Exhibit 10.20
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT, dated as of _________, 2002, among Loews
Cineplex Entertainment Corporation, a Delaware corporation (the "Company"),
1363880 Ontario Inc., a corporation organized and existing under the laws of
Ontario, Canada ("Onex Cinema"), OCM Cinema Holdings, LLC, a Delaware limited
liability company ("OCM"), and _________________, [a ________ of the Company]
("_____").
RECITALS
As of _________, 2002, OCM owns 42,559 shares of the class A common
stock, par value $0.01 per share, of the Company ("Class A Shares") and Onex
Cinema owns 63,588 shares of the class B common stock, par value $0.01 per
share, of the Company ("Class B Shares"), constituting all of the issued and
outstanding capital stock of the Company.
Effective as of ___________, 2002, _____ acquired _____ Class A Shares
at a purchase price of $3,350 per share.
The Company, OCM, Onex Cinema and _____ each desire to enter into this
Agreement to provide for certain restrictions on the transfer of the shares of
the capital stock and other securities of the Company held by _____ from time to
time.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
definitions:
1.1 "Affiliate" means, with respect to any Person, any other Person
that, directly or indirectly, through one or more intermediaries, Controls, or
is Controlled by, or is under common Control with, such Person.
1.2 "Agreement" means this Stockholders Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
1.3 "Automatic Conversion Event" has the meaning given thereto in the
Onex Cinema/OCM Stockholders Agreement.
1.4 "Board" means the Board of Directors of the Company.
1.5 "Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in New
York City or in Xxxxxxx, Xxxxxxx, Xxxxxx.
1.6 "Change of Control Transaction" means a sale, merger, tender offer
or other business combination transaction involving the Company in which the
stockholders of the
Company (immediately prior to the consummation of such business combination
transaction), assuming conversion of the Class B Shares, do not (immediately
following the consummation of such business combination transaction) own a
majority of the outstanding voting securities of the surviving Person.
1.7 "Class A Shares" has the meaning given thereto in the recitals to
this Agreement.
1.8 "Class B Shares" has the meaning given thereto in the recitals to
this Agreement.
1.9 "Common Stock" means Class A Shares, Class B Shares and any other
common stock of the Company that may be authorized.
1.10 "Common Stock Equivalent" means the right to acquire Common Stock
or other Shares, whether or not immediately exercisable, exchangeable,
convertible or the like, whether evidenced by an option, warrant, convertible or
exchangeable security or other security, instrument or agreement.
1.11 "Company" has the meaning given thereto in the introductory
paragraph of this Agreement.
1.12 "Company Asset Sale" means a sale of all or substantially all of
the assets of the Company determined on a consolidated basis that is approved by
the Board.
1.13 "Control" (including, with correlative meaning, the terms
"Controlling", "Controlled by" and "under common Control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Onex shall be deemed to "Control" all Persons "Controlled" by Xxxxxx X.
Xxxxxxxx, as long as Xx. Xxxxxxxx "Controls" Onex.
1.14 "Drag-Along Notice" has the meaning given thereto in Section
2.4(b) of this Agreement.
1.15 "Drag-Along Right" has the meaning given thereto in Section
2.4(a)(i) of this Agreement.
1.16 "Drag-Along Sale" has the meaning given thereto in Section 2.4(a)
of this Agreement.
1.17 "Drag-Along Securities" has the meaning given thereto in Section
2.4(a)(i) of this Agreement.
1.18 "Drag-Along Stockholders" has the meaning given thereto in Section
2.4(a)(i) of this Agreement.
1.19 "Drag-Along Transferee" has the meaning given thereto in Section
2.4(a)(i) of this Agreement.
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1.20 "Fully Diluted Shares" means, as of any date of determination, the
total number of Shares issued and outstanding as of such date (calculated
assuming exercise of all outstanding Common Stock Equivalents to their fullest
extent).
1.21 "Independent Third Party" means a Person that is not Onex, Onex
Cinema, a member of the Onex Group, Oaktree, OCM, a member of the Oaktree Group,
another Stockholder or a member of any other Stockholder Group or an Affiliate
of any of the foregoing.
1.22 "Initial Public Offering" means the first firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act covering the offer and sale of the Common Stock to the
public.
1.23 "_____" has the meaning given thereto in the introductory
paragraph of this Agreement and, where the context is appropriate, includes any
Transferee of _____ (other than the Company or any member of the Oaktree Group
or the Onex Group) who acquires Offered Securities pursuant to Section 2.3(e).
1.24 "Non-Qualifying Drag-Along Sale" has the meaning given thereto in
Section 2.4(a)(iv) of this Agreement.
1.25 "Notice of Offer" has the meaning given thereto in Section 2.3(a)
of this Agreement.
1.26 "Oaktree" means Oaktree Capital Management, LLC, as general
partner and/or investment manager of certain accounts and funds it manages.
1.27 "Oaktree Group" means Oaktree, OCM, and their respective
Affiliates, and the Persons listed on Exhibit A to the Onex Cinema/OCM
Stockholders Agreement for which Oaktree acts as investment manager or general
partner and other funds and accounts managed by Oaktree as of the date hereof.
1.28 "OCM" has the meaning given thereto in the introductory paragraph
of this Agreement.
1.29 "Offer Period" has the meaning given thereto in Section 2.3(a) of
this Agreement.
1.30 "Offered Securities" has the meaning given thereto in Section
2.3(a) of this Agreement.
