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EXHIBIT 10.1
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (this "Agreement"), dated as of
August 1, 1996, is by and among the parties listed on the signature page hereto
(together with persons who become parties pursuant to Section XII.A herein, the
"Stockholders") and Silver Cinemas International, Inc. (formerly Encore
Entertainment, Inc.), a Delaware corporation ("Holdings").
RECITALS
WHEREAS, Holdings has issued shares of Common Stock and Series A
Preferred Stock ("Holdings Common Stock" and "Holdings Series A Preferred
Stock", respectively, and, collectively, "Holdings Stock");
WHEREAS, the parties hereto desire to enter into this Agreement
for the purpose of regulating certain aspects of their relationship with regard
to their ownership of Holdings Stock on and after the date hereof;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
Section I. Authorization.
Each Stockholder hereby represents and warrants to Holdings and
to each other that it has full power and authority to execute, deliver and
perform its obligations under this Agreement. The execution and delivery of this
Agreement has been duly and validly authorized, and all necessary action has
been taken, to make this Agreement a valid and binding obligation of such
Stockholder, enforceable in accordance with its terms, except that the
enforcement thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and to general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
Section II. Certain Covenants of Holdings.
When it is first legally required to do so, Holdings will
register the Holdings Common Stock and/or the Holdings Series A Preferred Stock
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and will keep effective such registration and will timely file
such information, documents and reports as the Securities and Exchange
Commission (the "Commission") may require or prescribe under Section 13 of the
Exchange Act. From and after the effective date of the registration statement
filed by Holdings under the Act, Holdings will (whether or not it may then be
required to do so) timely file such information, documents and reports as the
Commission may require or present under Section 13 or 15(d) (whichever is
applicable) of the Exchange Act. Immediately upon becoming subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act,
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Holdings will forthwith upon request furnish any Stockholder (i) a written
statement by Holdings that it has complied with such reporting requirements,
(ii) a copy of the most recent annual or quarterly report of Holdings, and (iii)
such other reports and documents filed by Holdings with the Commission as such
Stockholder may reasonably request. Holdings acknowledges and agrees that the
purposes of the requirements contained in this Section II are to enable any such
Stockholder to comply with the current public information requirements contained
in Rule 144 and Rule 144A under the Securities Act of 1933, as amended (the
"Act"), should such Stockholder ever wish to dispose of any of the Holdings
Stock acquired by it hereunder, without registration under the Act in reliance
upon Rule 144 and Rule 144A (or any other similar exemptive provision). In
addition, Holdings will take such other measures and file such other
information, documents and reports, as shall hereafter be required by the
Commission as a condition to the availability of Rule 144 and Rule 144A under
the Act (or any similar exemptive provision hereafter in effect).
Section III. Rights of First Refusal.
A. Except as provided in Section VII below, before any shares of
Holdings Stock, or any beneficial interest therein, may be sold, transferred or
assigned (including transfer by operation of law) or pledged, hypothecated or
encumbered by any of the Stockholders (a "Selling Stockholder"), such shares
shall first be offered to Holdings as set forth below.
B. The Selling Stockholder shall deliver a notice (the "Notice")
to Holdings stating (i) his bona fide intention to sell or transfer such shares,
(ii) the number of shares proposed to be sold or transferred (the "Noticed
Shares"), (iii) the price for which it proposes to sell or transfer the Noticed
Shares (in the case of a transfer not involving a sale such price shall be
deemed to be fair market value of the Noticed Shares as determined pursuant to
Section III.D hereof) and the terms of payment of that price and other terms and
conditions of sale, and (iv) the name and address of the proposed purchaser or
transferee. A Selling Stockholder shall not effect, or attempt to effect, any
sale or other transfer for value of the Holdings Stock other than for money or
an obligation to pay money.
C. For a period of thirty (30) days after receipt of the Notice,
Holdings (or its assignee or assignees) shall have the right to purchase all of
the Noticed Shares. The price per share of the Noticed Shares purchased by
Holdings pursuant to this Section III.C shall be, in the case of a sale, the
price per share as set forth in the Notice and, in the case of a transfer not
involving a sale, the fair market value of such shares determined pursuant to
Section III.D hereof, and the purchase shall be on the same terms and subject to
the same conditions as those set forth in the Notice. If Holdings (including its
assignee or assignees) elects not to purchase all the Noticed Shares, it shall
give written notice within the thirty (30) day period following receipt of the
Notice.
D. In the case of a transfer of shares of Holdings Stock not
involving a sale, the fair market value of the shares shall be determined in
good faith by Holdings' Board of Directors. This determination will be final and
binding upon all parties and persons claiming under or through them. Anything in
this Section III.D to the contrary notwithstanding, if a Selling Stockholder is
not satisfied with the determination of fair market value, such
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Stockholder may elect not to proceed with the proposed transfer of shares of
Holdings Stock not involving a sale and retain such shares under this Agreement.
