Holder hereof, and for all other purposes, and the
Corporation will not be affected by any notice to the contrary.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly
executed as of the date first above written.
LOEWS CINEPLEX ENTERTAINMENT CORPORATION
By:
-------------------------------------
Name:
Title:
12
[FORM OF WARRANT EXERCISE]
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably(1) elects to exercise the right,
represented by this Warrant, to acquire ________ Class A Shares and hereby
elects to exercise in accordance with section 3(e) of the Warrant Agreement, or
herewith tenders in payment for such Class A Shares cash or a certified or
official bank check payable to the order of Loews Cineplex Entertainment
Corporation, in the amount of $ ________.
All in accordance with the terms of the Warrant Agreement, dated
___________ __, 2002, entered into by Loews Cineplex Entertainment Corporation
in favor of certain other parties, as amended. The undersigned requests that a
certificate for the Class A Shares to be issued pursuant to this exercise of
warrant be registered in the name of ___________________ ___________________
whose address is _______________________________________ and that such
certificate be delivered to ___________________________________, whose address
is _______________________________________. If said number of Class A share is
less than all the Class A Shares purchasable hereunder, the undersigned requests
that a new Warrant representing Warrants to purchase the remaining balance of
the Class A Shares be registered in the name of
__________________________________________, whose address is
_____________________________________________, and that such certificate be
delivered to ________________________________whose address is
______________________________.
Dated:
Signature: __________________________________________________
(Signature must conform in all respects to name
of Holder as specified on the face of the Warrant)
Signature Guaranteed:
___________________________
(1) If this Warrant Exercise is delivered in connection with a transaction
described in Section 3(a)(ii) of the Warrant Agreement as to which the
Company has delivered the written notice contemplated by the
penultimate sentence of Section 3(a), then the exercise of the Warrant
contemplated hereby may be made conditional upon the occurrence of the
transaction described in any such notice, and any such exercise may be
rescinded if such transaction is not consummated.
13
[FORM OF ASSIGNMENT]
(To be executed by the Holder if the Holder desires to transfer the Warrant)
FOR VALUE RECEIVED hereby sells, assigns and transfers unto
(Please print name and address of transferee)
[all] [ ] of the Warrants evidenced by this Warrant, together with all right,
title and interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within Warrant on the books of
the within-named Corporation, with full power of substitution.
Dated:
Signature:__________________________________________
(Signature must conform in all respects to
name of Holder as specified on the face
of the Warrant)
Signature Guaranteed:
14
OCM CINEMA HOLDINGS, LLC
c/o Oaktree Capital Management, LLC
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
as of March 21, 2002
1363880 Ontario Inc.
c/o Onex Corporation
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Re: Second Letter Agreement Loews Cineplex Entertainment Corporation.
----------------------------------------------------------------
Ladies and Gentlemen:
We refer to the (i) Stockholders Agreement (as amended, supplemented or
otherwise modified from time to time, the "Stockholders Agreement"), which is
being entered into immediately prior to the execution and delivery of this
letter agreement, among Loews Cineplex Entertainment Corporation, a Delaware
corporation ("Loews"), 1363880 Ontario Inc., an Ontario corporation ("Onex
Cinema"), and OCM Cinema Holdings, LLC, a Delaware limited liability company
("OCM"), and (ii) First Letter Agreement (as amended, supplemented or otherwise
modified from time to time, the "First Letter Agreement"), which is being
entered into immediately prior to the execution and delivery of this letter
agreement, among Onex Cinema and OCM, which such First Letter Agreement grants
to OCM the right, on the terms and conditions provided therein, to purchase
3,450 Class A Shares from Onex Cinema and receive the Oaktree Warrant (as
defined in the First Letter Agreement) (to purchase 2,302 Class A Shares at an
exercise price of $5,025 per share) from Loews. Capitalized terms used but not
otherwise defined in this letter agreement have the respective meanings given to
them in the Stockholders Agreement.
Substantially simultaneously with the sale of Class A Shares to OCM
by Onex Cinema, and the issuance by Loews of the Oaktree Warrant under the
First Letter Agreement, OCM shall sell, assign and convey to Onex Cinema, and
Onex Cinema shall buy and accept from OCM, OCM's right (i) to purchase under the
First Letter Agreement 1,816 Class A Shares from Onex Cinema and (ii) to
receive an Oaktree Warrant from Loews to purchase 727 Class A Shares (the
"Sale"), for consideration equal to $7.4 million (the "Purchase Price"), less
the amount (the "High Yield Return") of the Plan Distribution paid to the
Oaktree group in respect of the $56.0 million principal amount of the Notes (as
defined in the First Letter Agreement) held by the high yield debt funds and
accounts managed by Oaktree that are listed on Annex A to this letter agreement.
