AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
Amended and Restated Stockholders Agreement (the "Agreement"), dated
as of October 24, 1996, by and among Panavision Holdings, L.L.C.
("Warburg"), Xxxxxxx X. Xxxxx III and certain other management investors
whose names appear on Schedule I hereto (Xx. Xxxxx and such other management
investors are hereinafter referred to collectively as the "Management
Investors," and Warburg and the Management Investors are hereinafter referred
to individually as an "Investor" and collectively as the "Investors"), and
Panavision Inc., a Delaware corporation (the "Company").
R E C I T A L S
WHEREAS, Warburg, the Management Investors and the Company are parties
to a Stockholders Agreement dated as of June 12, 1996 (the "Prior Agreement");
WHEREAS, the parties now desire to amend and restate the Prior Agreement
as provided herein;
WHEREAS, the Investors own shares (the "Shares") of Common Stock, par
value $.01 per share, of the Company (the "Common Stock"); and
WHEREAS, Management Investors have been and may in the future be granted
options to purchase shares of Common Stock pursuant to the terms of the Stock
Option Plan (as defined in Section 2(a) hereof) and related Stock Option
Agreements between each Management Investor and the Company (each, a "Stock
Option Agreement"); and
WHEREAS, the Investors and the Company desire to promote their mutual
interests by agreeing to certain matters relating to the operations of the
Company and the disposition and voting of Shares.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:
1. COVENANTS OF THE PARTIES.
(a) LEGENDS. The certificates evidencing the shares of Common
Stock owned as of the date hereof or hereafter acquired by the Investors or to
be issued upon exercise of options to purchase shares of Common Stock pursuant
to the Stock Option Plan or otherwise will bear the following legend
reflecting the restrictions on the transfer of such securities contained in
this Agreement:
"The securities evidenced hereby are subject to the terms of that
certain Amended and Restated Stockholders Agreement, dated as of
October 24, 1996, by and among the Company and certain
investors identified therein, including certain restrictions on
transfer. A copy of the Stockholders Agreement has been filed
with the Secretary of the Company and is available upon written
request."
(b) ELECTION OF DIRECTORS. At all times throughout the term of
this Agreement, the Investors and the Company agree that the Company's Board
of Directors (the "Board") shall consist of at least five (5) but not more
than seven (7) members. The Board shall include at least (A) three (3)
designees nominated by Warburg and (B) (i) Xx. Xxxxx or, if he is not an
employee of Panavision International, L.P., or is otherwise unavailable, one
(1) designee nominated by the holders of a majority of the shares of Common
Stock held by the Management Investors who are then employed by the Company
or any of its subsidiaries and (ii) Xxxx X. Xxxxxxx or, if he is not an
employee of Panavision International, L.P., or is otherwise unavailable, one
(1) designee nominated by the holders of a majority of the shares of Common
Stock held by the Management Investors who are then employed by the Company
or any of its subsidiaries. For purposes of this Section 1(b) and Section
1(c), Management Investors shall include additional holders of Common Stock
who become parties to this Agreement and who are then employed by the Company
or any of its subsidiaries.
(c) REPLACEMENT DIRECTORS. In the event that any director (a
"Withdrawing Director") designated in the manner set forth in Section l(b)
hereof is unable to serve, or once having commenced to serve, is removed or
withdraws from the Board, such Withdrawing Director's replacement (the
"Substitute Director") will be designated by the Investor or parties that
designated the Withdrawing Director. The Company and each of the Investors
agree to take all action within their respective power, including but not
limited to the voting of capital stock of the Company, to cause the election
of such Substitute Director promptly following his or her nomination pursuant
to this Section l(c).
(d) RIGHTS NON-TRANSFERABLE. Except as otherwise expressly
contemplated by this Agreement, the rights of any Investor to designate
directors pursuant to this Section 1 are not transferable, whether by sale of
capital stock or otherwise, to any Person or entity other than an Affiliate
of such Investor.
2. TRANSFER OF STOCK.
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(a) TRANSFER OF SECURITIES. Until the second anniversary of the closing
of an Initial Public Offering, no Management Investor shall Transfer any
Shares other than in accordance with the provisions of this Section 2 and
Section 3 hereof; provided, that prior to such second anniversary, each
Management Investor may Transfer (subject to any lock-up agreements entered
into in connection with any public offering), in the aggregate, up to a
number of Shares equal to the remainder of (x) 20% of the total number
("Total Holdings") of Shares owned by him since the date of this Agreement,
including the Shares (i) owned by him on the date hereof, (ii) acquired by
him pursuant to the Company's Stock Option Plan dated as of June 12, 1996
(the "Stock Option Plan") and (iii) acquired by him pursuant to any
restructuring or similar transaction, minus (y) the number of Shares, if any,
sold or Transferred by such Management Investor pursuant to Section 2(b), 2(e)
or 3 hereof. In addition, Warburg shall not Transfer any shares of capital
stock of the Company other than in accordance with the provisions of this
Section 2 and Section 3(a). Any Transfer or purported Transfer made in
violation of this Section 2 shall be null and void and of no effect.