E. If Holdings (and/or any assignees of Holdings) does not elect
to purchase all of the shares of Holdings Stock to which the Notice refers as
provided in Section III.B hereof, then none of the shares shall be purchased
(unless the Selling Stockholder elects otherwise), and the Selling Stockholder
may sell or transfer all (but not less than all) of the shares to any purchaser
or transferee named in the Notice at, in the case of a sale, the price specified
in the Notice or at a higher price, provided that such sale or transfer is
consummated within five (5) months of the date of the Notice to Holdings.
F. Notwithstanding subsections A through E of this Section III,
Holdings shall not have any rights under this Section III: (i) in connection
with or at any time subsequent to the closing of an underwritten public offering
of the Common Stock pursuant to a registration statement declared effective
under the Act; (ii) at any time after any equity securities of Holdings have
been registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended; or (iii) as a result of or at any time after any transfer of Holdings
Common Stock in connection with a sale of Holdings, whether such sale is
effected by merger, consolidation, sale of assets or sale of exchange of stock
representing at least fifty percent (50%) of the voting power of the stock of
Holdings (in terms of number of votes for the election of directors).
Section IV. Tag-Along Rights.
A. If Brentwood Associates Buyout Fund II, L.P. (the
"Partnership") or any of its respective Affiliates (as hereinafter defined)
(collectively, the "Selling Group"), at any time or from time to time, enters
into an agreement (whether oral or written) to transfer, sell or otherwise
dispose of, directly or indirectly (a "Tag-Along Sale"), any shares of Holdings
Common Stock or any interest therein, then each other Stockholder shall have the
right, but not the obligation, to participate in such Tag-Along Sale (and to
displace the Selling Group to the extent of such participation) by selling up to
the number of shares of Holdings Stock (the "Stockholders' Allotment") equal to
the product of (i) the total number of shares of Holdings Stock proposed to be
sold or otherwise disposed of by the Selling Group in the Tag-Along Sale
multiplied by (ii) a fraction, the numerator of which shall equal the aggregate
number of shares of Holdings Stock owned by other Stockholders who have elected
to participate in such Tag-Along Sale immediately prior to the Tag-Along Sale
and the denominator of which shall equal the sum of: (A) the aggregate number of
shares of Holdings Stock owned by members of the Selling Group who have elected
to participate in such Tag-Along Sale immediately prior to the Tag-Along Sale;
and (B) the aggregate number of shares of Holdings Stock owned by other
Stockholders who have elected to participate in such Tag-Along Sale, immediately
prior to the Tag-Along Sale.
Any such sale by any Stockholder shall be on the same terms and
conditions as the proposed Tag-Along Sale by the Selling Group; provided,
however, that all selling Stockholders shall share pro rata, based upon the
number of shares being sold by each (i) in any indemnity liabilities to the
proposed transferee or purchaser in the Tag-Along Sale (other than
representations as to unencumbered ownership of and ability to transfer the
shares being
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sold of any other seller in the Tag-Along Sale, which shall be the sole
responsibility of such other seller) and (ii) in any escrow for the purpose of
satisfying any such indemnity liabilities.
B. The foregoing notwithstanding, Section IV.A shall not apply to
(i) any transfer, sale or other disposition of shares of Holdings Stock solely
among the Partnership and its Affiliates for a price not in excess of the
original purchase price of such shares, (ii) any distribution by the Partnership
to its partners and (iii) any merger or consolidation of Holdings with or into
another corporation or a sale of all or substantially all of the assets of
Holdings followed by its dissolution, provided that all shares of Holdings Stock
subject to this Agreement are treated the same in any such transaction.
C. The Selling Group members participating in a Tag-Along Sale or
a representative of the Selling Group (the "Selling Group Representative," which
shall be the general partner of the Partnership until the other Stockholders are
notified of the name and address of a successor representative) shall promptly
provide each Stockholder with written notice (the "Tag-Along Sale Notice") not
more than 60 nor less than 30 days prior to the proposed date of the Tag-Along
Sale (the "Tag-Along Sale Date"). In order to facilitate the prompt delivery of
the Tag-Along Sale Notices, Holdings hereby covenants to provide the Selling
Group members participating in a Tag-Along Sale or the Selling Group
Representative, as the case may be, access to stock record books of Holdings.
