Exhibit 10.12
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AMENDED AND RESTATED JOINT VENTURE AGREEMENT
BY AND AMONG
LOEWS CINEPLEX ENTERTAINMENT CORPORATION
AND
LOEWS CINEPLEX INTERNATIONAL HOLDINGS, INC.
AND
MEDIAPLEX, INC.
AND
MEGABOX CINEPLEX, INC.
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS ................................................ 2
Section 1.1. Definitions ........................................ 2
ARTICLE II ORGANIZATION OF THE COMPANY ............................... 2
Section 2.1. Organizational Documents; Shareholder Resolutions. . 3
Section 2.2. Purpose. ........................................... 3
ARTICLE III EFFECTIVENESS OF PRIOR AGREEMENTS ........................ 3
Section 3.1. Replacement of Prior Agreements. ................... 3
Section 3.2. Conditional Effectiveness. ......................... 3
ARTICLE IV CAPITAL CONTRIBUTIONS ..................................... 4
Section 4.1. Subsequent Capital Contributions. .................. 4
ARTICLE V REPRESENTATIONS AND WARRANTIES ............................. 4
ARTICLE VI CORPORATE GOVERNANCE; CERTAIN CORPORATE ACTIONS ........... 4
Section 6.1. Voting of Shares. .................................. 4
Section 6.2. Composition of the Board of Directors. ............. 5
Section 6.3. Representative Directors, Chief Operating Officer,
Chief Financial Officer and Statutory Auditor ...... 5
Section 6.4. Approval of Certain Matters. ....................... 6
ARTICLE VII TRANSFER AND SALE ........................................ 8
Section 7.1. Transfer Restrictions. ............................. 8
Section 7.2. Consent. ........................................... 8
Section 7.3. First Refusal. ..................................... 8
Section 7.4. Tag-Along Rights. .................................. 10
ARTICLE VIII COVENANTS OF THE PARTIES ................................ 11
Section 8.1. Access. ............................................ 11
article IX CERTAIN AGREEMENTS ........................................ 11
Section 9.1. Non-Competition. ................................... 11
Section 9.2. Access to Company. ................................. 12
Section 9.3. Financial Reporting Obligations .................... 12
Section 9.4 Related Party Transactions. ........................ 13
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Section 9.5 Excess Cash Distributions. ......................... 13
Section 9.6 Sale of Shares by Means of Public Offering. ........ 14
ARTICLE X CONDITIONS TO CLOSING ...................................... 14
ARTICLE XI INDEMNIFICATION ........................................... 14
Section 11.1. Survival ........................................... 14
Section 11.2. Losses ............................................. 14
Section 11.3. Indemnification by Mediaplex ....................... 14
Section 11.4. Indemnification by LCE ............................. 15
Section 11.5. Indemnification by the Company. .................... 15
Section 11.6. Claims ............................................. 16
Section 11.7. Contribution. ...................................... 16
ARTICLE XII TERMINATION AND LIQUIDATION .............................. 16
Section 12.1. General. ........................................... 16
Section 12.2 Termination by LCE. ................................ 17
Section 12.3. Termination by Mediaplex. .......................... 17
Section 12.4. Termination by Mutual Agreement. ................... 17
Section 12.5. Remedies upon Termination. ......................... 18
ARTICLE XIII GENERAL ................................................. 18
Section 13.1. Arbitration ........................................ 18
Section 13.2. Notices. ........................................... 19
Section 13.3. Assignment; Binding Effect; Benefit. ............... 20
Section 13.4. Confidentiality. ................................... 21
Section 13.5. Entire Agreement. .................................. 21
Section 13.6. Amendment. ......................................... 21
Section 13.7. Counterparts. ...................................... 21
Section 13.8. Headings. .......................................... 21
Section 13.9. Interpretation. .................................... 21
Section 13.10. Incorporation of Exhibits and Schedules. ........... 22
Section 13.11. Severability. ...................................... 22
Section 13.12. Enforcement of Agreement. .......................... 22
APPENDIX A - Definitions
APPENDIX B - Representations and Warranties
EXHIBITS
Exhibit 2.1 - Amended and Restated Articles of Incorporation
ii
AMENDED AND RESTATED JOINT VENTURE AGREEMENT
THIS AMENDED AND RESTATED JOINT VENTURE AGREEMENT, dated as of July
25, 2002 (this "Agreement"), by and among Megabox Cineplex, Inc., a corporation
established under the laws of the Republic of Korea and having its offices at
0X, Xxxxxxxxx X/X, 00-0 Xxxxxxx-xxxx, Xxxxxxx-xx, Xxxxx, Xxxxxxxx of Korea
(hereinafter the "Company"), Mediaplex, Inc., a corporation established under
the laws of the Republic of Korea and having its offices at 0X, Xxxxxxxxx X/X,
00-0 Xxxxxxx-xxxx, Xxxxxxx-xx, Xxxxx, Xxxxxxxx of Korea (hereinafter
"Mediaplex"), Loews Cineplex Entertainment Corporation, a corporation
established under the laws of the State of Delaware, United States of America,
and having its offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, U.S.A
(hereinafter "LCE") and Loews Cineplex International Holdings, Inc., a
corporation established under the laws of the State of Delaware, United States
of America and having its offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000,
X.X.X. (hereinafter "LCI")
W I T N E S S E T H:
WHEREAS, Mediaplex and LCE have entered into a Heads of Agreement
dated October 21, 1999, as amended by the First Amendment to Heads of Agreement
dated November 14, 1999, the Second Amendment to Heads of Agreement dated May 9,
2000, the Third Amendment to Heads of Agreement dated August 8, 2000 and the
Fourth Amendment to Heads of Agreement dated August 24, 2000 (the "Heads of
Agreement") establishing the basic framework of a joint venture to develop,
construct, own and operate new state-of-the-art multiplex theaters of high
quality in key locations in the Republic of Korea;
WHEREAS, in order to facilitate the transfer of the rights and
obligations under a Lease Agreement dated July 28, 1998 between Daewoo
Corporation ("Daewoo") and the Korea International Trade Association ("KITA")
regarding the UEC Multiplex located at KITA's ASEM MALL (the "UEC Multiplex"),
Daewoo and LCE executed an Agreement for the Formation of a Joint Venture
Agreement (the "JVA") on October 21, 1999, pursuant to which each of Daewoo and
LCE subscribed to 1,200,000 shares of the Company at the time of the Company's
incorporation on November 16, 1999;
WHEREAS, as contemplated by the Heads of Agreement, Mediaplex
acquired all of the 1,200,000 shares of the Company owned by Daewoo pursuant to
a Share Transfer Agreement dated November 25, 1999;
WHEREAS, Mediaplex, LCI and the Company have entered into a Joint
Venture Agreement dated May 9, 2000 (the "Joint Venture Agreement"), in which
the parties agreed to consummate Mediaplex's subscription to 2,479,840 Common
Shares of the Company (as defined therein), LCE's transfer of all of its Common
Shares of the Company to LCI and LCI's subscription to 2,479,840 Convertible
Preferred Shares of the Company (as defined therein) by August 8, 2000;
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WHEREAS, due to unforeseen circumstances, the closing of the Joint
Venture Agreement was rescheduled to August 25, 2000 by the First Amendment to
Joint Venture Agreement dated August 8, 2000 by and among Mediaplex, LCI and the
Company (the "First Amendment"), and subsequently to October 15, 2000 by the
Supplemental Agreement and Second Amendment to Joint Venture Agreement dated
August 24, 2000 by and among Mediaplex, LCI and the Company (the "Second
Amendment");
WHEREAS, as the closing did not occur on or prior to October 15,
2000 due to a cause solely attributable to LCI/LCE, pursuant to Article 4 of the
Second Amendment, Mediaplex subscribed to 2,479,840 Common Shares of the Company
on November 11, 2000, resulting in the shareholding ratio of Mediaplex and LCE
being 75.4% and 24.6%, respectively, and certain provisions of the Joint Venture
Agreement were amended to reflect the dilution of LCE's shareholding ratio;
WHEREAS, under Article 4(o) of the Second Amendment, LCI has the
right to subscribe to or purchase from Mediaplex on or prior to October 15, 2003
such number of shares of the Company that will result in both Mediaplex and LCI
having equal equity interests in the Company;
WHEREAS, concurrently with the execution of this Agreement,
Mediaplex, LCE and the Company have entered into a Stock Purchase and
Subscription Agreement (the "Stock Purchase and Subscription Agreement"), in
which LCE agreed to purchase from Mediaplex 1,015,518 shares of the Company's
common stock owned by Mediaplex, and to subscribe to 448,804 new shares of the
Company's common stock on the terms and conditions set forth therein, such that
each of Mediaplex and LCE shall have 50% equity interest in the Company; and
WHEREAS, in connection with LCE's purchase and subscription of the
shares of the Company contemplated in the Stock Purchase and Subscription
Agreement, the parties hereto wish to amend the Joint Venture Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions
Capitalized terms used herein are defined in Appendix A.