1.31 "Onex" means Onex Corporation, a corporation organized and
existing under the laws of Ontario, Canada.
1.32 "Onex Cinema" has the meaning given thereto in the introductory
paragraph of this Agreement.
1.33 "Onex Cinema/OCM Stockholders Agreement" means the Stockholders
Agreement, dated as of March 21, 2002, among the Company, Onex Cinema and OCM.
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1.34 "Onex Group" means Onex, Onex Cinema and any of their respective
Affiliates.
1.35 "Original Stockholders" means, collectively, OCM and Onex Cinema.
1.36 "Person" shall be construed broadly, and shall include, without
limitation, an individual, a partnership, an investment fund, a limited
liability company, a corporation, an association, a trust, a joint venture, a
joint stock company, an unincorporated organization, a governmental entity or
any department, agency or political subdivision thereof, and any other entity of
whatever nature.
1.37 "Pro Rata Share" means, at any time, the number of Fully Diluted
Shares owned by a Stockholder as of the date of determination, divided by the
number of Fully Diluted Shares owned by all Stockholders (other than _____) as
of such date, expressed as a percentage.
1.38 "Purchase Price" has the meaning given thereto in Section 2.3(c)
of this Agreement.
1.39 "Related Persons" has the meaning given thereto in the Onex
Cinema/OCM Stockholders Agreement.
1.40 "Securities Act" means the U.S. Securities Act of 1933, as the
same may be amended or supplemented from time to time, or any successor statute,
and the rules and regulations thereunder, as the same are from time to time in
effect.
1.41 "Selling Stockholders" has the meaning given thereto in Section
2.4(a) of this Agreement.
1.42 "Shares" means, collectively, (i) the Class A Shares, (ii) the
Class B Shares and (iii) all shares of capital stock or other securities of the
Company or any other Person which any Stockholder acquires in respect of such
Stockholder's Class A Shares or Class B Shares, whether upon conversion thereof,
in connection with any stock split, stock dividend, exchange, merger,
reclassification, recapitalization, consolidation, reorganization or other
transaction to which the Company is party, or otherwise.
1.43 "Statutory Drag-Along Sale" has the meaning given thereto in
Section 2.4(i) of this Agreement.
1.44 "Stockholder Group" means the Oaktree Group or the Onex Group or,
with respect to any Stockholder that is not a member of the Onex Group or
Oaktree Group, such Stockholder together with its Affiliates, as the context
dictates.
1.45 "Stockholder Joinder" has the meaning given thereto in Section
2.2(b) of this Agreement.
1.46 "Stockholders" means, collectively, OCM, Onex Cinema, _____ and
any other Person who from time to time becomes a Stockholder pursuant to Section
2.2 or by executing a Stockholder Joinder, as required or permitted by an
applicable provision hereof.
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1.47 "Transfer" (or any variation thereof used herein) means the direct
or indirect sale, transfer, conveyance, assignment, gift, pledge, hypothecation
or other encumbrance, or any other disposal (whether with or without
consideration and whether voluntary or involuntary or by operation of law) of
any interest in any Shares or Common Stock Equivalents, or the entry into any
contract, option or other arrangement with respect to any of the foregoing.
SECTION 2. TRANSFER OF SHARES.
2.1 Legends.
(a) The certificates evidencing all Shares and Common Stock
Equivalents acquired by _____ will bear the following legends reflecting the
restrictions on the Transfer of such securities contained in this Agreement:
"THE TRANSFER AND VOTING OF ANY OF THE SECURITIES EVIDENCED HEREBY
ARE SUBJECT TO THE TERMS OF THAT CERTAIN STOCKHOLDERS AGREEMENT,
DATED AS OF ___________, 2002, BY AND AMONG LOEWS CINEPLEX
ENTERTAINMENT CORPORATION (THE "COMPANY"), 1363880 ONTARIO INC.,
OCM CINEMA HOLDINGS, LLC AND _________________. A COPY OF SUCH
STOCKHOLDERS AGREEMENT HAS BEEN FILED WITH THE SECRETARY OF THE
COMPANY AND IS AVAILABLE UPON REQUEST. THE COMPANY WILL NOT
REGISTER THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE
COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE
WITH THE TERMS OF THE STOCKHOLDERS AGREEMENT."
"THE SECURITIES COVERED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE OFFERED OR SOLD OR
OTHERWISE DISPOSED OF ABSENT REGISTRATION OF THE SECURITIES UNDER
THE SECURITIES ACT OR IN A TRANSACTION WHICH QUALIFIES AS A
TRANSACTION VALIDLY EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT."
(b) The certificates evidencing the Shares and Common Stock
Equivalents acquired by _____ shall also bear any legend required under any
applicable U.S. state securities laws.
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(c) Absent an effective registration statement under the
Securities Act covering the Transfer of the Shares or Common Stock Equivalents
held by _____, _____ shall not Transfer any Shares or Common Stock Equivalents
unless such Transfer is exempt from the registration and prospectus delivery
requirements of the Securities Act and has been registered or qualified under
(or is exempt from the registration and qualification requirements of) any
applicable U.S. state securities laws and any applicable Canadian federal or
provincial securities laws.
(d) _____ consents to the Company making a notation on its records
or giving instructions to any transfer agent for the Shares or Common Stock
Equivalents in order to implement the restrictions on Transfer set forth in this
Section 2.1.