Each Tag-Along Sale Notice shall set forth: (i) the name and address of each
proposed transferee or purchaser of shares of Holdings Stock in the Tag-Along
Sale; (ii) the name and address of each Selling Group member participating in
the Tag-Along Sale and the number of shares of Holdings Stock proposed to be
transferred or sold by each such Selling Group member; (iii) the proposed amount
and form of consideration to be paid for such shares and the terms and
conditions of payment offered by each proposed transferee or purchaser, (iv) the
aggregate number of shares of Holdings Stock held of record as of the close of
business on the date of the Tag-Along Sale Notice (the "Tag-Along Notice Date")
by the Stockholder to whom the notice is sent and the aggregate number of such
Stockholder's shares of Holdings Stock outstanding on the Tag-Along Notice Date;
(v) the aggregate number of shares of Holdings Stock held of record as of the
Tag-Along Notice Date by the Selling Group; (vi) the maximum number of shares of
Holdings Stock (the "Stockholder's Allotment") that the Stockholder to whom the
notice is sent is entitled to include in the Tag-Along Sale assuming each
Stockholder elected to participate in the Tag-Along Sale and elected to sell the
maximum number of shares owned by such Stockholder; (vii) the number of shares
of Holdings Stock constituting the Stockholders' Allotment; (viii) confirmation
that the proposed purchaser or transferee has been informed of the "Tag-Along
Rights" provided for herein and has agreed to purchase shares of Holdings Stock
in accordance with the terms hereof; (ix) the Tag-Along Sale Date and (x)
confirmation that, with respect to the shares of Holdings Stock to be received
by the proposed transferee or purchaser, the proposed transferee or purchaser
agrees in writing to be bound by, and covenants that each transferee of all such
shares shall be bound by, the provisions of this Agreement (other than the
provisions of this Section IV), as if it were a member of the Selling Group.
Each Stockholder shall provide written notice (or oral notice
confirmed in writing) (the "Tag-Along Notice") to the member(s) of the Selling
Group participating in the Tag-Along Sale, or, at such Stockholder's option, to
the Selling Group Representative, no less
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than 15 days prior to the Tag-Along Sale Date. The Tag-Along Notice shall set
forth the number of shares of Holdings Stock, if any, that such Stockholder
desires to include in the Tag-Along Sale (which shall not exceed such
Stockholder's Allotment). The Tag-Along Notice shall also specify the aggregate
number of additional shares of Holdings Stock owned of record as of the
Tag-Along Notice Date by such Stockholder, if any, which such Stockholder
desires also to include in the Tag-Along Sale ("Additional Shares") in the event
there is an aggregate under subscription for the entire Stockholders' Allotment.
In the event there is an aggregate under subscription by the Stockholders for
the entire Stockholders' Allotment, the Selling Group member(s) participating in
the Tag-Along Sale shall apportion the unsubscribed shares of Holdings Stock to
Stockholders whose Tag-Along Notices specified an amount of Additional Shares,
which apportionment shall be on a pro rata basis among such Stockholders in
accordance with the number of Additional Shares specified by all such
Stockholders in their Tag-Along Notices.
The participating members of the Selling Group shall determine
the aggregate number of shares of Holdings Stock to be sold by each
participating Stockholder in any given Tag-Along Sale in accordance with the
terms hereof, and the Tag-Along Notices given by the Stockholders shall
constitute their binding respective agreements to sell such shares on the terms
and conditions applicable to such sale (including the requirements of this
Section IV). If the proposed transferee or purchaser does not purchase all of
such shares on the same terms and conditions applicable to the members of the
Selling Group, then the Partnership shall promptly offer to purchase, within
five business days of the date of such Tag-Along Sale, all such unpurchased
shares on such terms and conditions.
If a Tag-Along Notice is received by neither the members of the
Selling Group participating in the Tag-Along Sale nor the Selling Group
Representative, from a Stockholder within the 15-day period specified above, the
Selling Group members shall have the right to sell or otherwise transfer the
number of shares of Holdings Stock specified in the Tag-Along Sale Notice to the
proposed purchaser or transferee without any participation by such Stockholder,
but only on the terms and conditions stated in such Tag-Along Sale Notice and
only if such sale occurs on a date within five business days of the Tag-Along
Sale Date.
D. The provisions of this Section IV shall apply regardless of
the form of consideration received in the Tag-Along Sale.
E. "Affiliate" of a specified person means any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person and, in the case of a person who is an
individual, shall include (i) members of such specified person's immediate
family (as defined in instruction 2 of Item 404(a) of Regulation S-K promulgated
by the Securities and Exchange Commission) and (ii) trusts whose trustee and
beneficiaries include only such specified person or members of such person's
immediate family as determined in accordance with the foregoing clause (i). For
the purposes of this definition, "control," when used with respect to any
person, means the power to direct the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
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F. The provisions of this Section IV shall terminate on the
earlier to occur of (i) the closing of an underwritten public offering of the
Common Stock pursuant to a registration statement declared effective under the
Act, (ii) the first time at which any equity securities of Holdings have been
registered under Section 12(g) of the Exchange Act or (iii) as a result of or at
any time after any transfer of Holdings Common Stock in connection with a sale
of Holdings, whether such sale is effected by merger, consolidation, sale of
assets or sale of exchange of stock representing at least fifty percent (50%) of
the voting power of the stock of Holdings (in terms of number of votes for the
election of directors).
Section V. Drag-Along Rights.
A. In the event the Selling Group determines to accept an offer
from any person (other than a member of the Selling Group or any Affiliate
thereof) to purchase 100% of the outstanding shares of Holdings Stock, then,
subject to Section V.C below, each of the other Stockholders shall sell, and
shall cause any Affiliate of it to sell all shares of Holdings Stock held by it
or such Affiliate pursuant to such offer to purchase (the "Drag-Along Sale").