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ARTICLE II
ORGANIZATION OF THE COMPANY
Section 2.1. Organizational Documents; Shareholder Resolutions. The
parties hereto agree that, on or prior to the Closing, the Company will take
such action as is necessary to amend the Company's Articles of Incorporation
(the "Articles of Incorporation") so that they shall be as set forth in Exhibit
2.1 attached to this Agreement, effective upon the Closing. From the Closing, in
the event that the relevant Korean registration authorities considers that any
portion of the Articles of Incorporation should be changed from the form
contained in Exhibit 2.1, the parties will amend the Articles of Incorporation
so as to reflect as closely as possible the agreements set forth herein.
Notwithstanding anything herein or in the Articles of Incorporation to the
contrary, to the extent that any provision of the Articles of Incorporation
conflicts with, or otherwise is inconsistent with, any provision of this
Agreement with respect to any matter, or this Agreement covers any matter that
is not covered in the Articles of Incorporation, the provisions of this
Agreement with respect to such matter shall control and shall be binding upon
each of the parties hereto.
Section 2.2. Purpose. The purpose of the Company will be to develop
and operate, either itself or through its Subsidiaries, the UEC Multiplex and to
conduct such other business as prescribed in Article 2 of the Articles of
Incorporation, as amended from time to time.
ARTICLE III
EFFECTIVENESS OF PRIOR AGREEMENTS
Section 3.1. Replacement of Prior Agreements.
Subject to Section 3.2 hereof, the parties hereto agree that this
Agreement shall replace and supersede the Heads of Agreement, the JVA, the Joint
Venture Agreement, the First Amendment and the Second Amendment, regardless of
whether the Closing occurs. Any and all rights and obligations of the parties
under such prior agreements shall forthwith become null and void upon the
execution of this Agreement; provided, however, that each party shall continue
to be liable for its breach of such prior agreements, if any, prior to the date
of this Agreement; provided further, that Mediaplex's right to retain the
payment by LCI of $2,000,000 in accordance with Article 4 of the Second
Agreement shall not be affected by this Agreement.
Section 3.2. Conditional Effectiveness.
Notwithstanding anything to the contrary herein, none of the provisions in
Articles VI, and IX of this Agreement shall be effective until the Closing.
Until the Closing, Articles VI, and IX of the Joint Venture Agreement, as
amended by Article 4 of the Second Amendment, shall remain in full force and
effect, except that all references to LCI in the Joint Venture Agreement, the
First Amendment and the Second Amendment shall be interpreted as references to
LCE.
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ARTICLE IV
CAPITAL CONTRIBUTIONS
Section 4.1. Subsequent Capital Contributions.
(a) All capital contributions called for by the Board of Directors
subsequent to the payment for the New Shares (as defined in the Stock Purchase
and Subscription Agreement) will be made on a pro rata basis based on the
percentage of outstanding Shares held by each Shareholder.
(b) If at any time any Shareholder shall fail to subscribe for all
or part of the Shares which such Shareholder is required to make under this
Agreement on the date so required pursuant to written notice (a "Funding
Notice") provided by the Board of Directors (which date shall not be sooner than
45 days following the date of such notice), the Shareholder failing to subscribe
for such shares shall be deemed to be a "Non-Contributing Shareholder" and the
other Shareholder shall be deemed to be "Contributing Shareholder." In such
event, the Contributing Shareholder may subscribe for such Shares for which the
Non-Contributing Shareholder has failed to subscribe with written notice to the
Board of Directors.
(c) All capital contributions made pursuant to this Agreement shall
be in Won. The capital contributions required to be made to the Company pursuant
to Section 4.1 shall be made in the form of subscriptions for additional Shares
at such subscription price per Share as shall be determined by the Board of
Directors and set forth in the relevant Funding Notice.
(d) No Shareholder shall be required to make contributions pursuant
to Section 4.1 unless the other Shareholder shall have made or concurrently be
making its contribution pursuant to such Section.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The representations and warranties of the parties to this Agreement
are set forth in Appendix B.
ARTICLE VI
CORPORATE GOVERNANCE; CERTAIN CORPORATE ACTIONS
Section 6.1. Voting of Shares. Each Shareholder shall vote all
Shares owned or controlled by it, and shall take all other necessary or
desirable actions within its control (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), to effectuate the provisions
of this Agreement.
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Section 6.2. Composition of the Board of Directors. Each Shareholder
shall vote all Shares owned or controlled by it and shall take all necessary
action within its control, so that the composition of the Board of Directors and
the manner of selecting members thereof shall be as follows:
(a) From and after the Closing Date, the Board of Directors shall be
comprised of four persons, two of whom shall be designated by LCE and two of
whom shall be designated by Mediaplex. All such designations shall be notified
in writing to the Company, which shall notify all of the Shareholders.
(b) Each Shareholder shall have the right by notice in writing to
the Company to require the Board of Directors to call a shareholder meeting (i)
to remove, with or without cause, any Director designated by such shareholder
pursuant to this Section 6.2 and (ii) to designate any replacement for a
Director designated by such shareholder pursuant to this Section 6.2, upon the
death, resignation, retirement, disqualification or removal from office of such
Director; provided, however, that the Shareholder proposing to remove any
Director it has designated shall be responsible for any claims, actions, losses,
expenses or damage arising out of or in relation to such removal and shall
indemnify and hold harmless the other Shareholder and the Company from any
claim, actions, losses, expenses or damages arising out of or in relation to
such removal.
(c) At all meetings of the Board of Directors, a quorum shall
consist of not less than three Directors provided that such quorum consists of
at least one Director designated by LCE and one Director designated by
Mediaplex. Written notice shall be duly given to each Director at least fifteen
(15) business days in advance of each meeting, provided no notice need be given
to any Director who signs a written waiver of notice at or in advance of a
meeting, or who attends the meeting without protesting any lack of notice.
Unless a higher vote is specifically required by this Agreement, all actions of
the Board of Directors shall be determined by the vote of a simple majority
(i.e., greater than 50%) of the Directors attending the meeting; provided that
such majority includes at least one Director designated by LCE and one Director
designated by Mediaplex. Directors shall be entitled to participate at meetings
of the Board of Directors telephonically in the event telephonic participation
becomes permissible under the law of the Republic of Korea.
(d) Board of Directors meetings shall be held no less frequently
than once per year. Minutes of the Board of Directors meetings shall be taken
and a copy of the minutes shall be distributed to each Director in a timely
fashion.
Section 6.3. Representative Director, Chief Operating Officer, Chief
Financial Officer and Statutory Auditor. (a) The Company's Representative
Director shall be elected by
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the Board of Directors from among the members of the Board of Directors
nominated by Mediaplex. The Company shall also have one Statutory Auditor who
shall be nominated by Mediaplex and elected at the General Meeting of
Shareholders, one Chief Operating Officer who shall be an individual nominated
by Mediaplex and approved by LCE (and who shall be a resident of the Republic of
Korea) and one Chief Financial Officer who shall be nominated by Mediaplex and
approved by LCE (and who shall be a resident of the Republic of Korea). The
day-to-day affairs of the Company shall be managed by the Chief Operating
Officer.