(b) TAG-ALONG RIGHT. In the event Warburg intends to Transfer any of
its shares of Common Stock prior to the closing of an Initial Public Offering
other than to an Affiliate of Warburg or pursuant to a distribution of such
shares to its or any of its Affiliates' partners, Warburg shall notify each
other Investor, in writing, of such transfer and its terms and conditions.
Within 5 days of the date of such notice, each Investor shall notify Warburg
if it elects to participate in such Transfer. Each Investor that so notifies
Warburg shall have the right to sell, at the same price and on the same terms
as Warburg, an amount of shares equal to the shares of Common Stock the third
party actually proposes to purchase multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock owned by such Investor
and the denominator of which shall be the aggregate number of shares of
Common Stock owned by Warburg and each Investor exercising its rights under
this Section 2(b). Notwithstanding anything contained in this Section 2(b)
or elsewhere in this Agreement, no Management Investor may Transfer any of
its shares of Common Stock pursuant to this Section 2(b) if and to the extent
that such Transfer would result in a Percentage Imbalance.
(c) DRAG-ALONG RIGHT.
(i) If, prior to the closing of an Initial Public Offering,
Warburg is advised by the prospective managing underwriter of the Initial
Public Offering of the Company that a restructuring of the capitalization of
the Company is advisable in connection with such offering, and if Warburg is
willing to effect such a restructuring, Warburg shall so notify each other
Investor, in writing, specifying the terms and conditions of such
restructuring. Each other Investor, within 5 days of the receipt
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of such notice (or such longer period of time as Warburg shall designate)
shall take all such actions as shall be required in connection with such
restructuring (without any additional investment by the Management
Investors), upon the same terms and conditions as Warburg, including, without
limitation, the voting of such Investor's shares of Common Stock, the
conversion of one or more classes of Company securities, or the contribution
to the capital of the Company of one or more classes of the Company's equity
securities.
(ii) If at any time and from time to time
after the date of this Agreement and prior to the closing of an Initial
Public Offering, Warburg wishes to Transfer in a bona fide arms' length sale
all of the shares of capital stock of the Company then owned by it to any
Person or Persons who are not Affiliates of Warburg (the "Proposed
Transferee"), Warburg shall have the right (the "Drag-Along Right") to
require each other Investor to sell to the Proposed Transferee all of the
shares of capital stock of the Company then owned by such other Investor on
terms no less favorable than the terms on which the shares of capital stock
then owned by Warburg are being sold. Each Investor agrees to take all steps
necessary to enable it to comply with the provisions of this Section 2(c).
(iii) To exercise a Drag-Along Right, Warburg shall give each
Investor a written notice (a "Drag-Along Notice") containing (A) the name and
address of the Proposed Transferee and (B) the proposed purchase price, terms
of payment and other material terms and conditions of the Proposed
Transferee's offer. Each such Investor shall thereafter be obligated to
deliver for sale at the closing specified in such Drag-Along Notice, the
shares of capital stock subject to such Drag-Along Notice free and clear of
all liens, encumbrances and security interests.
(d) PARTICIPATION IN CERTAIN SECURITIES ISSUANCES AND REPURCHASES.
(i) If at any time prior to the closing of an Initial Public
Offering the Company proposes to issue to Warburg or any of its Affiliates
equity securities of any kind (the term "equity securities" shall include for
purposes of this Section 2(d) any warrants, options or other rights to
acquire equity securities and debt securities convertible into equity
securities), then, as to each Investor, the Company shall:
(a) give written notice setting forth in reasonable detail (1)
the designation and all of the terms and provisions of the securities
proposed to be issued (the "Proposed Securities"), including, where
applicable, the voting powers, preferences and relative participating,
optional or other special rights, and the qualification, limitations or
restrictions thereof and interest rate and maturity; (2) the price and
other terms of the proposed sale of
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such securities; (3) the amount of such securities proposed to be issued;
and (4) such other information as the Investors may reasonably request in
order to evaluate the proposed issuance; and
(b) offer to issue to each such Investor a portion of the
Proposed Securities equal to a percentage determined by dividing (x) the
number of shares of Common Stock held by such Investor and issuable to such
Investor, assuming conversion in full of any convertible securities or
vested Option Shares, by (y) the total number of shares of Common Stock
then outstanding assuming conversion in full of any convertible securities
and outstanding options, rights or similar securities to the extent then
vested.