The Purchase Price, less the High Yield Return, shall be paid by Onex Cinema by
wire transfer of immediately available funds to an account designated by OCM
substantially
simultaneously with the consummation of the transactions contemplated by the
First Letter Agreement. Onex Cinema and OCM shall take all actions, including
voting any Shares held thereby, as may be necessary to cause Loews, concurrently
with the consummation of the Sale, to take all actions necessary (including the
issuance of new share certificates and Oaktree Warrants) in connection with the
transactions contemplated hereby.
Upon consummation of the transactions described in the foregoing
paragraph, Onex Cinema and OCM shall cause such amendments to be made to the
Stockholders Agreement as may be necessary to give effect to this letter
agreement and the First Letter Agreement so that (i) the Additional Shares (as
defined in the First Letter Agreement) and Oaktree Warrants owned by OCM after
giving effect to the transactions contemplated in this letter agreement and by
the First Letter Agreement shall be considered for all purposes of the
Stockholders Agreement to have been owned by OCM as of Xxxxx 00, 0000, (xx) the
Additional Shares and Oaktree Warrants received by Onex Cinema after giving
effect to the transactions contemplated in this letter agreement and by the
First Letter Agreement shall be considered for all purposes of the Stockholders
Agreement to have been owned by Onex Cinema as of March 21, 2002 and (iii) the
Additional Shares transferred by Onex Cinema to OCM under the First Letter
Agreement shall be considered for all purposes of the Stockholders Agreement not
to have been owned by Onex Cinema as of March 21, 2002.
For avoidance of doubt, the transfer by OCM to Onex Cinema of its right
to receive an Oaktree Warrant for 727 Class A Shares reduces the number of Class
A Shares underlying the Oaktree Warrant to be issued to OCM after giving effect
to the transactions contemplated hereby and by the First Letter Agreement to
1,575 Class A Shares.
Notwithstanding anything to the contrary provided in the First Letter
Agreement, in connection with the consummation of the transactions contemplated
hereby and by this letter agreement, the amount payable by OCM to Onex Cinema
under the first paragraph of the First Letter Agreement shall be reduced by an
amount equal to the High Yield Return.
Notwithstanding anything to the contrary provided in the First Letter
Agreement, the parties agree that the transactions contemplated by the First
Letter Agreement and by this letter agreement shall be consummated
contemporaneously, and that such transactions shall be consummated as soon as
practicable after the receipt of the Plan Distribution by the members of the
Oaktree Group.
This letter agreement may be executed in one or more counterparts, each
of which shall constitute an original, and all of which shall constitute one and
the same instrument. This letter agreement (together with the Stockholders
Agreement and the First Letter Agreement) sets forth and represents the entire
agreement between the parties (and their respective Affiliates) with respect to
the subject matter hereof and thereof, supersedes (together with the
Stockholders Agreement and the First Letter Agreement) any and all prior written
or oral agreements, understandings, undertakings, negotiations and arrangements
between the parties (and their respective Affiliates) with respect to such
subject matter, and may be amended, supplemented or otherwise modified only by a
written agreement executed by the parties hereto. The failure of a
2
party to exercise any of its rights hereunder or to insist upon strict
adherence to any term or condition hereof on any one occasion shall not be
construed as a waiver or deprive that party of the right thereafter to insist
upon strict adherence to the terms and conditions of this letter agreement at a
later date. Further, no waiver of any of the terms and conditions of this
letter agreement shall be deemed to or shall otherwise constitute a waiver of
any other term or condition hereof (whether or not similar).
This letter agreement shall be binding and inure to the benefit of the
parties hereto and their respective successors, assigns, heirs and
administrators; provided, that neither this letter agreement nor any rights
hereunder may be assigned by any party hereto without the prior written consent
of the other party hereto.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed entirely within such State, and the parties hereby agree that the
provisions of Section 8.6 of the Stockholders Agreement shall apply in
connection with any suit, action or other proceeding arising out of this letter
agreement or any transaction contemplated hereby.
3
All notices, demands or other communications to be given or delivered
under or by reason of this letter agreement shall be in writing, and shall be
given or delivered in the manner and to the Persons set forth in Section 8.7 of
the Stockholders Agreement. Any such notices, demands or other communications
shall be deemed to have been duly given or delivered at the time determined
under Section 8.7 of the Stockholders Agreement.
OCM CINEMA HOLDINGS, LLC
By: Oaktree Capital Management, LLC, its Manager
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title Senior Vice President
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
1363880 ONTARIO INC.
By: /s/ X.X. Xxxxxx
--------------------------------
Name: X.X. Xxxxxx
Title: Vice President
4