(b) The Representative Director shall represent the Company and act
on all matters of the Company. The Representative Director and the Chief
Operating Officer will report to the Board of Directors. The Chief Operating
Officer, subject to the control of the Board of Directors, shall have general
charge and control of all of the Company's business and affairs and shall
perform all duties incident to his office; provided that neither the
Representative Director, the Chief Operating Officer nor any other executive of
the Company (acting individually or jointly) shall take or shall be entitled to
take, and each Shareholder shall use its best efforts to prevent the Company or
any of its Subsidiaries from taking, any of the actions specified in Section 6.4
(a) without the prior approval of the Board of Directors in accordance with this
Agreement. The Representative Director and the Chief Operating Officer shall
have such other powers and perform such other duties as may from time to time be
assigned to them by the Board of Directors.
(c) The Representative Director shall delegate all matters
concerning the day-to-day operations of the Company to the Chief Operating
Officer and shall authorize the Chief Operating Officer to take, without
approval of the Representative Director, any and all actions concerning the
Company not otherwise requiring the approval of the Board of Directors or
Shareholders pursuant to Section 6.4.
Section 6.4. Approval of Certain Matters. (a) The Representative
Director and the Chief Operating Officer, acting individually or jointly, shall
not and shall not permit the Company or any Subsidiary of the Company to take or
agree to take any of the following actions or engage in any of the following
transactions without the prior approval of the Board of Directors in accordance
with the provisions of this Agreement:
(i) expenditure of any Company sum or sums in excess of
$400,000 in the aggregate in any fiscal year that is not included in an
Approved Budget for the then current fiscal year, it being understood and
agreed that all such expenditures shall be directly related to the
construction, renovation, development or improvement of the Company's
theatres, it being further understood and agreed that expenditures on film
rental, to the extent such expenditures are determined by reference to
box-office sales, shall not be restricted by this clause (i); provided,
however, that at the end of the three-year period referenced in Section
6.3(a) above, the parties hereto shall review the provisions of this
Section 6.4(a)(i) and shall jointly determine whether it would be
appropriate to modify the terms hereof;
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(ii) sale, transfer or disposal of assets of the Company or
any of its Subsidiaries, or purchase or other acquisition of assets or
businesses, in each case in any single or series of related transactions,
for a consideration in excess of $100,000;
(iii) engagement by the Company or any of its Subsidiaries in
any business other than as prescribed in the Articles of Incorporation;
(iv) varying the Company's accounting policies and practices
in any material respect, other than to comply with Korean GAAP;
(v) entering into, amending or waiving the provision of any
agreement or transaction with any Shareholder or any Affiliate of any
Shareholder after the Closing Date, except as expressly provided for in
this Agreement, and except relating to the exhibition and settlement of
motion pictures;
(vi) establishing any place of business outside the Republic
of Korea;
(vii) commencing or settling litigation where the amount
involved exceeds $100,000 in the aggregate in any fiscal year or
consenting to any injunction;
(viii) entering into any joint venture, partnership, agreement
or similar arrangement requiring capital funding;
(ix) approving and adopting the annual budget or the Business
Plan or any change thereto;
(x) incurring any debt for borrowed money in excess of
$100,000 in the aggregate in any fiscal year; or
(xi) entering into any employment agreement or consulting
agreement with any Person involving the payment of any amount in excess of
$100,000 per year or authorizing any Person to enter into any such
employment agreement or consulting agreement.
(b) Neither the Company nor any Subsidiary of the Company shall take
any of the following actions without the approval of the Shareholders by a
two-thirds (2/3) vote:
(i) varying any of the rights attaching to the Shares;
(ii) modifying the Articles of Incorporation;
(iii) taking any steps to effect the winding-up, liquidation,
dissolution or voluntary bankruptcy of the Company or any of its
subsidiaries;
(iv) the issuance of additional Shares by the Company (except
for the issuance of new shares to third parties other than the
shareholders of the Company); provided, however, that the Shareholders
shall undertake discussions in good faith as and
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when requested by a Shareholder concerning capital raising activities,
including the possible sale of private or public equity in the Company;
(v) entering into any merger, amalgamation, consolidation or
other business combination to which the Company or any of its subsidiaries
is a party;
(vi) declaring dividend, distribution of liquidation proceeds
or purchase of treasury stock;
(vii) other actions requiring a special resolution of a
General Meeting of Shareholders pursuant to the Korean Commercial Code;
(viii) changing the name of the Company;
(ix) the removal of a Director or the Statutory Auditor;
(x) the transfer of all or a significant part of the business
of the Company;
(xi) the issuance of shares of the Company at a price less
than par value; or
(xii) reduction of paid-in capital of the Company.
ARTICLE VII
TRANSFER AND SALE
Section 7.1. Transfer Restrictions. Other than to a Permitted
Transferee, no Shareholder shall sell, transfer, assign, pledge or otherwise
dispose of (a "Transfer") all or part of any Shares beneficially owned by it (i)
except in compliance with the provisions of this Article VII and the Articles of
Incorporation, and (ii) without obtaining a written agreement in form and
substance reasonably satisfactory to the Company executed by the transferee to
be bound by the terms of this Agreement, and any Transfer not in compliance with
clauses (i) and (ii) and any other provisions of this Article VII shall have no
effect and be null and void. Notwithstanding the foregoing restrictions, either
Shareholder may pledge all or part of any Shares beneficially owned by it to a
third party for financing purposes, the period of which pledge must expire no
later than one (1) year from the Closing Date; provided, that transfer
restrictions set forth in this Article 7 shall apply with the same force and
effect to the sale, transfer or disposal of such pledged shares by such third
party.
Section 7.2. Consent. Until May 9, 2005 (the "Transfer Waiver
Date"), no Shareholder shall Transfer any Shares without the prior written
consent of the other Shareholders other than to a Permitted Transferee.
Section 7.3. First Refusal. (a) If, following the Transfer Waiver
Date, either LCE (on behalf of itself and its Permitted Transferees) or
Mediaplex (on behalf of itself and its Permitted Transferees) (as appropriate,
the "Transferring Shareholder") desires to Transfer,
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directly or indirectly, all or any portion of the Shares owned by it (other than
to a Permitted Transferee), the Transferring Shareholder shall provide the other
Shareholder (the "Non-Transferring Shareholder") with a written notice (the
"First Refusal Notice"), with a copy to the Company, setting forth:
(i) the number of Shares to be offered;
(ii) the terms and conditions of the proposed Transfer,
including the price (the "Offering Price") at which the Transferring
Shareholder proposes to Transfer such Shares; and
(iii) the name of the proposed transferee and a statement
specifying whether that transferee is a Competitor or not.
Within 30 Business Days following the delivery of the First Refusal
Notice, the Non-Transferring Shareholder shall, by notice in writing to the
Transferring Shareholder (copied to the Company), have the opportunity and right
to purchase 100% (but not less than 100%) of the Shares referred to in the First
Refusal Notice (on the terms specified in the First Refusal Notice or on any
other terms as are agreed by the parties). If the Non-Transferring Shareholder
fails to exercise or waive its right to purchase 100% of the Shares referred to
in the First Refusal Notice, then the Transferring Shareholder shall be free,
for a three-month period commencing at the end of such 30-day period to enter
into a definitive agreement to Transfer the offered Shares to any third party,
on terms (including, without limitation, all terms affecting price) no more
favorable to the proposed purchaser than the terms specified in the First
Refusal Notice, it being understood, however, that if the Transferring
Shareholder does not complete the Transfer of the Shares within one month
following the end of such three month period, or if the definitive agreement is
subsequently terminated, the Transferring Shareholder shall once again be
subject to all the provisions of this Section 7.3.