Each such Investor must exercise its purchase rights hereunder within
ten (10) days after receipt of such notice from the Company. If all of the
Proposed Securities offered to such Investors are not fully subscribed by
such Investors, the remaining Proposed Securities will be re-offered to the
Investors purchasing their full allotment upon the terms set forth in this
Section 2(d)(i), until all such Proposed Securities are fully subscribed for
or until all such Investors have subscribed for all such Proposed Securities
which they desire to purchase, except that such Investors must exercise their
purchase rights within five (5) days after receipt of all such re-offers. To
the extent that the Company offers two or more securities in units, Investors
must purchase such units as a whole and will not be given the opportunity to
purchase only one of the securities making up such unit.
Upon the expiration of the offering periods described above, the Company
will be free to sell such Proposed Securities that the Investors have not
elected to purchase during the ninety (90) days following such expiration on
terms and conditions no more favorable to the purchasers thereof than those
offered to the Investors. Any Proposed Securities offered or sold by the
Company after such ninety (90) day period must be re-offered to the Investors
pursuant to this Section 2(d).
The election by an Investor not to exercise its subscription rights
under this Section 2(d)(i) in any one instance shall not affect its rights
(other than in respect of a reduction of its percentage holdings) as to any
subsequent proposed issuance.
(ii) If at any time prior to the closing of an Initial Public
Offering the Company proposes a repurchase or redemption of the Company's
equity securities, then each Investor shall have the right to have its equity
securities of the same class repurchased or redeemed, as the case may be, in
an amount equal to a percentage determined by dividing (x) the number of
shares of such equity securities held by such Investor and
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issuable to such Investor, assuming conversion in full of any convertible
securities or options, by (y) the total number of shares of such equity
securities then outstanding assuming conversion in full of any convertible
securities and outstanding options, rights or similar securities to the
extent then vested.
(e) PERMITTED TRANSFERS. Any Investor may Transfer, without
compliance with the requirements of this Section 2, Shares (i) in the case of
the Management Investors, to immediate family members or the estate of any
such Management Investor (including, without limitation, any Transfer by such
Management Investor to or among any trust, custodial or other similar
accounts or funds in which such Management Investor serves as trustee or
custodian or in a similar fiduciary capacity), as well as any corporation,
partnership or other entity controlled by such Management Investor and/or
immediate family members of such Management Investor, in each case pursuant
to a bona fide gift, and (ii) in the case of Warburg, to any Affiliate;
provided in each instance that such transferee agrees to be bound by the
provisions (including the provisions in this Section 2) of this Agreement as
if such transferee were an original signatory hereto and such transferee
shall be deemed an Investor, as applicable, for purposes of this Agreement.
Notwithstanding anything contained in this Section 2(e) or elsewhere in this
Agreement, no Management Investor may Transfer any of its shares of Common
Stock pursuant to this Section 2(e) if and to the extent that the number of
Shares Transferred by such Management Investor pursuant to this Section 2(e),
when added to the Shares Transferred by such Management Investor pursuant to
Sections 2(a), 2(b) and 3 hereof, would exceed 20% of such Management
Investor's Total Holdings..
(f) TERMINATION OF CERTAIN PROVISIONS. The provisions of
Section 2(b), (c) and (d) shall terminate upon the closing of an Initial
Public Offering .
(g) INJUNCTIVE RELIEF. The Company and the Investors hereby
declare that it is impossible to measure in money the damages which will
accrue to the parties hereto by reason of the failure of any party to perform
any of its obligations set forth in this Section 2. Therefore, the Company
and the Investors shall have the right to specific performance of such
obligations, and if any party hereto shall institute any action or proceeding
to enforce the provisions hereof, each of the Company and the Investors
hereby waives the claim or defense that the party instituting such action or
proceeding has an adequate remedy at law.
3. REGISTRATION RIGHTS.
(a) REQUESTED REGISTRATION
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(i) At any time after an Initial Public Offering, if
the Company shall at any time receive from Warburg a written request that the
Company effect any registration with respect to all or a part of the
Registrable Shares owned by Warburg, the Company shall:
(A) within five (5) days of receipt of the written
request from Warburg, give written notice of the proposed registration
to all Management Investors holding Registrable Shares (the
"Holders"); and
(B) as soon as practicable, use its diligent best
efforts to effect such registration (including, without limitation,
the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations
issued under the Act) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such
Registrable Shares as are specified in such request, together with all
or such portion of the Registrable Shares of any Holder or Holders
joining in such request as are specified in a written request received
by the Company within ten (10) business days after written notice from
the Company is given pursuant to Section 3(a)(i)(A) above; provided,
that the Company shall not be obligated to effect, or take any action
to effect, any such registration pursuant to this Section 3(a):
(x) in any particular jurisdiction in which the
Company would be required to execute a general consent to service
of process in effecting such registration, qualification or
compliance, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Act or
applicable rules or regulations thereunder; or
(y) after the Company has effected two (2) such
registrations pursuant to this Section 3(a) and such
registrations have been declared or ordered effective and the
sales of such Registrable Shares shall have closed.