All holders of Holdings Stock in such Drag-Along Sale (i) shall receive the same
consideration per share of Holdings Stock, shall be subject to the same terms
and conditions of sale and shall otherwise be treated equally or, where
appropriate, pro rata based upon the number of shares of Holdings Stock held by
each stockholder and (ii) shall execute such documents and take such actions as
may be reasonably required by the Selling Group Representative.
Any such sale by any Stockholder shall be on the same terms and
conditions as the proposed Drag-Along Sale by the Selling Group; provided,
however, that all selling Stockholders shall share pro rata, based upon the
number of shares being sold by each, (i) in any indemnity liabilities to the
purchaser in the Drag-Along Sale (other than representations as to unencumbered
ownership of and ability to transfer the shares being sold of any other seller
in the Drag-Along Sale, which shall be the sole responsibility of such other
seller) and (ii) in any escrow for the purpose of satisfying any such indemnity
liabilities.
B. The Selling Group members participating in a Drag-Along Sale
or the Selling Group Representative shall promptly provide each Stockholder with
written notice (the "Sale Notice") not more than 60 nor less than 30 days prior
to the date of the Drag-Along Sale (the "Drag-Along Sale Date"). Each Sale
Notice shall set forth: (i) the name and address of each proposed transferee or
purchaser of shares of Holdings Stock in the Drag-Along Sale; (ii) the proposed
amount and form of consideration to be paid for such shares and the terms and
conditions of payment offered by each proposed transferee or purchaser, (iii)
confirmation that the proposed purchaser or transferee has been informed of the
"Drag-Along Rights" provided for herein and has agreed to purchase shares of
Holdings Stock in accordance with the terms hereof; and (iv) the Drag-Along Sale
Date.
C. The provisions of this Section V shall apply regardless of the
form of consideration received in the Drag-Along Sale, and if any non-cash
consideration is proposed in the Drag-Along Sale to each member of the Selling
Group, each Stockholder shall accept its pro rata share of such non-cash
consideration for the Holdings Stock based upon its proportional ownership of
shares of Holdings Stock; provided, however, that a Stockholder shall not be
required to participate in a Drag-Along Sale in which non-cash consideration is
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proposed if such Stockholder is not receiving cash consideration in connection
with such Drag-Along Sale in an amount sufficient to pay the federal income tax
that would be payable if it were to participate in the Drag-Along Sale.
D. The provisions of this Section V shall apply to warrants which
are exercisable for shares of Holdings Stock the same as if such warrants had in
fact been exercised by the holders thereof prior to the initiation of a
Drag-Along Sale.
E. The provisions of this Section V shall terminate on the
earlier to occur of (i) the closing of an underwritten public offering of
Holdings Common Stock pursuant to a registration statement declared effective
under the Act, (ii) the first time at which any equity securities of Holdings
have been registered under Section 12(g) of the Exchange Act or (iii) as a
result of or at any time after any transfer of Holdings Common Stock in
connection with a sale of Holdings, whether such sale is effected by merger,
consolidation, sale of assets or sale of exchange of stock representing at least
fifty percent (50%) of the voting power of the stock of Holdings (in terms of
number of votes for the election of directors).
Section VI. Registration Rights.
Each of the Stockholders shall have the registration rights
provided in the Registration Rights Agreement attached hereto as Exhibit A,
which Registration Rights Agreement is hereby incorporated herein as if set
forth in full in this Agreement. Execution and delivery of this Agreement shall,
without further act of any of the parties, constitute execution and delivery of
the Registration Rights Agreement.
Section VII. Exempt Transfers.
The provisions of Section III shall not apply to a transfer of
any Holdings Stock by a Stockholder, either during his lifetime or on death by
will or intestacy, to (i) his ancestors, descendants, spouse, brothers, sisters,
nephews or nieces, (ii) any custodian or trustee for the account or benefit of
such Stockholder or such Stockholder's ancestors, descendants, spouse, brothers,
sisters, nephews or nieces, or (iii) in the case of a Stockholder which is a
corporation, an entity directly or indirectly controlled by or under common
control with such Stockholder; provided, however, that the transferee shall
receive and hold such Shares subject to the provisions of Section VIII hereof
and to any legends on the certificates evidencing such shares and there shall be
no further transfer of such Shares except in accordance herewith; and provided
further, that the transferee shall acknowledge and agree, in a writing
satisfactory to Holdings, to be bound by the terms of this Agreement and shall
execute and deliver to Holdings a letter to such effect.
Section VIII. Restriction on Public Sale.