(b) Each acceptance made hereunder shall constitute a separate,
binding contract obligating the Transferring Shareholder to sell, and the
Non-Transferring Shareholder to purchase, the Shares accepted on the terms
specified in the relevant notice (or on any other terms as the parties shall
have agreed). The parties agree to negotiate in good faith to consummate the
transaction as soon as possible, but in no event later than the date 120 days
after the date the First Refusal Notice was given. Notwithstanding any provision
of this Agreement to the contrary, in the event of failure by the
Non-Transferring Shareholder to close the transaction within such 120-day time
periods referred to above, the Transferring Shareholder shall be entitled, in
addition to all other available remedies, to treat that failure as a waiver
under Section 7.3(a) by the Non-Transferring Shareholder of its purchase rights,
entitling the Transferring Shareholder to take the action specified in Section
7.3(a) pursuant to that waiver.
(c) If the Offering Price specified in the First Refusal Notice
includes any property other than cash, the fair market value of any non-cash
property shall be determined in the following manner:
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(i) The fair market value of securities which are publicly
traded shall be deemed to be the average of the daily closing prices of
those securities for the five consecutive trading days immediately prior
to the date of the First Refusal Notice (or the date of the last written
proposal made by the Transferring Shareholder); and
(ii) The fair market value of any other property shall be
determined by the good faith agreement of the Transferring Shareholder and
the accepting Non-Transferring Shareholder or, if such parties are unable
to agree, by an appropriate expert mutually selected by such parties. If
the parties cannot mutually agree on an expert, each party shall select an
expert, and those experts shall select an independent expert to resolve
the dispute. The costs and expenses of the appraisal shall be borne by the
Transferring Shareholder.
Notwithstanding anything to the contrary in this Section 7.3, each
Non-Transferring Shareholder may pay the Offering Price in cash, with any
non-cash property valued as provided above.
Section 7.4. Tag-Along Rights.
(a) If, following the Transfer Waiver Date, a Transferring
Shareholder desires to Transfer, directly or indirectly, all or any portion of
the Shares beneficially owned by it and its Affiliates, the Transferring
Shareholder shall provide the Non-Transferring Shareholder with written notice
(the "Tag Along Notice") (which may, but need not be, incorporated into the
First Refusal Notice required pursuant to Section 7.3) setting forth:
(i) the number of Shares proposed to be Transferred;
(ii) all terms and conditions of the proposed Transfer including the
Offering Price at which the Transferring Shareholder proposes to Transfer such
Shares;
(iii) the name of the proposed transferee and a statement specifying
whether or not that transferee is a Competitor; and
(iv) that the Transferring Shareholder is offering the
Non-Transferring Shareholder the right to participate in such Transfer on the
same terms and conditions as are applicable to the Transferring Shareholder.
(b) If the proposed transferee is a Competitor of a Non-Transferring
Shareholder then, within 10 Business Days following delivery of the Tag Along
Notice, such Non-Transferring Shareholder may, by notice in writing to the
Transferring Shareholder, require the Transferring Shareholder to request the
proposed transferee to purchase all of the Shares held by the Non-Transferring
Shareholder and its Affiliates on the terms specified in the Tag Along Notice.
If the Transferring Shareholder declines to make such request or the proposed
transferee rejects the request, the Transferring Shareholder shall not be
entitled to sell the Shares which are the subject of the Tag Along Notice to
that proposed transferee.
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(c) If the proposed transferee is not a Competitor of any
Non-Transferring Shareholder, then, within 10 Business Days following the
delivery of the Tag Along Notice, such Non-Transferring Shareholder shall, by
notice in writing to the Transferring Shareholder, have the opportunity to sell
to the prospective purchaser (upon the same terms and conditions as the
Transferring Shareholder) up to that number of Shares owned by such
Non-Transferring Shareholder as shall equal the product of (x) a fraction, the
numerator of which is the number of Shares owned by such Non-Transferring
Shareholder as of the date of such Tag Along Notice, and the denominator of
which is the aggregate number of Shares owned as of the date of such Tag Along
Notice by the Transferring Shareholder and the Non-Transferring Shareholder, and
(y) the number of Shares proposed to be sold. The amount of Shares to be sold by
the Transferring Shareholder shall be reduced if and to the extent necessary to
provide for such sale of Shares by the Non-Transferring Shareholder.
(d) If the Non-Transferring Shareholder does not elect to require
the Transferring Shareholder to effectuate the sale specified in Section 7.4(b)
or does not elect to participate in a sale specified in Section 7.4(c) within
the 10 Business Day periods referred to in those Sections, the Transferring
Shareholder shall be entitled to consummate such sale within 100 days following
delivery of the Tag Along Notice without the participation of the
Non-Transferring Shareholder.
ARTICLE VIII
COVENANTS OF THE PARTIES
Section 8.1. Access. The Company shall provide LCE and Mediaplex
with such information as either LCE or Mediaplex may from time to time
reasonably request with respect to the Company, and the transactions
contemplated by this Agreement and provide LCE, Mediaplex and their
representatives reasonable access during regular business hours and upon
reasonable notice to the properties, books and records of the Company as LCE or
Mediaplex may from time to time reasonably request.
ARTICLE IX
CERTAIN AGREEMENTS
Section 9.1. Non-Competition. (a) As long as LCE or any of its
Permitted Transferees directly or indirectly owns any Shares, and until the
fifth anniversary of the date that LCE and its Permitted Transferees cease to
own any Shares, neither LCE nor its Affiliates shall directly or indirectly have
any equity or other ownership or participation interest in (other than passive
investments of no more than 5% of the equity of a company whose equity
securities are publicly traded) any motion picture exhibition business (which
business includes the concessions business associated with exhibition of motion
pictures) in the Republic of Korea other than the Company or in such other
territories in Asia in which the Company is then authorized to operate in
accordance with the Articles of Incorporation.
(b) Subject to and except as permitted by Sections 9.1(c), as long
as Mediaplex or any of its Permitted Transferees directly or indirectly own any
Shares, and until the fifth anniversary of the date that Mediaplex and its
Permitted Transferees cease to own any
11
Shares, neither Mediaplex nor its Affiliates shall directly or indirectly have
any equity or other ownership or participation interest (other than passive
investments of no more than 5% of the equity of a company whose equity
securities are publicly traded) in any motion picture exhibition business (which
business includes the concessions business associated with exhibition of motion
pictures) in the Republic of Korea other than the Company or in such other
territories in Asia in which the Company is then authorized to operate in
accordance with the Articles of Incorporation.
(c) Notwithstanding Section 9.1(b), Mediaplex shall be entitled to
retain a one hundred percent (100%) interest in the Cinehouse Theatre.
(d) If either LCE or Mediaplex wishes to participate in or undertake
any business venture which would otherwise be prohibited by Section 9.1(a) or
9.1(b) (a "New Venture"), the party proposing such New Venture (the "Proposing
Party") shall first offer it to the Company by providing written notice (a
"Notice of New Venture") to the Company containing a detailed description of the
nature, structure and terms of such New Venture as well as a copy of any
proposed agreements relating thereto. The Company shall have thirty (30) days to
determine whether it wishes to pursue the New Venture, it being agreed that such
determination shall be made by the Directors representing the non-Proposing
Party. In the event that the Company determines not to participate in such New
Venture, then the Proposing Party (and/or its Affiliates) shall have the right
to enter into the New Venture as described in the Notice of New Venture
independently or with such third Persons as it selects; provided that the terms
related to such New Venture shall be no more favorable than the terms offered to
the Company. Notwithstanding the foregoing sentence, to the extent that there is
a material change in the details of the New Venture as described in the Notice
of New Venture, a Proposing Party will not have the right to directly or
indirectly, participate in or undertake the New Venture without giving an
additional Notice of New Venture to the Company pursuant to this Section 9.1(d).
(e) Notwithstanding anything to the contrary herein, within the time
prescribed in Sections 9.1(a) and (b), neither LCE (or its Affiliates) nor
Mediaplex (or its Affiliates) may participate in or undertake any New Venture
regardless of whether a first offer has been made to the Company pursuant to
Section 9.1(d), if such New Venture has or is to have any place of business
within a ten kilometer radius from one of the Company's places of business (six
kilometers if within metropolitan Seoul) or if such New Venture is conducted by
any Competitor or Affiliate thereof.
Section 9.2. Access to Company. Upon ten Business Days' notice, each
Shareholder and its representatives shall be permitted to inspect the books and
records of the Company for any proper purpose and make copies thereof at any
reasonable time during normal business hours, it being acknowledged that any
information provided under this Section 9.2 shall be subject to the provisions
of Section 13.4.
Section 9.3. Financial Reporting Obligations. The Shareholders shall
cause the Company to deliver to each of the Shareholders (and shall allow the
Company to hire adequate personnel for such tasks) (i) as soon as available, but
in any event not later than 60 days after the end of each fiscal year of the
Company, a copy of the consolidated balance sheet of the
12
Company as at the end of such year and the related unaudited consolidated
statements of net income and retained earnings and of cash flows of the Company
for such year setting forth in each case in comparative form the figures for the
previous year, (ii) as soon as available, but in any event not later than 90
days after the end of the fiscal year of the Company, its financial statements
referred to in clause (i), reported on by independent certified public
accountants of internationally recognized standing, (iii) as soon as available,
but in any event not later than 30 days after the end of each of the first three
quarterly periods of each fiscal year of the Company, the unaudited consolidated
balance sheet of the Company as at the end of such quarter and the related
unaudited consolidated statements of net income and retained earnings and of
cash flows of the Company for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by the Chief Financial Officer or
equivalent director or employee of the Company as being fairly stated in all
material respects (subject to normal year-end audit adjustments) and (iv) as
soon as available, but in any event not later than 30 days after the end of each
month of each fiscal year of the Company, the unaudited consolidated balance
sheet of the Company as at the end of such month and the related unaudited
consolidated statements of net income and retained earnings and of cash flows of
the Company for such month certified by the Chief Financial Officer or
equivalent director or employee of the Company as being fairly stated in all
material respects (subject to normal year-end audit adjustments). All such
financial statements shall be prepared in reasonable detail and in accordance
with Korean GAAP applied consistently throughout the periods reflected therein
and with prior periods (except as any inconsistent application of Korean GAAP is
approved by such accountants or officer, as the case may be, and disclosed
therein). The Company shall also prepare such financial statements in accordance
with U.S. GAAP and shall prepare all information required under this Section 9.3
in English if so requested by LCE. The Company's independent certified public
accountants shall be a Korean affiliate of PriceWaterhouseCoopers unless
otherwise decided by the Board of Directors.
Section 9.4 Related Party Transactions. In the event the Company
elects to enter into one or more business transactions with a third party in
which Mediaplex or LCE has a direct or indirect ownership or beneficial interest
greater than five percent (5%) (each a "Related Party"), all such transactions
shall be conducted on an arm's length basis, without consideration of the
Related Party's status or the beneficial interest of either Mediaplex or LCE, as
the case may be. All contracts, agreements or other business arrangements
between Mediaplex's or LCE's production or distribution Affiliates, on the one
hand, and the Company, on the other hand, shall be on terms no less favorable to
the Company than those offered to similarly situated non-related exhibition
companies.
Section 9.5 Excess Cash Distributions. Notwithstanding anything to
the contrary herein, if, at the end of each fiscal year, Excess Cash (as
hereinafter defined) is positive, the Company shall distribute such Excess Cash
to the Shareholders in proportion to their respective ownership interest in the
Company no later than 60 days after completion and submission of the audited
financial statements for the relevant fiscal year; provided, however, that the
automatic distribution of Excess Cash provided for hereunder may be waived by
the unanimous consent of the Shareholders. For purposes of this Agreement,
"Excess Cash" means, for the applicable fiscal year, an amount equal to (i) the
amount for such fiscal year of EBITDA minus (ii) the sum, without duplication,
of the amounts for such period of (a) voluntary and
13
scheduled repayments of debt actually made, (b) capital expenditures (net of any
proceeds of any related financings with respect to such expenditures), (c)
interest expenses to the extent paid in cash, (d) authorized investments and
acquisitions to the extent made in cash (net of any proceeds of any related
financings with respect to such authorized investments and acquisitions), (e)
provisions for Taxes to the extent paid in cash with respect to such fiscal
year, (f) any management fees or dividends paid in cash and (g) $3 million (the
threshold level which must be achieved after deducting (a) through (f) before
cash distributions are payable).
Section 9.6 Sale of Shares by Means of Public Offering. At any time
during the three year period commencing on the Closing Date of the Stock
Purchase and Subscription Agreement, Mediaplex and LCE shall, at either party's
request, meet to explore in good faith the timeliness of a sale of the Company's
stock by means of a public offering taking into account, among other things,
current market conditions, the needs of the Company, the needs of the
Shareholders and the applicable competitive environment. In the event the
Company has not completed a sale of the Company's stock by means of public
offering during such three-year period, a meeting shall be convened by the
Representative Director no later than 60 days after the expiration of such
period in order to establish a mutually acceptable deadline by which date the
Company shall have conducted a sale of shares of the Company's stock by means of
a public offering.
ARTICLE X
CONDITIONS TO CLOSING
[Deleted in its entirety]
ARTICLE XI
INDEMNIFICATION
Section 11.1. Survival. The representations and warranties made in
this Agreement shall survive the Closing and remain in full force and effect for
a period of eighteen (18) months after the Closing Date.
Section 11.2. Losses. For purposes of this Agreement, the terms
"Loss" or "Losses" shall mean each and all of the following items to the extent
actually incurred: claims, losses, liabilities, damages, judgments, awards,
costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel). Losses shall exclude all consequential damages.
14
Section 11.3. Indemnification by Mediaplex. (a) Mediaplex shall
indemnify and hold harmless LCE, the Company and their respective Affiliates
from and against any and all Losses based upon, arising out of, or resulting
from, any of the following:
(i) any breach by Mediaplex of any of the representations or
warranties made by Mediaplex in this Agreement; and
(ii) any failure by Mediaplex to perform any of its covenants
or agreements contained in this Agreement.
(b) Notwithstanding anything to the contrary contained herein,
Mediaplex
(i) shall not be obligated to pay any amount for
indemnification under this Section 11.3 until the aggregate amount of
indemnification required to be made under this Section 11.3 exceeds $50,000 (the
"Basket Amount"), whereupon Mediaplex shall be obligated to pay all amounts for
such indemnification in excess of the Basket Amount; and
(ii) shall not be obligated to make any payments for
indemnification under this Section 11.3 which exceed LCE's total investment in
the Company.
Section 11.4. Indemnification by LCE. (a) LCE shall indemnify and
hold harmless Mediaplex, the Company and its Affiliates from and against any and
all Losses based upon or resulting from any of the following:
(i) any breach by LCE of any of the representations or
warranties made by LCE in this Agreement; or
(ii) any failure by LCE to perform any of its covenants or
agreements contained in this Agreement.
(b) Notwithstanding anything to the contrary contained herein, LCE
(i) shall not be obligated to pay any amount for
indemnification under this Section 11.4 until the aggregate amount of
indemnification required to be made under this Section 11.4 exceeds the Basket
Amount, whereupon LCE shall be obligated to pay all amounts for such
indemnification in excess of the Basket Amount; and
(ii) shall not be obligated to make any payments for
indemnification under this Section 11.4 which exceed Mediaplex's total
investment in the Company.
Section 11.5. Indemnification by the Company. (a) The Shareholders
shall cause the Company to indemnify and hold harmless each Shareholder and each
Director, each Affiliate of each Shareholder, each of the foregoing's respective
directors, officers, employees and agents and each of the heirs, executors,
successors and assigns of any of the foregoing, from and against any and all
Losses based upon or resulting from, (i) any Liability of the Company or (ii)
any act or omission performed or omitted to be performed by such Person in its
or his capacity as a Shareholder, Director or an Affiliate of a Shareholder or
as a director, officer,
15
employee, agent, successor or assign of such Shareholder, Director or Affiliate)
except for acts or omissions constituting gross negligence, bad faith, fraud or
willful misconduct, or breach of this Agreement, provided that no Person shall
have any obligation or liability under this Section 11.5 with respect to any
Losses for which such Person is indemnified or is entitled to indemnification
pursuant to Section 11.3 or 11.4.
(b) Except as expressly provided in this Article XI, no Shareholder
will have any obligation or Liability to any other Shareholder arising out of or
relating to any Liability of the Company.
Section 11.6. Claims. (a) When a party seeking indemnification under
Section 11.3, 11.4 or 11.5(a) (the "Indemnified Party") receives notice of any
claims made by third parties ("Third Party Claims") or has any other claim for
indemnification other than a Third Party Claim, which is to be the basis for a
claim for indemnification hereunder, the Indemnified Party shall give prompt
written notice thereof to the other party or parties (the "Indemnifying Party")
reasonably indicating (to the extent known) the nature of such claims and the
basis thereof; provided, however, that failure of the Indemnified Party to give
the Indemnifying Party prompt notice as provided herein shall not relieve the
Indemnifying Party of any of its obligations hereunder unless and only to the
extent that the Indemnifying Party shall have been materially prejudiced
thereby. The Indemnified Party shall have the right to either (i) assume the
defense of any Third Party Claim or (ii) request that the Indemnifying Party
assume the defense of such Third Party Claim. No compromise or settlement in
respect of any Third Party Claims may be effected by the Indemnifying Party
without the Indemnified Party's prior written consent (which consent shall not
be unreasonably withheld or delayed). Regardless of whether the Indemnified
Party assumes the defense of a Third Party Claim or requests the Indemnifying
Party to assume such defense, the Indemnifying Party shall pay all costs and
expenses thereof, including without limitation fees and expenses of legal
counsel.
Section 11.7. Contribution.
Except as otherwise provided in Section 11.3 or 11.4, as the case
may be, in the event that any Shareholder shall pay in good faith or become
obligated to pay any proper obligation of the Company, such Shareholder shall be
entitled to contribution from the other Shareholder(s) to the extent necessary
so that, after giving effect to such contribution, each Shareholder shall bear
no more than that part of such obligation which corresponds to its total share
subscription capital contributions at the time of the occurrence, circumstances,
events or conditions giving rise to such obligation.
ARTICLE XII
TERMINATION AND LIQUIDATION
Section 12.1. General.
This Agreement shall terminate thirty (30) days after issuance of a
termination notice (hereinafter a "Termination Notice") in accordance with
Sections 12.2 and 12.3, provided that such Termination Notice has not been
revoked by the Shareholder that issued it prior to the
16
expiration of such thirty (30) day period. If the Termination Notice has not
been revoked within such thirty (30) days, it shall become effective as of the
expiration of such period. Issuance of a Termination Notice pursuant to Section
12.2 or 12.3 shall operate without prejudice to the issuing Shareholder's rights
with respect to a claim, if applicable for damages.
Section 12.2 Termination by LCE.
LCE shall be entitled to terminate this Agreement pursuant to
Section 12.1 by issuing a Termination Notice to Mediaplex following the
occurrence of any of the following events:
(i) the breach by Mediaplex of any term of this Agreement if
not cured by Mediaplex within sixty (60) days after receipt by Mediaplex of
written notice of such breach from LCE, which notice shall set forth in
reasonable details the facts forming the basis of the breach; or
(ii) any Governmental Entity issues a notice terminating or
ordering the liquidation of the Company; or
(iii) Mediaplex or its assets become the subject of
bankruptcy, insolvency, receivership, liquidation or similar proceedings with
respect to the rights of creditors, which proceedings are not dismissed or
otherwise terminated within sixty (60) days after their commencement.
Section 12.3. Termination by Mediaplex.
Mediaplex shall be entitled to terminate this Agreement pursuant to
Section 12.1 by issuing a Termination Notice to LCE following the occurrence of
any of the following events:
(i) the breach by LCE of any term of this Agreement if not
cured by LCE within sixty (60) days after receipt by LCE of written notice of
such breach from Mediaplex, which notice shall set forth in reasonable details
the facts forming the basis of the breach; or
(ii) any Governmental Entity issues a notice terminating or
ordering the liquidation of the Company; or
(iii) LCE or its assets become the subject of bankruptcy,
insolvency, receivership, liquidation or similar proceedings with respect to the
rights of creditors, which proceedings are not dismissed or otherwise terminated
within sixty (60) days after their commencement.
Section 12.4. Termination by Mutual Agreement.
17
This Agreement may also be terminated by the unanimous agreement of
the Shareholders.
Section 12.5. Remedies upon Termination.
Upon termination of this Agreement pursuant to this Article XII, the
Company shall be liquidated. The Board of Directors shall appoint a liquidation
commission (hereinafter the "Liquidation Commission") and shall determine their
powers, remuneration and procedures of liquidation. The Liquidation Commission
shall consist of three (3) members, one to be appointed by Mediaplex, one to be
appointed by LCE and one to act as an umpire. If the Board of Directors fails to
appoint the two Shareholder representatives to the Liquidation Commission or the
umpire within thirty (30) days after the delivery of a Termination Notice, then
the Shareholder representatives to the Liquidation Commission and/or the umpire
shall be appointed by the Chairman of the Singapore Arbitration Centre
(hereinafter "SIAC") at the request of either Shareholder. The two Shareholder
representatives to the Liquidation Commission and the umpire shall act jointly
but not separately. In the event the Board of Directors is unable to approve the
proposals of the Liquidation Commission concerning liquidation, then the
decision of the umpire shall be binding upon the Liquidation Commission, the
Shareholders, the Board of Directors and the Company.
The proceeds of the liquidation after satisfaction of the debts of
the Company (including, but not limited to, debts owed to the Shareholders) and
any expenses, including remuneration of the members of the Liquidation
Commission and the umpire, shall be distributed between the Shareholders in
proportion to the amount of capital contributions actually contributed to the
Company and shall be allocated first to the refund to the Shareholders of the
value of their capital contributions. After liquidation, the Liquidation
Commission shall prepare and submit to the Board of Directors a report detailing
the liquidation of the Company for approval. After approval, the Board of
Directors shall submit such report to the appropriate Governmental Entities and
shall ensure that the liquidation of the Company is registered.
ARTICLE XIII
GENERAL
Section 13.1. Arbitration. In the event a dispute occurs with
respect to any matter in connection with this Agreement, Mediaplex and LCE will
promptly attempt to settle such dispute through consultation and negotiation in
good faith and in a spirit of mutual cooperation. If agreement is reached
concerning the resolution of such dispute, then such agreement shall be final,
conclusive and binding on Mediaplex and LCE. If, on or before the twentieth day
after written notice of such dispute is given by one party to the other, such
dispute has not been resolved by the agreement of Mediaplex and LCE, the dispute
shall be resolved by submission of such dispute for settlement to SIAC in
accordance with UNCITRAL Arbitration Rules as in force and effect on the date of
this Agreement. The language of the arbitration proceedings shall be English.
There shall be three (3) arbitrators, one of whom shall be appointed by LCE, one
of whom shall be appointed by Mediaplex and one of whom shall be appointed by
the Chairman of SIAC and who shall serve as chairman of the panel. The
18
arbitrators shall be instructed to apply the laws of the Republic of Korea. The
arbitrator's decision and award with respect to the dispute referred to shall be
final and binding on Mediaplex and LCE and may be entered in any court with
jurisdiction. The cost of the arbitration proceeding and any proceeding in court
to confirm or to vacate any arbitration award, as applicable (including, without
limitation, attorneys' fees and costs), shall be borne by the unsuccessful party
to the dispute and shall be awarded as part of the arbitrator's award; provided,
however, that (i) each of LCE and Mediaplex shall bear its own attorneys' fees
and costs in connection with the arbitration proceedings and (ii) if the
arbitrator does not find one of LCE or Mediaplex to be unsuccessful then the
cost of the arbitral proceedings shall be paid equally by LCE and Mediaplex.