2.2 Resale of Securities.
(a) Restrictions on Transfer. _____ shall not Transfer or permit
the Transfer of any Shares or Common Stock Equivalents held by _____ on the date
of this Agreement or hereafter acquired by _____, other than as specifically
permitted by this Agreement.
(b) Joinder Agreement. It shall be a condition precedent to any
Transfer by _____ permitted by this Agreement that such Transferee execute a
written joinder agreement in substantially the form attached as Annex A hereto
(a "Stockholder Joinder") under which such Transferee agrees to become a party
to this Agreement and to be subject to, and bound by the terms, conditions and
restrictions hereof.
(c) Ineffectiveness of Prohibited Transfers. Any Transfer by _____
or purported Transfer by _____ made in violation of this Agreement (including,
without limitation, this Section 2) shall be null and void ab initio, and shall
be of no force and effect. _____ shall notify the Company in writing five days
in advance of any attempted Transfer, and the Company shall not recognize any
Transfer by _____ made in violation of this Section 2. _____ hereby consents in
advance to a "stop-transfer" order with respect to his Shares and/or Common
Stock Equivalents being made on the books of the Company or given to any
transfer agent for the Shares and Common Stock Equivalents, in the event of any
attempted Transfer by _____ in violation of this Agreement (including, without
limitation, this Section 2).
2.3 Right of First Offer.
(a) Offer by _____. Subject to Section 2.3(f), if _____ wishes to
Transfer any or all of the Shares and/or Common Stock Equivalents held by _____
at any time from and after the fifth anniversary of the date of this Agreement
and otherwise during the term of this Agreement, _____ will promptly notify the
Company and the Original Stockholders in writing of _____'s desire to Transfer
such Shares or Common Stock Equivalents (the "Notice of Offer"). The Notice of
Offer shall (x) identify all of the Shares or Common Stock Equivalents proposed
to be Transferred (the "Offered Securities"), and (y) state the proposed
purchase price per Share or Common Stock Equivalent and the other material terms
and conditions of such Transfer. The Notice of Offer shall be deemed to
constitute an irrevocable offer (open to acceptance as described below for a
period of 20 Business Days from the date of receipt by the Company of the Notice
of Offer (the "Offer Period")) by _____ to sell to the Company the
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Offered Securities, or in the event the Company is unable to accept or otherwise
rejects such offer, to each Original Stockholder such Original Stockholder's Pro
Rata Share of the Offered Securities. For greater certainty, _____ may not give
a Notice of Offer prior to the fifth anniversary of the date of this Agreement.
(b) Acceptance of Offer. The Company may elect to purchase all
(but not less than all) of the Offered Securities by delivering a written notice
of such acceptance to _____ and each Original Stockholder on or prior to the
30th day of the Offer Period. If the Company is unable to accept or otherwise
rejects the offer, the Company shall deliver written notice of rejection of such
offer to _____ and each Original Stockholder on or prior to the 10th day of the
Offer Period. Failure to deliver a notice of acceptance or a notice of rejection
by the Company during such period shall constitute a rejection of such offer. In
the event the Company rejects the offer, each Original Stockholder may elect to
purchase all (but not less than all) of its Pro Rata Share of the Offered
Securities, by delivering a written notice of such acceptance to _____ on or
prior to the last day of the Offer Period (which notice shall indicate whether
each such Original Stockholder elects to purchase the Offered Securities
allocated to the other Original Stockholder, if such Offered Securities are not
purchased by such other Original Stockholder). If any Offered Securities
allocated to either Original Stockholder are not purchased by such Original
Stockholder, all of such Offered Securities shall be allocated to, and may be
purchased by, the other Original Stockholder if such other Original Stockholder
indicated in its notice that it would purchase all such other Offered
Securities. Unless the Company or the Original Stockholders agree to purchase
all of the Offered Securities, the Company and the Original Stockholders shall
be deemed to have rejected the offer contained in the Notice of Offer and such
Offered Securities may be Transferred by _____ pursuant to Section 2.3(e).
(c) Purchase Price for Offered Securities. The purchase price per
Share for the Offered Securities shall be the lesser of (i) $3,350 per Share
plus interest on such amount from the date _____ acquired the Shares through the
date of sale, at a rate per annum equal to the then-effective prime rate, as
announced by Citibank N.A. and (ii) the proposed purchase price per Share
specified in the Notice of Offer (the "Purchase Price").
(d) Closing of Purchase of Offered Securities. The closing of the
purchase of Offered Securities shall take place at the principal offices of the
Company or at such other location as the Company and _____ may mutually agree.
Such closing shall take place as promptly as practicable, but in no event more
than 10 days after the expiration of the Offer Period. At the closing, the
purchase price for the Offered Securities shall be paid by the Company or the
Original Stockholders, as the case may be, to _____ against delivery by _____ to
the Company or the Original Stockholders, as the case may be, of the
certificates evidencing the Offered Securities to be conveyed, duly endorsed or
accompanied by stock powers or other appropriate instruments of Transfer duly
executed in blank, free and clear of all liens, encumbrances, security
interests, adverse claims or other restrictions (other than those created by
this Agreement).
(e) Sale by _____. Upon the expiration of the Offer Period, if the
Company or the Original Stockholders have not elected to purchase all of the
Offered Securities specified in the Notice of Offer, _____ will be free to
Transfer all but not less than all of the Offered Securities specified in the
Notice of Offer during the 180-day period following the expiration of
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the Offer Period to a third party at the Purchase Price (or a price greater than
the Purchase Price) per Offered Security and on other terms no more favorable to
such third party than specified in the Notice of Offer; provided, that prior to
the consummation of such sale, such third party shall execute a Stockholder
Joinder. If all such Offered Securities have not been Transferred at the
expiration of such 180-day period, then all such Offered Securities shall once
again be subject to all of the terms of this Section 2.3 and must be offered to
the Company and the Original Stockholders prior to any attempted Transfer
thereof (other than in accordance with or otherwise permitted by the terms of
this Agreement).
(f) Exempted Transfers. The provisions of this Section 2.3 shall
not apply to Transfers at any time after an Initial Public Offering, or to
Transfers pursuant to a Drag-Along Sale with respect to which the Drag-Along
Right is exercised under Section 2.4.
2.4 Drag-Along Right; Company Asset Sales.
(a) Grant of Drag-Along Right. If at any time prior to the
occurrence of an Automatic Conversion Event, one or more members of the Onex
Group, individually or together (the "Selling Stockholders"), wish, in one or a
series of related transactions, to Transfer Shares and/or Common Stock
Equivalents held by them to an Independent Third Party or group of Independent
Third Parties in a bona fide arm's length transaction, whether by way of merger,
consolidation, sale of securities, exchange of securities or any other type of
business combination transaction (a "Drag-Along Sale"), then:
(i) the Selling Stockholders shall be entitled to exercise the
right (the "Drag-Along Right") provided in this Section 2.4 to require
_____ and any Transferee of _____ who acquires Offered Securities
pursuant to Section 2.3(e) (the "Drag-Along Stockholders") to Transfer
at the closing of such Drag-Along Sale to the proposed Transferee (the
"Drag-Along Transferee") Shares and/or Common Stock Equivalents
constituting the same proportion of the Fully Diluted Shares then held
by such Stockholder as the Selling Stockholders are Transferring of
their Fully Diluted Shares (the "Drag-Along Securities");
(ii) the Drag-Along Stockholders shall receive the same type
and amount of consideration per Share (without distinction as between
Class A Shares and Class B Shares) and the same type and amount of
consideration for each type of Common Stock Equivalent, in each case,
as is paid or delivered by the Drag-Along Transferee in the Drag-Along
Sale to the Selling Stockholders;
(iii) without limiting Section 2.4(a)(ii) above, any and all
consideration received by the Drag-Along Stockholders must be in the
form of cash or readily marketable securities of U.S. issuers or
readily marketable securities of one or more non-U.S. issuers; the
securities of each such non-U.S. issuer must be listed or quoted on a
U.S. stock exchange or automatic quotation system or a major
international stock exchange or automatic quotation system, and each
such non-U.S. issuer must have a total market capitalization equal to
the equivalent of US$500,000,000 or more;
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(iv) before delivering a Drag-Along Notice in connection with
a Drag-Along Sale that involves the Transfer of less than 50% of the
Fully Diluted Shares then held by the members of the Onex Group in the
aggregate (any such Transfer, a "Non-Qualifying Drag-Along Sale"), the
Selling Stockholders must first comply with Section 3.3 of the Onex
Cinema/OCM Stockholders Agreement with respect to the Shares and/or
Common Stock Equivalents proposed to be Transferred in such Drag-Along
Sale by the Selling Stockholders;
(v) the Drag-Along Stockholders shall otherwise participate in
the Drag-Along Sale on the same terms and conditions as the Selling
Stockholders, subject to Section 2.4(d) below;
(vi) No consideration or fees shall be paid or provided to the
Selling Stockholders or any of their respective Affiliates or Related
Persons in any manner (including, without limitation, in connection
with a non-compete agreement, consulting arrangement or any other
agreement, arrangement or understanding) in connection with a
Drag-Along Sale, that would cause the Selling Stockholders or any of
their respective Affiliates or Related Persons to receive a benefit (of
any kind, in any form and/or at any time) not available to the
Drag-Along Stockholders on a proportionate basis; and
(vii) All definitive agreements, whether written or oral,
between the Selling Stockholders or any of their respective Affiliates
or Related Persons, on the one hand, and the Drag-Along Transferee or
any of its Affiliates, on the other hand, governing or relating to, or
otherwise in connection with a Drag-Along Sale shall be disclosed in
writing to the Selling Stockholders prior to any such party entering
into any such definitive agreements governing or relating to, or
otherwise in connection with such Drag-Along Sale.
(b) Exercise of Drag-Along Right. To exercise the Drag-Along
Right, the Onex Group shall give Drag-Along Stockholders a written notice of
exercise (a "Drag-Along Notice") setting forth (i) to the extent then known, the
identity of the Drag-Along Transferee, (ii) the proposed type and amount of
consideration and the terms of payment associated with the Drag-Along Sale,
(iii) the number of Shares and the number of each type of Common Stock
Equivalent that each Drag-Along Stockholder will be required to Transfer in the
Drag-Along Sale as Drag-Along Securities and (iv) the other material terms and
conditions of the Drag-Along Sale. Thereafter, the Drag-Along Stockholders shall
be obligated to Transfer the Drag-Along Securities to the Drag-Along Transferee
at the closing of the Drag-Along Sale, conditioned only upon the closing of the
Drag-Along Sale, and to otherwise comply with the provisions of this Section 2.4
in connection with the Drag-Along Sale.
(c) Drag-Along Stockholder Approval of Drag-Along Sale; Company
Asset Sales; Etc. The Drag-Along Stockholders shall consent to, and shall raise
no objections against, a Drag-Along Sale or Company Asset Sale effected in
accordance with this Section 2.4. If any Company Asset Sale requires, or the
Drag-Along Sale is structured as a merger or consolidation of the Company or
other type business combination transaction which requires, approval of the
stockholders of the Company and/or if dissenters rights, appraisal rights or
similar rights may be
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available, in connection with such Company Asset Sale or Drag-Along Sale, then
each Drag-Along Stockholder shall vote all Shares and other voting securities of
the Company held thereby to approve such merger, consolidation or other
transaction or Company Asset Sale, and shall waive any such dissenters rights,
appraisal rights or similar rights in connection with such merger or
consolidation or other transaction or Company Asset Sale.
(d) Agreements in Drag-Along Sale. In connection with any
Drag-Along Sale, the Drag-Along Stockholders shall take such actions as may be
reasonably requested by the Onex Group as desirable or necessary to facilitate
the consummation of the Drag-Along Sale, including, without limitation, the
execution and delivery of such agreements and other documents, and the taking of
such actions, as may be reasonably necessary to (i) provide representations and
warranties, covenants, indemnities and escrow arrangements relating to the
Drag-Along Sale, to the extent that the same are being provided by the Selling
Stockholders and (ii) effect the allocation and distribution of the aggregate
net consideration payable to the Selling Stockholders and the Drag-Along
Stockholders upon the closing of the Drag-Along Sale. Any representations,
warranties and indemnities to be provided by a Drag-Along Stockholder (other
than those relating to such Stockholder's existence, capacity, authorization,
execution and delivery and title to securities) shall be several in nature, and
such Stockholder's liability in connection therewith shall be on a pro rata
basis, based upon the proportion that the aggregate gross proceeds received by
such Person in the Drag-Along Sale for its Shares and/or Common Stock
Equivalents bears to the aggregate gross proceeds received by all Persons
selling Shares and/or Common Stock Equivalents therein.
(e) Composition of Drag-Along Securities. Notwithstanding anything
to the contrary herein, if the Selling Stockholders exercise the Drag-Along
Right, the Selling Stockholders shall be entitled to require the Drag-Along
Stockholders to exercise, exchange or convert any Common Stock Equivalents held
by them into Shares in connection with the closing of the Drag-Along Sale and
the sale of Drag-Along Securities to the Drag-Along Transferee. If the
securities that the Selling Stockholders are Transferring to the Drag-Along
Transferee in a Drag-Along Sale in which the Onex Group is selling less than all
of its Fully Diluted Shares consist of either (1) Shares and one or more types
of Common Stock Equivalents or (2) more than one type of Common Stock
Equivalent, then the Drag-Along Securities of the Drag-Along Stockholders shall
include each such type of security (to the extent held by the Drag-Along
Stockholders) in the same proportions as they are included in the securities
being sold by the Selling Stockholders in such Drag-Along Sale.
(f) Purchaser Representative for Drag-Along Sale. If the Selling
Stockholders or their representatives enter into any negotiation or transaction
for which Regulation D under the Securities Act (or any similar rule or
regulation then in effect) may be available with respect to such negotiation or
transaction (including a merger, consolidation or other reorganization), each
Drag-Along Stockholder who is not an accredited investor (as such term is
defined in Rule 501 under the Securities Act) will, at the request of the
Selling Stockholders, appoint a purchaser representative (as such term is
defined in Rule 501 under the Securities Act) reasonably acceptable to the
Selling Stockholders.
(g) Alternative Consideration to Avoid Registration, Etc.
Notwithstanding anything to the contrary herein, in the event that all or a
portion of the purchase price to be paid
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by the Drag-Along Transferee in the Drag-Along Sale consists of securities, and
the sale of such securities to the Drag-Along Stockholders would require either
a registration under the Securities Act or the preparation of a disclosure
document under Regulation D under the Securities Act (or any successor
regulation) or a similar provision of any U.S. state or Canadian federal or
provincial securities laws, then, at the option of the Selling Stockholders, the
Drag-Along Stockholders may receive, in lieu of such securities, the fair market
value of such securities in cash, as determined in good faith by the Board.
(h) Closing of Drag-Along Sale. At or prior to the closing of a
Drag-Along Sale, the Drag-Along Stockholders shall deliver to the Drag-Along
Transferee certificates representing the Drag-Along Securities to be conveyed,
duly endorsed or accompanied by stock powers or other appropriate instruments of
transfer duly executed in blank, free and clear of all liens, encumbrances,
security interests, adverse claims or other restrictions (other than those
created by this Agreement), against delivery by the Drag-Along Transferee of the
consideration for the Drag-Along Securities.
(i) Certain Drag-Along Sales. The Onex Group shall not,
without exercising the Drag-Along Right:
(x) cause the Company to consummate a Change of
Control Transaction that is structured as a sale, merger,
tender offer, consolidation or other business combination or
sale of all or substantially all the assets of the Company,
capable of being approved by the members of the Onex Group in
their capacity as stockholders of the Company without the
approval of any other holder of Common Stock (any of the
foregoing, a "Statutory Drag-Along Sale"), unless such
Statutory Drag-Along Sale (A) is approved by the holders of a
majority of the outstanding shares of Common Stock held by
Persons other than the Onex Group or (B) is in connection with
a bona fide arm's length transaction with an Independent Third
Party or group of Independent Third Parties and would, if
conducted as a Drag-Along Sale, comply with Sections
2.4(a)(ii), (iii), (iv), (v), (vi) and (vii) hereof;
(y) Transfer Shares and/or Common Stock Equivalents
representing more than 50% of the Shares and Common Stock
Equivalents then held by the Onex Group to an Independent
Third Party or group of Independent Third Parties; or
(z) Transfer Shares and/or Common Stock Equivalents
held by it to an Independent Third Party or group of
Independent Third Parties if such Transfer would constitute a
Change of Control Transaction.
2.5 Lock-Up Agreement. In connection with an Initial Public Offering,
_____ agrees to enter into a lock-up agreement, in a form reasonably requested
by the underwriters, agreeing not to sell or otherwise Transfer any Shares or
Common Stock Equivalents for a period of 180 days after the date of the final
prospectus for the Initial Public Offering.
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SECTION 3. FINANCIAL STATEMENTS.
Prior to an Initial Public Offering, the Company shall deliver to
_____:
(a) within 120 days after the end of each fiscal year of the
Company, consolidated balance sheets of the Company and its Subsidiaries as at
the end of such fiscal year, and consolidated statements of income and of cash
flow of the Company and its Subsidiaries for such fiscal year, accompanied by a
report thereon of independent certified public accountants; and
(b) within 60 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, consolidated balance sheets of the
Company and its Subsidiaries as at the end of such quarter, and consolidated
statements of income and of cash flow for such quarter.
SECTION 4. TERMINATION.
4.1 Termination of this Agreement. This Agreement shall terminate upon
the earliest to occur of (a) the dissolution, liquidation or winding up of the
Company; (b) the written agreement of Onex Cinema, OCM and _____; (c) the
consummation of an Initial Public Offering; and (d) the 20-year anniversary of
the date hereof.
4.2 Effect of Termination. Upon the termination of this Agreement, the
restrictions and obligations set forth herein shall terminate and be of no
further effect, except (a) as otherwise expressly set forth herein and (b) that
such termination shall not affect any rights perfected or obligations incurred
under this Agreement prior to such termination.
4.3 Termination as to Particular Stockholder. As to any particular
Stockholder, this Agreement shall no longer be binding or of further force or
effect as to such Stockholder as of the date such Stockholder has Transferred
all of such Stockholder's interest in any of the Shares or Common Stock
Equivalents; provided, that no such termination shall be effective if such
Stockholder is in breach of this Agreement immediately before or after giving
effect to such Transfer(s).
SECTION 5. APPOINTMENT OF REPRESENTATIVES.
5.1 Oaktree Group Representative. Each member of the Oaktree Group
hereby irrevocably appoints OCM as its representative and attorney-in-fact to
receive and give on such member's behalf all notices, to make on such member's
behalf all elections and determinations and to take on such member's behalf all
other actions, in each case, as may be contemplated to be so received, given,
made or taken by any member of the Oaktree Group by the provisions of this
Agreement. Each notice given to OCM under this Agreement by the Company, _____
or any member of the Onex Group shall be deemed to have also been given to each
other Person who is at the time of such notice a member of the Oaktree Group. In
the event this Agreement calls for OCM to deliver to the Company, _____ and/or
any member(s) of the Onex Group a notice which sets forth an election of any
member of the Oaktree Group or otherwise purports to deal with or bind any
member of the Oaktree Group or any securities held thereby, the Company, _____
and/or such member(s) of the Onex Group shall be entitled to rely conclusively
for all
12
purposes of this Agreement on such notice as conclusive and binding as to such
member of the Oaktree Group.
5.2 Onex Group Representative. Each member of the Onex Group hereby
irrevocably appoints Onex Cinema as its representative and attorney-in-fact to
receive and give on such member's behalf all notices, to make on such member's
behalf all determinations, and to take on such member's behalf all other
actions, in each case, as may be contemplated to be so received, given, made or
taken by any member of the Onex Group by the provisions of this Agreement. Each
notice given to Onex Cinema under this Agreement by the Company, _____ or any
member of the Oaktree Group shall be deemed to have also been given to each
other Person who is at the time of such notice member of the Onex Group. In the
event Agreement calls for Onex Cinema to deliver to the Company, _____ and/or
any member(s) of the Oaktree Group a notice which sets forth an election of any
member of the Onex Group or otherwise purports to deal with or bind any member
of the Onex Group or any securities held thereby, the Company, _____ and/or such
member(s) of the Oaktree Group shall be entitled to rely conclusively for all
purposes of this Agreement on such notice as conclusive and binding as to such
member of the Onex Group.
SECTION 6. MISCELLANEOUS.
6.1 Remedies. Each of the parties hereto acknowledges and agrees that
no remedy at law would be adequate in the event of any breach of this Agreement.
Accordingly, if any dispute arises concerning the sale or other disposition of
any of the securities of the Company subject to this Agreement or concerning any
other provisions hereof or the obligations of the parties hereunder, each party
hereto agrees that, in addition to any other remedy to which they may be
entitled at law or in equity, the other parties hereto shall be entitled to a
decree of specific performance to enforce this Agreement (without bond or other
security being required unless the party seeking such remedy fails to
demonstrate to an appropriate court having jurisdiction that such party has a
likelihood of success on the merits), and each party hereto waives the defense
in any action or proceeding brought to enforce this Agreement that there exists
an adequate remedy at law. Such remedies shall be cumulative and non-exclusive
and shall be in addition to any other rights and remedies the parties may have
under this Agreement or otherwise.
