EXHIBIT 10.3
STOCKHOLDERS AGREEMENT dated as
of October 24, 1997, among DIGITAL THEATER
SYSTEMS, INC., a Delaware corporation (the
"Company"), and the stockholders of the
Company listed on Schedule A hereto (the
"Stockholders").
The Company and the Stockholders agree that it is in their respective
interests that provision be made for the continuity and stability of the
business and policies of the Company and, to that end, the Company and the
Stockholders hereby set forth their agreement with respect to the Stockholder
Shares (as defined below) that are owned or may be acquired by the Stockholders.
The Company and the Stockholders are entering into this Agreement as a condition
to and in connection with the execution and delivery of the Securities Purchase
Agreement (as defined below).
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Definitions.
As used in this Agreement, the following terms shall have the meanings
ascribed to them below:
"Affiliate" means, with respect to any Person, any of (a) a director,
officer or partner of such Person, (b) a spouse, parent, sibling or descendant
of such Person or a spouse, parent, sibling or descendant of a director,
officer, or partner of such Person and (c) any other Person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, another Person. The term "control" includes,
without limitation, the possession, directly or indirectly, of the power to
direct the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agreement" means this Stockholders Agreement.
"Board" means, with respect to the Company or any Subsidiary, the board
of directors of the Company or such Subsidiary, as applicable.
"Common Stock" means (i) the Common Stock, par value $.0001 per share,
of the Company, and (ii) any other class of capital stock of the Company
authorized after the date hereof that is not entitled to at least a fixed sum or
percentage of par or stated value in respect of the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company.
"Common Stock Equivalent" means a share of Common Stock or the right to
acquire, whether or not immediately exercisable, a share of Common Stock,
whether evidenced by an option, warrant, convertible security or other
instrument or agreement.
"Company" has the meaning set forth in the caption to this Agreement.
"Company Charter" means the Certificate of Incorporation of the
Company, as amended, supplemented, or otherwise modified from time to time, and
any certificate of designations filed in connection therewith, in each case
pursuant to the General Corporation Law of the State of Delaware.
"Convertible Securities" means any stock or securities convertible,
directly or indirectly, into or exchangeable for Common Stock or Preferred
Stock.
"Eos" means Eos Partners SBIC, L.P.
"Equity Securities" means all shares of capital stock of the Company,
all securities convertible into or exchangeable for shares of capital stock of
the Company, and all options, warrants, and other rights to purchase or
otherwise acquire from the Company shares of such capital stock, or securities
convertible into or exchangeable for shares of such capital stock.
"Excluded Securities" means (i) any options issued or issuable pursuant
to a Stock Option Plan and any shares of Common Stock issuable upon exercise of
any options granted pursuant to a Stock Option Plan; provided, that any shares
of Common Stock which are so issued or issuable shall not exceed 1,660,466
shares of Common Stock in the aggregate, (ii) stock issued upon the conversion
of any Convertible Securities or the exercise of any options, warrants or other
rights to acquire capital stock of the Company issued on or before the date
hereof, including without limitation the Existing Shareholder Warrants, the
Xxxxxxxxx Warrants, the Universal Warrants, the H&Q Warrants and the Imperial
Bank Warrants (iii) stock issued in connection with any stock split, stock
dividend or recapitalization by the Company, (iv) Common Stock issued in a
Public Offering and (v) Series A Preferred Stock issued pursuant to a Strategic
Investment (and any Common Stock issuable upon conversion thereof).
"Existing Shareholders" has the meaning set forth in the Securities
Purchase Agreement.
"Existing Shareholder Warrants" means warrants issued by the Company to
the Existing Shareholders that are exercisable for an aggregate of 4,253,327
shares of the Company's Common Stock, at an exercise price per share of $6.057.
"Fully Diluted Basis" means in the case of (i) any calculation of the
number of shares of Common Stock deemed outstanding, that effect is first given
to (A) all shares of Common Stock outstanding at the time of determination, (B)
all shares of Common Stock issuable upon the exercise of any option, warrant or
other right outstanding and exercisable at the time of determination (provided
any such option, warrant or right shall only by considered to be outstanding if
the per share exercise price thereof is less than the fair value of a share of
Common Stock at such time), and (C) all shares of Common Stock issuable upon the
exercise of any conversion or exchange right contained in any security
outstanding at the time of determination that is convertible into or
exchangeable for shares of Common Stock; and (ii) any calculation of value, that
effect is first given to (A) the securities referred to in clause (i) above and
(B) the payment of any consideration payable upon the exercise, conversion or
exchange of any option, warrant, security or other right referred to in clause
(i) above if such option, warrant, security or other right were exercisable at
the time of determination.