Section 13.2. Notices. Any notice required to be given hereunder
shall be sufficient if in writing, and (i) sent by facsimile transmission or by
courier service (with proof of service) for international delivery or (ii) hand
delivery or certified or registered mail (return receipt requested and
first-class postage prepaid) for domestic delivery, addressed as follows:
If to the Company: If to LCE or LCI:
Megabox Cineplex, Inc. Loews Cineplex Entertainment
7F, Cinehouse B/D Corporation
91-6 Nonhyun-dong 711 Fifth Avenue,
Kangnam-ku New York, N.Y. 00000
Xxxxx, Xxxxxxxx of Korea Attention: Xxxx X. XxXxxxx, Xx.
Attention: Representative Director General Counsel
Facsimilie:82 2 3218 5600 Facsimile: 000 000 0000
With copies to: With copies to:
Woo Xxxx Xxx Xxxx X. Xxxxxx
Mediaplex, Inc. Senior Vice President and
7F, Cinehouse B/D Chief Financial Officer
00-0 Xxxxxxx-xxxx Xxxxx Cineplex Entertainment
Kangnam-ku Corporation
Seoul, Republic of Korea 000 Xxxxx Xxxxxx
Facsimile: 82 2 3218 5600 Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000 000 0000
And
Xxxxxx Xxxx
President and CEO
Xxx & Xxxxx Loews Cineplex Entertainment
Seyang Building Corporation
000 Xxxxx-xxxx 000 Xxxxx Xxxxxx
Xxxxx, 000-000, Xxxxxxxx of Korea Xxx Xxxx, Xxx Xxxx 00000
Attention: Dong Xxxx Xxxx Facsimile: 000 000 0000
Facsimile: 82 2 737 9091
And
19
DW Partners
KMD Xxxx. 0xx Xxxxx
000-00, Xxxxxx-xxxx,
Xxxxxxx-xx
Xxxxx, 000-000, Xxxxxxxx of
Korea
Attention: Xxxxxxxxx Xxxx
Facsimile: 82 2 512 6060
If to Mediaplex:
Mediaplex, Inc.
7F, Cinehouse B/D
00-0 Xxxxxxx-xxxx
Xxxxxxx-xx
Xxxxx, Xxxxxxxx of Korea
Attention: Woo Xxxx Xxx
Facsimilie:82 2 3218 5600
With a copy to:
Xxx & Xxxxx
Xxxxxx Building
000 Xxxxx-xxxx
Xxxxx, 000-000, Xxxxxxxx of Korea
Attention: Dong Xxxx Xxxx
Facsimile: 82 2 737 9091
or to such other address as any party or other addressee shall specify by
written notice so given, and such notice shall be deemed to have been delivered
as of the date so telecommunicated, personally delivered or received if by
courier.
Section 13.3. Assignment; Binding Effect; Benefit. Except as
expressly contemplated herein, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except any rights, interests or obligations
relating to Shares transferred to a Permitted Transferee, provided that no such
assignment will relieve the assigning party of any of its obligations hereunder,
and provided further that the foregoing restriction shall not apply to any
assignment to any successor Person in connection with any merger or
consolidation or sale of all or substantially all of a party's assets. Subject
to the preceding sentence, this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns. Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, express or implied, is intended to confer on any
Person other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
20
Section 13.4. Confidentiality. Each Shareholder agrees that it shall
keep all information regarding the business, affairs and plans of the Company
strictly confidential and shall maintain and protect all information regarding
the business, affairs and plans of the Company in no less careful a manner than
it maintains and protects its own confidential business information; provided,
however, that such information may be disclosed by a Shareholder if, in the
reasonable opinion of counsel to such Shareholder, and after prior consultation
with the other Shareholders and their counsel (but not their consent), such
disclosure is required by law or applicable rules of any securities exchange;
provided further, that the provisions of this Section 13.4 shall not apply to
information which (i) becomes generally available to the public other than as a
result of a disclosure by such Shareholder or holder or its representatives,
(ii) was available to such Shareholder on a non-confidential basis prior to its
disclosure to such Shareholder by any other Shareholder or its representatives,
or (iii) becomes available to such Shareholder on a non-confidential basis from
a source other than any other Shareholder or its representatives.
Section 13.5. Entire Agreement. This Agreement has been prepared and
executed in the English language, shall be binding on the parties hereto and
shall prevail over any translations thereof. Except as otherwise provided
herein, this Agreement, the exhibits, appendices and schedules hereto and any
certificate delivered by the parties in connection herewith shall constitute the
entire agreement between the parties with respect to the subject matter hereof
and shall supersede all prior agreements and understandings (oral and written)
among the parties with respect thereto.
Section 13.6. Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by or on behalf of each of
the parties hereto.
Section 13.7. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies of this Agreement, each of which may be signed by less than all of the
parties hereto, but together all such copies are signed by all of the parties
hereto.
Section 13.8. Headings. Headings of the Articles and Sections of
this Agreement are for the convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever.
Section 13.9. Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural, and vice versa, "including" shall mean "including, without limitation,"
words denoting any gender shall include all genders, and references to a Person
shall include such Person's successors and permitted assigns. In this Agreement,
unless defined herein, all accounting terms shall have the meaning given to them
under Korean GAAP.
21
Section 13.10. Incorporation of Exhibits and Schedules. All
exhibits, appendices and schedules hereto are hereby incorporated herein and
made a part hereof for all purposes as if fully set forth herein.
Section 13.11. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or otherwise affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
Section 13.12. Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
Article VI, Article VII or Section 9.1 of this Agreement was not performed in
accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of Article VI, Article VII or Section 9.1 of this Agreement and
to enforce specifically the terms and provisions of Articles VI, Article VII or
Section 9.1 of this Agreement in any court of competent jurisdiction, this being
in addition to any other remedy to which they may be entitled at law or in
equity.
22
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf as of the day and year
first written above.
LOEWS CINEPLEX INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxxx X. XxXxxxx, Xx.
----------------------------------
Name: Xxxx X. XxXxxxx, Xx.
Title: Senior Vice President
and General Counsel
LOEWS CINEPLEX ENTERTAINMENT CORPORATION
By: /s/ Xxxx X. XxXxxxx, Xx.
----------------------------------
Name: Xxxx X. XxXxxxx, Xx.
Title: Senior Vice President
and General Counsel
MEDIAPLEX, INC.
By: /s/ Xxx, Xxxx Kon
----------------------------------
Name: Xxx, Xxxx Kon
Title: President
MEGABOX CINEPLEX, INC.
By: /s/ Xxx, Xxxx Kon
----------------------------------
Name: Xxx, Xxxx Kon
Title: Representative Director
23
Appendix A
Definitions
"$": means United States dollar, the lawful currency of the United
States of America.
"Affiliate": means with respect to a specified Person, any Person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the specified Person. As used in
this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, as trustee
or executor, by contract or otherwise. If a Person is a natural person, the term
Affiliate also includes the wife, parents, children, siblings, nieces, nephews
and grandchildren of such natural person, any trusts established for their
benefit and any legal entities in which they are partners or of which they own
(legally or beneficially), directly or indirectly, more than 50% of such
entity's voting securities.
"Agreement": as defined in the preamble to this Agreement.
"Approved Budget": for any fiscal year means the annual budget of
the Company for such fiscal year as approved by the Shareholders pursuant to
this Agreement.
"Articles of Incorporation": as defined in Section 2.1.
"Basket Amount": as defined in Section 11.3(b)(i).
"Board of Directors": means the board of directors of the Company
duly elected in accordance with the Company's Articles of Incorporation.
"Business Day": means a day on which banks are open for business in
Korea.
"Business Plan": means the business plan of the Company as approved
and adopted by the Board of Directors from time to time.
"Cinehouse Theatre": means the four-screen multiplex Cinehouse
Theatre located at Cinehouse B/D, 00-0 Xxxxxxx-xxxx, Xxxxxxx-xx, Xxxxx, Xxxxxxxx
of Korea, and currently owned and operated by Mediaplex.
"Closing": as defined in the Stock Purchase and Subscription
Agreement.
"Closing Date": as defined in the Stock Purchase and Subscription
Agreement
"Company": as defined in the preamble to this Agreement.
"Competitor": means any person which engages in the business of
distributing or exhibiting motion pictures in the Republic of Korea or the
United States of America.
"Daewoo": as defined in the preamble to this Agreement.
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"Debt": means indebtedness for borrowed money (including pursuant to
capital leases) of the Company outstanding as of the time of measurement.
"Director": means a member of the Board of Directors.
"Excess Cash": as defined in Section 9.5.
"First Amendment": as defined in the preamble to this Agreement.
"First Refusal Notice": as defined in Section 7.3(a).
"Funding Notice": as defined in Section 4.2(b).
"GAAP": means generally accepted accounting principles.
"Governmental Entity": means any central, provincial, local or
foreign government or any court of competent jurisdiction, administrative agency
or commission or other governmental authority or instrumentality, domestic or
foreign.
"Heads of Agreement": as defined in the preamble to this Agreement.
"Indemnified Party": as defined in Section 11.6.
"Indemnifying Party": as defined in Section 11.6.
"JVA": as defined in the preamble to this Agreement.
"Joint Venture Agreement": as defined in the preamble to this
Agreement.
"KITA": as defined in the preamble to this Agreement.
"Korean GAAP": means generally accepted accounting principles of the
Republic of Korea.
"Laws": means applicable laws (including statutes and judicial and
administrative decisions, orders and decrees), rules and regulations.
"LCE": as defined in the preamble to this Agreement.
"LCI": as defined in the preamble to this Agreement.
"Liabilities": means, as to any Person, all debts, liabilities and
obligations, direct, indirect, absolute or contingent of such Person, whether
accrued, vested or otherwise, whether known or unknown and whether or not
actually reflected, or required by Korean GAAP to be reflected, in such Person's
balance sheets or other books and records, including, for the avoidance of
doubt, accrued interest.
"Liquidation Commission": as defined in Section 12.5.
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"Losses": as defined in Section 11.2.
"Mediaplex": as defined in the preamble to this Agreement.
"New Venture": as defined in Section 9.1(d).
"Non-Transferring Shareholder": as defined in Section 7.3(a).
"Notice of New Venture": as defined in Section 9.1(d).
"Offering Price": as defined in Section 7.3(a).
"Permitted Transferee": means, with respect to a Shareholder, any
direct or indirect Subsidiary of such Shareholder, provided that such transferee
(i) must continue to be a Subsidiary of LCE or Mediaplex, as the case may be, as
long as such transferee holds any Shares, and if at any time after such Transfer
the transferee ceases to be a Subsidiary of LCE or Mediaplex, as the case may
be, the transferee must immediately Transfer any Shares it holds back to the
transferring Shareholder from whom it received its Shares and (ii) has agreed in
writing to be bound by the terms of this Agreement. For the avoidance of any
doubt, any direct or indirect Subsidiary of the third party pledgee referred to
in Article 7.1 hereof shall not be interpreted as a Permitted Transferee.
"Person": means any natural person, corporation, company,
partnership, firm, association, trust, government, governmental agency or other
entity, whether acting in an individual, fiduciary or other capacity.
"Proposing Party": as defined in Section 9.1(c).
"Related Party": as defined in Section 9.4.
"Second Amendment": as defined in the preamble to this Agreement.
"Share" or "Shares": means the shares of the Company's common stock.
"Shareholder": means either Mediaplex or LCE.
"SIAC": as defined in Section 12.5.
"Subsidiary": of any Person shall mean any corporation or other
legal entity of which such Person (either alone or through or together with its
Subsidiaries) owns, directly or indirectly, 50% or more of the stock or other
equity interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
"Stock Purchase and Subscription Agreement": as defined in the
preamble to this Agreement.
"Tag Along Notice": As defined in Section 7.4.
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"Tax" or "Taxes": means taxes of any kind, levies or other like
assessments, duties, imposts, charges or fees, including any interest, penalties
or additions to tax attributable to any such Tax or requirement to report
information with respect thereto, and any damages, costs, fees or other
liability arising from such Tax or reporting requirement.
"Termination Notice": as defined in Section 12.1.
"Third Party Claims": as defined in Section 11.6.
"Transfer": as defined in Section 7.1.
"Transfer Waiver Date": as defined in Section 7.2.
"Transferring Shareholder": as defined in Section 7.3(a).
"UEC Multiplex": as defined in the preamble to this Agreement.
"US GAAP": means generally accepted accounting principles of the
United States of America.
"Won": means the lawful currency of the Republic of Korea.
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Appendix B
Representations and Warranties
A. Mediaplex hereby represents and warrants to LCE as follows:
1. Organization. Mediaplex is a corporation duly organized and
validly existing under the laws of its jurisdiction of incorporation and has all
requisite power and authority to enable it to own, lease or otherwise hold its
properties and assets and to carry on its business as it is now being conducted.
2. Authority. Mediaplex has full corporate power and authority
to execute and deliver this Agreement and any ancillary agreement to which it is
a party, and to perform its obligations hereunder and thereunder. The execution
and delivery by Mediaplex of this Agreement and any ancillary agreements to
which it is party have been duly authorized by all necessary action (corporate
or otherwise) of Mediaplex. This Agreement and any ancillary agreements have
been duly and validly executed and delivered by Mediaplex and constitute the
valid and binding obligations of Mediaplex, enforceable against it in accordance
with its terms.
3. No Conflicts. The execution and delivery by Mediaplex of
this Agreement and any ancillary agreements to which it is party will not (i)
violate, conflict with, result in a breach of, or default under, or permit the
termination of, or require consent under any agreement, obligation or commitment
to which Mediaplex is bound, or to which any of its properties or assets is
subject, (ii) violate any provision of any Laws to which Mediaplex is subject,
(iii) violate any order, judgment or decree applicable to Mediaplex, or (iv)
conflict with, or result in a breach of or default under, any term or condition
of the governing documents of Mediaplex
4. Consents. No consent, license, approval, waiver, expiration
of waiting period or authorization of, or registration or declaration with, any
Governmental Entity is required to be obtained or made by Mediaplex (in
connection with the execution, delivery and performance of this Agreement and
any ancillary agreements to which it is party.
5. Broker's and Finder's Fee. Mediaplex has not employed any
broker, finder, or financial intermediary in connection with the transactions
contemplated by this Agreement and any ancillary agreements to which it is party
that would be entitled to a broker's, finder's or similar fee or commission in
connection therewith.
B. LCE hereby represents and warrants to Mediaplex as follows:
1. Organization. LCE is a corporation duly organized and
validly existing under the laws of its jurisdiction of incorporation and has all
requisite power and authority to enable it to own, lease or otherwise hold its
properties and assets and to carry on its business as it is now being conducted.
2. Authority. LCE has full corporate power and authority to
execute and deliver this Agreement and any ancillary agreement to which it is a
party, to perform its
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obligations hereunder and thereunder. The execution and delivery by LCE of this
Agreement and any ancillary agreements to which it is party have been duly
authorized by all necessary action (corporate or otherwise) of LCE. This
Agreement and any ancillary agreements have been duly and validly executed and
delivered by LCE and constitute the valid and binding obligations of LCE,
enforceable against it in accordance with its terms.
3. No Conflicts. The execution and delivery by LCE of this
Agreement and any ancillary agreements to which it is party will not (i)
violate, conflict with, result in a breach of, or default under, or permit the
termination of, or require consent under any agreement, obligation or commitment
to which LCE is bound, or to which any of its properties or assets is subject,
(ii) violate any provision of any Laws to which LCE is subject, (iii) violate
any order, judgment or decree applicable to LCE, or (iv) conflict with, or
result in a breach of or default under, any term or condition of the governing
documents of LCE
4. Consents. No consent, license, approval, waiver, expiration
of waiting period or authorization of, or registration or declaration with, any
Governmental Entity is required to be obtained or made by LCE (other than
registration with the U.S. Securities and Exchange Commission) in connection
with the execution, delivery and performance of this Agreement and any ancillary
agreements to which it is party.
5. Broker's and Finder's Fee. LCE has not employed any broker,
finder, or financial intermediary in connection with the transactions
contemplated by this Agreement and any ancillary agreements to which it is party
that would be entitled to a broker's, finder's or similar fee or commission in
connection therewith.
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