Anything to the contrary herein notwithstanding, in the event
that Holdings files a registration statement with respect to an underwritten
public offering under the Act in which any class of Holdings' equity securities
is offered, a Stockholder shall not effect any public sale or distribution of
any of the shares of Holdings Stock (which shares, for the purposes of this
Section VIII, shall include any and all voting securities received by such
Stockholder as a
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stock dividend, stock split or other recapitalization or similar distribution on
or in respect of the shares of Holdings Stock) or any of Holdings' other equity
securities, or of any securities convertible into or exchangeable for such
securities, during the period beginning ten (10) days before the filing of such
registration statement with the Securities and Exchange Commission and ending
one hundred eighty (180) days after such registration statement has become
effective or ten (10) days after is has been withdrawn.
Section IX. Register of Securities; Removal of Restrictions on Transfer.
A. Register of Securities. Holdings or its duly appointed agent
shall maintain separate registers for the shares of Holdings Series A Preferred
Stock and the shares of Holdings Common Stock, in which it shall register the
issue and sale of all such respective shares. Holdings may issue stop transfer
instructions to such agent and make similar notations in such register to ensure
that all transfers of such securities are made in accordance with this
Agreement. All transfers of such securities shall be recorded on the register
maintained by Holdings or its agent, and Holdings shall be entitled to regard
the registered holder of such securities as the actual holder thereof until
Holdings or its agent is required to record a transfer of such securities on its
register. Subject to Sections III and VIII hereof, Holdings or its agent shall
be required to record any such transfer when it receives the security to be
transferred duly and properly endorsed by the registered holder thereof or by
its attorney duly authorized in writing.
B. Removal of Transfer Restrictions. Any legend endorsed on a
certificate evidencing shares of Holdings Stock and the stop transfer
instructions and record notations with respect to such shares shall be removed
and Holdings shall issue a certificate without such legend to the holder of such
shares of Holdings Stock (i) if such shares are registered under the Act, or
(ii) if a notification under Regulation A under the Act is in effect with
respect thereto, or (iii) if such shares may be sold under Rule 144 or Rule 144A
under the Act.
C. Legends. In addition to any legends required by securities
laws, each stock certificate evidencing shares of Holdings Stock shall bear a
legend in substantially the following form until such legends may be removed in
accordance with this Agreement:
"The shares represented by this certificate are subject to a
Stockholders' Agreement dated as of August 1, 1996, which contains
restrictions on transfer, rights of first refusal, drag-along rights and
certain registration rights. A copy of said Stockholders' Agreement may
be obtained from the Company by the holder of such certificate."
Section X. Enforcement.
The parties acknowledge that the remedy at law for any breach or
violation of the provisions of Section VIII hereof shall be inadequate and that,
in the event of any such breach or violation, Holdings and/or the Stockholders
shall be entitled to injunctive relief in addition to any other remedy, at law
or in equity, to which it may be entitled.
Section XI. Violation of Transfer Provisions.
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Holdings shall not be required (i) to transfer on its books any
shares of Holdings Stock which shall have been sold, transferred, assigned or
pledged in violation of any of the provisions set forth in this Agreement, or
(ii) to treat as owner of such shares of Holdings Stock or to accord the right
to vote as such owner or to pay dividends to any transferee to whom such shares
shall have been so transferred.
Section XII. General Provisions.
A. After-Acquired Shares. All of the provisions of this Agreement
shall apply to (i) all of the shares of Holdings Stock now owned or which may be
transferred hereafter to, or owned by, any Stockholder and (ii) all securities
and instruments (A) received by a Stockholder as a dividend on or other payment
made to holders of Holdings Stock, or (B) issued in connection with a split of
Holdings Stock or as a result of any exchange for or reclassification of
Holdings Stock or a reorganization, recapitalization, consolidation or merger.
In addition, any person or entity who does not presently own but subsequently
acquires shares of Holdings Stock may become a party to and bound by all or any
portion of this Agreement by executing a Joinder substantially in the form
attached hereto as Exhibit B.
B. Rights and Obligations of Transferees. If a Stockholder
transfers any or all of its shares of Holdings Stock to any person, such person
and each subsequent transferee shall have the same rights hereunder (including
pursuant to Exhibit A) as are given to the Stockholder, and shall be subject to
the same obligations as are imposed upon, the Stockholder by the terms hereof
(and all references herein to a Stockholder shall include such transferee),
unless otherwise provided herein. Holdings will not record any transfer of
Holdings Stock that was made in violation of any provision of this Agreement,
including, without limitation, Exhibit A.
C. Owner of Stockholder Shares. The person in whose name shares
of Holdings Stock are registered in the stock books of Holdings may be treated
as the owner thereof for all purposes, including without limitation, for the
giving of notices under this Agreement.
D. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given and made and served either by personal delivery
to the person for whom it is intended or if deposited, postage prepaid,
registered or certified mail, return receipt requested, in the United States
mail:
(1) if to any Stockholder, addressed to such Stockholder
at its address is shown on the stock register maintained by
Holdings, or at such other address as such Stockholder may
specify by written notice to Holdings; or
(2) if to Holdings, at Encore Entertainment, Inc., c/o
Brentwood Associates, 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xx 00000, Attention: Xxxxx Xxxx
Each such notice, request, consent or other communication shall be deemed to
have been given
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upon receipt thereof or, if sooner, five (5) days after such has been deposited
as described above. The addresses for the purposes of this Section XII.D, may be
changed by giving written notice of such change in the manner provided herein
for giving notice. Unless and until such written notice is received, the address
provided herein shall be deemed to continue in effect for all purposes
hereunder.