6.2 No Conflicting Agreements. No Stockholder shall enter into, and
each Stockholder represents and warrants that it is not on the date hereof a
party to, any stockholders agreements, option agreements, voting agreements,
proxies or other arrangements of any kind with any Person with respect to any
Shares, Common Stock Equivalents or other securities of the Company on terms
inconsistent with the provisions of this Agreement (whether or not such
agreements or arrangements are with other Stockholders or with Persons that are
not party to this Agreement), including, without limitation, agreements or
arrangements with respect to the acquisition, Transfer or voting of any such
securities in a manner that is inconsistent with this Agreement. The parties
agree that the Onex Cinema/OCM Stockholders Agreement is consistent with the
foregoing representation and warranty.
6.3 Onex Cinema/OCM Stockholders Agreement. Nothing to the contrary
herein shall affect the validity or enforceability of the Onex Cinema/OCM
Stockholders Agreement, which remains in full force and effect.
13
6.4 Further Assurances. Each party hereto shall do and perform or cause
to be done and performed all such further acts and things, and shall execute and
deliver all such further agreements, certificates, instruments and documents, as
any other party hereto reasonably may request in order to carry out the
provisions of this Agreement and the consummation of the transactions
contemplated hereby.
6.5 Recapitalizations, Exchange, Etc.
(a) The provisions of this Agreement shall apply, to the full
extent set forth herein with respect to the Shares and the Common Stock
Equivalents, to any and all shares of capital stock of the Company, Common Stock
Equivalents or other securities of the Company that may be issued in respect of,
in exchange for, or in substitution of the Shares or Common Stock Equivalents,
and shall be appropriately adjusted for any stock dividends, splits, reverse
splits, combinations, reclassifications, recapitalizations and the like
occurring after the date of this Agreement.
(b) If, and as often as, there are any changes in the Shares or
the Common Stock Equivalents, by way of any stock dividends, splits, reverse
splits, combinations or reclassifications, or through merger, consolidation,
reorganization or recapitalization or by any other means occurring after the
date of this Agreement, appropriate adjustment shall be made to the provisions
of this Agreement, as may be required, so that the rights, privileges, duties
and obligations hereunder shall continue with respect to the Shares and Common
Stock Equivalents as so changed.
6.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
6.7 Consent to Jurisdiction. Each party irrevocably submits to the
non-exclusive jurisdiction of (i) the courts of the State of Delaware, and (ii)
the United States District Court for the District of Delaware, for the purposes
of any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each party agrees to commence any such action,
suit or proceeding either in the United States District Court for the District
of Delaware or, if such suit, action or other proceeding may not be brought in
such court for jurisdictional reasons, in the courts of the State of Delaware.
Each party that at any time after the date hereof is not a resident of the State
of Delaware or does not maintain an agent for service of process in the State of
Delaware hereby irrevocably designates, appoints and empowers The Corporation
Trust Company, having its address at the date hereof at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx (New Castle County) U.S.A., as its agent for service of
process to receive for and on its behalf service of process in the State of
Delaware in any legal action, suit or proceeding with respect to this Agreement.
It is understood that a copy of any such process served on such process agent
shall be promptly forwarded by air mail by such process agent and the person
commencing such proceeding to the relevant party at its address specified in
Section 6.8, but the failure of the relevant party to receive such copy shall
not affect in any way the service of such process as aforesaid. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law. Each party irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or
14
proceeding arising out of this Agreement or the transactions contemplated hereby
in (A) the courts of the State of Delaware, or (B) the United States District
Court for the District of Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
6.8 Notices. All notices, consents and other communications required,
or contemplated under this Agreement shall be in writing and shall be delivered
in the manner specified herein or, in the absence of such specification, shall
be deemed to have been duly given and delivered (i) when delivered by hand, (ii)
upon confirmation of receipt by telecopy, or (iii) one day after sending by
overnight delivery service, to the respective addresses or telecopy numbers of
the parties set forth below:
(a) For notices and communications to the Company:
Loews Cineplex Entertainment Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Telecopy: (000) 000-0000
with copies to:
Xxxx X. Xxxxxxxxx, Esq.
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
and
Loews Cineplex Entertainment Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. XxXxxxx, Xx.
General Counsel
A copy of any notices or communications given to the Company under this
Agreement shall also be given to each of Onex Cinema and OCM in the manner
contemplated by Section 6.8(b) and (c) below.
15
(b) For notices and communications to Onex Cinema or any other
member of the Onex Group:
Onex Investment Corp.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
Telecopy: (000) 000-0000
with copies to:
Onex Corporation
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: Xxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
and
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(c) For notices and communications to OCM or any other member of
the Oaktree Group:
OCM Cinema Holdings, LLC
c/o Oaktree Capital Management LLC
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telecopy: (000) 000-0000
and
Oaktree Capital Management LLC
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telecopy: (000) 000-0000
16
and
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
(d) For notices and communications to _____:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
(e) For notices and communications to any Stockholder other than a
member of the Onex Group, the Oaktree Group or _____, in accordance with the
notice information provided by such Stockholder in its Stockholder Joinder.
By notice complying with the foregoing provisions of this Section 6.8,
each party shall have the right to change the mailing address or telecopy
numbers for future notices and communications to such party.
6.9 Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof, and supersedes any and
all prior written or oral agreements, contracts, negotiations, discussions,
understandings, undertakings or arrangements among the parties with respect to
such subject matter, other than the Onex Cinema/OCM Stockholders Agreement.
6.10 Amendment; Waiver. This Agreement may be amended only by a written
agreement duly executed on behalf of the Company, Onex Cinema, OCM and _____.
Any waiver of any of the terms or conditions of this Agreement must be in
writing and must be duly executed by or on behalf of the party to be charged
with such waiver (which, in the case of any member of the Oaktree Group may be
OCM on such member's behalf and in the case of any member of the Onex Group may
be Onex Cinema on such member's behalf). The failure of a party to exercise any
of its rights hereunder or to insist upon strict adherence to any term or
condition hereof on any one occasion shall not be construed as a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
the terms and conditions of this Agreement at a later date. Further, no waiver
of any of the terms and conditions of this Agreement shall be deemed to or shall
constitute a waiver of any other term of condition hereof (whether or not
similar).
6.11 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
Transferees, successors, assigns, heirs and administrators; provided, that this
Agreement and the rights hereunder may not be
17
assigned or assumed (including by operation of law) except as and to the extent
expressly provided herein.
6.12 Severability. It is the desire and intent of the parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
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.
6.13 Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, (i) consents, waivers and
modifications which may hereafter be executed and (ii) documents received by
each Stockholder or the Company pursuant hereto, may be reproduced by each party
hereto by a photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and each party may destroy any original
document so reproduced. All parties hereto agree and stipulate that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by each party in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
6.14 Titles; Construction. Titles and Section references are provided
herein for convenience only, and are not to serve as a basis for interpretation
or construction of this Agreement. The masculine pronoun shall include the
feminine and neuter and the singular shall include the plural, when the context
so indicates. References in this Agreement to any "Section" are references to
the relevant Sections of this Agreement. As used in this Agreement, the word
"including" is not limiting, and the word "or" is not exclusive. The words "this
Agreement", "hereto", "herein", "hereunder", "hereof", and words or phrases of
similar import refer to this Agreement as a whole, together with any and all
Schedules and Exhibits hereto, and not to any particular article, section,
subsection, paragraph, clause or other portion of this Agreement. Where specific
language is used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or restrict in any
manner the construction of the general statement to which it relates. The
language used in this Agreement shall be deemed to be the language chosen by the
parties to express their mutual intent, and no rule of strict construction shall
be applied against any party.
6.15 Counterparts and Facsimile Execution. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered (by facsimile or otherwise) to
the other party, it being understood that all parties need not sign the same
counterpart. Any counterpart or other signature hereupon delivered by facsimile
shall be deemed for all purposes as constituting good and valid execution and
delivery
18
of this Agreement by such party. The failure of any Stockholder to execute this
Agreement does not make it invalid as against any other Stockholder.
[Signature page follows]
19
IN WITNESS WHEREOF, the parties have caused this Stockholders Agreement
to be duly executed on their behalf as of the date first written above.
LOEWS CINEPLEX ENTERTAINMENT
CORPORATION
By:
--------------------------------------
Name:
Title:
OCM CINEMA HOLDINGS, LLC
By: Oaktree Capital Management, LLC,
its Manager
By:
--------------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
1363880 ONTARIO INC.
By:
--------------------------------------
Name:
Title:
------------------------------------
_________________
20
Annex A
Form of Stockholder Joinder Agreement
Reference is made to the Stockholders Agreement (as amended,
supplemented or otherwise modified from time to time, the "Stockholders
Agreement"), dated as of ________, 2002, among Loews Cineplex Entertainment
Corporation, a Delaware corporation, 1363880 Ontario Inc., a corporation
organized and existing under the laws of Ontario, Canada, OCM Cinema Holdings,
LLC, a Delaware limited liability company, and _________________. Capitalized
terms used but not otherwise defined in this Stockholder Joinder Agreement have
the respective meanings given to them in the Stockholders Agreement.
The undersigned is neither a member of the Onex Group nor a member of
the Oaktree Group. This Stockholder Joinder Agreement is being delivered by the
undersigned as required by Section 2.2(b) of the Stockholders Agreement.
Substantially simultaneously with the execution and delivery of this
Stockholder Joinder Agreement, the undersigned is acquiring Shares and/or Common
Stock Equivalents from a Person (a "Transferee") that is a party to the
Stockholders Agreement in the capacity of a Stockholder (and not a member of the
Onex Group or a member of the Oaktree Group). The undersigned hereby represents
and warrants to the Company, Onex Cinema, OCM and _____ that the undersigned is
acquiring the Shares and/or Common Stock Equivalents giving rise to the
requirement to execute and deliver this Stockholder Joinder Agreement in a
transaction in which all of the applicable requirements of the Stockholders
Agreement have been complied with.
Accordingly, the undersigned, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound, hereby agrees, as of the date hereof to join in and become a
party to the Stockholders Agreement and to be bound by the terms, conditions,
restrictions and provisions of the Stockholders Agreement applicable to _____
thereunder, entitled to all of the rights available to him and subject to all of
the burdens imposed on him.
IN WITNESS WHEREOF, the undersigned has executed this Stockholder
Joinder Agreement as of the ___ day of ______________, 20__.
[ ]
By:
--------------------------------------
Name:
Title:
21