Notwithstanding anything contained in this Section 3(a)(i) or elsewhere
in this Agreement, no Management Investor may Transfer any of its shares of
Common Stock pursuant to this Section 3(a)(i) if and to the extent that such
Transfer would result in a Percentage Imbalance. The registration rights set
forth in this Section 3(a) shall be assignable, in whole or in
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part, to any transferee of Common Stock under Section 2(e) only (who shall be
bound by all obligations of this Section 3).
(ii) If Warburg intends to distribute the Registrable Shares
covered by its request by means of a registered underwriting, it shall so advise
the Company as a part of its request made pursuant to Section 3(a).
In such case, any Holder may request inclusion in such registration
conditioned on such Holder's acceptance of the further applicable provisions
of this Section 3. Each Holder that so requests shall have the right to
include in such registration a number of shares equal to the Registrable
Shares owned by such Holder multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock to be included in such
registration by Warburg and the denominator of which shall be the aggregate
number of shares of Common Stock owned by Warburg; provided, however, that if
pursuant to the remaining provisions of this paragraph any Holder's
participation in a registration is reduced without a pro rata reduction in
Warburg's participation, such Holder's permitted pro rata participation in a
subsequent registration governed by this Section 3(a) shall be
correspondingly increased (subject to the same volume restrictions contained
in such remaining provisions). The Holders whose shares are to be included
in such registration, Warburg and the Company shall enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for such underwriting by Warburg and
reasonably acceptable to the Company. Notwithstanding any other provision of
this Section 3(a), if the representative advises the Holders in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the number of shares included in the registration by Warburg
and each Holder shall be reduced on a pro rata basis (based on the number of
shares held by Warburg and each such Holder), by such minimum number of
shares as is necessary to comply with such request; provided, that if such
marketing factors relate primarily to the representative's good faith belief
that the number of shares sold by Holders in their capacity as Management
Investors should be limited, then the number of shares included in the
registration by each such Holder (but not by Warburg) shall be reduced on a
pro rata basis (based on the number of shares held by each such Holder) by
such minimum number of shares as is necessary to comply with such request.
No Registrable Shares excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration.
If any Holder who has requested inclusion in such registration as provided
above disapproves of the terms of the underwriting, such person may elect to
withdraw therefrom by written notice to the Company, the underwriter and
Warburg. The securities so withdrawn shall also be withdrawn from
registration. If the underwriter has not limited the number of Registrable
Shares or other securities to be underwritten, the Company may include its
securities for its own account in such
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registration if the representative so agrees and if the number of Registrable
Shares and other securities which would otherwise have been included in such
registration and underwriting will not thereby be limited.
Notwithstanding anything contained in this Section 3(a)(ii) or
elsewhere in this Agreement, no Management Investor may Transfer any of its
shares of Common Stock pursuant to this Section 3(a)(ii) if and to the extent
that such Transfer would result in a Percentage Imbalance.
(iii) Notwithstanding the foregoing, if the Company shall
furnish to Warburg a certificate signed by the Chief Executive Officer of the
Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
stockholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, then the
Company shall have the right to defer such filing for a period of not more
than 120 days after receipt of the request of Warburg; PROVIDED, HOWEVER,
that the Company may not utilize this right more than once in any 12-month
period.
(b) PIGGYBACK REGISTRATION.
(i) Commencing two years after the closing of an Initial
Public Offering, and at any time thereafter and from time to time, whenever
the Company proposes to file a Registration Statement it will, prior to such
filing, give written notice to each Investor of its intention to do so and,
upon the written request of any Investor given within five (5) days after the
Company provides such notice (which request shall state the intended method
of disposition of the Registrable Shares), the Company shall use its good
faith efforts to cause all Registrable Shares which the Company has been
requested by an Investor to register to be registered under the Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of such
Investor; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 3(b) without
obligation to any Investor.
(ii) In connection with any offering under this Section 3(b)
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such underwriting unless the Investor accepts the terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it, and then only in such quantity as will not, in the sole
discretion of the underwriters, jeopardize the success of the offering by the
Company. If in the sole discretion of the managing underwriter or
underwriters the registration of all, or part of, the Registrable Shares
which the Investor has requested to be included would adversely affect such
public offering, then the Company shall be required to include in
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the underwriting only that number of Registrable Shares, if any, which the
managing underwriter believes may be sold without causing such adverse
effect. If the number of Registrable Shares to be included in the
underwriting in accordance with the foregoing is less than the total number
of shares which any Investor has requested to be included, then, except as
described below, such Investor shall participate in the underwriting pro rata
based upon its total ownership of Registrable Shares compared to the total
number of shares held by others for which registration has been requested
pursuant to this Agreement (or in any other proportion as agreed upon by all
holders of the Common Stock entitled to and requesting registration) and if
any Investor would thus be entitled to include more shares than such Investor
requested to be registered, the excess shall be allocated among other
requesting holders pro rata based upon their total ownership of Registrable
Shares.
(c) REGISTRATION PROCEDURES. If and when the Company is required
by the provisions of this Agreement to use its good faith efforts to effect
the registration of any of the Registrable Shares under the Act, the Company
shall:
(i) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its good faith efforts to cause
that Registration Statement to become and remain effective;
(ii) prepare and file with the Commission any amendments and
supplements to the Registration Statement and the prospectus included in the
Registration Statement as may be necessary to keep the Registration Statement
effective for a period of up to 120 days from the effective date;
(iii) furnish to the Investor such reasonable number of copies
of the prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as the Investor may
reasonably request in order to facilitate the public sale or other
disposition of the Registrable Shares owned by the Investor; and
(iv) use its good faith efforts to register or qualify the
Registrable Shares covered by the Registration Statement under the securities
or blue sky laws of such states as the Investors shall reasonably request,
and do any and all other acts and things that may be necessary or desirable
to enable the holders to consummate the public sale or other disposition in
such jurisdictions of the Registrable Shares owned by the Investors;
provided, however, that the Company shall not be required in connection with
this Section 3(c) to qualify as a foreign corporation in any jurisdiction nor
register or qualify the securities in any state which as a condition to such
registration or qualification would impose restrictions or other conditions
on the Company or any of its officers, directors or shareholders (including
with respect to any shares held by such
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persons or entities) unless such restrictions or other conditions are
approved by the party adversely affected.
If the Company has delivered preliminary or final prospectuses to the
Investors and after having done so the prospectus is amended to comply with the
requirements of the Act, the Company shall promptly notify the Investors and, if
requested, the Investors shall immediately cease making offers of Registrable
Shares and return all undistributed prospectuses to the Company. The Company
shall promptly provide the Investors with revised prospectuses to permit the
Investors to resume making offers of the Registrable Shares.
(d) ALLOCATION OF EXPENSES. The Company will pay all
Registration Expenses of all registrations under this Agreement. For purposes
of this Section 3, the term "Registration Expenses" shall mean all expenses
incurred by the Company in complying with this Section 3, including, without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, fees and disbursements of counsel for the Company, state blue sky fees
and expenses, and the expense of any special audits incident to or required by
any such registration, but excluding underwriting discounts and selling
commissions attributable to the Registrable Shares and the fees and expenses of
any Investor's own counsel and accountants, which shall be borne by such
Investor.
(e) INDEMNIFICATION. In the event of any registration of any of
the Registrable Shares under the Act pursuant to this Agreement, the Company
will indemnify and hold harmless the Investors against any losses, claims,
damages or liabilities, joint or several, to which the Investors may become
subject under the Act, the Exchange Act, state securities laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of any material
fact contained in any Registration Statement under which such Registrable
Shares were registered under the Act, any preliminary prospectus or final
prospectus contained in such Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon
the omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and the Company will
reimburse the Investors for any legal or any other expenses reasonably
incurred by the Investors in connection with investigating and defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable to any Investor in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon any untrue statement or omission made in such Registration
Statement, preliminary prospectus or prospectus, or any such amendment or
supplement, in reliance upon and in conformity with information furnished to
the Company by or on behalf of such Investor specifically for use in the
preparation thereof, or as a result
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of the failure of any Investor, or any agent of any Investor, to deliver any
amendments and supplements to any Registration Statement and the prospectus
included in any such Registration Statement.
In the event of any registration of any of its Registrable Shares under
the Act pursuant to this Agreement, each Investor will indemnify and hold
harmless the Company, each of its directors and officers and each person, if
any, who controls the Company within the meaning of the Act or the Exchange
Act, against any losses, claims, damages or liabilities, joint or several, to
which the Company, such directors and officers, or controlling person may
become subject under the Act, Exchange Act, state securities laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement of a
material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Act, any preliminary prospectus
or final prospectus contained in the Registration Statement, or any amendment
or supplement to the Registration Statement, or arise out of or are based
upon any omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, if the statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Investor, or any agent thereof, specifically
for use in connection with the preparation of such Registration Statement,
prospectus, amendment or supplement, and such Investor will reimburse the
Company, each of its directors and officers, and each controlling person,
severally and not jointly, for any legal or other expenses reasonably
incurred by the Company, each director and officer, and each controlling
person in connection with investigating and defending any such loss, claim,
damage, liability or action.