E. Choice of Law. This Agreement shall be governed by and
construed in accordance with the internal laws, and not the laws of conflicts of
laws, of the State of Delaware.
F. Severability. The parties hereto agree that the terms and
provisions in this Agreement are reasonable and shall be binding and enforceable
in accordance with the terms hereof and, in any event, that the terms and
provisions of this Agreement shall be enforced to the fullest extent permissible
under law. In the event that any term or provision of this Agreement shall for
any reason be adjudged to be unenforceable or invalid, then such unenforceable
or invalid term or provision shall not affect the enforceability or validity of
the remaining terms and provisions of this Agreement, and the parties hereto
hereby agree to replace such unenforceable or invalid term or provision with an
enforceable and valid arrangement which in its economic effect shall be as close
as possible to the unenforceable or invalid term or provision.
G. Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, whether so
expressed or not.
H. Modification, Amendment and Waiver. No modification or
amendment of any provision of this Agreement shall be effective against Holdings
or any Stockholder unless approved in writing by a majority of the Stockholders,
and, in the case of Holdings, authorized by its Board of Directors. Furthermore,
no amendment or modification which adversely affects any Stockholder uniquely
(as opposed to the same effect on all Stockholders) shall be effective unless
such affected Stockholder consents in writing thereto. The failure at any time
to enforce any of the provisions of this Agreement shall in no way be construed
as a waiver of such provisions and shall not affect the right of any of the
parties thereafter to enforce each and every provision hereof in accordance with
its terms.
I. Integration. This Agreement, together with Schedule I,
Schedule II and Exhibit A hereto, constitutes the entire agreement of the
parties with respect to the subject matter hereof and thereof and supersedes all
prior agreements and negotiations with respect thereto. Notwithstanding the
foregoing, certain parties hereto may have entered into stock purchase
agreements which contain provisions with regard to "vesting" of shares and
repurchase options in favor of Holdings. Those agreements are specifically
agreed to deal with a subject matter different from the subject matter hereof
and are therefore not superseded by this Agreement and are specifically
acknowledged to remain in full force and effect.
J. Headings and Pronouns. The headings of the sections and
paragraphs of this Agreement have been inserted for convenience of reference
only and do not constitute a part of this Agreement. Whenever used herein, words
importing the singular shall include the
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plural and words importing the masculine shall include the feminine and neuter,
and vice versa, unless the context otherwise requires.
K. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders' Agreement as of the day and year first above written.
ENCORE ENTERTAINMENT, INC.
By:___________________________________
Name: _____________________________
Its: ______________________________
______________________________________
Xxxxxx X. Xxxxxx
______________________________________
Xxxxxx Xxxxx
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BRENTWOOD ASSOCIATES BUYOUT FUND II, L.P.
By: Brentwood Private Equity LLC,
Its: General Partner
By: _________________________________
Name: Xxxxx X. Xxxx
Its: Managing Member
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Exhibit A
REGISTRATION RIGHTS AGREEMENT
Section 1. Definitions.
Terms defined in the foregoing Stockholders' Agreement (the
"Agreement") are used as therein defined unless otherwise defined in this
Exhibit A. In addition, the following terms shall have the meanings indicated:
"Commission" means the Securities and Exchange Commission, or any
other federal agency then administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
Section 2. Rights of Stockholders.
If at any time Holdings proposes to register (other than a
registration (1) on Form S-8 or any successor form thereto; (2) of debt
securities of Holdings; (3) of Preferred Stock of Holdings; or (4) of securities
for the purpose of consummating any acquisition by Holdings including a
registration on Form S-4 (or any successor form thereto)) any public offering of
shares of its capital stock under the Securities Act, Holdings will give written
notice to each Stockholder of its intention so to do at least twenty (20) days
prior to the filing of the registration statement.
A. In the event of an underwritten public offering:
(1) If the representative of the underwriters
participating in the sale and distribution of Holdings'
securities covered by said registration statement agrees that a
number of shares of outstanding Holdings Common Stock (the
"Permissible Secondary Shares") may be included in the offering
covered by the registration statement, Holdings' notice shall
afford each Stockholder an opportunity to elect to include in
such filing all or any part of the shares of Holdings Common
Stock then owned by such Stockholder. Each Stockholder shall have
fifteen (15) days after receipt of Holdings' notice to notify
Holdings in writing of the number of shares of Holdings Common
Stock (the "Elected Shares") which such Stockholder elects to
include in the offering. The Elected Shares shall be included in
the offering to the extent permitted by the representative. If
the aggregate number of Elected Shares that each such electing
Stockholder and any other holders of securities of Holdings
possessing registration rights desire to include in such filing
exceeds the number of Permissible Secondary Shares, then such
Stockholder shall, subject to any priority available to other
holders of securities which was not granted in violation of the
Agreement or the Warrants (as defined therein), be entitled to
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include that number of shares of Holdings Common Stock that
bears the same ratio to the number of Permissible Secondary
Shares as the number of Elected Shares of Holdings Common Stock
that Stockholder desires to include bears to the number of
Elected Shares that all eligible holders of securities desire to
include. Such representative may increase or decrease the number
of Permissible Secondary Shares at any time until all shares of
Holdings Common Stock included in such registration shall have
been sold by such underwriters.