"Group" means:
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(i) in the case of any Stockholder which is a
partnership, (A) such partnership and any of its limited or general
partners, (B) any corporation or other business organization to which
such partnership shall sell all or substantially all of its assets or
with which it shall be merged and (C) any Affiliate of such
partnership;
(ii) in the case of any Stockholder which is a
corporation, (A) such corporation, (B) any corporation or other
business organization to which such corporation shall sell or transfer
all or substantially all of its assets or with which it shall be merged
and (C) any Affiliate of such corporation; and
(iii) in the case of any Stockholder that is an individual,
such individual's (A) spouse, (B) parents, (C) siblings, (D) children
or grandchildren (whether natural or adopted), and (E), any one or more
trusts solely for the benefit of the Persons described in this clause
(iii).
"H&Q Warrants" means warrants for capital stock of the Company issued
to H&Q Digital Theater Systems Investors, L.P. on or before the date hereof.
"Imperial Bank Warrants" means warrants for capital stock of the
Company issued to Imperial Bank on or before the date hereof.
"Investor" means any Stockholder that is not a Management Stockholder
and any other Person which or who has executed an Investor Joinder.
"Investor Joinder" means a joinder agreement, substantially in the form
of Exhibit B hereto, by which a Person may become an Investor on or after the
date hereof.
"Liquidation" has the meaning set forth in the Company Charter.
"Major Stockholder" means any Stockholder or Stockholder Group that
owns, acquires or controls five percent (5%) or more of the issued and
outstanding capital stock of the Company (based upon Common Stock Equivalents).
"Management Stockholder" means those individuals identified on Annex I
and any other Person which or who has executed a Management Joinder.
"Management Joinder" means a joinder agreement, substantially in the
form of Exhibit A hereto, by which a Person may become a Management Stockholder
on or after the date hereof.
"Original Issuance Price" has the meaning set forth in the Company
Charter.
"Other Stockholders" has the meaning set forth in Section 5.
"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 joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
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"Preferred Stock" means (i) the Series A Preferred Stock and (ii) any
other class or series of the capital stock of the Company that is entitled to at
least a fixed sum or percentage of par or stated value in respect of the rights
of the holders thereof to participate in dividends or in the distribution of
assets upon any liquidation, dissolution or winding up of the Company.
"Public Offering" means, with respect to any Person, the sale, in an
underwritten public offering registered under the Securities Act, of shares of
the capital stock of such Person.
"Purchase" has the meaning ascribed thereto in the Securities Purchase
Agreement.
"Qualified Public Offering" means an initial Public Offering of Common
Stock underwritten on a firm commitment basis which results in aggregate gross
cash proceeds to the Company of not less than $20,000,000 at an offering price
per share of Common Stock equal to or in excess of three hundred percent (300%)
of the Series A Conversion Price (as such term is defined in the Company
Chatter) then in effect.
"Qualified Sale Transaction" means any sale in which the holders of the
Series A Preferred Stock receive, in respect of such shares, or the shares of
Common Stock received upon conversion thereof, cash or marketable securities in
a per share amount equal to at least three hundred percent (300%) of the Series
A Conversion Price then in effect.
"Relatively Equivalent Terms" means, as of any date of determination,
(A) with respect to any share of Common Stock proposed to be sold pursuant to a
Sale Notice, the Relatively Equivalent Terms for a share of a series of
Preferred Stock shall equal the product of (1) the amount payable in respect of
such share of Common Stock and (2) the number of shares of Common Stock into
which such share of Preferred Stock is convertible in the event of an optional
conversion of such share of Preferred Stock pursuant to the Company Charter as
of such date of determination, and (B) with respect to any share of Preferred
Stock proposed to be sold pursuant to a Sale Notice, the Relatively Equivalent
Terms for a share of Common Stock shall equal the divisor of (1) the amount
payable in respect of such share of Preferred Stock, over (2) the number of
shares of Common Stock into which such share of Preferred Stock is convertible
in the event of an optional conversion of such share of Preferred Stock pursuant
to the Company Charter as of such date of determination. The form of
consideration paid in respect of such different classes of capital stock shall
be identical.
"Sale Notice" has the meaning set forth in Section 5.
"Scripps" means Scripps Ventures, LLC.
"Securities Act" means the 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.
"Securities Purchase Agreement" means the Securities Purchase Agreement
dated the date hereof among the Company and the Purchasers dated as of the date
hereof, as amended from time to time.
"Selling Notice" has the meaning set forth in Section 5.
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"Selling Stockholder" has the meaning set forth in Section 5.
"Series A Conversion Price" has the meaning set forth in the Company
Charter.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock of the Company, par value $.0001 per share.
"Series A Warrants" means the warrants issued pursuant to the
Securities Purchase Agreement.
"Xxxxxxxxx" means Xxxxxx Xxxxxxxxx or an entity not less than
majority-owned or controlled by Xxxxxx Xxxxxxxxx and his or its Affiliates.
"Xxxxxxxxx Warrants" means warrants for capital stock of the Company
issued to Xxxxxxxxx.
"Stockholder" has the meaning set forth in the caption to this
Agreement.
"Stockholder Shares" means (i) any Common Stock or Preferred Stock
purchased or otherwise acquired by any Stockholder, (ii) any Common Stock or
Preferred Stock issued upon the exercise or conversion of any Convertible
Security, and (iii) any equity securities issued or issuable directly or
indirectly with respect to the Common Stock or Preferred Stock referred to in
clause (i) and clause (ii) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. For purposes of this Agreement, holders of any portion
of any Convertible Security (other than Preferred Stock) shall be deemed to be
holders of Stockholder Shares issuable upon exercise of such Convertible
Security and therefore shall be subject to the provisions and restrictions of
this Agreement. As to any particular shares constituting Stockholder Shares,
such shares will cease to be Stockholder Shares when they have been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them or sold pursuant to Rule 144.
"Stock Option Plan" means any stock option plan adopted by the Company
and any other grants of stock options made by the Company, in each case granted
to employees, directors and independent contractors to the Company or its
Subsidiaries.
"Strategic Investment" means an investment in Series A Preferred Stock
by a Person or Persons satisfactory to the Board of up to $5,000,000 in the
aggregate, at prices per share at the higher of fair market value or $2.019,
after the date hereof and on or before March 31, 1998.
"Subsidiary" means any Person of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors (or comparable governing body) directly or through one or more
subsidiaries.
"Tag-Along Notice" has the meaning set forth in Section 5.
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"Termination Date" means the earlier to occur of the date of
consummation of any (i) Qualified Public Offering; (ii) Qualified Sale
Transaction; (iii) redemption in fall of all Series A Preferred Stock; or (iv)
Liquidation.
"Transfer" means the sale, transfer, assignment, pledge or other
disposal (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law) of any interest in any Stockholder Share.
"Universal" means Universal City Studios, Inc. and its affiliates.
"Universal Warrants" means warrants for capital stock of the Company
issued to Universal on or before the date hereof.
"Weston" means Weston Presidio Capital II.
2. Election of Directors; Voting.
(a) Each Stockholder shall vote all of his or its
Stockholder Shares (to the extent such Stockholder Shares possess the right to
so vote) and shall take all other necessary or desirable actions within his or
its control (whether in such Stockholder's capacity as a stockholder of the
Company or otherwise, and including, without limitation, attendance at meetings
in person or by proxy for purposes of obtaining a quorum and execution of
written consents in lieu of meetings), and the Company shall take all necessary
and desirable actions within its control (including, without limitation, calling
special Board and stockholder meetings), so that:
(i) The authorized number of directors on the
Board of the Company shall be established at seven (7) directors.
(ii) The following persons shall be elected to
the Board of the Company and each committee thereof:
(A) two (2) representatives, designated
by the holders of a majority of the Stockholder Shares set forth on
Annex I hereto, as determined by a majority in interest;
(B) one (1) representative designated
by Eos (who shall be a Series A Director (as defined in the Certificate
of Designations));
(C) one (1) representative designated
by Weston (who shall be a Series A Director (as defined in the
Certificate of Designations));
(D) one (1) representative designated
by Universal;
(E) one (1) representative designated
by Xxxxxxxxx;
(F) one (1) representative who shall be
designated and approved by a majority of the other members of the
Board.
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(iii) In the event that a party elects not to
designate one or more directors which such party is entitled to
designate in accordance with Section 2(a)(ii), the Stockholders agree
not to vote to fill such vacancy other than with an individual
designated by such party as provided in Section 2(a)(ii).
(iv) The designation of a representative pursuant
to Section 2(a)(ii) at any time shall be effective only upon written
notice thereof to the Company by the party or parties making such
designation. Such written notice shall be recorded as soon as
reasonably practical in the minutes of the Company and may be relied
upon by the Company as conclusive until such time as the Company is in
receipt of a subsequent written notice making a new designation.
(b) Scripps shall have the right to designate one (1)
representative to attend as observer all meetings of the Board. The Company
shall deliver to such observer all notices and other materials, and provide such
observer with such reimbursements and other benefits, as are generally delivered
or provided to members of the Board. Such observer shall agree to be bound by
any confidentiality obligations generally applicable to the directors.
3. Future Stockholders/Limitations on Transfers.
(a) The Company shall require each person or entity
(other than parties hereto) that acquires Equity Securities, other than
Stockholder Shares, from the Company after the date hereof in an amount
sufficient to cause such person or entity to become a Major Stockholder, as a
condition to the effectiveness of such acquisition, to execute a counterpart to
this Agreement, whereupon such Person shall be bound by, and entitled to the
benefits of, this Agreement.
(b) Each Transfer of any Stockholder Shares before the
Termination Date shall not become effective unless and until the transferee
executes and delivers to the Company a counterpart to this Agreement, agreeing
to be treated in the same manner as the transferring Stockholder. Upon such
Transfer and such execution and delivery, the transferee shall be bound by, and
entitled to the benefits of, this Agreement with respect to the transferred
Shares.
4. Management Stockholders.
No Management Stockholder shall Transfer any Stockholder Shares;
provided however, subject to the terms and conditions of this Agreement, a
Transfer of Stockholder Shares by a Management Stockholder shall be permitted if
such Transfer is: (i) made pursuant to Section 5; or (ii) in the case of any
Management Stockholder who is an individual, (A) among such Management
Stockholder's Group, provided that the transferee immediately assigns by proxy
all of his or her voting rights with respect to the Stockholders Shares being
Transferred to the Management Stockholder making the Transfer, or (B) to a
current or former spouse of the Management Stockholder pursuant to any order,
judgment or decree issued upon the divorce of the Management Stockholder from
such transferee, provided such transferee immediately assigns by proxy all of
his or her voting rights with respect to the Stockholders Shares being
Transferred to the Management Stockholder making the Transfer; or (iii) part of
a Qualified Public Offering or Qualified Sale Transaction.
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5. Co-Sale.
(a) Except as provided in Section 5(f) and (g) below, if
any Major Stockholder proposes to Transfer Stockholder Shares to any third party
before a Qualified Public Offering or Qualified Sale Transaction, such Major
Stockholder shall, at least 30 days before such Transfer, deliver a notice (the
"Sale Notice") to the Company and the other Stockholders (the "Other
Stockholders") specifying the identity of the proposed transferee and disclosing
in reasonable detail the terms and conditions of the proposed Transfer including
whether the offer to purchase such shares is irrevocable for a period of at
least 30 days.
(b) The Major Stockholder shall not consummate the
Transfer until 30 days after the Sale Notice has been given to the Company and
the Other Stockholders, unless the Company and all of the Other Stockholders
consent in writing to an earlier consummation of the proposed Transfer.
(c) Within 15 days after delivery of the Sale Notice,
each Other Stockholder may elect to participate in the proposed Transfer by
delivering to such Major Stockholder a notice (the "Tag-Along Notice")
specifying the Stockholder Shares (class, series, number) with respect to which
the Other Stockholder exercises its right under this Section 5.
(d) Any shares included in any Tag-Along Notice that are
of the same series and class of shares as the shares of Stockholder Shares
proposed to be transferred in the Sale Notice shall be transferred on the same
terms and conditions set forth in the Sale Notice. Any shares included in the
Tag-Along Notice that are of a different class or series than the shares
proposed to be transferred in the Sale Notice shall be transferred upon the same
conditions and Relatively Equivalent Terms as set forth in the Sale Notice.
(e) Each of the Other Stockholders shall be entitled to
Transfer up to a number of Stockholder Shares equal to its pro rata amount of
the aggregate number of Stockholder Shares subject to the Transfer.
(f) Transfers to Affiliates shall not be subject to this
Section 5; provided, however, that such Affiliates must execute a counterpart of
this Agreement, whereupon such Person shall be bound by, and entitled to the
benefits of, this Agreement.
(g) The provisions of Section 5(a) through (e) shall not
be applicable to Xxxxxxxxx'x transfer of up to 50% of his Stockholder Shares for
no or de minimus consideration to an organization qualified under Section 501(c)
of the Internal Revenue Code of 1986, as amended; provided, however that
Xxxxxxxxx shall not transfer pursuant to this Section 5(g) any amount of
Stockholder Shares that in the aggregate would result in Xxxxxxxxx having legal
or beneficial ownership of less than 5% of the Company's Common Stock on a Fully
Diluted Basis.
6. First Offer Rights to the Stockholders.
(a) If the Company authorizes the issuance and sale of
any shares of capital stock or any other securities containing options or rights
to acquire any shares of capital stock, (including, without limitation,
convertible debt), other than the Excluded Securities, the Company shall first
offer to sell to each of the Stockholders a portion of such securities equal to
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the percentage determined by dividing (1) the number of Stockholder Shares held
by such Stockholder, by (2) the number of shares of Common Stock deemed
outstanding on a Fully Diluted Basis. Each holder of Stockholder Shares shall be
entitled to purchase such securities at the same price and on the same terms as
such securities are to be offered.
(b) Each Stockholder must elect to exercise its purchase
rights hereunder within 15 days after receipt of written notice from the Company
describing in reasonable detail the stock or securities being offered, the
purchase price thereof (if known), the payment terms and such Stockholder' s
percentage allotment.
(c) Upon the expiration of the offering period set forth
in Section 6(b), the Company shall be free to sell such stock or securities
which the Stockholders have not elected to purchase during the 60 days following
such expiration on terms and conditions no more favorable to the purchasers
thereof than those offered to the Stockholders. Any stock or securities offered
or sold by the Company after such 60-day period must be re-offered to the
Stockholders pursuant to the terms of this Section 6(c).
(d) The provisions of this Section 6 shall not apply to
issuances by the Company pursuant to a Strategic Investment.
7. Additional Restrictions on Transfer of Stockholder Shares.
(a) Legend. The certificates representing the Stockholder
Shares shall bear a legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
AS OF OCTOBER ___, 1997, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN A STOCKHOLDERS
AGREEMENT DATED AS OF OCTOBER __, 1997, AMONG DIGITAL THEATER SYSTEMS,
INC, (THE "COMPANY") AND CERTAIN OF ITS STOCKHOLDERS. A COPY OF SUCH
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S
PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(b) Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Stockholder Shares in violation of any provision of
this Agreement shall be void, and the Company shall not record such Transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such stock for any purpose.
(c) Pledges. Notwithstanding any provision in this
Agreement to the contrary, no holder of Stockholder Shares may pledge any
Stockholder Shares on or after the date hereof.
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8. Binding Effect; Joinders; Additional Shares.
(a) Any transferee of Stockholder Shares from an Investor
(other than the Company or a Management Stockholder) shall, as a condition to
such Transfer, be deemed an Investor for purposes of this Agreement and be bound
by and subject to the terms and provisions of this Agreement applicable to
Investors, and if not already a signatory to this Agreement as an Investor, such
Person shall execute and deliver to the Company an Investor Joinder. Any
transferee of Stockholder Shares of the Company from a Management Stockholder
(other than the Company or an Investor) shall, as a condition to such Transfer,
be deemed a Management Stockholder for purposes of this Agreement and be bound
by and subject to the terms and provisions of this Agreement applicable to
Management Stockholders, and if not already a signatory to this Agreement as a
Management Stockholder, such Person shall execute and deliver to the Company a
Management Joinder.
(b) In the event additional Stockholder Shares are issued
by the Company to a Stockholder at any time during the term of this Agreement,
such additional Stockholder Shares shall, as a condition to such issuance, be
deemed subject to the terms and provisions of this Agreement.
(c) In the event the Company issues to any employee or
officer of, or consultant to, the Company or any of its Subsidiaries or an
Affiliate or designee thereof at any time during the term of this Agreement,
Common Stock or securities of the Company convertible into or exercisable or
exchangeable for shares of Common Stock in amounts in excess of the lesser of
(i) 100,000 shares of Common Stock (on an as-converted basis) or (ii) 1.0% of
all Common Stock on a Fully Diluted Basis, such employee, officer, Affiliate or
designee, as a condition to receiving such shares of Common Stock or securities
of the Company convertible into or exercisable or exchangeable for shares of
Common Stock, shall be deemed a Management Stockholder for purposes of this
Agreement and be bound by and subject to the terms and provisions of this
Agreement applicable to Management Stockholders and, if not already a signatory
to this Agreement as a Management Stockholder, such Person shall execute and
deliver to the Company a Management Joinder.
9. No Conflicting Agreements.
No Stockholder shall enter into any stockholder agreements or
arrangements of any kind with any Person with respect to any Stockholder Shares
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 parties to this Agreement), including, but not limited to, agreements or
arrangements with respect to the acquisition or disposition of Stockholder
Shares in a manner that is inconsistent with this Agreement.
10. 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 other 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.
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11. Termination.
(a) All of the provisions of this Agreement shall
terminate and, except as otherwise expressly provided herein, shall be of no
further force or effect and shall not be binding upon any party hereto, upon the
first to occur of (i) a Termination Date and (ii) the approval of such
termination by each of (A) the Company, (B) the holders of a majority in voting
power of the Series A Preferred Stock subject to this Agreement, (C) Xxxxxxxxx,
(D) Universal, and (E) the holders of a majority in voting power of the shares
set forth on Annex I.
(b) As to any particular Stockholder, this Agreement
shall no longer be binding or of further force or effect as to such Stockholder,
except as otherwise expressly provided herein, as of the date such Stockholder
has transferred all such Stockholder's interest in the Company's securities and
each transferee of such securities, if required by this Agreement, shall have
become a party hereto; provided, however, 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).
12. General Provisions.
(a) Amendment: Waiver and Release. Except as otherwise
provided herein, no modification, amendment or waiver of any provision of this
Agreement shall be effective unless such modification, amendment or waiver is
approved in writing by (i) the Company, (ii) the Stockholders holding at least a
majority in voting power of the Stockholder Shares subject to this Agreement,
(iii) Xxxxxxxxx (so long as Xxxxxxxxx continues to hold 50% or more of the
Stockholder shares held by Xxxxxxxxx that are subject to this Agreement), (iv)
Universal (so long as Universal continues to hold 50% or more of the Stockholder
Shares held by Universal that are subject to this Agreement) and (v) the holders
of a majority in voting power of the shares set forth on Annex I. The failure of
any party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
(b) 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 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
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.
(c) Entire Agreement. Except as otherwise expressly set
forth herein, this document embodies the complete agreement and understanding
among the parties hereto with
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respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
(d) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company and, so long as Stockholder Shares are held by such Person, each
Person which or who is a Stockholder on the date hereof and each subsequent
Stockholder. None of the provisions hereof shall create, or be construed or
deemed to create, any right of employment in favor of any Person by the Company
or any of its Subsidiaries. This Agreement is not intended to create any third
party beneficiaries.
(e) Counterparts. This Agreement may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
(f) Remedies. The Company and the Stockholders shall be
entitled to enforce their rights under this Agreement specifically to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in their favor. The Company and the
Stockholders agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that the Company
and any Stockholder may in its or his sole discretion apply to any court of law
or equity of competent jurisdiction for specific performance and/or injunctive
relief (without posting a bond or other security) in order to enforce or prevent
any violation of the provisions of this Agreement.
(g) Notices. All notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, telecopied, sent by nationally
recognized overnight courier or mailed by registered or certified mail (return
receipt requested), postage prepaid, to the parties at the following addresses
(or at such other address for a parry as shall be specified by like notice):
(i) If to the Company, to:
Digital Theater Systems, Inc.
00000 Xxx Xxxxxxx #000
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxx, CFO
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxx & Xxxxx Professional Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX
12
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(ii) If to a Stockholder set forth on Schedule A
hereto, to:
the related address or telecopier number
set forth on Schedule A hereto.
with a copy to:
the Person set forth immediately across from the name
of such Stockholder on Schedule A hereto, at the
related address or telecopier number set forth on
Schedule A hereto.
If to a Stockholder not set forth on Schedule A
hereto, to:
the related address or telecopier number set forth in
the last Joinder executed and delivered by such
Stockholder to the Company.
with a copy to:
the Person designated to receive copies in the such
Joinder, at the related address or telecopier number
set forth in such Joinder.
All such notices and other communications shall be deemed to have been
given and received (a) in the case of personal delivery or delivery by telecopy,
on the date of such delivery, (b) in the case of delivery by nationally
recognized overnight courier, on the third business day following such dispatch
and (c) in the case of mailing, on the seventh business day following such
mailing.
(h) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF
THE STATE OF NEW YORK, OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED, EXCEPT TO THE
EXTENT THAT THIS AGREEMENT RELATES TO THE INTERNAL AFFAIRS OF THE CORPORATION,
WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING
PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE
TO BE APPLIED TO SUCH MATTERS. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW
OF THE STATE OF NEW YORK OR THE STATE OF DELAWARE, AS THE CASE MAY BE, WILL
CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER
SUCH JURISDICTION'S CHOICE OF LAW OR
13
CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD
ORDINARILY APPLY.
(i) Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
(j) Construction. 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.
(k) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(l) Nouns and Pronouns. Whenever the context may require,
any pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice-versa.
* * * *
14
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.
DIGITAL THEATER SYSTEMS, INC.
By: /s/ Xxx Xxxxxxxx
--------------------------------
Name: Xxx Xxxxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.
EOS PARTNERS SBIC, L.P,
By: Eos SBIC General, L.P.,
its General Partner
By: Eos SBIC, Inc.,
its General Partner
By: /s/ Xxxx Xxxxxx
--------------------------------
Name: Xxxx Xxxxxx
Title: General Partner
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.
WESTON PRESIDIO CAPITAL II
By /s/ Xxxxx XxXxxxx
--------------------------------
Xxxxx X. XxXxxxx
General Partner
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement the day and year first above written.
SCRIPPS VENTURES, LLC
By /s/ illegible
--------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement the day and year first above written.
THE PHOENIX PARTNERS IV LIMITED
PARTNERSHIP
By: The Phoenix Management IV,
L.L.C.,
Its General Partner
By /s/ Xxxxx Xxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxx
Managing Member
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement the day and year first above written.
H&Q DIGITAL THEATER SYSTEMS
INVESTORS, L.P.
By /s/ Xxxxxx Xxxxxxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxxxxxx
Title: Attorney-in-Fact
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement the day and year first above written.
UNIVERSAL CITY STUDIOS, INC.
By /s/ Xxxxx Xxxxxxxx
--------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement the day and year first above written.
FORTH INVESTMENTS, LLC
By /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
Title: Chief Financial Officer
AT Communications KK
/s/ Takec Asano
-------------------------------------
Name: Takec Asano
Title: Managing Director
_____________________________________
Xxxxxxx Xxxxxxxxx
_____________________________________
Buzz Xxxxxxx
_____________________________________
Xxx Xxxxxxxx
_____________________________________
Xxxxx Xxxxxx
_____________________________________
Xx. Xxxx X. Xxxxx
_____________________________________
Xxx. Xxxx X. Xxxxx
_____________________________________
Xxx Xxxxxxx
_____________________________________
Xxxxxxx Xxxxxx
_____________________________________
Xxxxx Xxxxxxxxx
_____________________________________
Xxxxx Xxxxx
/s/ Xxxxxxxxx Xxxx
-------------------------------------
Xxxxxxxxx X. Xxxx
_____________________________________
Xxx Xxxxxxxx
_____________________________________
Xxxxx Xxxxxxxx
_____________________________________
Xxxx Xxxxx
_____________________________________
Xxxx Xxx
_____________________________________
Xx. X.X. Xxxxxxxxx
_____________________________________
Xxx. X.X. Xxxxxxxxx
_____________________________________
Xxxxx Xxxxxxxxxx
_____________________________________
Xxxxxxxx Xxxxxxxx
_____________________________________
Xxxxxxx Xxxxxx
_____________________________________
Xxx Xxxxx
_____________________________________
Xxxxx Xxxxxx
_____________________________________
Xxxxxx Xxx
/s/ Xxxxxxx Xxxxx
-------------------------------------
Xxxxxxx Xxxxx
/s/ Xxxxx Xxxxxxx
-------------------------------------
Xxxxx Xxxxxxx
SCHEDULE A
STOCKHOLDERS
Stockholder: With copies to:
----------- --------------
Eos Partners SBIC, X.X. X'Xxxxxxxx Graev & Karabell, LLP
x/x Xxx Xxxxxxxx, X.X. 00 Xxxxxxxxxxx Xxxxx
000 Xxxx Xxxxxx 00xx Xxxxx
00xx Xxxxx Xxx Xxxx, XX 00000
Xxx Xxxx, XX 00000 Attn: Xxxx X. Xxxxxx, Esq.
Attn: Mr. Xxxxx Xxxxxxxx Telephone: (000) 000-0000
Telephone: (000) 000-0000 Telecopy: (000) 000-0000
Telecopy: (000) 000-0000
Weston Presidio Capital
000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
Attn: Xx. Xxxxx X. XxXxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Scripps Ventures, L.L.C. Xxxxx & Xxxxxxxxx, LLP
000 Xxxxxxx Xxxxxx 0000 Xxxxxxxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000 0000 Xxxx Xxxxx Xxxxxx
Attn: Xxxxxxxx Xxxxxxx Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000 Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
The Phoenix Partners IV Limited Partnership
c/o Phoenix Partners
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
H&Q Digital Theater Systems Investors, L.P.
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Universal City Studios, Inc. Xxxxxx, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxx Xxxxx 000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx Xxxx, XX 00000 35th Floor
Attn: Xxxxx Xxxxxxxx Xxx Xxxxxxx, XX 00000
Telecopy: (000) 000-0000 Attn: Xxxx Xxxxxx, Esq.
Attn: General Counsel Telephone: (000) 000-0000
Telecopy: (818) 866- Telecopy: (000) 000-0000
Forth Investments, LLC Gang Tyre Xxxxx & Xxxxx
c/o Xxxxxx Xxxxxxxxx 000 Xxxxx Xxxxx Xxxxx
Provident Financial Manager Xxxxxxx Xxxxx, XX 00000
00000 Xxxxxxx Xxxxxxxxx Attn: Xxxxxx Xxxxx, Esq.
Xxx Xxxxxxx, XX 00000
Xxxxxxxxx X. Xxxx
c/o the Company (see address in Agreement)
Xxx Xxxxxxxx
c/o the Company (see address in Agreement)
Xxxxx Xxxxxxxx
c/o the Company (see address in Agreement)
Xxxx Xxxxx
c/o the Company (see address in Agreement)
Xxxx Xxx
c/o the Company (see address in Agreement)
Mr. and Xxx. X.X. Xxxxxxxxx
c/o the Company (see address in Agreement)
Xxxxx Xxxxxxxxxx
c/o the Company (see address in Agreement)
Xxxxxxxx Xxxxxxxx
c/o the Company (see address in Agreement)
Xxxxxxx Xxxxxx
c/o the Company (see address in Agreement)
Xxx Xxxxx
c/o the Company (see address in Agreement)
Xxxx Xxxx Xxxxxx
c/o the Company (see address in Agreement)
Xxxxxx Xxx
c/o the Company (see address in Agreement)
AT Communications KK
c/o the Company (see address in Agreement)
Xxxx Xxxxxxxxx
c/o the Company (see address in Agreement)
Xxxxxx Xxxxxxx
c/o the Company (see address in Agreement)
Xxx Xxxxxxxx
c/o the Company (see address in Agreement)
Xxxxx Xxxxxx
c/o the Company (see address in Agreement)
Mr. and Xxx. Xxxx X. Xxxxx
c/o the Company (see address in Agreement)
Xxx Xxxxxxx
c/o the Company (see address in Agreement)
Xxxxxxx Xxxxxx
c/o the Company (see address in Agreement)
Xxxxx Xxxxxxxxx
c/o the Company (see address in Agreement)
Xxxxx Xxxxx
c/o the Company (see address in Agreement)
ANNEX I
(MANAGEMENT SHAREHOLDERS)
Xxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxx Xxxxxxx
EXHIBIT A
MANAGEMENT JOINDER
By execution of this Management Joinder, the undersigned
agrees to become a party to that certain Stockholders Agreement dated as of
October ___, 1997 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Stockholders Agreement"), among Digital Theater
Systems, Inc., a Delaware corporation, and certain of its stockholders. The
undersigned shall have all the rights, and shall observe all the obligations,
applicable to a Management Stockholder (as defined in the Stockholders
Agreement).
Name: _______________________
Address for with copies
Notices: to:
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
Signature: __________________________
Date: _______________________
EXHIBIT B
INVESTOR JOINDER
By execution of this Investor Joinder, the undersigned agrees to become
a party to that certain Stockholders Agreement dated as of October ___, 1997 (as
the same may be amended, supplemented or otherwise modified from time to time,
the "Stockholders Agreement"), among Digital Theater Systems, Inc., a Delaware
corporation, and certain of its stockholders. The undersigned shall have all the
rights, and shall observe all the obligations, applicable to an Investor (as
defined in the Stockholders Agreement).
Name: _______________________
Address for with copies
Notices: to:
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
Signature: __________________________
Date: _______________________