Each party entitled to indemnification under this Section 3(e) (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom; provided, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld or delayed); and, provided, further, that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 3,
except when material prejudice to the Indemnifying Part shall have resulted
from the failure to give such notice. The Indemnified Party may participate
in such defense at such party's expense. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
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thereof, the giving by the claimant or plaintiff to such Indemnified Party of
a release from all liability in respect of such claim or litigation.
(f) INFORMATION BY INVESTORS. Each Investor shall promptly
furnish to the Company such information regarding such Investor and the
distribution proposed by such Investor as the Company may request in writing
and as shall be required in connection with any registration, qualification
or compliance referred to in this Section 3.
(g) "STAND-OFF" AGREEMENT. Each Investor, if requested by the
Company and/or an underwriter of Common Stock or other securities of the
Company, shall agree not to sell or otherwise transfer or dispose of any
Registrable Shares or other securities of the Company held by such Investor for
the period of time specified by the Company and/or such underwriter, before or
after the effective date of a Registration Statement. Such agreement shall be
in writing in a form satisfactory to the Company and such underwriter. The
Company may impose stop transfer instructions with respect to the Registrable
Shares or other securities subject to the foregoing restriction until the end of
the stand-off period.
4. INFORMATION AS TO COMPANY AND RELATED COVENANTS.
(a) INVESTOR FINANCIAL INFORMATION. From and after the date
hereof, the Company shall deliver to each Investor so long as such Investor
continues to hold at least five percent (5%) of the outstanding shares of Common
Stock (except for the annual reports referred to in (a)(iii) below, which shall
be delivered to each Investor as long as such Investor owns any shares of Common
Stock):
(i) MONTHLY FINANCIAL STATEMENTS. As soon as practicable,
and in any event within 30 days after the close of each month of each fiscal
year of the Company, a consolidated balance sheet, statement of income and
statement of changes in cash flow of the Company and its Subsidiaries as of the
close of such month and the portion of the Company's fiscal year ending on the
last day of such month, all in reasonable detail and prepared in accordance with
U.S. generally accepted accounting principles, consistently applied, subject to
audit and year end adjustments, setting forth in each case in comparative form
the figures for the comparable period of the previous year;
(ii) QUARTERLY STATEMENTS. As soon as practicable, and in
any event within 45 days after the close of each of the first three fiscal
quarters of each fiscal year of the Company, a consolidated balance sheet,
statement of income and statement of changes in cash flow of the Company and its
Subsidiaries as of the close of such quarter and the portion of the Company's
fiscal year ending on the last day of such quarter, all in reasonable detail and
prepared in accordance with U.S.
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generally accepted accounting principles, consistently applied, subject to
audit and year end adjustments, setting forth in each case in comparative
form the figures for the comparable period of the previous year;
(iii) ANNUAL STATEMENTS. As soon as practicable after the end
of each fiscal year of the Company, and in any event within 120 days
thereafter, a copy of the consolidated balance sheet, and consolidated
statements of income, stockholders' equity and changes in cash flow of the
Company and its Subsidiaries for each year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and accompanied by an opinion thereon of independent certified public
accountants of recognized national standing selected by the Company, which
opinion shall state that such financial statements fairly present the
financial position and results of operations of the Company and its
Subsidiaries on a consolidated basis and have been prepared in accordance
with U.S. generally accepted accounting principles consistently applied
(except for changes in application in which such accountants concur) and that
the examination of such accountants has been made in accordance with
generally accepted auditing standards, and accordingly included such tests of
the accounting records and such other auditing procedures as were considered
necessary in the circumstances; and
(iv) OTHER REPORTS. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement sent
by the Company to its stockholders generally, of each financial statement,
report, notice or proxy statement sent by the Company or any of its
Subsidiaries to the Commission or any successor agency, if applicable, of
each regular or periodic report and any registration statement, prospectus or
written communication (other than transmittal letters) in respect thereof
filed by the Company or any of its Subsidiaries with any securities exchange
or the Commission or any successor agency, and of any press release issued by
the Company or any of its Subsidiaries.
(b) INSPECTION. From and after the date hereof, the Company
will permit each Investor, its nominee, assignee or its representative, so long
as such Investor continues to hold at least five percent (5%) of the outstanding
shares of Common Stock, to visit and inspect any of the properties of the
Company, to examine all its books of account, records, reports and other papers
not contractually required of the Company to be confidential or secret, to make
copies and extracts therefrom, and to discuss its affairs, finances and accounts
with its officers, directors, key employees and independent public accountants
or any of them (and by this provision the Company authorizes said accountants to
discuss with each said Investor, its nominee, assignee and representatives the
finances and affairs of the Company and its Subsidiaries), all at such
reasonable times and as often as may be reasonably requested,
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provided that the business of the Company is not unreasonably interfered with.
(c) CONFIDENTIALITY. As to so much of the information and
other material furnished under or in connection with this Agreement (whether
furnished before or after the date hereof) as constitutes or contains
confidential business, financial or other information of the Company or its
Subsidiaries, each Investor covenants for itself and its directors, officers,
partners and stockholders that it will use due care to prevent its respective
officers, directors, employees, counsel, accountants and other authorized
representatives from using or disclosing such information in any manner
materially detrimental to the Company; PROVIDED, HOWEVER, that the Investor
may disclose or deliver any information or other material disclosed to or
received by the Investor should such disclosure or delivery be required by
law or legal process; and provided further, that each Investor understands
and acknowledges that Warburg and/or its Affiliates may invest or otherwise
have an interest in entities that may be, or may be perceived to be,
competitive with the business engaged in by the Company from time to time and
that this clause (c) shall not in any way be construed to restrict any such
investment activities or any management or other similar activities engaged
in by Warburg or any of its Affiliates, partners, employees or
other-representatives on behalf of any such entities, and that the persons
engaged in such management or similar activities may possess such
confidential information concerning the Company and its Subsidiaries.
5. TERMINATION. This Agreement shall terminate on the date on which
Warburg and its Affiliates beneficially own (within the meaning of Rule 13d-3
of the Exchange Act) less than 5% of the outstanding shares of capital stock
of the Company.
6. INTERPRETATION OF THIS AGREEMENT.
(a) TERMS DEFINED. As used in this Agreement, the following
terms have the respective meanings set forth below:
"ACT:" means the Securities Act of 1933, as amended.
"AFFILIATE:" in respect of any Person, means any other Person,
directly or indirectly, controlling, controlled by or under common control
with such Person.
"COMMISSION:" means the Securities and Exchange Commission, or
any other federal agency at the time administering the Act;
"EXCHANGE ACT:" means the Securities Exchange Act of 1934, as
amended.
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"INITIAL PUBLIC OFFERING:" means the initial public offering of
the Common Stock registered under the Act, as a result of which a public
market for the Common Stock is established.
"PERCENTAGE IMBALANCE:" means, in respect of the relevant
Management Investor, that condition where, at the time in question, Warburg
and its permitted transferees under Section 2(e) own, in the aggregate, a
number of shares of Common Stock, expressed as a percentage of the total
number of shares of Common Stock owned by Warburg or such transferees since
the date of this Agreement, such that such percentage exceeds the percentage
that the shares of Common Stock (including shares issuable upon the exercise
of vested Options without duplication) owned by such Management Investor
represents in respect of all such shares so owned (or so deemed owned) by
such Management Investor since the date of this Agreement.
"PERSON:" an individual, partnership, limited liability
company, joint-stock company, corporation, trust or unincorporated
organization, and a government or agency or political subdivision thereof.
"REGISTRATION EXPENSES:" means the expenses described in
Section 3(d).
"REGISTRABLE SHARES:" means (A) shares of Common Stock issued
to the Investors, (B) any additional shares of Common Stock acquired by the
Investors, (C) any shares of Common Stock acquired upon the exercise of
vested Options held by the Investors or to be acquired, pursuant to an
exercise notice (which may be conditioned on the closing of a public
offering), at or prior to the occurrence of the relevant event and (D) any
capital stock of the Company issued as a dividend or other distribution with
respect to, or in exchange for or in replacement of, the shares of Common
Stock referred to in clause (A), (B) or (C) above.
"REGISTRATION STATEMENT:" means a registration statement filed
by the Company with the Commission for a public offering and sale of
securities of the Company (other than any registration statement on Form S-4
or Form S-8, or their successors, or any other form for a limited purpose, or
any registration statement covering only securities proposed to be issued in
exchange for securities or assets of another company or entity).
"SECURITY, SECURITIES:" as defined in Section 2(1) of the Act.
"SUBSIDIARY:" a corporation, partnership or other business entity
of which the Company owns, directly or indirectly, more than fifty percent (50%)
of the Voting Stock.
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"TRANSFER:" any sale, assignment, pledge, hypothecation, or
other disposition or encumbrance.
"VOTING STOCK:" capital stock, partnership interests or other
securities of any class or classes of a corporation, partnership or other
business entity the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions) or otherwise control the operations of
such entity.
(b) ACCOUNTING PRINCIPLES. Where the character or amount of
any asset, liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required
to be made for the purposes of this Agreement, this shall be done in
accordance with U.S. generally accepted accounting principles at the time in
effect, to the extent applicable, except where such principles are
inconsistent with the explicit requirements of this Agreement.
(c) DIRECTLY OR INDIRECTLY. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such Person.
(d) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to its conflict of laws rules.
(e) JURISDICTION AND VENUE. Any suit, action or proceeding
against any party to this Agreement arising out of or relating to this
Agreement or any transaction contemplated hereby may only be brought in any
Federal or State court located in the Borough of Manhattan, The City of New
York, and each party hereto hereby submits to the exclusive jurisdiction of
such courts for the purpose of any such suit, action or proceeding. To the
extent that service of process by mail is permitted by applicable law, each
party irrevocably consents to the service of process in any such suit, action
or proceeding in such courts by the mailing of such process by registered or
certified mail, postage prepaid, at its address for notices provided for
below. Each party irrevocably agrees not to assert any objection which it
may ever have to the laying of venue of any such suit, action or proceeding
in any Federal or State court located in the Borough of Manhattan, the City
of New York, and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum. Each party to
this Agreement agrees not to bring any action, suit or proceeding against any
other party arising out of or relating to this Agreement or any transaction
contemplated hereby except in a Federal or State court in the Borough of
Manhattan, The City of New York.
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(f) SECTION HEADINGS. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
(g) PRONOUNS. Any pronoun used in this Agreement shall be
construed to refer to the appropriate gender, masculine, feminine or neuter.
7. MISCELLANEOUS.
(a) NOTICES.
(i) All communications under this Agreement shall be in
writing and shall be delivered by hand, by fax or mailed by overnight
courier or by registered or certified mail, postage prepaid:
(A) if to any of the Management Investors, at the
address of such Management Investor as set forth on Schedule I
hereto, or at such other address as the Management Investor may
have furnished the Company in writing;
(B) if to Warburg, at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxx, Fax: (000) 000-0000
or at such other address or fax as Warburg may have furnished the
Company in writing; and
(C) if to the Company, at 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, marked for the attention of the Chief Executive
Officer of the Company, or at such other address as it may have
furnished in writing to each of the Investors.
(ii) Any notice so addressed shall be deemed to be given; if
delivered by hand, on the date of such delivery by independent courier; if
sent by fax, on the date of receipt; and if mailed by registered or
certified mail, on the third business day after the date of such mailing.
(b) EXPENSES AND TAXES. The Company will pay, and save each
Investor harmless from any and all liabilities (including interest and
penalties) with respect to, or resulting from any delay or failure in paying,
stamp and other taxes (other than income taxes), if any, which may be payable
or determined to be payable on the execution and delivery of this Agreement
or acquisition of its capital stock pursuant to this Agreement.
(c) REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating thereto, including, without limitation, (i) consents,
waivers and modifications which may
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hereafter be executed, (ii) documents received by each Investor pursuant
hereto and (iii) financial statements, certificates and other information
previously or hereafter furnished to each Investor, may be reproduced by each
Investor by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and each Investor 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 Investor
in the regular course of business) and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties. Warburg may assign all or any portion of its rights herein to any
purchaser of some or all of the capital stock of the Company purchased by it;
provided, however, that (i) such assignees agree to be bound by the
provisions of Sections 1 and 2 (if and to the extent then in effect) hereof
and (ii) the Company is furnished within a reasonable time of its request,
such information as it shall reasonably request relating to such assignees.
Warburg may assign any of its rights hereunder to any of its Affiliates or to
any partner thereof, and, following any such assignment, any rights
exercisable by "Warburg" hereunder may be exercisable by any Affiliate or
such other person, subject to the provisions hereof and subject further to
the understanding that no such assignment shall in any way diminish the
rights of any Management Investor hereunder.
(e) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(f) ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement and
the Stock Option Plan constitute the entire understanding of the parties hereto
and supersede all prior understandings among such parties. This Agreement may
be amended, and the observance of any term of this Agreement may be waived, with
(and only with) the written consent of the Company and Warburg and holders of a
majority of the shares held by those Management Investors whose rights would be
affected by the proposed amendment or waiver.
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IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement as of the date first above written.
PANAVISION HOLDINGS, L.L.C.
By: /s/ XXXXXX X. XXXXX
---------------------------
Name: Xxxxxx X. Xxxxx
Title: Authorized Signatory
PANAVISION INC.
By: /s/ XXXXXX X. XXXXX
---------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
MANAGEMENT INVESTORS:
/s/ XXXXXXX X. XXXXX III
------------------------------
Xxxxxxx X. Xxxxx III
/s/ XXXX X. XXXXXXX
------------------------------
Xxxx X. Xxxxxxx
/s/ XXXXXXX X. XXXXXXXXX
------------------------------
Xxxxxxx X. Xxxxxxxxx
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SCHEDULE I
Management Investors
Name Address
Xxxxxxx X. Xxxxx III Panavision International, L.P.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxx X. Xxxxxxx Panavision International, L.P.
0000 Xx Xxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxxx X. Xxxxxxxxx Panavision International, L.P.
0000 Xx Xxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
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