(2) The inclusion in such filing of shares of Holdings
Common Stock shall be upon the condition that such electing
Stockholder sells his shares of Holdings Common Stock to the
underwriters on the same terms and conditions as Holdings and
other selling holders.
(3) Holdings shall afford each Stockholder the right to
participate in each underwritten registration.
B. In the event of any public offering, whether or not
underwritten:
(1) Each Stockholder shall have fifteen (15) days after
receipt of Holdings' notice to notify Holdings in writing of the
number of shares of Holdings Common Stock that are owned by him
which such Stockholder elects to include in the offering.
(2) Holdings will use its best efforts to prepare and
file with the Commission a registration statement with respect
to such shares of Holdings Common Stock and shall cause such
registration statement to become effective, to prepare and file
with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration
statement effective until the earlier of the sale of all shares
of Holdings Common Stock covered thereby and the expiration of a
period of 9 months after its effective date and to comply with
the provisions of the Securities Act with respect to the
disposition of all shares of Holdings Common Stock covered by
such registration statement. In the event that any shares of
Holdings Common Stock included in a registration statement
subject to, or required by, this Exhibit A remain unsold at the
end of such period, Holdings may file a post-effective amendment
to the registration statement for the purpose of deregistering
such shares.
(3) Holdings will furnish to each Stockholder so many
copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such
other documents, as such Stockholder may reasonably request.
(4) Holdings will use its best efforts to register or
qualify the securities covered by such registration statement
under such other securities or blue sky laws of such
jurisdictions (not exceeding ten (10) in number) as such
electing Stockholder shall request, and do any and all other
acts and things that
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may be reasonably necessary or advisable to enable such
Stockholder to consummate the disposition in such jurisdictions
of the shares of Holdings Common Stock covered by the
registration statement; provided, however, that Holdings shall
not be obligated, by reason thereof, to qualify as a foreign
corporation or file any general consent to service of process
under the laws of any such jurisdiction or subject itself to
taxation as doing business in any such jurisdiction.
(5) Holdings shall notify each Stockholder when the
registration statement covering the offering of the shares of
Holdings Common Stock to be registered has been filed with the
Commission under the Securities Act and when it has been made
effective by order of the Commission.
Section 3. Obligations of Stockholders.
To include any shares of Holdings Common Stock in any
registration, each Stockholder shall:
(1) cooperate with Holdings in preparing each such
registration and execute all such agreements as any
representative of the underwriters may deem reasonably necessary
in favor of the underwriters;
(2) promptly supply Holdings with all information,
documents, representations and agreements as the underwriters or
Holdings may deem reasonably necessary in connection with such
registration; and
(3) agree in writing not to sell or transfer any shares
of the capital stock of Holdings not included in such
registration during the period beginning ten (10) days prior to
the filing and ending one hundred eighty (180) days after the
effective date of such registration without the underwriters' or
Holdings' consent.
Section 4. Completion of Offering Not Required.
Anything herein to the contrary notwithstanding, Holdings shall
have no obligation to the Stockholders if the Board of Directors of Holdings
determines, for any reason, not to complete any proposed public offering of its
securities.
Section 5. Registration Expenses.
The costs and expenses (other than underwriting discount or
commission and such fees for counsel, printing, registration and other fees as
state securities officials may require that each Stockholder pay) of all
registrations and qualifications under the Securities Act, and of all other
actions that Holdings is required to take or effect pursuant to this
Registration Rights Agreement, shall be paid by Holdings (including, without
limitation, all registration and filing fees, printing expenses, costs of
special audits incident to or required by any such registration, fees and
disbursements of counsel for Holdings).
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Section 6. Indemnification by Company.
In the event of any registration under the Securities Act of any
offering including shares of Holdings Common Stock, Holdings hereby agrees to
indemnify and hold harmless each Stockholder, and each other person or entity
that controls such Stockholder and each such Stockholder's officers, directors
and employees, against any losses, claims, damages or liabilities, joint or
several, to which such Stockholder and/or person or entity may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or proceedings in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which shares of Holdings Common Stock were registered under the Securities Act,
in any preliminary prospectus or final prospectus contained therein or any
amendment or supplement thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading or (iii) any failure or alleged failure of
Holdings to comply with any applicable statute, rule or regulation in connection
with the registration statement or the offering, and will reimburse such
Stockholder and/or such person or entity for any legal or other expenses
reasonably incurred by such Stockholder and/or such person or entity in
connection with investigating or defending any such loss, claim, damage,
liability or proceeding; provided, that Holdings will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, said preliminary or final
prospectus or said amendment or supplement in reliance upon and in strict
conformity with written information furnished by such Stockholder and/or such
person or entity on behalf of such Stockholder in such Stockholder's capacity as
such specifically for use in the preparation thereof.
Section 7. Indemnification by Stockholders.
In the event of any registration under the Securities Act of any
offering including shares of Holdings Common Stock, each Stockholder hereby
agrees to indemnify and hold harmless Holdings, and each other person, if any,
who controls Holdings within the meaning of the Securities Act and each other
person (including each underwriter, and each other person, if any, who controls
such underwriter) who participates in the offering of such Holdings Common Stock
against any losses, claims, damages or liabilities, joint or several, to which
Holdings, such controlling person or participating person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or proceedings in respect thereof arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained,
on the effective date thereof, in any registration statement under which an
offering of such Holdings Common Stock was registered under the Securities Act,
in any preliminary prospectus or final prospectus contained therein, or in any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse Holdings and each such controlling person or participating person for
any legal or other expenses reasonably incurred by Holdings or such controlling
person or participating person in connection with investigating
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or defending any such loss, claim, damage, liability or proceeding; provided
that each Stockholder will be liable in any such case to the extent, and only to
the extent, that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, said preliminary or final
prospectus or said amendment or supplement in reliance upon and in strict
conformity with written information furnished by such Stockholder in his
capacity as such specifically for use in the preparation thereof and provided
further that each Stockholder will be liable only in his, her or its capacity as
such only to the extent of the proceeds received from the sale of securities
sold by him, her or it pursuant to such registration statement.
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Exhibit B
JOINDER
Reference is made to the Stockholders' Agreement (the
"Agreement") dated as of ____________, 1996, among Encore Entertainment, Inc.
and certain other parties listed on the signature page thereto. All capitalized
terms used but not otherwise defined herein with the meanings ascribed to such
terms in the Agreement.
The undersigned is the holder of [_______ shares of Common Stock]
[__________ shares of Series A Preferred Stock] (the "Securities"). The
undersigned hereby joins the Agreement as a party thereto with respect to the
Securities, entitled to the rights and benefits of, and subject to the
obligations of a party thereto with respect to the Securities.
The undersigned's address for notices is________________________
___________________________________________________________.
Dated this ____ day of _________, 19__.
By: ___________________________
Name:______________________
Its:_______________________
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AMENDMENT TO STOCKHOLDER'S AGREEMENT
This amendment (the "Amendment") is executed as of April 18, 1998 by
and between Silver Cinemas International, Inc. ("Holdings"), Brentwood
Associates Buyout Fund II, L.P. (the "Partnership") and DLJ Fund Investment
Partners II, L.P. (the "Purchaser") to modify the terms described in that
certain Stockholders' Agreement (the "Agreement") dated as of August 1, 1996 by
and between Holdings and the parties listed on the signature page thereto.
1. Section XII.H shall be deleted and replaced in its entirety by the
following language:
Modification, Amendment and Waiver. No modification or amendment of any
provision of this Agreement shall be effective against Holdings or any
Stockholder unless approved in writing by a majority of the
Stockholders, and, in the case of Holdings, authorized by its Board of
Directors. Furthermore, no amendment or modification which adversely
affects any Stockholder uniquely (as opposed to the same effect on all
Stockholders) or DLJ Fund Investment Partners II, L.P., with respect to
Tag-Along Rights as set forth in Section IV, shall be effective unless
such affected Stockholder or DLJ Fund Investment Partners II, L.P.,
respectively, consents in writing thereto. The failure at any time to
enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right
of any of the parties thereafter to enforce each and every provision
hereof in accordance with its terms.
2. A new Section XIII shall be added to the Agreement as follows:
Holdings agrees that it will not issue, sell or otherwise transfer to
the Partnership or any affiliates (as such term is defined in the
Securities Exchange Act of 1934, as amended) of the Partnership, any
common or preferred stock of Holdings unless Holdings delivers written
notice to the Purchaser of the terms of such proposed sale, issuance or
transfer, no later than ten days before the consummation of such
transfer. If the Purchaser notifies Holdings in writing that it wishes
to participate in such transfer, Holdings and the Partnership will make
available to the Purchaser a portion of the stock proposed to be
transferred in the same proportion to the relative ownership of the
Partnership and the Purchaser on that date immediately prior to such
proposed transfer, on the same terms and on the same basis as the
Partnership.
3. Except as expressly amended by this Amendment, the Agreement shall
remain unchanged and in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
day and years first above written.
SILVER CINEMAS INTERNATIONAL, INC.
By: ___________________________________
Name:
Its:
BRENTWOOD ASSOCIATES BUYOUT FUND II, L.P.
By: ___________________________________
Name:
Its:
DLJ FUND INVESTMENT PARTNERS II, L.P.
By: ___________________________________
Name:
Its:
