STOCKHOLDERS AGREEMENT
among
LTM HOLDINGS, INC.,
SONY PICTURES ENTERTAINMENT INC.,
UNIVERSAL STUDIOS, INC.,
CHARLES ROSNER BRONFMAN FAMILY TRUST
AND
THE OTHER PARTIES HERETO
dated as of September 30, 1997
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms 1
SECTION 1.2 Other Defined Terms 11
SECTION 1.3 Other Definitional Provisions 12
SECTION 1.4 Methodology for Calculations 12
ARTICLE II
CORPORATE GOVERNANCE
SECTION 2.1 Composition of the Board 13
SECTION 2.2 Board Procedures 18
SECTION 2.3 Committees 19
SECTION 2.4 Voting on Certain Matters 20
SECTION 2.5 Irrevocable Proxy 20
SECTION 2.6 Certain Restrictions 21
SECTION 2.7 Cooperation 22
ARTICLE III
CONSENT RIGHTS
SECTION 3.1 Consent for Certain Actions 22
SECTION 3.2 Certain Certificate Provisions 28
SECTION 3.3 Arbitration 28
SECTION 3.4 Approval of Disinterested Directors 29
SECTION 3.5 Additional Shares 30
ARTICLE IV
TRANSFER OF COMMON SHARES
SECTION 4.1 Restrictions on Transfer during Six-Months Following
Closing 30
SECTION 4.2 Tag-Along for All Stockholders 30
SECTION 4.3 Tag-Along for USI and Claridge Group 31
SECTION 4.4 Right of First Refusal 32
SECTION 4.5 Transferees 35
SECTION 4.6 Notice of Transfer 37
SECTION 4.7 Compliance with Transfer Provisions 37
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.1 Demand Registrations 38
SECTION 5.2 Piggyback Registrations 40
SECTION 5.3 Registration Procedures 41
SECTION 5.4 Registration Expenses 46
SECTION 5.5 Limitations on Sale or Distribution of Other
Securities 47
SECTION 5.6 Company Right to Postpone Registration 47
SECTION 5.7 No Required Sale 48
SECTION 5.8 Indemnification 48
SECTION 5.9 Contribution 50
SECTION 5.10 Underwritten Offerings 52
SECTION 5.11 Rule 144 52
SECTION 5.12 Article V Termination 52
ARTICLE VI
STANDSTILL
SECTION 6.1 Standstill with the Company 53
SECTION 6.2 Standstill among the Stockholders 55
ARTICLE VII
EQUITY PURCHASE RIGHTS
SECTION 7.1 Equity Purchase Rights 57
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Conflicting Agreements 59
SECTION 8.2 Duration of Agreement 59
SECTION 8.3 Best Efforts 59
SECTION 8.4 Ownership Information 60
SECTION 8.5 Further Assurances 60
SECTION 8.6 Amendment and Waiver 60
SECTION 8.7 Severability 60
SECTION 8.8 Entire Agreement 61
SECTION 8.9 Successors and Assigns 61
SECTION 8.10 Counterparts 61
SECTION 8.11 Remedies 61
SECTION 8.12 Notices 62
SECTION 8.13 Governing Law; Consent to Jurisdiction 64
SECTION 8.14 Legends 64
SECTION 8.15 Interpretation 65
SECTION 8.16 Agents for Stockholders 65
SECTION 8.17 Additional Agreement 66
SECTION 8.18 Effectiveness 66
EXHIBITS
Exhibit A Members of the Claridge Group
Exhibit B Form of Arbitration Agreement
Exhibit C Sound Systems
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of September 30, 1997 among LTM
Holdings, Inc., a Delaware corporation (the "Company"), Sony Pictures
Entertainment Inc., a Delaware corporation ("SPE"), Universal Studios, Inc., a
Delaware corporation ("USI"), the Charles Rosner Bronfman Family Trust, a
trust created under the laws of the province of Quebec (the "Trust"), and the
other persons listed on Exhibit A (such persons, together with the Trust,
collectively, the "Claridge Group").
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company, SPE and Cineplex Odeon Corporation, a corporation
formed under the laws of the province of Ontario ("CO"), are entering into a
Master Agreement dated as of the date hereof (the "Master Agreement") pursuant
to which and subject to the terms and conditions thereof, among other things,
(i) CO and the Company will engage in a business combination (the
"Transaction") and (ii) the shareholders of CO will exchange shares of CO for
shares of Common Stock (as defined below);
WHEREAS, upon the closing of the Transaction (the "Closing"), and
before giving effect to any Equity Offering (as defined below), (i) SPE will
beneficially own 51.14% of the issued and outstanding Common Shares (as
defined below), 49.90% of the issued and outstanding Common Stock and 100% of
the issued and outstanding Non-Voting Common Stock (as defined below), (ii)
USI will beneficially own 26.02% of the issued and outstanding Common Shares
and 26.68% of the issued and outstanding Common Stock, and (iii) the Claridge
Group will beneficially own 9.60% of the issued and outstanding Common Shares
and 9.85% of the issued and outstanding Common Stock; and
WHEREAS, the parties hereto desire to enter into certain
post-Closing arrangements relating to the Company.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby
agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used herein, the following
terms shall have the following meanings:
"Adjusted Applicable Percentage" means, with respect to any
Stockholder, at any time, such Stockholder's Applicable Percentage,
recalculated after subtracting from (x) the Voting Shares beneficially owned
by such Stockholder and its Permitted Transferees and, in the case of the
Claridge Group, all other members of the Claridge Group and their respective
Permitted Transferees (y) all Voting Shares acquired in open market purchases,
in privately-negotiated transactions (other than from a Stockholder or a
Permitted Transferee of any Stockholder) or from the Company (other than
pursuant to Section 7.1 or a transaction described in clause (ii) of Section
7.1(g)).
"Affiliate" means, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person. For
purposes of this definition, (i) no member of the Claridge Group shall be
considered an Affiliate of USI or any Subsidiary of USI, (ii) Matsushita
Electric Industrial Co., Ltd. ("MEI") shall not be considered an Affiliate of
USI or any Subsidiary of USI, provided, that clause (ii) shall not be
applicable at any time that USI shall disclose in a Schedule 13D filed
pursuant to the Exchange Act that USI and MEI have formed a Group with respect
to Voting Shares, and (iii) each member of the Claridge Group shall be
considered an Affiliate of each other member of the Claridge Group.
"Agreement" means this Stockholders Agreement as it may be
amended, supplemented, restated or modified from time to time.
"Applicable Percentage" means, with respect to any Stockholder, at
any time, the ratio, expressed as a percentage, of (i) the then outstanding
Voting Shares beneficially owned by such Stockholder and (a) in the case of
SPE or USI, such Stockholder's Permitted Transferees, and (b) in the case of
any member of the Claridge Group, all other members of the Claridge Group and
all Permitted Transferees of the Claridge Group, to (ii) the sum of (x) the
total then outstanding Voting Shares and (y) with respect to such Stockholder,
any Voting Shares included in clause (i) that are issuable upon conversion,
exchange or exercise of Voting Share Equivalents, provided, that if the
Company shall issue or sell Voting Shares in a transaction (other than the
Equity Offering) in respect of which either SPE or USI does not have the right
to consent pursuant to clause (vii) of Section 3.1(a) at a time when such
Stockholder has an Article III Consent Right, the aggregate amount of Voting
Shares issued or sold pursuant to all such transactions shall be subtracted
from the amount of outstanding Voting Shares in calculating such Stockholder's
Applicable Percentage for purposes of Articles II and III and for any
calculation of such Stockholder's Applicable Percentage under the Certificate,
subject to the applicable rules of any stock exchange on which the Common
Stock shall then be listed.
"Article III Consent Right" means, with respect to SPE or USI, the
right of such Stockholder pursuant to Section 3.1(a) to approve the actions
specified in clauses (i)-(xiv) of such Section.
"beneficial owner" or "beneficially own" has the meaning given
such term in Rule 13d-3 under the Exchange Act and a Person's beneficial
ownership of Voting Shares shall be calculated in accordance with the
provisions of such Rule, provided, however, that (i) in determining beneficial
ownership for purposes of Article II, Section 4.3 and clauses (ii) and (iii)
of Section 4.5(b) and for any calculation of such Stockholder's Applicable
Percentage under the Certificate (including in the calculation of a
Stockholder's Applicable Percentage and Adjusted Applicable Percentage in such
provisions), a Person shall not be deemed to be the beneficial owner of any
Voting Shares which may be acquired by such Person upon the conversion,
exchange or exercise of any Voting Share Equivalents, except for purposes of
Section 4.3, a Person shall be deemed to beneficially own such Voting Shares
if such Person has irrevocably agreed to convert, exchange or exercise the
related Voting Share Equivalent upon consummation of the applicable Third
Party Sale, (ii) in determining beneficial ownership for purposes of the other
provisions of this Agreement, a Person shall be deemed to be the beneficial
owner of any Voting Shares which may be acquired by such Person, whether
within 60 days or thereafter, upon the conversion, exchange or exercise of any
warrants, options, rights or other securities issued by the Company or any
Subsidiary thereof and (iii) in determining beneficial ownership for purposes
of Sections 2.1(a), (b) and (c), clauses (i) and (ii) of Section 2.1(g),
Sections 4.2, 4.3 and 5.12, Article VII and Section 8.2 and for any
calculation of such Stockholder's Applicable Percentage under the Certificate
(including in the calculation of a Stockholder's Applicable Percentage and
Adjusted Applicable Percentage in such provisions), a Person shall not be
deemed to be the beneficial owner of any Voting Shares unless such Person has
a pecuniary interest in such Voting Shares.
"Board" means the Board of Directors of the Company.
"Business Day" shall mean any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
The City of New York.
"Bylaws" means the Amended and Restated Bylaws of the Company in
the form attached as Exhibit F to the Master Agreement, as the same may be
amended, supplemented or modified from time to time.
"Capital Lease Obligations" of a Person means the obligation to
pay rent or other payment amounts under a lease of (or other arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability
on a balance sheet of such Person in accordance with GAAP. The principal
amount of such obligation shall be the capitalized amount thereof that appears
on a balance sheet of such Person in accordance with GAAP.
"Capital Stock" means, with respect to any Person at any time, any
and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of capital stock, partnership
interests (whether general or limited) or equivalent ownership interests in or
issued by such Person.
"Cash Flow" means, for purposes of determining the cash flow of an
asset under clauses (i) or (ii) of Section 3.1(a), (i) with respect of any
motion picture theater, "Cash Flow" as defined in the Master Agreement, and
(ii) with respect to any other type of asset, cash flow shall be defined as
the Company and each Stockholder who at the time of determination has an
Article III Consent Right shall jointly determine in good faith and, in making
any such determination, such parties shall consider any definition of cash
flow that is customarily utilized by nationally recognized investment banking
firms to measure the cash flow of such assets.
"Certificate" means the Amended and Restated Certificate of
Incorporation of the Company in the form attached as Exhibit A to the Master
Agreement, as the same may be amended, supplemented or modified from time to
time.
"Certificate Amendment" means any amendment or restatement of the
Certificate after the Closing.
"Claridge Director" means any Director designated pursuant to
Section 2.1 by the Claridge Group.
"Commission" means the Securities and Exchange Commission, and any
successor commission or agency having similar powers.
"Common Shares" means, collectively, the Common Stock and the Non-
Voting Common Stock.
"Common Stock" means common stock, par value $0.01 per share, of
the Company and any securities issued in respect thereof, or in substitution
therefor, in connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, consolidation, exchange or other
similar reorganization.
"Company Expenses" means (i)(a) fees and disbursements of counsel
for the Company and (b) fees and disbursements of all independent public
accountants (including the expenses of any audit and/or "cold comfort" letter)
and fees and expenses of other Persons, including special experts retained by
the Company, incident to the Company's performance of or compliance with its
obligations under Article V, and (ii) if the Company participates in a
registration pursuant to Article V, the Company's pro rata share of other
Expenses related to such registration on the basis of the number of securities
included in such registration by the Company relative to the total number of
securities included in such registration.
"Consolidated Income Tax Expense" of any Person means for any
period the consolidated provision for income taxes of such Person and its
consolidated Subsidiaries for such period as reported on such Person's
financial statements for such period and determined in accordance with GAAP.
"Consolidated Interest Expense" of any Person means for any period
the consolidated interest expense included in a consolidated income statement
(net of interest income) of such Person and its consolidated Subsidiaries for
such period as reported on such Person's financial statements for such period
and determined in accordance with GAAP.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person and its consolidated
Subsidiaries for such period as reported on such Person's financial statements
for such period and determined in accordance with GAAP; provided that there
shall be excluded therefrom (i) gains or losses on asset dispositions by such
Person or its consolidated Subsidiaries, (ii) all extraordinary gains and
extraordinary losses, (iii) any net income (loss) of a consolidated Subsidiary
that is attributable to a minority interest in such consolidated Subsidiary,
(iv) all non-cash non-recurring charges and credits during such period not in
the ordinary course of business and (v) the tax effect of any of the items
described in clauses (i) through (iv) above.
"control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct
or cause the direction of the affairs or management of a Person, whether
through the ownership of voting securities, as trustee or executor, by
contract or otherwise.
"Current Market Value" means, with respect to any security, the
average of the daily closing prices on the New York Stock Exchange (or such
principal exchange or market on which such security may be listed or may
trade) for such security for the 20 consecutive trading days commencing on the
22nd trading day prior to the date with respect to which the Current Market
Value is being determined. The closing price for each day shall be the
closing price, if reported, or, if the closing price is not reported, the
average of the closing bid and asked prices as reported by the New York Stock
Exchange (or such principal exchange or market) or a similar source selected
from time to time by the Company for such purpose. In the event such closing
prices are unavailable, the Current Market Value shall be the Fair Market
Value of such security established by a Determination of the Independent
Directors. If a determination is required under this Agreement of the Current
Market Value of any Non-Voting Common Stock, such value shall be deemed to be
equal to the Current Market Value of an equivalent number of shares of Common
Stock.
"Debt" means (without duplication), with respect to any Person,
whether or not recourse is to all or a portion of the assets of such Person or
any of its Subsidiaries, (i) every obligation of such Person or any of its
Subsidiaries for money borrowed, (ii) every obligation of such Person or any
of its Subsidiaries evidenced by bonds, debentures, notes or other similar
instruments, (iii) every reimbursement obligation of such Person or any of its
Subsidiaries with respect to letters of credit (including standby letters of
credit to the extent drawn upon), bankers' acceptances or similar facilities
issued for the account of such Person or any of its Subsidiaries, (iv) every
obligation of such Person or any of its Subsidiaries issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business),
(v) every Capital Lease Obligation of such Person or any of its Subsidiaries
other than Capital Lease Obligations of such Person or any of its Subsidiaries
for real property, and (vi) every obligation of the type referred to in
clauses (i) through (v) of another Person and all dividends of another Person
the payment of which, in either case, such Person or any of its Subsidiaries
has guaranteed or for which such Person is responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or otherwise; provided
that, in the case of joint venture Debt, there shall only be included that
portion of such Debt equal to the ratable share in such joint venture of such
Person or any of its Subsidiaries.
"DGCL" means the Delaware General Corporation Law.
"Determination of the Independent Directors" means, with respect
to any matter, a determination made in good faith, on the basis of such
relevant factors as the Independent Directors consider, in their judgment,
appropriate, by the vote of a majority of the Independent Directors present at
a meeting of the Independent Directors called for such purpose, a quorum being
present (or at a meeting of the Board if a quorum of the Independent Directors
is present at such meeting), or without a meeting if a majority of all
Independent Directors consent thereto in writing. For these purposes, a
majority of all Independent Directors, acting at a meeting duly assembled,
shall constitute a quorum for the making of any such determination at such
meeting.
"Director" means any member of the Board.
"Directors Chart" means the chart attached as Schedule I.
"Disinterested Directors" means, with respect to any matter that
is subject to approval under Section 3.4, all Directors other than any
Director who is a designee of SPE (in the case of Section 3.4(a)) or USI (in
the case of Section 3.4(b)).
"Dissolution" means a voluntary liquidation, dissolution or
winding up of the Company.
"EBITDA" of any Person means for any period the Consolidated Net
Income for such period increased by the sum of (i) Consolidated Interest
Expense of such Person for such period, plus (ii) Consolidated Income Tax
Expense of such Person for such period, plus (iii) the consolidated
depreciation and amortization expense deducted in determining the Consolidated
Net Income of such Person for such period (excluding amortization of
Capitalized Lease Obligations other than those incurred to finance equipment);
provided, however, that the Consolidated Interest Expense, Consolidated Income
Tax Expense and consolidated depreciation and amortization expense of a
consolidated Subsidiary of such Person shall be added to the Consolidated Net
Income of such Person pursuant to the foregoing only to the extent and in the
same proportion that the Consolidated Net Income of such consolidated
Subsidiary was included in calculating the Consolidated Net Income of such
Person.
"Equity Offering" means the sale for cash by the Company in one or
more underwritten public offerings of Common Stock for an aggregate offering
price of $200 million (before deducting underwriting discounts or
commissions).
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
"Excluded Securities" means options issued by the Company to
employees or directors of the Company or its Subsidiaries pursuant to any
stock option or similar plan (and any Common Stock issuable thereunder)
approved by the Board and any Common Stock issuable upon conversion of Non-
Voting Common Stock.
"Expenses" means any and all fees and expenses incident to the
Company's performance of or compliance with its obligations under Article V
(other than internal expenses incurred by the Company including the services
of the Company's executives and legal department), including: (i) listing and
filing fees of the Commission or any stock exchange registration, (ii) fees
and expenses of compliance with state and provincial securities or "blue sky"
laws and in connection with the preparation of a "blue sky" survey, including
reasonable fees and expenses of "blue sky" counsel, (iii) fees and expenses of
compliance with any Canadian securities laws, (iv) printing and copying
expenses, (v) messenger and delivery expenses, (vi) expenses incurred in
connection with any road show, (vii) fees and disbursements of counsel for the
Company, (viii) with respect to each registration, the reasonable fees and
disbursements of one counsel for the selling Holder(s) (selected by the
Initiating Holder, in the case of a Demand Registration, or by the Requisite
Percentage of Participating Holders, in the case of a Piggyback Registration),
(ix) fees and disbursements of all independent public accountants (including
the expenses of any audit and/or "cold comfort" letter) and fees and expenses
of other Persons, including special experts, retained by the Company, and (x)
any other fees and disbursements of underwriters, if any, customarily paid by
issuers or sellers of securities.
"Fair Market Value" means, as to any securities or other property,
the cash price at which a willing seller would sell and a willing buyer would
buy such securities or property in an arm's-length negotiated transaction
without time constraints.
"Five-Year Plan" means (i) the Initial Five-Year Plan, or any
replacement of such plan adopted in accordance with Section 3.1(b), and (ii)
after the expiration of the Initial Five-Year Plan, or any replacement
thereof, subsequent five-year strategic business plans of the Company adopted
by the Board in accordance with Section 3.1(d) or any replacement thereof
adopted in accordance with Section 3.1(b).
"GAAP" means United States generally accepted accounting
principles, as in effect from time to time.
"Group" shall have the meaning assigned to it in Section 13(d)(3)
of the Exchange Act.
"Holder" means SPE, USI, each member of the Claridge Group and any
of their respective Permitted Transferees, and any Third Party Transferee (i)
to the extent the rights and obligations of a Holder are specifically assigned
to such Third Party Transferee by a Stockholder in accordance with Section
4.5(b)(iv) and (ii) who agrees, pursuant to Sections 4.5(b) and 4.5(c), to be
bound by the provisions of this Agreement as a "Holder" hereunder.
"Independent Director" means any Director who satisfies the
criteria set forth in the second paragraph of Section 2.1(i).
"Initial Five-Year Plan" means the Company's five-year strategic
business plan in effect as of the Closing, as adopted by the Board.
"Initial Interest" means, with respect to any Stockholder, all of
the Common Shares beneficially owned by such Stockholder and its Permitted
Transferees immediately following the Closing.
"Management Director" means any Director who is also an executive
officer of the Company.
"Market Capitalization" means, as of any Determination Date, the
product of (i) the number of Common Shares outstanding and (ii) the Current
Market Value.
"Market Sale" means a "brokers' transaction" within the meaning of
Section 4(4) of the Securities Act.
"Maximum Debt Ratio" means 6.0 to 1.0, provided that such ratio
shall be decreased by 0.25 to 1.0 if the Company shall have issued Common
Stock in a public offering after the Closing for an aggregate net offering
price of $40 million and by an additional 0.25 to 1.0 for each additional $40
million that the Company shall issue in a public offering after the Closing,
provided, further, that in no event shall such ratio be less than 4.75 to 1.0.
"Merger" means any merger or consolidation in which the Company is
a constituent corporation or any sale of all or substantially all of the
assets of the Company and its Subsidiaries taken as a whole, provided that a
merger which satisfies all of the following criteria shall not be deemed a
Merger for purposes of this definition: (i) the Company is the surviving
corporation, (ii) all shares of Common Stock outstanding immediately prior to
the consummation thereof remain outstanding immediately after the consummation
thereof and the only change in the Capital Stock of the Company resulting from
such merger is the issuance of shares of Capital Stock pursuant thereto, and
(iii) no consent of the Stockholders would be required in connection therewith
either under the DGCL or under Article III.
"Minimum Percentage" means, with respect to SPE or USI, an
Applicable Percentage of 17.86%, provided that if such Stockholder and its
Permitted Transferees beneficially own at least 80% of such Stockholder's
Initial Interest, such percentage shall equal 15%.
"Non-Voting Common Stock" means non-voting common stock, par value
$0.01 per share, of the Company and any securities issued in respect thereof,
or in substitution therefor, in connection with any stock split, dividend or
combination, or any reclassification, recapitalization, merger, consolidation,
exchange or other similar reorganization.
"pecuniary interest" has the meaning given such term in Rule 16a-
1(a)(2) under the Exchange Act.
"Permitted Transferee" means (i) with respect to SPE, any direct
or indirect wholly-owned Subsidiary of Sony Corporation which is incorporated
in the United States, (ii) with respect to USI, any direct or indirect wholly-
owned Subsidiary of The Seagram Company Ltd. or USI which is incorporated in
the United States, and (iii) with respect to each member of the Claridge
Group, (a) any member of the Claridge Group, (b) any one or more of the lineal
descendants of Charles R. Bronfman, Senator E. Leo Kolber or Arnold M.
Ludwick, (c) the spouses of any one or more of the foregoing Persons referred
to in this clause (iii), (d) any trust of which any one or more of the
foregoing Persons referred to in this clause (iii) is the principal
beneficiary, (e) Phyllis Lambert, (f) the legal representatives of any one or
more of the Persons referred to in clauses (a), (b) or (c) of this clause
(iii), (g) any corporation, partnership or other entity directly or indirectly
of which more than 90% of the total voting power of the Capital Stock entitled
to vote in the election of directors, managers or administrators thereof is
beneficially owned by Persons referred to in this clause (iii), and (h) any
private charitable foundation of which one or more of the foregoing Persons
referred to in this clause (iii) constitutes a majority of the members. In
addition, each of SPE, USI and each member of the Claridge Group shall each be
a Permitted Transferee of its respective Permitted Transferees.
"Person" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, government or any
agency or political subdivisions thereof or any Group comprised of two or more
of the foregoing.
"Public Stockholder" means any stockholder of the Company other
than (i) the Stockholders and their respective Permitted Transferees and (ii)
stockholders of the Company who are required to file a Schedule 13D pursuant
to the Exchange Act with respect to their ownership of Voting Shares,
excluding any such stockholders that (a) are investment advisers registered
under Section 203 of the Investment Advisers Act of 1940, as amended, (b) are
not participating and have not publicly disclosed (in a Schedule 13D filing or
otherwise) an intention to participate in an election contest affecting the
Company and (c) have not publicly disclosed (in a Schedule 13D filing or
otherwise) any intention or purpose of influencing control of the Company in
any material respect (including seeking representation on the Board).
"Registrable Securities" means any Common Stock beneficially owned
by any Holder (including any Common Stock issuable upon conversion of Non-
Voting Common Stock), whether beneficially owned as of the Closing or
thereafter acquired. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the sale of such securities shall have been declared
effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (ii) such
securities shall have been sold (other than in a privately-negotiated sale)
pursuant to Rule 144 (or any successor provision) under the Securities Act or
(iii) such securities shall have ceased to be outstanding.
"Requisite Percentage of Participating Holders" means, with
respect to any registration pursuant to Article V, Holders of a majority of
the total Registrable Securities which the Company has been requested to
register by all Holders.
"Securities Act" means the Securities Act of 1933, as amended.
"SPE Director" means any Director designated pursuant to Section
2.1 by SPE.
"Stockholder" means each of SPE, USI and each member of the
Claridge Group.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, joint venture, limited liability company or other entity
controlled by such Person directly or indirectly through one or more
intermediaries.
"Targeted EBITDA" means (i) for the 12-month period commencing on
the Closing Date, if the Closing Date shall be on the first day of a month, or
otherwise for the 12-month period commencing on the first day of the month
following the month during which the Closing shall occur, and (ii) for each
12-month period thereafter (each full 12-month period, including the initial
period described in clause (i), a "Measurement Period"), Targeted EBITDA of
the Company as set forth in the Five-Year Plan, subject to the following
adjustments: (x) Targeted EBITDA shall be reduced (but not increased) as at
the end of any Measurement Period if subsidiaries or assets specifically
identified in the Five-Year Plan to be disposed of or closed during such
period shall not have been disposed of or closed, such reduction to be in an
amount equal to the extent to which the aggregate actual EBITDA of such assets
or subsidiaries during such Measurement Period is negative (net of any
positive actual EBITDA of any such assets or subsidiaries), and if such assets
or subsidiaries are not disposed of or closed within 12 months following the
date projected in the Five-Year Plan for such disposition or closure, Targeted
EBITDA in respect of such 12-month period shall be reduced (but not increased)
in an amount equal to the extent to which the aggregate actual EBITDA of such
assets or subsidiaries during such 12-month period is negative (net of any
positive actual EBITDA of any such assets or subsidiaries), (y) Targeted
EBITDA shall be reduced (but not increased) as at the end of any Measurement
Period if expansions and acquisitions specifically identified in the Five-Year
Plan to be made during such period shall not have occurred during such period,
such reduction to be in an amount equal to the amount of EBITDA specifically
identified in the Five-Year Plan as being associated with such expansions and
acquisitions (net of any positive actual EBITDA during such Measurement Period
from expansions and acquisitions that were not specifically identified in the
Five-Year Plan), and (z) Targeted EBITDA shall be reduced by an amount equal
to 25% of the projected expense savings that are specifically identified in
the Five-Year Plan.
"Third Party Transferee" means any Person to whom a Stockholder
(including a Third Party Transferee subject to this Agreement pursuant to
Sections 4.5(b) and 4.5(c)) or a Permitted Transferee Transfers Voting Shares,
other than a Permitted Transferee of such Stockholder.
"Transfer" means, directly or indirectly, to sell, transfer,
assign, pledge, encumber, hypothecate or similarly dispose of, either
voluntarily or involuntarily, or to enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, assignment,
pledge, encumbrance, hypothecation or similar disposition of, any Voting
Shares or any interest in any Voting Shares, provided, however, that, subject
to the second to last sentence of Section 4.5(a), a merger or consolidation in
which a Stockholder is a constituent corporation shall not be deemed to be the
Transfer of any Voting Shares beneficially owned by such Stockholder
(provided, that the primary purpose of any such transaction is not to avoid
the provisions of this Agreement).
"USI Director" means any Director designated pursuant to Section
2.1 by USI.
"USI Subscription Agreement" means the Agreement between USI and
the Company attached as Exhibit I to the Master Agreement, as the same may be
amended, supplemented or modified from time to time.
"Voting Share Equivalents" means any warrants, options, rights or
securities convertible into, or exchangeable or exercisable for, Voting
Shares.
"Voting Shares" means any securities of the Company the holders of
which are generally entitled to vote for members of the Board and any
securities issued in respect thereof, or in substitution therefor, in
connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, consolidation, exchange or other
similar reorganization.
SECTION 1.2 Other Defined Terms.
The following terms shall have the meanings defined for such terms in the
Sections set forth below:
Term Section
Aggrieved Stockholder 8.11(c)
Arbitration Agreement 3.3(c)
Arbitrator 3.3(c)
Bylaw Amendment 2.4(a)
CO Recitals
Claims 5.8(a)
Claridge Group Preamble
Closing Recitals
Company Preamble
Demand Exercise Notice 5.1(a)
Demand Registration Requests 5.1(a)
Demand Registrations 5.1(a)
Determination Date 3.1(a)
Initiating Holder 5.1(a)
Issuance Notice 7.1(b)
Issuance Shares 7.1(a)
Litigation 8.13
Master Agreement Recitals
New Five-Year Plan 3.1(b)
Nominating Committee 2.1(i)
Offer Notice 4.4(b)
Offer Price 4.4(c)
Offered Shares 7.1(a)
Offeree 7.1(a)
Other Holders 5.1(b)
Other Stockholder 4.4(b)
Permitted Debt 3.1(a)
Piggyback Registration 5.2(a)
Reorganization Proposal 3.1(f)
Significant Sale 4.2(a)
Significant Sale Initiator 4.2(a)
Significant Sale Notice 4.2(a)
Significant Sale Shares 4.2(a)
SPE Preamble
Tag-Along Notice 4.3(a)
Tag-Along Offeree 4.3(a)
Tag-Along Sale 4.3(a)
Tag-Along Shares 4.3(a)
Target 3.1(a)
Transaction Recitals
Transferring Party 4.4(a)
Trust Preamble
USI Preamble
SECTION 1.3 Other Definitional Provisions. (a) The words "hereof",
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Article, Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 1.4 Methodology for Calculations. For purposes of this Agreement,
the Transfer or issuance of a Voting Share Equivalent shall be treated as the
Transfer or issuance of the Voting Shares into which such Voting Share
Equivalent can be converted, exchanged or exercised. For purposes of
calculating the amount of outstanding Voting Shares as of any date and the
amount of Voting Shares beneficially owned by any Person as of any date, (i)
the amount of any Voting Shares shall be equal to the number of votes such
Voting Shares shall then entitle the holder thereof to cast in an election for
members of the Board, (ii) any Voting Shares held in the Company's treasury or
owned by any Subsidiaries of the Company shall be disregarded, (iii) the
Stockholders shall not be deemed to share beneficial ownership of any Voting
Shares as a result of any of the provisions of this Agreement and (iv) if any
Voting Shares shall otherwise be deemed to be beneficially owned by more than
one Stockholder, such shares shall be deemed to be beneficially owned only by
the Stockholder with the greatest pecuniary interest in such shares (provided
that if such Stockholders shall have an equal pecuniary interest in any such
shares, each Stockholder shall be deemed to beneficially own an equal portion
of such shares (which portions shall not exceed 100% in the aggregate)).
ARTICLE II
CORPORATE GOVERNANCE
SECTION 2.1 Composition of the Board.
(a) Effective as of the Closing, the Board
shall be comprised of 16 members, consisting of six designees of SPE, three
designees of USI, one designee of the Claridge Group, two Management Directors
and four Independent Directors. The designees of SPE, USI and the Claridge
Group shall have been designated by SPE, USI and the Claridge Group prior to
the Closing in accordance with the provisions of Section 6.18 of the Master
Agreement, the Independent Directors shall have been designated by SPE, USI
and a majority of the members of the Special Committee (as defined in the
Master Agreement) prior to the Closing in accordance with the provisions of
Section 6.18 of the Master Agreement and the Management Directors shall be the
individuals satisfying the criteria set forth in Section 2.1(j).
(b) After the Closing, SPE, USI and the Claridge Group shall be
entitled to designate for nomination for election to the Board the number of
Directors set forth in the Directors Chart which corresponds to such
Stockholder's Applicable Percentage; provided, however, that:
(i) (x) until the five-year anniversary of the Closing, the
Claridge Group shall be entitled to designate one Director if its
Applicable Percentage exceeds 3.5%, and, thereafter, if its Applicable
Percentage exceeds 5%, and (y) the Claridge Group's entitlement to
designate two or more Directors shall be determined in accordance with
this Section 2.1 on the same basis as the entitlement of the other
Stockholders;
(ii) if the Directors Chart provides that the Stockholders
would in the aggregate be entitled to designate more than 14 Directors,
each reference to a percentage in such chart under the "Applicable
Percentage" column, shall be increased by the least number of percentage
points that would result in the Stockholders in the aggregate being
entitled to designate 14 Directors (after giving effect to the
provisions of clause (i)(x) above); and
(iii) prior to the four-year anniversary of the Closing, no
Stockholder shall be entitled to designate more than eight Directors,
provided, however, that if any Stockholder would be entitled to
designate more than eight Directors pursuant to the Directors Chart
based on such Stockholder's Adjusted Applicable Percentage (rather than
such Stockholder's Applicable Percentage), (x) such Stockholder shall be
entitled to designate the number of Directors set forth in the Directors
Chart based on such Stockholder's Applicable Percentage and (y) the
limitation contained in this clause (iii) regarding a Stockholder's
entitlement to designate Directors shall thereupon terminate.
(c) Notwithstanding anything to the contrary contained in Section
2.1(b), each of SPE and USI covenants and agrees with the other and each
member of the Claridge Group covenants and agrees with each of SPE and USI
that:
(i) no Stockholder shall be entitled to designate more than
six Directors, provided, however, that if any Stockholder would be
entitled to designate more than eight Directors pursuant to the
Directors Chart based on such Stockholder's Adjusted Applicable
Percentage (rather than such Stockholder's Applicable Percentage), such
Stockholder shall be entitled to designate such greater number of
Directors and the limitation contained in this clause (i) regarding a
Stockholder's entitlement to designate Directors shall thereupon
terminate, provided, further, that, if at any time commencing on the
three-year anniversary of the Closing, any Stockholder's Applicable
Percentage exceeds 45%, the limitation contained in this clause (i)
regarding a Stockholder's entitlement to designate Directors shall be
increased from six Directors to seven Directors;
(ii) at any time that SPE's Applicable Percentage equals or
exceeds 40.625% but the number of SPE Directors is limited to six by
clause (i) of this Section 2.1(c), USI agrees with SPE that one of the
individuals designated by USI to serve as a Director shall be an
Independent Director so long as USI's Applicable Percentage equals or
exceeds 21.875% (provided that in determining whether such individual is
an Independent Director, the opinion of such Stockholder shall be
substituted for the opinion of the Nominating Committee for purposes of
clauses (i) and (iii) of Section 2.1(i)); and
(iii) at any time that USI's Applicable Percentage equals
or exceeds 40.625% but the number of USI Directors is limited to six by
clause (i) of this Section 2.1(c), SPE agrees with USI that one of the
individuals designated by SPE to serve as a Director shall be an
Independent Director so long as SPE's Applicable Percentage exceeds
21.875% (provided that in determining whether such individual is an
Independent Director, the opinion of such Stockholder shall be
substituted for the opinion of the Nominating Committee for purposes of
clauses (i) and (iii) of Section 2.1(i)).
(d) After the Closing, except for the designees of the
Stockholders and for the Management Directors (who shall be selected in
accordance with Section 2.1(i) and (j)), the individuals to be nominated for
election as Directors shall all be Independent Directors and shall be selected
in accordance with Section 2.1(i), unless the Independent Directors (based on
a Determination of the Independent Directors) shall otherwise agree, provided
that there shall be at least two Independent Directors and at least two
Management Directors nominated in each such election.
(e) Each Stockholder agrees to vote (and cause each of its
Affiliates to vote, if applicable), or act by written consent with respect to,
any Voting Shares beneficially owned by it to cause the designees of SPE, USI
and the Claridge Group and each of the Independent Directors and Management
Directors designated by the Nominating Committee to be elected to the Board,
and the Company agrees to use its best efforts to cause the election of each
such designee to the Board, including nominating such individuals to be
elected as members of the Board as provided herein. At least 45 days prior to
its distribution of its proxy statement or information statement with respect
to each meeting of stockholders at which Directors are to be elected, the
Company shall notify each Stockholder that is then entitled to designate
Directors pursuant to Section 2.1(b) of (i) the aggregate number of Directors
to be elected at the meeting, (ii) such Stockholder's Applicable Percentage as
of the record date for such meeting and (iii) the number of Directors such
Stockholder is entitled to designate (calculated based on such Stockholder's
Applicable Percentage as of the record date). Each Stockholder shall notify
the Company of the Directors designated by it pursuant to this Section on or
prior to the close of business on the later of (x) the 15th day following its
receipt of the Company's notice and (y) the 20th day prior to the Company's
distribution of such proxy statement or information statement.
(f) In the event that a vacancy is created at any time by the
death, disability, retirement, resignation or removal (with or without cause)
of any SPE Director, USI Director or Claridge Director, SPE, USI or the
Claridge Group, as the case may be, shall have the right to designate a
replacement Director to fill such vacancy and the Company agrees to use its
best efforts to cause such vacancy to be filled with the replacement Director
so designated. Upon the written request of SPE, USI or the Claridge Group,
each Stockholder shall vote (and cause each of its Affiliates to vote, if
applicable), or act by written consent with respect to, all Voting Shares
beneficially owned by it and otherwise take or cause to be taken all actions
necessary to remove any Director designated by such requesting party and to
elect any replacement Director designated as provided in the first sentence of
this Section 2.1(f). Unless all the Stockholders otherwise agree, no
Stockholder or any of its Affiliates shall take any action to cause the
removal of any SPE Director, USI Director, Claridge Director, Management
Director or Independent Director without cause, except (i) in the case of an
SPE Director, USI Director or Claridge Director, upon the written request of
the Stockholder which designated such Director, (ii) in the case of a
Management Director, if such individual shall cease to serve as one of the two
most senior executive officers of the Company, and (iii) as provided in
Section 2.1(g). For purposes of the preceding sentence, "cause" shall mean
the wilful and continuous failure of a Director to substantially perform such
Director's duties to the Company or the wilful engaging by a Director in gross
misconduct materially and demonstrably injurious to the Company.
(g) If, at any time, any of the Stockholders or any of their
respective Permitted Transferees shall Transfer Voting Shares and, upon
consummation of such Transfer, the Applicable Percentage of such Stockholder
is reduced such that the number of Directors such Stockholder is entitled to
designate pursuant to Section 2.1(b) and 2.1(c) is reduced by one or more
Directors, then:
(i) the number of SPE Directors, USI Directors and Claridge
Directors shall be recalculated by the Company in accordance with
Section 2.1(b) and 2.1(c) as of the consummation of such Transfer (and
after giving effect thereto);
(ii) to the extent that, after giving effect to the
recalculation described in clause (i), any of SPE, USI or the Claridge
Group is entitled to designate fewer Directors than the number of
Directors then serving as designees of such Stockholder(s), any such
Stockholder shall use its best efforts to cause Director(s) designated
by such Stockholder to resign from the Board as promptly as practicable
so that the number of Directors designated by such Stockholder does not
exceed the number of designees such Stockholder shall then be entitled
to designate based on such recalculation;
(iii) if a sufficient number of SPE Directors, USI
Directors or Claridge Directors, as the case may be, shall not have
resigned within 30 days of the event requiring such recalculation, each
Stockholder shall vote (and cause each of its Affiliates to vote, if
applicable), or act by written consent with respect to, all Voting
Shares beneficially owned by it and otherwise take or cause to be taken
all actions necessary to remove such excess number of Directors
designated by the Stockholder(s) whose designees have not resigned in
accordance with clause (ii);
(iv) upon the effectiveness of the resignation(s) or
removal(s) described in clauses (ii) and (iii), the Company shall cause
the Board (and each Stockholder shall use its best efforts to cause its
respective designees to the Board) to fill all vacancies created by such
resignation(s) or removal(s) (x) by appointing to the Board designees of
any Stockholder (including any Third Party Transferee described in
clause (ii) of Section 4.5(b)) who is entitled, as a result of the
recalculation described in clause (i), to designate more Directors than
the number of Directors then serving as designees of such Stockholder
and (y) to the extent vacancies remain after giving effect to clause
(x), by filling such remaining vacancies with Independent Directors
designated by the Nominating Committee pursuant to Section 2.1(i); and
(v) if the vacancies to the Board have not be filled in
accordance with clause (iv), each Stockholder shall vote (and cause each
of its Affiliates to vote, if applicable), or act by written consent
with respect to, all Voting Shares beneficially owned by it and
otherwise take or cause to be taken all actions necessary to fill all
vacancies as provided in clause (iv).
(h) The Company agrees not to take any action that would cause
the number of Directors constituting the entire Board to be other than 16 and
each Stockholder agrees to use its best efforts to cause the number of
Directors constituting the entire Board to be 16.
(i) In connection with each election of Directors, the Company
will use its best efforts to cause there to be nominated for election as
Directors, in accordance with the Company's procedures for the nomination of
Directors and to the extent permissible in accordance with applicable legal
requirements, (1) the two Management Directors who satisfy the criteria set
forth in Section 2.1(j), and (2) the number of Independent Directors required
to be nominated in accordance with Section 2.1(d). With respect to each
election held after the Closing, the Management Directors referred to in
clause (1) above and the Independent Directors referred to in clause (2) above
shall be designated by a nominating committee of the Board (the "Nominating
Committee") established to determine whether prospective nominees meet the
criteria set forth in Section 2.1(j) with respect to such Management Directors
and the criteria set forth in the following paragraph with respect to such
Independent Directors. The Company agrees to cause the Nominating Committee
to be comprised of four Directors, consisting of (x) two Independent Directors
designated by a majority of the Independent Directors and (y) one SPE Director
and one USI Director, provided if at any time there shall cease to be at least
one USI Director or one SPE Director, then the Nominating Committee shall
include two SPE Directors or two USI Directors, as the case may be, to the
extent SPE or USI, as applicable, then has two designees serving as Directors.
An Independent Director is a Director who, and each future
qualified nominee for election as an Independent Director shall be an
individual who:
(i) is free from any relationship that, in the opinion of
the Nominating Committee, would interfere with the exercise of
independent judgment as a member of the Board;
(ii) is not an Affiliate of the Company, SPE, USI or the
Claridge Group or a current or former officer of the Company or any of
its Subsidiaries or a current or former officer or director of SPE or
USI or any of their respective Subsidiaries;
(iii) does not, in addition to such individual's role as a
Director, also act on a regular basis as an individual or representative
of an organization serving as a professional advisor, legal counsel or
consultant to management of the Company or SPE, USI or the Claridge
Group or any of their respective Subsidiaries; and
(iv) does not represent, and is not a member of the
immediate family of, a Person who does not satisfy the requirements of
clauses (i), (ii) or (iii) above.
In the event that the Stockholders collectively have the right to
designate at least 13 of the members of the Board pursuant to Section 2.1, SPE
and USI agree that at least one of the individuals designated by each such
Stockholder to serve as a Director shall be an Independent Director, provided
that if one of such Stockholders shall be entitled to designate only one
Director, such Stockholder shall not be required to designate an Independent
Director and the other such Stockholder shall be required to designate two
Independent Directors (provided, further, that such designees shall qualify to
serve on the Audit Committee of the Board in accordance with the policies of
the New York Stock Exchange governing membership on audit committees).
(j) The two Management Directors referenced in clause (1) of
Section 2.1(i) shall be the two most senior executive officers of the Company,
provided that so long as Allen Karp shall be an executive officer of the
Company or any Affiliate thereof he shall be a Management Director even if he
is not one of the two most senior executive officers and, in such
circumstances, the Management Directors shall be the most senior executive
officer of the Company and Mr. Karp. If any Management Director shall cease
to satisfy the foregoing criteria, the Company shall cause such individual to
immediately resign as a Management Director, and upon such resignation, the
Company shall cause the Board (and each Stockholder shall use its best efforts
to cause its respective designees to the Board) to fill the vacancy created
thereby in accordance with Section 2.1.
(k) If, on the three-year anniversary of the Closing, any
Stockholder shall then be entitled to designate seven Directors rather than
six Directors in accordance with the second proviso contained in clause (i) of
Section 2.1(c), at the request of such Stockholder, the Company shall take
such action as may be necessary to cause one of the Independent Directors to
resign from the Board so as to enable such Stockholder to designate a seventh
Director, and if an Independent Director has not so resigned within 30 days of
such Stockholder's request to the Company, at the request of such Stockholder,
each other Stockholder shall vote (and cause each of its Affiliates to vote,
if applicable), or act by written consent with respect to, all Voting Shares
beneficially owned by it and otherwise take or cause to be taken all actions
necessary to remove the Independent Director designated by the requesting
Stockholder.
(l) If the number of SPE Directors or USI Directors shall have
been limited to six by clause (i) of Section 2.1(c) and as a result thereof
one of the USI Directors or the SPE Directors shall be an Independent Director
in accordance with clauses (ii) or (iii), as the case may be, of Section
2.1(c), and if the number of SPE Directors or USI Directors shall cease to be
limited to six on the three-year anniversary of Closing in accordance with the
second proviso contained in clause (i) of Section 2.1(c), at the request of
USI or SPE, as the case may be, the Company shall take such action as may be
necessary to cause the Independent Director designated by USI or SPE, as the
case may be, to resign and, if such Independent Director has not resigned
within 30 days of such Stockholder's request to the Company, at the request of
such Stockholder, each other Stockholder shall vote (and cause each of its
Affiliates to vote, if applicable), or act by written consent with respect to,
all Voting Shares beneficially owned by it and otherwise take or cause to be
taken all actions necessary to remove the Independent Director designated by
USI or SPE, as the case may be.
SECTION 2.2 Board Procedures. The Company shall cause
the following procedures to be followed:
(a) Meetings. The Board shall hold at least six regularly
scheduled meetings per year at such times as may from time to time be fixed by
resolution of the Board and no notice (other than the resolution) need be
given as to a regularly scheduled meeting. Special meetings of the Board may
be held at any time upon the call of the Chairman of the Board or at least two
Directors, following notice to each Director which shall be given orally or by
personal delivery, facsimile or reliable overnight courier at least three
Business Days before the meeting. Reasonable efforts shall be made to ensure
that each Director actually receives timely notice of any such special
meeting. An annual meeting of the Board shall be held without notice
immediately following the annual meeting of the stockholders of the Company.
(b) Agenda. A reasonably detailed agenda shall be supplied to
each Director reasonably in advance of each meeting of the Board, together
with other appropriate documentation with respect to agenda items calling for
Board action, to inform adequately the Directors regarding matters to come
before the Board. Any Director wishing to place a matter on the agenda for
any meeting of the Board may do so by communicating with the Chairman of the
Board sufficiently in advance of the meeting of the Board so as to permit
timely dissemination to all Directors of information with respect to the
agenda items.
(c) Powers of the Board. The Board shall reserve to itself the
power to approve transactions that are of a type customarily subject to board
approval as a matter of good corporate practice for public companies in the
United States. The Board shall not delegate to any committee of the Board or
to any officers of the Company the authority to conduct business in any manner
that would circumvent, or deprive SPE, USI or the Claridge Group or any of
their respective Permitted Transferees of, any of their respective rights set
forth in this Agreement. In no event will the Board establish an executive
committee, or any committee performing functions comparable to those
customarily performed by executive committees of boards of directors of public
companies in the United States, without the prior written consent of SPE and
USI. All committees of the Board will report to and be accountable to the
Board. The Board shall establish, in cooperation with the Chief Executive
Officer of the Company, a schedule for Board review or action, as appropriate,
with respect to matters which shall typically come before the Board,
including, but not limited to (i) annual and multi-year business plans
(including capital expenditures and operating budgets), (ii) major
collaborative arrangements with third parties not in the ordinary and normal
course of business as theretofore conducted and (iii) appointments of
officers.
SECTION 2.3 Committees. Except for the Nominating
Committee and except for an audit committee and compensation committee
performing functions comparable to those
customarily performed by audit committees and compensation committees of
boards of directors of public companies in the United States, the Company
shall cause the Board not to establish any committees without the prior
written consent of SPE and USI. Except for the Nominating Committee, the
members of which shall be determined in accordance with Section 2.1(i) above,
the Company shall cause each committee of the Board to, subject to any
requirements under the Exchange Act or applicable to securities, or the
issuance of securities, traded on the principal United States exchange or
market on which the Common Stock shall be listed or trade, include (x) at the
request of SPE, a number of SPE Directors (rounded to the nearest whole
number, but in no event less than one such SPE Director) equivalent to the
proportion of SPE Directors then serving on the whole Board multiplied by the
total number of members comprising such committee and (y) at the request of
USI, a number of USI Directors (rounded to the nearest whole number, but in no
event less than one such USI Director) equivalent to the proportion of USI
Directors then serving on the whole Board multiplied by the total number of
members comprising such committee. Subject to the rights of SPE and USI
pursuant to clause (xi) of Section 3.1, the Company shall cause matters
relating to the hiring, termination or compensation of executive officers of
the Company (including any entering into, amendment, termination or renewal
(including option renewals) of any agreement with an executive officer of the
Company) to be approved by the compensation committee of the Board. The
Company shall not permit any Management Director to serve on the audit or
compensation committee of the Board. Subject to the foregoing, the Board
shall have the power at any time to fill vacancies in, to change the
membership of or to discharge any committee.
SECTION 2.4 Voting on Certain Matters.
(a) In connection with any vote
or action by written consent of the Board relating to a Merger, Dissolution or
Certificate Amendment or the amendment or repeal of any provision of, or the
addition of any provision to, the Bylaws (a "Bylaw Amendment"), each
Stockholder agrees to use its best efforts to cause the Director(s) designated
by such Stockholder, to vote against (and not consent to) such Merger,
Dissolution, Certificate Amendment or Bylaw Amendment at the request of SPE or
USI, provided, that at the time SPE or USI delivers such request its
Applicable Percentage exceeds the Minimum Percentage.
(b) In connection with any vote or action by written consent of
the stockholders of the Company relating to a Merger, Dissolution, Certificate
Amendment or Bylaw Amendment, each Stockholder agrees (and agrees to cause
each of its Affiliates, if applicable), with respect to any Voting Shares
beneficially owned by it, to vote against (and not consent to) such Merger,
Dissolution, Certificate Amendment or Bylaw Amendment at the request of SPE or
USI (which, in the case of a vote at a meeting of stockholders, shall be
delivered to such Stockholder no later than fifteen Business Days prior to the
applicable meeting), provided, that at the time SPE or USI delivers such
request its Applicable Percentage exceeds the Minimum Percentage.
SECTION 2.5 Irrevocable Proxy.
(a) At least ten Business Days prior to any meeting of
stockholders (or three Business Days following receipt of proxy solicitation
materials from the Company, if later), each Stockholder agrees to deliver a
duly executed irrevocable proxy to the Company (and a copy of such proxy to
each other Stockholder by such day) specifying how such Stockholder intends to
vote as to each matter scheduled to be brought before the meeting. Such proxy
shall appoint the Chief Executive Officer of the Company and Secretary of the
Company as such Stockholder's true and lawful proxies and attorneys-in-fact as
to the matters to be voted at the meeting, shall state that it is irrevocable
and shall be voted in accordance with the provisions of this Agreement. Such
proxy shall also state that it is not effective until the date of the
applicable meeting of stockholders and that its effectiveness is contingent
upon the Company not having received, prior to the third Business Day before
the meeting, a notification from any other Stockholder asserting such other
Stockholder's good faith belief that such proxy does not comply with the
provisions of this Agreement.
(b) In connection with any proposed action by written consent of
the stockholders, each Stockholder agrees that it shall execute and deliver
its written consent to the Company (with simultaneous delivery of a copy
thereof to each other Stockholder). Such consent shall state that it is not
effective until a specified date (which date shall be at least ten Business
Days following delivery to the Company), and that its effectiveness is
contingent upon the Company not having received prior to the third Business
Day before such specified date a notification from any other Stockholder
asserting such other Stockholder's good faith belief that such consent does
not comply with the provisions of this Agreement. Any written consent
delivered by any Stockholder shall be made in accordance with the terms of
this Agreement.
(c) If any Stockholder shall fail to deliver a proxy to the
Company and the other Stockholders by the date described in Section 2.5(a) or
a consent to the Company and the other Stockholders by the date described in
Section 2.5(b) or if such proxy (or consent) shall not comply with the
provisions of this Agreement, or shall be voted in a manner that is contrary
to this Agreement, the irrevocable proxies set forth in Section 2.5(d) below
shall thereupon be irrevocably activated with respect to the matters to be
brought before the meeting or which are subject to the consent, as the case
may be.
(d) In order to secure each Stockholder's obligation to vote (or
to act or not act by written consent with respect to) all Voting Shares
beneficially owned by it in accordance with the provisions of this Article II
and Sections 3.2 and 8.11, each Stockholder hereby appoints each other
Stockholder as its true and lawful proxy and attorney-in-fact, with full power
of substitution, to vote (or to act or not act by written consent with respect
to) all of the Voting Shares beneficially owned by it in accordance with the
terms of this Agreement and to take all such other actions as are necessary to
enforce the rights of such other Stockholders under this Article II and
Sections 3.2 and 8.11 in the event the Stockholder fails to comply with any
provision of this Agreement granting such other Stockholder rights under this
Article II and Sections 3.2 and 8.11. The proxies and powers granted by each
Stockholder pursuant to this Section 2.5 are irrevocable and are coupled with
an interest and are given to secure the performance of the Stockholders'
obligations under this Article II and Sections 3.2 and 8.11. Such proxies and
powers shall survive the bankruptcy, insolvency, dissolution or liquidation of
a Stockholder. Notwithstanding the foregoing, upon termination of the rights
and obligations of a Stockholder pursuant to Section 8.2 any proxy granted by
such Stockholder or granted to such Stockholder pursuant to this Section 2.5
shall terminate.
SECTION 2.6 Certain Restrictions .
Without the prior written consent of SPE and
USI, each Stockholder agrees not to, and to cause each of its Affiliates not
to, directly or indirectly, alone or in concert with others:
(a) seek election to, seek to place a representative on, or seek
the removal (other than for cause) of any member of, the Board, except
pursuant to Section 2.1;
(b) deposit any Common Shares in a voting trust or subject any
Common Shares to any arrangement or agreement with respect to the voting of
such Common Shares (other than this Agreement or a voting trust, arrangement
or agreement solely among members of the Claridge Group);
(c) engage in any "solicitation" (within the meaning of Rule 14a-
1 under the Exchange Act) of proxies or consents (whether or not relating to
the election or removal of directors) with respect to the Company, or become a
"participant" in any "election contest" (within the meaning of Rule 14a-11
under the Exchange Act) or, except as contemplated by this Agreement, execute
any written consent in lieu of a meeting of the holders of any class of Common
Shares, provided that the foregoing shall not prohibit any such action (i) in
response to a solicitation conducted by any Person that is neither a
Stockholder nor an Affiliate thereof or (ii) to facilitate a tender offer or
exchange offer by such Stockholder in response to a bona fide tender or
exchange offer to acquire more than 20% of the Voting Shares made by any
Person other than such Stockholder or any Affiliate thereof, in each case so
long as such Stockholder otherwise remains in compliance with its obligations
under this Agreement in all material respects; or
(d) form, join or in any way participate in or assist in the
formation of a Group with respect to any Common Shares, other than any such
Group consisting exclusively of Stockholders, any of their Affiliates or
Permitted Transferees.
SECTION 2.7 Cooperation.
Each Stockholder shall vote (or act or not act by written
consent with respect to) all of its Voting Shares and shall take all other
necessary or desirable actions within its control (including attending all
meetings in person or by proxy for purposes of obtaining a quorum, executing
all written consents in lieu of meetings and voting to remove members of the
Board, as applicable), and the Company shall take all necessary and desirable
actions within its control (including calling special Board and stockholder
meetings, as applicable), to effectuate the provisions of this Article II.
ARTICLE III
CONSENT RIGHTS
SECTION 3.1 Consent for Certain Actions.
(a) The Company shall not,
and shall cause its Subsidiaries not to, directly or indirectly, take any of
the following actions without the prior written consent of (i) SPE, if its
Applicable Percentage equals or exceeds the Minimum Percentage, and (ii) USI,
if its Applicable Percentage equals or exceeds the Minimum Percentage:
(i) in the case of the Company or any Subsidiary of the
Company that is a "significant subsidiary" as defined in Rule 405
under the Securities Act, voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the United
States Code as now constituted or hereafter amended, or any other
federal, state or foreign bankruptcy, insolvency or similar law;
(ii) merge or consolidate with, purchase or otherwise
acquire any other Person (the "Target") or all or substantially
all of the business or any assets of another Person in one or a
series of related transactions if (x) the book value of the assets
of the Target (in the case of an acquisition of a Target) or of
the business and/or assets to be acquired as reflected on the
books of the seller of such business or assets, as the case may
be, as of the end of such Person's most recently ended fiscal
quarter preceding the earlier of the date the Company or a
Subsidiary thereof enters into definitive agreements in respect of
such transaction or publicly announces such transaction (the
"Determination Date") (based on a Determination of the Independent
Directors) would exceed 20% of the book value of the Company's
total assets as of the end of the Company's most recently ended
fiscal quarter preceding the Determination Date or (y) the Fair
Market Value (based on a Determination of the Independent
Directors) of the consideration paid or payable for the Target,
the business and/or assets to be acquired as of the Determination
Date (including, with respect to any asset acquisition, the value
of any Debt assumed or to be assumed in such transaction) would
exceed 20% of the Company's Market Capitalization as of the
Determination Date or (z) EBITDA of the Target and/or of the
business and/or the Cash Flow of the assets to be acquired as
reflected on the books of the Target and/or such seller, as the
case may be, for its last four fiscal quarters preceding the
Determination Date exceeds 20% of the Company's EBITDA for the
Company's last four fiscal quarters preceding the Determination
Date;
(iii) sell, lease, transfer or otherwise dispose of
(including by merger, dividend or other distribution or other
transaction involving one or more stockholders of the Company,
formation of a joint venture or otherwise) any other Person,
business or assets in one or a series of related transactions if
(x) the book value of such Person, business and/or assets exceeds
15% of the book value of the Company's total assets as of the end
of the Company's most recent fiscal quarter preceding the
Determination Date or (y) the Fair Market Value (based on a
Determination of the Independent Directors) of the consideration
received or receivable for such Person, the business and/or assets
(including, with respect to any asset acquisition, the value of
any Debt assumed or to be assumed in such transaction) exceeds 15%
of the Company's Market Capitalization as of the Determination
Date or (z) the EBITDA of such Person and/or business and/or the
Cash Flow of such assets for the Company's last four fiscal
quarters preceding the Determination Date exceeds 15% of the
Company's EBITDA for such four fiscal quarters;
(iv) enter into, commence or engage in any business other
than the exhibition of films (including as a result of an
acquisition or pursuant to a joint venture) except as otherwise
provided for in the Five-Year Plan and except for matters
customarily related to the exhibition of films in respect of which
the Company and its Subsidiaries do not expend more than an
aggregate of $5 million of cash during any calendar year;
(v) enter into any contract with or otherwise engage in or
become obligated to engage in any transaction or series of related
transactions with SPE or USI or any of their respective Affiliates
involving more than $1 million per calendar year; provided,
however, that (A) all such contracts and transactions (whether or
not exceeding the $1 million limitation) shall be on an arms'
length basis and (B) the $1 million limitation shall not apply to
transactions that occur in the ordinary course of the Company's
business, including film booking arrangements;
(vi) increase or decrease the number of Directors that
comprise the entire Board or that constitute a quorum for purposes
of convening a meeting of the Board;
(vii) issue or sell (including by merger or otherwise) any
Voting Shares or Voting Share Equivalents (other than pursuant to
the Equity Offering or upon conversion of the Non-Voting Common
Stock) that would, upon closing of such issuance or sale (A)
together with the aggregate amount of all such issuances or sales
during the 12-month period preceding the proposed date of issuance
or sale, increase the number of Voting Shares by more than 10% of
the average number of Voting Shares outstanding as of the last day
of each of the 12 full calendar months preceding the proposed date
of issuance or sale or (B) together with the aggregate amount of
all such issuances or sales during the 24-month period preceding
the proposed date of issuance or sale, increase the number of
Voting Shares by more than 15% of the average number of Voting
Shares outstanding as of the last day of each of the 24 full
calendar months preceding the proposed date of issuance or sale;
provided, (1) in determining whether SPE or USI shall have an
Article III Consent Right in respect of issuances or sales
described in clauses (A) or (B), issuances or sales pursuant to
the Equity Offering shall be disregarded in calculating the
aggregate amount of issuances or sales during the applicable
period (but shall not be disregarded in calculating the
outstanding Voting Shares as of any date) and (2) the issuance or
sale of Voting Shares upon the exercise, conversion or exchange of
Voting Share Equivalents shall not be an issuance or sale that is
subject to this clause (vii) but the issuance or sale of Voting
Share Equivalents shall be subject to this clause (vii) in
accordance with Section 1.4;
(viii) pay, declare or set aside any sums for the payment
of any cash dividends on, or make any other cash distributions on
(including by merger or otherwise), any shares of Capital Stock,
or any warrants, options, rights or securities convertible into,
exchangeable or exercisable for, Capital Stock (excluding any such
payment or distribution made to the Company or any of its
Subsidiaries), if the amount thereof, together with the aggregate
amount of any other items referred in this clause (viii) and
clause (ix) below, during the prior 12 months, exceeds 5% of the
Company's Market Capitalization at the time of such action;
provided that the payment of any such dividend or distribution
shall be permitted to be made within 60 days of its declaration if
such declaration was not subject to an Article III Consent Right;
(ix) redeem, purchase or otherwise acquire for cash
(including by merger or otherwise), any shares of Capital Stock or
any warrants, options and rights or securities convertible into,
exchangeable or exercisable for, Capital Stock, or redeem or
purchase for cash or make any cash payments with respect to any
stock appreciation rights or phantom stock plans (excluding any
such redemption, purchase or payment from the Company or any of
its Subsidiaries), if the amount thereof, together with the
aggregate amount of any other items referred to in clause (viii)
above and this clause (ix), during the prior 12 months, exceed 5%
of the greater of (x) the Company's Market Capitalization at the
time of such payment and (y) the Company's Market Capitalization
at the time it commits to make such redemption, purchase or
payment;
(x) incur, assume or otherwise become obligated with
respect to, any Debt (x) if immediately after giving effect to the
incurrence of such Debt and the receipt and application of the
proceeds thereof, the ratio of the Company's consolidated Debt to
EBITDA for the four full fiscal quarters next preceding the
incurrence of such Debt, calculated on a pro forma basis as if
such Debt had been incurred and the proceeds thereof had been
received and so applied at the beginning of the four full fiscal
quarters, would be greater than the Maximum Debt Ratio or (y) in
excess of $100,000,000 in aggregate principal amount in one or a
series of related transactions, provided that this clause (y)
shall not apply to (1) Debt owed by the Company to any of its
Subsidiaries or Debt owed by a Subsidiary of the Company to the
Company or to another Subsidiary of the Company, (2) Debt
outstanding immediately following the Closing and (3) Debt
incurred to renew, extend, refinance or refund any outstanding
Debt permitted in clauses (1) or (2) and any Debt incurred in
connection with subsequent refinancings of such Debt
(collectively, "Permitted Debt"), provided, further, that any Debt
described in clause (3) shall not be Permitted Debt if the amount
of such Debt shall exceed the amount of the outstanding Debt that
is being renewed, extended, refinanced or refunded.
(xi) hire, or renew the employment contract (including
option renewals) of, either the Chief Executive Officer of the
Company or the second most senior executive officer of the
Company;
(xii) enter into any arrangement (other than this Agreement
or pursuant to this Agreement) with any holder of Voting Shares in
such holder's capacity as a holder of Voting Shares which subjects
actions taken by the Company or any Subsidiary to the prior
approval of any Person, or issue or sell any series or class of
Capital Stock of the Company having either (x) more than one vote
per share or (y) a class vote on any matter, except to the extent
such class vote is required by the DGCL or to the extent that the
holders of any series of preferred stock may have the right,
voting separately as a class, to elect a number of Directors upon
the occurrence of a default in payment of dividend or redemption
price;
(xiii) adopt any stockholder rights plan, or any other plan
or arrangement that could reasonably be expected to disadvantage
any stockholder on the basis of the size of its shareholding, such
that any holder of Common Shares or any of its Affiliates would be
adversely affected; or
(xiv) adopt a Bylaw Amendment by action of the Board.
Notwithstanding anything to the contrary contained in this Section 3.1(a),
neither SPE nor USI shall have an Article III Consent Right to the extent such
action requires the approval of holders of Common Stock under the DGCL or the
Certificate.
(b) If any of the following shall occur and be continuing:
(i) the Company's actual EBITDA in each of the two most
recently ended fiscal years is less than 80% of Targeted EBITDA
for such year;
(ii) at the end of the most recent fiscal quarter, the
Company's ratio of consolidated Debt as reported in its financial
statements to EBITDA for the last four fiscal quarters exceeds the
Maximum Debt Ratio, or
(iii) at the end of the most recent fiscal quarter, the
Company's EBITDA for the last four fiscal quarters is less than
8.5% of the Company's consolidated total assets as reported in its
financial statements (excluding intangible assets and construction
work-in-process);
the Company (x) shall submit to SPE, if its Applicable Percentage equals or
exceeds the Minimum Percentage, and USI, if its Applicable Percentage equals
or exceeds the Minimum Percentage, for approval a new plan for the Company
covering a new five-year term commencing with the first day of the next fiscal
year of the Company (the "New Five-Year Plan") which shall replace the Five-
Year Plan and which shall be consistent in form and contain a corresponding
level of detail with the Initial Five-Year Plan and (y) pending the
effectiveness of the New Five-Year Plan, shall submit to SPE, if its
Applicable Percentage equals or exceeds the Minimum Percentage, and USI, if
its Applicable Percentage equals or exceeds the Minimum Percentage, for
approval no later than the last Business Day of the month immediately
preceding the end of the Company's fiscal year, annual operating and capital
budgets for the next fiscal year. The Company and any such Stockholder agree
to cooperate in good faith to adopt the New Five-Year Plan and such budgets as
promptly as practicable.
(c) If any of the conditions specified in paragraph (b)(i)
through (iii) above shall have occurred, then until the Company's actual
EBITDA for each of two consecutive fiscal years shall equal or exceed Targeted
EBITDA for each of such years as reflected in the New Five-Year Plan, the
Company shall not, and shall cause its Subsidiaries not to, directly or
indirectly, take any of the following actions without the prior written
consent of SPE (so long as its Applicable Percentage equals or exceeds the
Minimum Percentage) and USI (so long as its Applicable Percentage equals or
exceeds the Minimum Percentage): (w) make, or agree to make, any capital
expenditures not specifically identified in the New Five-Year Plan in excess
of $5,000,000 per expenditure or series of related expenditures or $10,000,000
in the aggregate during any 12-month period, (x) incur an aggregate amount of
Debt in excess of $25,000,000, excluding Debt specifically identified in the
New Five-Year Plan and Permitted Debt, (y) create or incur any lien on the
assets of the Company or any of its Subsidiaries to secure unsecured Debt of
the Company or any of its Subsidiaries and (z) except for issuances or sales
of Excluded Securities, authorize the issuance of, or issue or sell, any
additional shares of, or any new series or class of, Capital Stock of the
Company.
(d) So long as any Stockholder shall have an Article III Consent
Right, at least six months prior to the expiration of the period covered by
any Five-Year Plan, the Company shall in good faith prepare a Five-Year Plan
for the subsequent five year period, which shall be subject to prior approval
by the Board and which shall be consistent in form and contain a corresponding
level of detail with the Initial Five-Year Plan. The provisions of Sections
3.1(a), (b) and (c) shall be applicable to all Five-Year Plans or New Five-
Year Plans, whether adopted prior to, on or after the five-year anniversary of
the Closing.
(e) Any action or attempted action of the Company or any
Subsidiary of the Company in violation of any provision of Section 3.1 shall
be void.
(f) The Company agrees to notify the Trust when practicable of
any proposed (A) corporate reorganization, (B) share capital reorganization,
(C) transaction involving the exchange of Capital Stock of the Company for
other equity of the Company or any other corporation or (D) merger with
another corporation (any one of such proposals, a "Reorganization Proposal")
which would, in the opinion of counsel for the Company, constitute a
disposition of Common Stock pursuant to the Income Tax Act (Canada) or any
successor legislation, for Canadian resident holders thereof in respect of
which any resulting gain would be taxable pursuant to such Act. In the event
of any such Reorganization Proposal, the Company shall assist the Claridge
Group, at the request of the Claridge Group and at its expense, with an
application for a remission order pursuant to the Financial Administration Act
(Canada), provided that counsel to the Company considers that the Department
of Finance (Canada) is likely to issue a remission order providing fiscal
relief to Canadian resident stockholders of the Company.
(g) In connection with the grant of any consent relating to a
matter described in clauses (ii) or (iii) of Section 3.1(a), the Company and
each Stockholder who then has an Article III Consent Right agree to negotiate
in good faith appropriate adjustments to Targeted EBITDA. If after 21 days
following the grant of such consent, the Company and the Stockholders have not
agreed upon appropriate adjustments, then each of SPE and USI shall have the
opportunity to submit its reasonable estimate of the appropriate adjustments
to Targeted EBITDA to any "Big Six" accounting firm mutually selected by SPE
and USI that is not the principal outside accounting firm for SPE, CO or USI
within the 10 days (the "Submission Period") following the end of such 21-day
period. If the parties cannot agree upon such an accounting firm, the
principal outside accounting firms of SPE and USI shall mutually select
another "Big Six" accounting firm to act hereunder.
Along with their proposed adjustments to Targeted EBITDA, the
Company and each Stockholder who then has an Article III Consent Right may
submit to the accounting firm such written memoranda, arguments, briefs and
other evidence in support of their respective adjustments as they see fit,
copies of which shall also be provided to the other parties hereto. Within 10
days following the expiration of the Submission Period, the accounting firm
shall make a determination as to which of the adjustments submitted by the
parties is the most reasonable estimate of the impact on the Company's EBITDA
of the matter which was subject to consent (the adjustment so chosen, the
"Final Adjustment"). The accounting firm shall be limited to selecting one of
the adjustments submitted by the parties as the Final Adjustment and shall
have no authority to alter in any way any adjustment so submitted.
The Final Adjustment shall be deemed to be approved by all parties
to this Agreement for all purposes of this Agreement. If the accounting firm
shall select the adjustment submitted by USI, SPE shall bear all fees and
expenses of the accounting firm, including the fees and expenses of any
experts hired by the accounting firm to assist it in rendering a decision
hereunder. If the accounting firm shall select the adjustment submitted by
SPE, USI shall bear all such fees and expenses.
Following the determination of the Final Adjustment, the Company
shall cause the Final Adjustment to be submitted to the Board for its
approval. The Company shall use its best efforts to cause the Final
Adjustment to be adopted by the Board, and SPE and USI covenant and agree with
each other to use their respective best efforts to cause the Company to
fulfill the Company's obligations under this Section 3.1(g).
SECTION 3.2 Certain Certificate Provisions.
So long as the Applicable
Percentage of SPE or USI equals or exceeds the Minimum Percentage, (i) the
Company agrees that the Certificate will provide that effecting a Merger or
Dissolution or adopting a Certificate Amendment or adopting a Bylaw Amendment
by action of the stockholders of the Company shall require the affirmative
vote or written consent of the holders of at least 80% of the outstanding
Common Stock, provided that in the case of any of the foregoing matters (other
than adopting a Bylaw Amendment by action of the stockholders) such 80%
stockholder approval requirement shall not be applicable if 14 members of the
Board shall have approved such matter, provided, further, that in the case of
any Merger that is approved by 14 members of the Board, such Merger shall
require the affirmative vote or written consent of the holders of at least 66
2/3% of the outstanding Common Stock and (ii) no Stockholder shall vote in
favor of, consent in writing to, or take any other action to effect an
amendment or repeal of such provisions of the Certificate.
SECTION 3.3 Arbitration .
(a) At least seven Business Days prior to the Company or any
Subsidiary thereof (i) merging or consolidating with, or purchasing or
otherwise acquiring, any other entity or assets, except in the ordinary course
of business consistent with past practice, (ii) selling, leasing, transferring
or otherwise disposing of any assets, except in the ordinary course of
business consistent with past practice, (iii) issuing or selling any Voting
Shares or new series or class of Capital Stock (other than Excluded
Securities), (iv) incurring or assuming any Debt, other than incurrences of
Debt in the ordinary course of business consistent with past practice that
could not reasonably be expected to trigger an Article III Consent Right, or
(v) taking any action described in clauses (i), (iv), (v), (vi), (viii), (ix),
(xi), (xii), (xiii) or (xiv) of Section 3.1(a), the Company shall provide SPE
and USI with a notice that describes the material terms of such proposed
action and indicates whether the Company reasonably believes in good faith
that any Article III Consent Right will be triggered by such action. The
Company shall also provide such Stockholders with all information reasonably
relevant and necessary to determine whether an Article III Consent Right will
be triggered by such action. The foregoing notification requirement will be
satisfied if the Company provides the requisite information to any SPE
Director, in the case of SPE, and any USI Director, in the case of USI. If
either SPE or USI disagrees with the Company's conclusion and reasonably
believes in good faith that such Stockholder has an Article III Consent Right
in connection with such action, such Stockholder shall provide the Company
with written notice of its disagreement by the close of business on the sixth
Business Day following receipt of the Company's notice.
(b) In addition, if either SPE or USI reasonably believes in good
faith that the Company intends to take any action in respect of which the
Company has not delivered a notice described in Section 3.3(a) and that such
Stockholder has an Article III Consent Right in connection with such action,
such Stockholder may provide the Company with written notice of such belief.
By the close of business on the sixth Business Day following receipt of such
Stockholder's notice and prior to taking any such action, the Company shall
provide such Stockholder with a notice that indicates whether the Company
reasonably believes in good faith that such action would trigger an Article
III Consent Right and with all information reasonably relevant and necessary
to determine whether an Article III Consent Right will be triggered by such
action.
(c) If within five Business Days following the Company's receipt
of a notice described in the last sentence of Section 3.3(a) or a
Stockholder's receipt of a notice described in the second sentence of Section
3.3(b), as the case may be, the Company and such Stockholder cannot reach an
agreement as to whether an Article III Consent Right is triggered in
connection with the proposed action, the issue shall be submitted for
arbitration by the Company and the objecting Stockholder(s) in accordance with
the Arbitration Agreement, a form of which is attached Exhibit B (the
"Arbitration Agreement"). The scope of the dispute to be resolved by the
arbitrator thereunder (the "Arbitrator") in connection with any such dispute
is limited to whether, under the terms of this Agreement, an Article III
Consent Right is triggered in connection with the proposed action.
(d) Prior to the Closing Date, SPE, USI, the members of the
Claridge Group and the Company agree to cooperate in good faith in selecting
the Arbitrator, who shall be reasonably acceptable to each such party, and
agree to execute and deliver the Arbitration Agreement at the Closing. If the
parties cannot so select the Arbitrator by such date, SPE, USI and the
Independent Directors shall each designate an individual who qualifies to
serve as the Arbitrator under the Arbitrator Agreement and the three such
individuals shall jointly select to Arbitrator.
SECTION 3.4 Approval of Disinterested Directors. (a) If the
Applicable Percentage of SPE equals or exceeds the Minimum Percentage, neither
SPE nor any of its Affiliates shall enter into any contract with the Company
or any Subsidiary thereof, nor shall the Company otherwise engage in or become
obligated to engage in any transaction or series of related transactions with
SPE and/or its Affiliates, in either case involving more than $1 million per
calendar year, unless such contract or transaction shall have been approved by
a majority of the Disinterested Directors following disclosure of the material
facts of the contract or transaction to the Disinterested Directors, provided,
however, that the foregoing shall not apply to contracts or transactions that
occur in the ordinary course of the Company's business, including film booking
arrangements, or to any Transactions contemplated by the Documents.
(b) If the Applicable Percentage of USI equals or exceeds the
Minimum Percentage, neither USI nor any of its Affiliates shall enter into any
contract with the Company or any Subsidiary thereof, nor shall the Company
otherwise engage in or become obligated to engage in any transaction or series
of related transactions with USI and/or its Affiliates, in either case
involving more than $1 million per calendar year, unless such contract or
transaction shall have been approved by a majority of the Disinterested
Directors following disclosure of the material facts of the contract or
transaction to the Disinterested Directors, provided, however, that the
foregoing shall not apply to contracts or transactions that occur in the
ordinary course of the Company's business, including film booking
arrangements, or to any Transactions contemplated by the Documents.
SECTION 3.5 Additional Shares. Notwithstanding
anything to the contrary in Section
3.1, without the prior written consent of USI, the Company agrees that it
shall not issue or sell any Common Shares or any Voting Share Equivalents
(other than Excluded Securities) at or after the Closing (other than pursuant
to the Amalgamation or the USI Subscription Agreement) unless USI or its
designee shall be issued Additional Shares (as defined in the USI Subscription
Agreement) to the extent required by, and in accordance with, the terms of
Section 4.6 of such agreement.
ARTICLE IV
TRANSFER OF COMMON SHARES
SECTION 4.1 Restrictions on Transfer during Six-Months
Following Closing . Without the consent of a majority of the
Independent Directors, during the period commencing on the Closing and ending
on the six-month anniversary thereof, each of SPE and USI agrees not to, and
to cause its respective Permitted Transferees not to, Transfer in privately-
negotiated transactions more than 20% of such Stockholder's Initial Interest,
provided, that the foregoing shall not be applicable to Transfers (i) between
such Stockholder and its Permitted Transferees, (ii) to another Stockholder or
its Permitted Transferees, (iii) pursuant to a merger or consolidation in
which the Company is a constituent corporation or (iv) pursuant to a bona fide
third party tender offer or exchange offer which was not induced directly or
indirectly by such Stockholder or any of its Affiliates.
SECTION 4.2 Tag-Along for All Stockholders.
(a) Subject to prior
compliance with Section 4.4, neither SPE nor USI nor any of their respective
Affiliates shall be permitted to Transfer, individually or collectively, an
aggregate of more than 50% of the then outstanding Common Shares in one or a
series of related transactions to a Third Party Transferee (or to one or more
Third Party Transferees constituting a Group) (a "Significant Sale") unless
each stockholder of the Company has the right to participate in the
Significant Sale on the same basis as the proposed transferor(s) (all such
proposed transferors, collectively the "Significant Sale Initiator"). If the
Significant Sale Initiator desires to effect a Significant Sale, it shall give
not less than 20 days prior written notice of such intended Transfer to each
Stockholder and the Company. Such notice (the "Significant Sale Notice")
shall set forth the terms and conditions of such proposed Significant Sale,
including the name of the proposed transferee, the number of shares of Common
Stock (the "Significant Sale Shares") proposed to be Transferred by the
Significant Sale Initiator (specifying the number of shares of Common Stock
for each proposed transferor, if more than one), the purchase price per Share
proposed to be paid therefor and the payment terms and other material terms of
the proposed Transfer.
(b) Within 10 days after delivery of the Significant Sale Notice
to the Company, the Independent Directors shall review the terms of the
proposed Significant Sale and, subject to compliance with applicable law and
stock exchange requirements, establish procedures to ensure that each
stockholder of the Company (including each Stockholder which is not a
Significant Sale Initiator) shall have the opportunity and right to sell to
the proposed transferee (upon the same terms and conditions as the Significant
Sale Initiator) up to that number of Common Shares owned of record by such
stockholder as shall equal the product of (x) a fraction, the numerator of
which is the number of Significant Sale Shares and the denominator of which is
the aggregate number of Common Shares beneficially owned as of the date of the
Significant Sale Notice by the Significant Sale Initiator and its Permitted
Transferees (provided that if there shall be more than one proposed
transferor, the denominator shall be the aggregate number of Common Shares
beneficially owned as of such date by all the proposed transferors),
multiplied by (y) the number of Common Shares owned of record by such
stockholder as of the date of the Significant Sale Notice. The number of
Common Shares that a stockholder, including the Significant Sale Initiator,
may sell pursuant to this Section 4.2 shall be determined by multiplying the
maximum number of Common Shares that the proposed transferee of the
Significant Sale Shares is willing to purchase on the terms set forth in the
Significant Sale Notice by a fraction, the numerator of which is the number of
Common Shares that such stockholder proposes to sell hereunder and the
denominator of which is the aggregate number of Common Shares that all
stockholders exercising rights under this Section 4.2, including the
Significant Sale Initiator, propose to sell hereunder.
(c) No Transfer or Transfers constituting a Significant Sale
shall be effected absent compliance with this Section 4.2.
SECTION 4.3 Tag-Along for USI and Claridge Group.
(a) Subject to
prior compliance with Section 4.4, if SPE or any of its Affiliates shall
desire to Transfer an aggregate of more than 50% of SPE's Initial Interest to
any Person (including any Group), other than an SPE Permitted Transferee, in
one or a series of related transactions (a "Tag-Along Sale"), SPE shall give
not less than 20 days prior written notice of such intended Transfer to USI
and the Claridge Group (each, a "Tag-Along Offeree"). Such notice (the
"Tag-Along Notice") shall set forth the terms and conditions of such proposed
Transfer, including the name of the proposed transferee, the number of Common
Shares proposed to be Transferred (the "Tag-Along Shares"), the purchase price
per Share proposed to be paid therefor and the payment terms and type of
Transfer to be effectuated.
(b) Within 10 days after delivery of the Tag-Along Notice by SPE
to the Tag-Along Offerees, each Tag-Along Offeree shall, by written notice to
SPE, have the opportunity and right to sell to the transferee in such proposed
Transfer (upon the same terms and conditions as SPE) up to that number of
Common Shares beneficially owned by such Tag-Along Offeree as shall equal the
product of (x) a fraction, the numerator of which is the number of Tag-Along
Shares and the denominator of which is the aggregate number of Common Shares
beneficially owned as of the date of the Tag-Along Notice by SPE and its
Affiliates, multiplied by (y) the number of Common Shares beneficially owned
by such Tag-Along Offeree as of the date of the Tag-Along Notice, provided,
that in respect of any proposed Transfer to USI or a USI Permitted Transferee,
for purposes of this clause (y), the number of Common Shares beneficially
owned by the Claridge Group shall be reduced by the number of Common Shares
acquired (net of Transfers) by the Claridge Group after the Closing (other
than from the Company or other members of the Claridge Group). The number of
Common Shares that a Stockholder, including SPE, may sell pursuant to this
Section 4.3 shall be determined by multiplying the maximum number of Common
Shares that the proposed transferee of the Tag-Along Shares is willing to
purchase on the terms set forth in the Tag-Along Notice by a fraction, the
numerator of which is the number of Common Shares that such Stockholder
proposes to sell hereunder (subject to the maximum amount for each Stockholder
calculated pursuant to the preceding sentence) and the denominator of which is
the aggregate number of Common Shares that all Stockholders exercising rights
under this Section 4.3, including SPE, propose to sell hereunder.
(c) At the closing of any proposed Transfer in respect of which a
Tag-Along Notice has been delivered, each Stockholder electing to sell Common
Shares shall deliver, free and clear of all liens, to the proposed transferee
certificates evidencing the Common Shares to be sold thereto duly endorsed
with Transfer powers and shall receive in exchange therefore the consideration
to be paid by the proposed transferee in respect of such Common Shares as
described in the Tag-Along Notice.
(d) No Transfer or Transfers constituting a Tag-Along Sale shall
be effected absent compliance with this Section 4.3.
(e) This Section 4.3 shall not be applicable to any Transfer
which constitutes a Significant Sale with respect to which each stockholder of
the Company has the right to participate pursuant to Section 4.2.
SECTION 4.4 Right of First Refusal
(a) The following Transfers of Voting Shares
by SPE or USI or their respective Affiliates (the proposed transferor, the
"Transferring Party") will be subject to the right of first refusal provisions
of this Section 4.4:
(i) any Transfer in one or a series of related privately-
negotiated transactions or a public offering if (A) 5% or more of
the then outstanding Voting Shares are subject to the Transfer,
(B) any transferee, or any Group of which a transferee is a
member, would, following such Transfer, beneficially own 5% or
more of the outstanding Voting Shares (except, in the case of any
public offering, the limitation set forth in this clause (B) shall
not be applicable if the Transferring Party has taken all
reasonable steps to assure that such limitation shall have been
satisfied) or (C) in the case of any Transfer by SPE or any of its
Affiliates, SPE's Applicable Percentage exceeds 25%;
(ii) any Transfer pursuant to a bona fide third party
tender offer or exchange offer;
(iii) any Transfer to the Company or to a Subsidiary of the
Company pursuant to a self-tender offer or otherwise; and
(iv) any Transfer in a Market Sale.
Notwithstanding the foregoing and subject to compliance with Section 4.5(a),
the provisions of this Section 4.4 shall not apply to any Transfer between SPE
or USI and any of their respective Permitted Transferees.
(b) Prior to effecting any Transfer described in Section 4.4(a),
the Transferring Party shall deliver a written notice (the "Offer Notice") to
USI, if the Transferring Party is SPE or an Affiliate thereof, or to SPE, if
the Transferring Party is USI or an Affiliate thereof (the recipient of such
notice, the "Other Stockholder"), which Offer Notice shall specify (i) the
Person to whom the Transferring Party proposes to make such Transfer or the
proposed manner of Transfer in the case of a public offering or a Market Sale,
(ii) the number or amount and description of the Voting Shares to be
Transferred, (iii) except in the case of a public offering or a Market Sale,
the Offer Price (as defined below), and (iv) all other material terms and
conditions of the proposed Transfer, including a description of any non-cash
consideration sufficiently detailed to permit valuation thereof, and which
Offer Notice shall be accompanied by any written offer from the prospective
transferee to purchase such Voting Shares, if available and permitted pursuant
to the terms thereof. The Offer Notice shall constitute an irrevocable offer
to the Other Stockholder or its designee, for the period of time described
below, to purchase all (but not less than all) of such Voting Shares upon the
same terms specified in the Offer Notice, subject to Section 4.4(g) and as
otherwise set forth in this Section 4.4. The Other Stockholder may elect to
purchase all (but not less than all) of the Voting Shares at the Offer Price
(or, if the Offer Price includes property other than cash, the equivalent in
cash of such property as determined in accordance with Section 4.4(g)) and
upon the other terms and conditions specified in the Offer Notice.
(c) For purposes of this Section 4.4, "Offer Price" shall be
defined to mean on a per share or other amount of Voting Shares basis (i) in
the case of a third party tender offer or exchange offer, the tender offer or
exchange offer price per Voting Share taking into account any provisions
thereof with respect to proration and any proposed second step or "back-end"
transaction, (ii) in the case of a public offering or a Market Sale, the
Current Market Value per Voting Share as of the date the election notice of
the Other Stockholder hereinafter described is delivered and (iii) in the case
of a privately-negotiated transaction, the proposed sale price per Voting
Share.
(d) If the Other Stockholder elects to purchase the offered
Voting Shares, it shall give notice to the Transferring Party within 20 days
of its receipt of the Offer Notice of its election (or in the case of a third
party tender offer or exchange offer, not later than five Business Days prior
to the expiration date of such offer, provided that all conditions to such
offer (other than with respect to the number of Voting Shares tendered) shall
have been satisfied or waived and the Offer Notice shall have been provided at
least ten Business Days prior to the expiration date of such offer), which
shall constitute a binding obligation, subject to standard terms and
conditions for a stock purchase contract between two significant stockholders
of an issuer (provided that the Transferring Party shall not be required to
make any representations or warranties regarding the business of the Company),
to purchase the offered Voting Shares, which notice shall include the date set
for the closing of such purchase, which date shall be no later than 60 days
following the delivery of such election notice. Notwithstanding the
foregoing, such time periods shall not be deemed to commence with respect to
any purported notice that does not comply in all material respects with the
requirements of this Section 4.4(d). The Other Stockholder may assign its
rights to purchase under this Section 4.4 to any Person (including the
Company).
(e) Subject to Section 4.4(f) in the case of a Market Sale, if
the Other Stockholder does not respond to the Offer Notice within the required
response time period or elects not to purchase the offered Voting Shares, the
Transferring Party shall be free to complete the proposed Transfer (to the
same proposed transferee, in the case of privately-negotiated transaction) on
terms no less favorable to the Transferring Party or its Affiliate, as the
case may be, than those set forth in the Offer Notice, provided that (x) such
Transfer is closed within 90 days after the latest of (A) the expiration of
the foregoing required response time periods, or (B) the receipt by the
Transferring Party of the foregoing election notice or, in the case of a
public offering, within 20 days of the declaration by the Commission of the
effectiveness of a registration statement filed with the Commission pursuant
to this Agreement, and (y) the price at which the Voting Shares are
transferred must be equal to or higher than the Offer Price (except in the
case of a public offering, in which case the price at which the Voting Shares
are sold (before deducting underwriting discounts and commissions) shall be
equal to at least 90% of the Offer Price). Such periods within which such
Transfer must be closed shall be extended to the extent necessary to obtain
required governmental approvals and other required approvals and the
Transferring Party and the Other Stockholder shall use their respective best
efforts to obtain such approvals.
(f) If the Other Stockholder does not respond to the Offer Notice
with respect to a Market Sale within the required response time period or
elects not to purchase the offered Voting Shares, the Transferring Party shall
be free to complete the proposed Market Sale in one or more transactions
during the 90-day period commencing on the latest of (i) the expiration of the
required response time period described in Section 4.4(d) or (ii) receipt by
the Transferring Party of the election notice described in Section 4.4(d),
provided that the price at which each Voting Share is transferred (excluding
brokerage commissions) shall be at least equal to 90% of the Offer Price.
(g) If (i) the consideration specified in the Offer Notice
consists of, or includes, consideration other than cash or a publicly traded
security for which a closing market price is published for each Business Day,
or (ii) any property other than Voting Shares is proposed to be transferred in
connection with the transaction to which the Offer Notice relates, then the
price payable by the Other Stockholder under this Section 4.4 for the Voting
Shares being transferred shall be the Determination of the Independent
Directors of the Fair Market Value of the consideration per share or amount in
the case of clause (i) and the Determination of the Independent Directors of
the Fair Market Value of the consideration per share or amount determined to
be properly allocable to the Voting Shares in the case of clause (ii).
Notwithstanding anything to the contrary contained in this Section 4.4, the
time periods applicable to an election by the Other Stockholder to purchase
the offered securities set forth in Section 4.4(a) shall not be deemed to
commence until the Determination of the Independent Directors under this
Section 4.4(g) has been made, provided that, in the case of a third party
tender offer or exchange offer, in no event shall any such election be
permitted later than 24 hours prior to the latest time by which Voting Shares
shall be tendered in order to be accepted pursuant to such offer or to qualify
for any proration applicable to such offer if all conditions to such offer
(other than the number of shares tendered) have been satisfied or waived. The
Company agrees to use its best efforts to cause the Determination of the
Independent Directors under this Section 4.4(g) to be made as promptly as
practicable but in no event later than ten Business Days after the receipt by
the Company of the Offer Notice.
(h) The provisions of this Section 4.4 shall be applicable to any
proposed Transfer of Non-Voting Common Stock to any Person other than an SPE
Permitted Transferee as if the Common Stock that is issuable upon Transfer in
accordance with clause (i) of Section 4(b) of Article IV of the Certificate
were being Transferred.
SECTION 4.5 Transferees.
(a) Any Permitted Transferee of a Stockholder shall be
subject to the terms and conditions of this Agreement as if such Permitted
Transferee were SPE (in the case SPE or a Permitted Transferee of SPE is the
transferor), USI (in the case USI or a Permitted Transferee of USI is the
transferor) or a member of the Claridge Group (in the case a member of the
Claridge Group or a Permitted Transferee thereof is the transferor). Prior to
the initial acquisition of beneficial ownership of any Voting Shares or Non-
Voting Common Stock by any Permitted Transferee, and as a condition thereto,
each Stockholder agrees (i) to cause its respective Permitted Transferees to
agree in writing with the other parties hereto to be bound by the terms and
conditions of this Agreement to the extent described in the preceding sentence
and (ii) that such Stockholder shall remain directly liable for the
performance by its respective Permitted Transferees of all obligations of such
Permitted Transferees under this Agreement; provided, however, that, unless
the Trust elects otherwise, the foregoing shall not be applicable to any
Permitted Transferee described in clause (iii)(b) of the definition thereof or
any spouse of any such Permitted Transferee so long as such Person has not
purchased Voting Shares for aggregate consideration (excluding brokerage
commissions) exceeding $20,000 (measured at the time of the applicable
acquisition) and that such Voting Shares have been acquired solely in open
market purchases; provided, further, that the Trust shall not permit all
Persons described in the preceding proviso who the Trust has not elected to be
subject to clause (i) and (ii) above to so acquire Voting Shares for aggregate
consideration (excluding brokerage commissions) exceeding $100,000 (measured
at the time of the applicable acquisition). Each of SPE and USI agrees not to
cause or permit any of its respective Permitted Transferees to cease to be
directly or indirectly wholly-owned by such Stockholder so long as such
Permitted Transferee beneficially owns any Voting Shares or Non-Voting Common
Stock, and if any such Permitted Transferee shall cease to be so wholly-owned,
such Permitted Transferee shall automatically upon the occurrence of such
event cease to be a "Permitted Transferee" for any purpose under this
Agreement. Each Stockholder agrees not to Transfer any Voting Shares or Non-
Voting Common Stock to any Affiliate other than a Permitted Transferee of such
Stockholder.
(b) No Third Party Transferee shall have any rights or
obligations under this Agreement, except:
(i) if such Third Party Transferee (together with its
Affiliates) would beneficially own more than 10% of the
outstanding Voting Shares upon consummation of any Transfer or if
such Third Party Transferee (together with its Affiliates) shall
acquire beneficial ownership of more than 3.5% of the outstanding
Voting Shares in any Transfer or series of related Transfers from
members of the Claridge Group and Permitted Transferees thereof,
such Third Party Transferee shall be subject to the terms and
conditions of Article I, Article II (but shall not have the right
to designate any Directors pursuant thereto, except in the
circumstances described in clauses (ii) or (iii) below), Section
4.4 (but only with respect to the rights and obligations of a
"Transferring Party" thereunder, and such Third Party Transferee
shall not have the right to purchase Voting Shares pursuant
thereto or any other rights of an "Other Stockholder" thereunder),
this Section 4.5, Section 4.6 and Articles VI and VIII as if such
Third Party Transferee were SPE (in the case SPE or a Permitted
Transferee of SPE is the transferor), USI (in the case USI or a
Permitted Transferee of USI is the transferor) or a member of the
Claridge Group (in the case a member of the Claridge Group or a
Permitted Transferee thereof is the transferor);
(ii) if such Third Party Transferee (together with its
Affiliates) would beneficially own more than 10% of the
outstanding Voting Shares upon consummation of any Transfer from
SPE or USI or any of their respective Permitted Transferees, and
if such Third Party Transferee shall have acquired from SPE or USI
(or such Permitted Transferees) all Voting Shares then
beneficially owned by such Stockholder and its Permitted
Transferees, such Third Party Transferee shall have the right to
designate Directors pursuant to Article II if the applicable
transferor elects to assign such right to such Third Party
Transferee;
(iii) if in a Transfer or series of related Transfers from
any member of the Claridge Group and Permitted Transferees thereof
to any Third Party Transferee, such Third Party Transferee
(together with its Affiliates) shall acquire beneficial ownership
of more than 3.5% of the outstanding Voting Shares constituting
more than 50% of the Initial Interest of the Claridge Group, such
Third Party Transferee shall have the right to designate Directors
pursuant to Section 2.1(b)(i) if (x) the applicable transferor
elects to assign such right to such Third Party Transferee (which
in the event of the grant of an option upon Voting Shares, may be
assigned either upon the grant or the exercise thereof) and (y)
SPE and USI shall have given their prior written consent to the
assignment of such right to the Third Party Transferee (which
consent shall not be unreasonably withheld), provided that (i)
upon any such Transfer or series of related Transfers the Claridge
Group shall cease to have a right to elect Directors pursuant to
Section 2.1 in the event that such right is transferred in
accordance with the provisions of this subsection 4.5(b)(iii) and
(ii) such Third Party Transferee shall not have the right to
assign such right to any Person (other than a Permitted Transferee
thereof); and
(iv) if such Third Party Transferee (together with its
Affiliates) shall acquire beneficial ownership of more than 3.5%
of the outstanding Voting Shares in any Transfer or series of
related Transfers from a Stockholder and/or its Permitted
Transferees, such Third Party Transferee shall have the right to
initiate Demand Registrations pursuant to Section 5.1 and the
other rights and obligations of a Holder pursuant to Article V to
the extent the transferor to such Third Party Transferee assigns,
in whole or in part, any such rights and obligations to such Third
Party Transferee (provided that no rights of a Holder under
Article V shall be assigned unless the obligations of a Holder
thereunder are also assigned).
(c) Prior to the consummation of a Transfer described in
Section 4.5(b) to the extent rights and obligations are to be assigned, and as
a condition thereto, the applicable Third Party Transferee shall agree in
writing with the other parties hereto to be bound by the terms and conditions
of this Agreement to the extent described in Section 4.5(b). To the extent
the Third Party Transferee is not an "ultimate parent entity" (as defined in
the HSR Act), the ultimate parent entity of such Third Party Transferee shall
agree in writing to be directly liable for the performance of the Third Party
Transferee to the same extent USI or SPE would be liable for their respective
Permitted Transferees.
SECTION 4.6 Notice of Transfer. To the extent
any Stockholder and its Permitted
Transferees shall Transfer any Voting Shares, such Stockholder shall, within
three Business Days following consummation of such Transfer, deliver notice
thereof to the Company and the other Stockholders, provided, however, that no
such notice shall be required to be delivered unless the aggregate Voting
Shares transferred by such Stockholder and its Permitted Transferees since the
date of the last notice delivered by such Stockholder pursuant to this Section
4.6 or Section 8.4(b) exceeds 1% of the outstanding Voting Shares.
SECTION 4.7 Compliance with Transfer
Provisions. Any Transfer or
attempted Transfer of Voting Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Voting Shares as the owner of
such Voting Shares for any purpose.
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.1 Demand Registrations.
(a) Subject to Section 5.1(d), at any time and from
time to time after the one-year anniversary of the Closing, any Holder shall
have the right to require the Company to file a registration statement under
the Securities Act and/or a prospectus under applicable Canadian securities
laws covering all or any part of their respective Registrable Securities, by
delivering a written request therefor to the Company specifying the number of
Registrable Securities to be included in such registration by such Holder(s)
and the intended method of distribution thereof. All such requests pursuant
to this Section 5.1(a) are referred to herein as "Demand Registration
Requests" and the registrations so requested are referred to herein as "Demand
Registrations" (with respect to any Demand Registration, the Holder making
such demand for registration being referred to as the "Initiating Holder").
As promptly as practicable, but no later than 15 days after receipt of a
Demand Registration Request, the Company shall give written notice (the
"Demand Exercise Notice") of such Demand Registration Request to all Holders
of record of Registrable Securities.
(b) The Company shall include in a Demand Registration (i) the
Registrable Securities of the Initiating Holder and (ii) the Registrable
Securities of any other Holder (collectively, the "Other Holders") that shall
have made a written request to the Company for inclusion thereof in such
registration (which request shall specify the maximum number of Registrable
Securities intended to be disposed of by such Holder(s)) within 30 days after
the receipt of the Demand Exercise Notice.
(c) The Company shall, as expeditiously as possible following a
Demand Registration Request, use its best efforts to (i) effect the
registration under the Securities Act (including by means of a shelf
registration pursuant to Rule 415 under the Securities Act if so requested and
if the Company is then eligible to use such a registration) of the Registrable
Securities which the Company has been so requested to register by such Holder,
for distribution, in accordance with such intended method of distribution, and
(ii) if requested by the Initiating Holder, obtain acceleration of the
effective date of the registration statement relating to such registration.
(d) The rights of Holders of Registrable Securities to request
Demand Registrations pursuant to Section 5.1(a) are subject to the following
limitations: (i) the Company shall not be obligated to effect a Demand
Registration within six months after the effective date of any other
registration of equity securities by the Company (other than pursuant to a
registration on Form S-4 or Form S-8 or any successor or similar form that is
then in effect) which was not effected on Form S-3 (or any successor or
similar short-form registration statement), provided, however, that this
clause (i) shall not be applicable with respect to any Registrable Securities
beneficially owned by any Holder if in connection with a Piggyback
Registration such Holder requested during such six month period to have such
Registrable Securities included in such Piggyback Registration and Registrable
Securities with a Current Market Value exceeding $25,000,000 (valued at the
time of such request) were not included pursuant to Section 5.2(d), (ii) in no
event shall the Company be required to effect, in the case of SPE, more than
four Demand Registrations, in the case of USI, more than four Demand
Registrations, and, in the case of the Claridge Group, more than one Demand
Registration, (iii) the Company shall not be obligated to effect a Demand
Registration by either SPE or USI if a Demand Registration initiated by either
SPE or USI shall have been effected in the preceding 12 months, and (iv) the
Company shall not be obligated to effect a Demand Registration the reasonably
anticipated aggregate price to the public of which would not exceed
$25,000,000. Upon assignment by a Stockholder of the right to initiate a
Demand Registration to a Third Party Transferee in accordance with Section
4.5(b)(iv), such Stockholder shall cease to have the right to initiate such
Demand Registration and the number of Demand Registrations to which such
Stockholder shall be entitled as set forth in the preceding sentence shall be
reduced accordingly. In no event shall the Company be required to effect more
than nine Demand Registrations pursuant to this Agreement.
(e) The Company shall select the registration statement form for
any registration pursuant to this Section, provided, that if any registration
requested pursuant to this Section which is proposed by the Company to be
effected by the filing of a registration statement on Form S-3 (or any
successor or similar short-form registration statement) shall be in connection
with an underwritten public offering, and if the managing underwriter shall
advise the Company in writing that, in its opinion, the use of another form of
registration statement is of material importance to the success of such
proposed offering, then such registration shall be effected on such other
form.
(f) A registration requested pursuant to this Section 5.1 will
not be deemed to have been effected unless it has become effective, provided
that if, within 180 days after it has become effective, the offering of
Registrable Securities pursuant to such registration is subject to any stop
order, injunction or other order or requirement of the Commission or other
governmental agency or court, such registration will be deemed not to have
been effected.
(g) If a requested registration pursuant to this Section involves
an underwritten offering, the Company shall have the right to select in good
faith the investment banker or bankers and managers to administer the
offering; provided, however, that such investment banker or bankers and
managers shall be reasonably satisfactory to the Initiating Holder. The
Initiating Holder shall notify the Company if such Holder objects to any
investment banker or manager selected by the Company pursuant to this Section
5.1(g) within 10 Business Days after the Company has notified such Holder of
such selection.
(h) If the managing underwriter of any underwritten offering
shall advise the Holders participating in a Demand Registration that the
Registrable Securities covered by the registration statement cannot be sold in
such offering within a price range acceptable to the Initiating Holder, then
the Initiating Holder shall have the right to notify the Company that it has
determined that the registration statement be abandoned or withdrawn, in which
event the Company shall abandon or withdraw such registration statement. If a
requested registration pursuant to this Section 5.1 involves an underwritten
offering and the managing underwriter advises the Company that, in its
opinion, the number of securities requested to be included in such
registration (including securities of the Company which are not Registrable
Securities) exceeds the number which can be sold in such offering within a
price range acceptable to the Initiating Holder, the Company will include in
such registration only the Registrable Securities requested to be included in
such registration pursuant to this Section 5.1. In the event that the number
of Registrable Securities requested to be included in such registration
exceeds the number which, in the opinion of such managing underwriter, can be
sold in such offering within a price range acceptable to the Initiating
Holder, the Company shall include in such registration the number of
Registrable Securities proposed to be sold by the Initiating Holder and, to
the extent the managing underwriter believes that additional Registrable
Securities can be sold in such offering within such price range, the number of
Registrable Securities proposed to be sold by the Other Holders, allocated pro
rata among the Other Holders on the basis of the relative number of shares of
Registrable Securities requested to be registered pursuant to clause (ii) of
Section 5.1(b) by each such Holder. In the event that the number of
Registrable Securities requested by all Holders to be included in such
registration is less than the number which, in the opinion of the managing
underwriter, can be sold, the Company may include in such registration a
number of securities that the Company proposes to sell up to the number of
securities that, in the opinion of the underwriter, can be sold in such
offering within a price range acceptable to the Initiating Holder.
(i) If the Company at any time grants to any other holders of
Voting Shares (or securities that are convertible, exchangeable or exercisable
into Voting Shares) any rights to request the Company to effect the
registration under the Securities Act of any such Voting Shares (or any such
securities) on terms more favorable to such holders than the terms set forth
in this Section 5.1, then the Holders shall be entitled to such more favorable
rights and benefits.
SECTION 5.2 Piggyback Registrations.
(a) If, at any time following the Equity
Offering, the Company proposes or is required to register any of its equity
securities under the Securities Act (other than pursuant to (i) registrations
on such form or similar form(s) solely for registration of securities in
connection with an employee benefit plan or dividend reinvestment plan or a
merger, consolidation or acquisition or (ii) a Demand Registration pursuant to
Section 5.1) on a registration statement on Form S-1, Form S-2 or Form S-3 (or
an equivalent general registration form then in effect), whether or not for
its own account, the Company shall give prompt written notice of its intention
to do so to each of the Holders of record of Registrable Securities. Upon the
written request of any Holder, made within 15 days following the receipt of
any such written notice (which request shall specify the maximum number of
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof), the Company shall use its best
efforts to cause all such Registrable Securities, the Holders of which have so
requested the registration thereof, to be registered under the Securities Act
(with the securities that the Company at the time proposes to register) to
permit the sale or other disposition by such Holders (in accordance with the
intended method of distribution thereof) of the Registrable Securities to be
so registered (such registration, a "Piggyback Registration"). There is no
limitation on the number of Piggyback Registrations pursuant to the preceding
sentence that the Company is obligated to effect. No registration effected
under this Section 5.2(a) shall relieve the Company of its obligations to
effect Demand Registrations.
(b) If, at any time after giving written notice of its intention
to register any equity securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of
such equity securities, the Company may, at its election, give written notice
of such determination to all Holders of record of Registrable Securities and
(i) in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
abandoned registration, without prejudice, however, to the rights of Holders
under Section 5.1, and (ii) in the case of a determination to delay such
registration of its equity securities, shall be permitted to delay the
registration of such Registrable Securities for the same period as the delay
in registering such other equity securities.
(c) Any Holder shall have the right to withdraw its request for
inclusion of its Registrable Securities in any registration statement pursuant
to this Section 5.2 by giving written notice to the Company of its request to
withdraw; provided, however, that (i) such request must be made in writing
prior to the earlier of the execution of the underwriting agreement or the
execution of the custody agreement with respect to such registration and (ii)
such withdrawal shall be irrevocable and, after making such withdrawal, a
Holder shall no longer have any right to include Registrable Securities in the
registration as to which such withdrawal was made.
(d) If the managing underwriter of any underwritten offering
shall inform the Company by letter of its belief that the number of
Registrable Securities requested to be included in a registration under this
Section 5.2 would materially adversely affect such offering, then the Company
will include in such registration, first, the securities proposed by the
Company to be sold for its own account, second, the Registrable Securities and
all other securities of the Company to be included in such registration to the
extent of the number and type, if any, that the Company is so advised can be
sold in (or during the time of) such offering, pro rata among the Holders on
the basis of the relative number of shares of Registrable Securities requested
to be registered pursuant to Section 5.2(a) by each such Holder and, third,
pro rata among the holders of any other securities of the Company with respect
to which the holders thereof are entitled to and desire "piggy-back" or
similar registration rights.
SECTION 5.3 Registration Procedures.
If and whenever the Company is required by
the provisions of this Agreement to use its best efforts to effect or cause
the registration of any Registrable Securities under the Securities Act as
provided in this Agreement, the Company shall, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
on an appropriate registration form of the Commission for the disposition of
such Registrable Securities in accordance with the intended method of
disposition thereof, which form (i) shall be selected by the Company and (ii)
shall, in the case of a shelf registration, be available for the sale of the
Registrable Securities by the selling Holders thereof and such registration
statement shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the Commission to be filed therewith, and the Company shall use
its best efforts to cause such registration statement to become effective
(provided, however, that before filing a registration statement or prospectus
or any amendments or supplements thereto, or comparable statements under
securities or "blue sky" laws of any jurisdiction, the Company will furnish to
counsel for the Holders participating in the planned offering (selected by the
Initiating Holder, in the case of a Demand Registration, or the Requisite
Percentage of Participating Holders, in the case of a Piggyback Registration)
and the underwriters, if any, copies of all such documents proposed to be
filed (including all exhibits thereto), which documents will be subject to the
reasonable review and, in the case of a registration pursuant to Section 5.1,
reasonable comment of such counsel, and the Company shall not file any
registration statement or amendment thereto or any prospectus or supplement
thereto pursuant to Section 5.1 to which the Holders of a majority of the
Registrable Securities covered by such registration statement or the
underwriters, if any, shall reasonably object in writing);
(b) prepare and file with the Commission such amendments
(including post-effective amendments) and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective for such period as any seller of
Registrable Securities pursuant to such registration statement shall request
and to comply with the provisions of the Securities Act with respect to the
sale or other disposition of all Registrable Securities covered by such
registration statement in accordance with the intended methods of disposition
by the seller or sellers thereof set forth in such registration statement
until the earlier of (i) such time as all such Registrable Securities have
been disposed of in accordance with the intended methods of disposition by the
Holder or Holders thereof set forth in such registration statement and (ii)
the expiration of 180 days from the date such registration statement first
becomes effective;
(c) furnish, without charge, to each seller of such Registrable
Securities and each underwriter, if any, of the securities covered by such
registration statement such number of copies of such registration statement,
each amendment and supplement thereto (in each case including all exhibits),
and the prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, such documents incorporated by reference
in such registration statement, and such other documents, as such seller and
underwriter may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify all Registrable
Securities covered by such registration statement under such other securities
or "blue sky" laws of such jurisdictions as any sellers of Registrable
Securities or any managing underwriter, if any, shall reasonably request, and
do any and all other acts and things that may be necessary or advisable to
enable such sellers or underwriter, if any, to consummate the disposition of
the Registrable Securities in such jurisdictions, except that in no event
shall the Company be required to qualify generally to do business as a foreign
corporation in any jurisdiction where it would not, but for the requirements
of this paragraph (d), be required to be so qualified, to subject itself to
taxation in any such jurisdiction or to consent to general service of process
in any such jurisdiction;
(e) enter into such customary agreements (including an
underwriting agreement in customary form), which may include indemnification
provisions in favor of underwriters and other persons in addition to, or in
substitution for, the provisions of Section 5.8 hereof, and take such other
actions as the Initiating Holder, in the case of a Demand Registration, or the
Requisite Percentage of Participating Holders, in the case of a Piggyback
Registration, or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities;
(f) furnish to each seller of Registrable Securities (i) a signed
counterpart, addressed to such seller, of any opinion of counsel for the
Company, dated the date of the closing under the underwriting agreement with
respect to such offering, in customary form and in form and scope reasonably
satisfactory to the underwriter and its counsel, and (ii) a signed
counterpart, if requested by such Seller, addressed to it, of any "cold
comfort" letter signed by the independent public accountants in customary form
and covering matters of the type customarily covered by "cold comfort" letters
(provided that Registrable Securities constitute at least 25% of the
securities covered by such registration statement, unless such a "cold
comfort" letter or letters are provided to the Company or other selling
holders in connection with such registration);
(g) immediately notify each Holder selling Registrable Securities
covered by such registration statement and each managing underwriter, if any:
(i) when the registration statement, any pre-effective amendment, the
prospectus or any prospectus supplement related thereto or post-effective
amendment to the registration statement has been filed and, with respect to
the registration statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission or state securities
authority for amendments or supplements to the registration statement or the
prospectus related thereto or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the registration statement or the initiation of any proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect
to the suspension of the qualification of any Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction or the initiation
of any proceeding for such purpose; (v) of the existence of any fact of which
the Company becomes aware that results in the registration statement, the
prospectus related thereto or any document incorporated therein by reference
containing an untrue statement of a material fact or omitting to state a
material fact required to be stated therein or necessary to make any statement
therein not misleading; and (vi) if at any time the representations and
warranties contemplated by Section 5.8 below cease to be true and correct in
all material respects; and, if the notification relates to an event described
in clause (v), the Company shall promptly prepare and furnish to each such
seller and each underwriter, if any, a reasonable number of copies of a
prospectus supplemented or amended so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in
the light of the circumstances under which they were made not misleading;
(h) use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable after the effective date of the registration
statement (and in any event within 16 months thereafter), an earnings
statement (which need not be audited) covering the period of at least 12
consecutive months beginning with the first day of the Company's first
calendar quarter after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations thereunder;
(i) use its best efforts to cause all such Registrable Securities
covered by such registration statement to be listed on each securities
exchange or quotation system on which similar securities issued by the Company
are then listed or quoted (if any), and provide a transfer agent and registrar
for such Registrable Securities not later than the effective date of such
registration statement;
(j) enter into such customary agreements (including, if
applicable, an underwriting agreement) and take such other actions as the
Initiating Holder, in the case of a Demand Registration, or the Requisite
Percentage of Participating Holders, in the case of a Piggyback Registration,
shall reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities;
(k) deliver promptly to the each Holder and counsel for the
selling Holders participating in the offering and each underwriter, if any,
copies of all correspondence between the Commission and the Company, its
counsel or auditors and any memoranda relating to discussions with the
Commission or its staff with respect to the registration statement, other than
those portions of any such memoranda that contain information subject to
attorney-client privilege with respect to the Company, and, upon receipt of
such confidentiality agreements as the Company may reasonably request, make
reasonably available for inspection by any seller of such Registrable
Securities covered by such registration statement, by any underwriter, if any,
participating in any disposition to be effected pursuant to such registration
statement and by any attorney, accountant or other agent retained by any such
seller or any such underwriter, all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause all of
the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(l) use reasonable efforts to prevent the issuance of any stop
order suspending the effectiveness of the registration statement or of any
order preventing or suspending the use of any preliminary prospectus and, if
any such order is issued, to obtain the withdrawal of any such order at the
earliest possible moment;
(m) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the registration statement;
(n) make reasonably available its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into
account the needs of the Company's businesses and the requirements of the
marketing process) in the marketing of Registrable Securities in any
underwritten offering;
(o) promptly prior to the filing of any document that is to be
incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement), provide copies of
such document to counsel for the selling Holders and to each managing
underwriter, if any, and make the Company's representatives reasonably
available for discussion of such document and make such changes in such
document concerning the selling holders prior to the filing thereof as counsel
for such selling holders or underwriters may reasonably request;
(p) furnish to each Holder participating in the offering and the
managing underwriter, without charge, at least one signed copy of the
registration statement and any post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(q) cooperate with each seller of Registrable Securities and each
underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings
required to be made with the National Association of Securities Dealers, Inc.;
(r) use reasonable efforts to make available the executive
officers of the Company to participate with the Holders of Registrable
Securities and any underwriters in any "road shows" or other selling efforts
that may be reasonably requested by the selling Holders in connection with the
methods of distribution for the Registrable Securities;
(s) cooperate with the selling Holders of Registrable Securities
and the managing underwriter, if any, to facilitate the timely preparation and
delivery of certificates not bearing any restrictive legends representing the
Registrable Securities to be sold, and cause such Registrable Securities to be
issued in such denominations and registered in such names in accordance with
the underwriting agreement prior to any sale of Registrable Securities to the
underwriters or, if not an underwritten offering, in accordance with the
instructions of the selling Holders of Registrable Securities at least three
business days prior to any sale of Registrable Securities;
(t) in the case of a registration under Canadian securities laws,
take such reasonable actions as may be necessary to facilitate the sale of
Registrable Securities on a public basis in Canada, including making any
necessary filings with Canadian securities authorities or any Canadian stock
exchange on which the Registrable Securities are listed; and
(u) take all such other reasonable actions as are necessary or
advisable in order to expedite or facilitate the disposition of such
Registrable Securities.
The Company may require as a condition precedent to the Company's obligations
under this Section 5.3 that each seller of Registrable Securities as to which
any registration is being effected furnish the Company such information
regarding such seller and the distribution of such securities as the Company
may from time to time reasonably request in writing and as shall be required
by law or by the Commission in connection therewith, provided that such
information shall be used only in connection with such registration. Each
Holder of Registrable Securities agrees that upon receipt of any notice from
the Company of the happening of any event of the kind described in clause (v)
of paragraph (g) of this Section 5.3, such Holder will discontinue such
Holder's disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Holder's receipt of
the copies of the supplemented or amended prospectus contemplated by paragraph
(g) of this Section 5.3 and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such Holder's possession of the prospectus covering such
Registrable Securities that was in effect at the time of receipt of such
notice. In the event the Company shall give any such notice, the applicable
period mentioned in paragraph (b) of this Section 5.3 shall be extended by the
number of days during such period from and including the date of the giving of
such notice to and including the date when each seller of any Registrable
Securities covered by such registration statement shall have received the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 5.3. If any such registration statement or comparable
statement under "blue sky" laws refers to any Holder by name or otherwise as
the Holder of any securities of the Company, then such Holder shall have the
right to require (i) the insertion therein of language, in form and substance
satisfactory to such Holder and the Company, to the effect that the holding by
such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such Holder will assist in
meeting any future financial requirements of the Company or (ii) in the event
that such reference to such Holder by name or otherwise is not in the judgment
of the Company, as advised by counsel, required by the Securities Act or any
similar federal statute or any state "blue sky" or securities law then in
force, the deletion of the reference to such Holder.
SECTION 5.4 Registration Expenses.
(a) Each Holder of Registrable Securities
(together with the Company, if the Company participates in a registration)
participating in any registration pursuant to Section 5.1 shall pay its pro
rata share of Expenses related to such registration on the basis of the number
of Registrable Securities included in such registration by such Holder
(including the Company, if applicable) relative to the number of securities
included in such registration by all holders (including the Company, if
applicable, and any other holders including securities in the registration
pursuant to an agreement with the Company other than this Agreement), other
than Expenses directly attributable to a particular Holder, which shall be
borne by such Holder, provided that the Company shall bear all expenses of the
initial registration effected pursuant to Section 5.1 upon the request of each
of SPE, USI and the Claridge Group.
(b) Each Holder of Registrable Securities participating in any
registration initiated by the Company pursuant to Section 5.2 shall pay its
pro rata share of Expenses (other than Company Expenses which shall be borne
by the Company) related to such registration on the basis of the number of
Registrable Securities included in such registration by such Holder relative
to the number of securities included in such registration by all holders
(excluding the Company and including any holders including securities in the
registration pursuant to an agreement with the Company other than this
Agreement), other than Expenses directly attributable to a particular Holder
which shall be borne by such Holder.
(c) Notwithstanding the foregoing, (i) the provisions of this
Section 5.4 shall be deemed amended to the extent necessary to cause these
expense provisions to comply with the "blue sky" laws of each state in which
the offering is made, (ii) in connection with any registration hereunder, each
Holder of Registrable Securities being registered shall pay all underwriting
discounts and commissions and any transfer taxes, if any, attributable to the
sale of such Registrable Securities, pro rata with respect to payments of
discounts and commissions in accordance with the number of shares sold in the
offering by such Holder, and (iii) the Company shall, in the case of all
registrations under this Article V, be responsible for all its internal
expenses (including all salaries and expenses of its officers and employees
performing legal or accounting duties).
SECTION 5.5 Limitations on Sale or Distribution of
Other Securities. (a) To the extent requested in writing by a managing
underwriter, if any, of any registration effected pursuant to Section 5.1,
each Holder of Registrable Securities agrees not to Transfer, including any
sale pursuant to Rule 144 under the Securities Act, any Common Stock (other
than as part of such underwritten public offering) during the time period
reasonably requested by the managing underwriter, not to exceed 90 days (and
the Company hereby also so agrees (except that the Company may effect any sale
or distribution of any such securities pursuant to a registration on Form S-4
(if reasonably acceptable to such managing underwriter) or Form S-8, or any
successor or similar form that is then in effect or upon the conversion,
exchange or exercise of any then outstanding Common Stock Equivalent) to use
its reasonable best efforts to cause each holder of any equity security or any
security convertible into or exchangeable or exercisable for any equity
security of the Company purchased from the Company at any time other than in a
public offering so to agree). Each managing underwriter shall be entitled to
rely on the agreements of each Holder of Registrable Securities set forth in
this Section 5.5(a) and shall be a third party beneficiary of the provisions
of this Section 5.5(a).
(b) The Company hereby agrees that, if it shall previously have
received a request for registration pursuant to Section 5.1, and if such
previous registration shall not have been withdrawn or abandoned, the Company
shall not Transfer any Common Stock (other than as part of such underwritten
public offering, a registration on Form S-4 or Form S-8 or any successor or
similar form that is then in effect or upon the conversion, exchange or
exercise of any then outstanding Common Stock Equivalent), until a period of
90 days shall have elapsed from the effective date of such previous
registration; and the Company shall so provide in any registration rights
agreements hereafter entered into with respect to any of its securities.
SECTION 5.6 Company Right to Postpone Registration.
The Company
shall be entitled to postpone for a reasonable period of time (but not
exceeding 120 days) the filing of any registration statement otherwise
required to be prepared and filed by it pursuant to this Agreement if the
Company concludes that such registration and offering would materially
adversely affect any financing, acquisition, corporate reorganization or other
material transaction involving the Company or any of its Affiliates or would
require premature disclosure thereof and the Company promptly gives the
Holders of Registrable Securities requesting registration thereof pursuant to
Section 5.1 written notice of such delay. If the Company shall so postpone
the filing of a registration statement, such Holders of Registrable Securities
requesting registration thereof pursuant to Section 5.1 shall have the right
to withdraw the request for registration by giving written notice to the
Company within 30 days after receipt of the notice of postponement and, in the
event of such withdrawal, such request shall not be counted for purposes of
the requests for registration to which Holders of Registrable Securities are
entitled pursuant to Section 5.1 hereof.
SECTION 5.7 No Required Sale.
Nothing in this Agreement shall be deemed to create an
independent obligation on the part of any Holder to sell any Registrable
Securities pursuant to any effective registration statement.
SECTION 5.8 Indemnification.
(a) In the event of any registration of any securities of
the Company under the Securities Act pursuant to this Article V, the Company
will, and hereby does, indemnify and hold harmless, to the fullest extent
permitted by law, each seller of any Registrable Securities covered by such
registration statement, its directors, officers, affiliates, employees,
stockholders, members and general and limited partners (and the directors,
officers, affiliates, employees, stockholders, members and general and limited
partners thereof), each other Person who participates as an underwriter in the
offering or sale of such securities, each officer, director, employee,
stockholder, member or general and limited partner of such underwriter, and
each other Person, if any, who controls such seller or any such underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any and all losses, claims, damages or liabilities,
joint or several, actions or proceedings (whether commenced or threatened) in
respect thereof ("Claims") and expenses (including reasonable fees of counsel
and any amounts paid in any settlement effected with the Company's consent,
which consent shall not be unreasonably withheld or delayed) to which each
such indemnified party may become subject under the Securities Act or
otherwise, insofar as such Claims or expenses arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which such securities were
registered under the Securities Act, together with the documents incorporated
by reference therein or 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 (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary, final or
summary prospectus or any amendment or supplement thereto, together with the
documents incorporated by reference therein, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Company shall not be liable to any such indemnified party in any such
case to the extent such Claim or expense arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission of a material fact made in such registration statement or
amendment thereof or supplement thereto or in any such prospectus or any
preliminary, final or summary prospectus in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
indemnified party specifically for use therein. Such indemnity and
reimbursement of expenses shall remain in full force and effect regardless of
any investigation made by or on behalf of such indemnified party and shall
survive the Transfer of such securities by such seller.
(b) Each Holder of Registrable Securities that are included in
the securities as to which any registration under Section 5.1 or 5.2 is being
effected (and, if the Company requires as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 5.1 or 5.2, any underwriter) shall, severally and not jointly,
indemnify and hold harmless (in the same manner and to the same extent as set
forth in paragraph (a) of this Section 5.8) to the extent permitted by law the
Company, its officers and directors, each Person controlling the Company
within the meaning of the Securities Act and all other prospective sellers and
their directors, officers, general and limited partners and respective
controlling Persons with respect to any untrue statement or alleged untrue
statement of any material fact in, or omission or alleged omission of any
material fact from, such registration statement, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company or its representatives by or on behalf of such Holder or
underwriter specifically for use therein and reimburse such indemnified party
for any legal or other expenses reasonably incurred in connection with
investigating or defending any such Claim as such expenses are incurred;
provided, however, that the aggregate amount that any such Holder shall be
required to pay pursuant to this Section 5.8(b) and Sections 5.8(c) and 5.9
shall in no case be greater than the amount of the net proceeds received by
such person upon the sale of the Registrable Securities pursuant to the
registration statement giving rise to such Claim. Such indemnity and
reimbursement of expenses shall remain in full force and effect regardless of
any investigation made by or on behalf of such indemnified party and shall
survive the Transfer of such securities by such Holder.
(c) Indemnification similar to that specified in the preceding
paragraphs (a) and (b) of this Section 5.8 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities
under any state securities and "blue sky" laws.
(d) Any person entitled to indemnification under this Agreement
shall notify promptly the indemnifying party in writing of the commencement of
any action or proceeding with respect to which a claim for indemnification may
be made pursuant to this Section 5.8, but the failure of any indemnified party
to provide such notice shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 5.8, except to the
extent the indemnifying party is materially prejudiced thereby, and shall not
relieve the indemnifying party from any liability that it may have to any
indemnified party otherwise than under this Article V. In case any action or
proceeding is brought against an indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, unless in the reasonable opinion of
outside counsel to the indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, to
assume the defense thereof jointly with any other indemnifying party similarly
notified, to the extent that it chooses, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to
such indemnified party of its election to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that if (i) the indemnifying party fails to
take reasonable steps necessary to defend diligently the action or proceeding
within 20 days after receiving notice from such indemnified party that the
indemnified party believes it has failed to do so; (ii) such indemnified party
who is a defendant in any action or proceeding that is also brought against
the indemnifying party reasonably shall have concluded that there may be one
or more legal defenses available to such indemnified party that are not
available to the indemnifying party; or (iii) representation of both parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct, then, in any such case, the indemnified party shall have
the right to assume or continue its own defense as set forth above (but with
no more than one firm of counsel for all indemnified parties in each
jurisdiction who shall be approved by the Requisite Percentage of
Participating Holders in the registration in respect of which such
indemnification is sought), and the indemnifying party shall be liable for any
expenses therefor. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or threatened action
or claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(x) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (y) does not include a
statement as to or an admission of fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(e) The indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution that any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party and shall survive the
Transfer of the Registrable Securities by any such party.
(f) The indemnification and contribution required by this Section
5.8 and Section 5.9 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
SECTION 5.9 Contribution.
(a) If for any reason the indemnity provided for in Section
5.8 is unavailable or is insufficient to hold harmless an indemnified party
under Sections 5.8(a), (b) or (c), then each indemnifying party and the
Company (i) as between the Company and the holders of Registrable Securities
covered by a registration statement, on the one hand, and the underwriters, on
the other, in such proportion as is appropriate to reflect the relative
benefits received by the Company and such holders, on the one hand, and the
underwriters, on the other, from the offering of the Registrable Securities,
or if such allocation is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits but also the
relative fault of the Company and such holders, on the one hand, and of the
underwriters, on the other, in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations, and (ii) as between the Company, on
the one hand, and each holder of Registrable Securities covered by a
registration statement, on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of each such holder in
connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
such holders, on the one hand, and the underwriters, on the other, shall be
deemed to be in the same proportion as the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and such holders bear to the total underwriting
discounts and commissions received by the underwriters. The relative fault of
the Company and such holders, on the one hand, and of the underwriters, on the
other, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company and such holders or by the underwriters. The relative fault of
the Company, on the one hand, and of each such holder, on the other, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact relates to information supplied by such
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(b) The Company and the holders of Registrable Securities agree
that it would not be just and equitable if contribution pursuant to this
Section 5.9 were determined by pro rata allocation (even if the underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the next preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the next preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 5.9, no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public exceeds the amount
of any damages that such underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, and no holder of Registrable Securities shall be required to
contribute any amount in excess of the amount by which the total price at
which the Registrable Securities of such holder were offered to the public
exceeds the amount of any damages that such holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Each Stockholder's obligation to contribute pursuant to
this Section 5.9 is several in the proportion that the proceeds of the
offering received by such Stockholder bears to the total proceeds of the
offering received by all the Stockholders and not joint.
SECTION 5.10 Underwritten Offerings.
(a) If requested by the underwriters for any
underwritten offering by the Holders pursuant to a registration requested
under Section 5.1, the Company shall enter into a customary underwriting
agreement with the underwriters. Such underwriting agreement shall be
satisfactory in form and substance to the Initiating Holder and shall contain
such representations and warranties by, and such other agreements on the part
of, the Company and such other terms as are generally included in the standard
underwriting agreement of such underwriters, including indemnities and
contribution agreements. Any Holder participating in the offering shall be a
party to such underwriting agreement and may, at its option, require that any
or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall
also be made to and for the benefit of such Holder and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Holder. Such underwriting agreement shall also contain such representations
and warranties by the participating Holders as are customary in agreements of
that type.
(b) In the case of a registration pursuant to Section 5.2 hereof,
if the Company shall have determined to enter into an underwriting agreement
in connection therewith, all of the Holders' Registrable Securities to be
included in such registration shall be subject to such underwriting agreement.
Any Holder participating in such registration may, at its option, require
that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such Holder and that
any or all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the obligations
of such Holder. Such underwriting agreement shall also contain such
representations and warranties by the participating Holders as are customary
in agreements of that type.
SECTION 5.11 Rule 144.
The Company covenants and agrees that (i) so long as it remains
subject to the reporting provisions of the Exchange Act, it will timely file
the reports required to be filed by it under the Securities Act or the
Exchange Act (including, but not limited to, the reports under Sections 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 under
the Securities Act), and (ii) it will take such further action as any Holder
of Registrable Securities may reasonably request, all to the extent required
from time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (x) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (y) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any Holder of Registrable Securities, the
Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
SECTION 5.12 Article V Termination.
The rights and obligations of a Stockholder
and its Permitted Transferees under this Article V shall terminate upon such
Stockholder's Applicable Percentage equalling less than 3.5%, provided that in
the event that a Stockholder's Applicable Percentage shall be less than 3.5%
as a result of the issuance of additional Voting Shares by the Company, such
Stockholder shall be so advised by the Company by written notice and the
provisions of this Article V shall continue to bind and enure to the benefit
of such Stockholder for a period of 180 days following such Stockholder's
receipt of such notice and will continue to bind and enure to the benefit of
such Stockholder thereafter in the event that such Stockholder (and/or its
Permitted Transferees) acquires, during such 180-day period, a sufficient
number of Voting Shares such that its Applicable Percentage equals or exceeds
3.5%.
ARTICLE VI
STANDSTILL
SECTION 6.1 Standstill with the Company.
(a) Each of SPE and USI and
each member of the Claridge Group covenants and agrees with the Company and
with each of SPE and USI that such Stockholder shall not, and shall cause its
Affiliates not to, acquire, directly or indirectly, the beneficial ownership
of any additional Voting Shares (except by way of stock dividends, stock
reclassifications or other distributions or offerings made available to
holders of Voting Shares generally), except for:
(i) subject to the provisions at the end of clause (ii)
below, acquisitions of a number of Voting Shares representing up to an
aggregate of 5% of the Company's outstanding Voting Shares in open
market purchases or in privately-negotiated transactions during any
rolling 12-month period (measuring the outstanding Voting Shares as of
the first day of such period), provided that any such acquisition in a
privately-negotiated transaction shall not be at a price in excess of 3%
of the closing price of such Voting Shares on the principal exchange or
market on which such security may be listed or trade on the trading day
immediately preceding the date on which a binding agreement is entered
into regarding such acquisition and, in the event a closing price is
unavailable, such price shall not be in excess of Fair Market Value ;
(ii) acquisitions in privately-negotiated transactions from
five or fewer persons pursuant to offers not made generally to holders
of Voting Shares and pursuant to which the value of any consideration
paid for any Voting Shares, including brokerage fees or commissions,
does not exceed 115% of the "Market Price" (as determined in accordance
with the regulations under the Securities Act (Ontario)), provided,
however, that no acquisition shall be permitted pursuant to clause (i)
or (ii) if, as a result of such acquisition, the Public Stockholders
would beneficially own less than 20% of the outstanding Voting Shares,
provided, further, that the foregoing proviso shall not be applicable to
USI or any of its Affiliates, SPE or any of its Affiliates or the
members of the Claridge Group if, upon consummation of such acquisition,
such Stockholder's Applicable Percentage would be less than 25%.
(iii) acquisitions from SPE, USI, members of the Claridge
Group and their respective Permitted Transferees;
(iv) acquisitions from the Company pursuant to Section 7.1
or on terms and conditions approved by a Determination of the
Independent Directors;
(v) acquisitions pursuant to a tender offer or exchange
offer made in accordance with applicable law;
(vi) if the Company shall have issued or sold Voting Shares
(other than pursuant to the Equity Offering) to any Person other than
such Stockholder or a Permitted Transferee thereof without effecting a
pro rata issuance of Voting Shares to such Stockholder or a Permitted
Transferee thereof (calculated based on such Stockholder's Applicable
Percentage at the time of such issuance or sale), acquisitions (whether
pursuant to Section 7.1 or otherwise) of an aggregate number of Voting
Shares equal to the number of Voting Shares that would result in such
Stockholder having the same Applicable Percentage as such Stockholder
would have had if the Company had not issued or sold such Voting Shares;
or
(vii) acquisitions of Common Stock upon the conversion of
Non-Voting Common Stock.
(b) Notwithstanding anything to the contrary contained in Section
6.1(a), in the case of any acquisition permitted pursuant to Section 6.1(a)
that would constitute a "Rule 13e-3 transaction" (as defined in Rule 13e-3
under the Exchange Act), prior to the consummation of any such transaction (x)
a nationally recognized investment bank shall have delivered an opinion to the
Board that such transaction is fair from a financial point of view to the
stockholders of the Company, other than the applicable Stockholder, (y) a
majority of the Independent Directors shall have approved the transaction and
(z) if the Public Stockholders beneficially own more than 20% of the Voting
Shares and if approval of stockholders of the Company is required by the DGCL
or the Certificate, a majority of the shares of Common Stock held by such
holders shall have been voted in favor of the transaction.
(c) The restrictions of Section 6.1(a) and 6.1(b) shall terminate
on the earlier of (x) the six-year anniversary of the Closing and (y) any time
after the four-year anniversary of the Closing upon the Claridge Group ceasing
to have the right to designate a Director pursuant to Section 2.1, or upon the
occurrence of:
(i) a bona fide tender or exchange offer to acquire more
than 20% of the Voting Shares having been made by any Person (except
that such restrictions shall not terminate as to any Stockholder if such
tender or exchange offer is made by such Stockholder or any of its
Affiliates or by any Person acting in concert with such Stockholder or
any of its Affiliates or is induced by such Stockholder or any of its
Affiliates), provided that if such offer is withdrawn or expires without
being consummated, Section 6.1(a) and 6.1(b) shall be reinstated (but no
such reinstatement shall prohibit any Stockholder from thereafter
purchasing Voting Shares pursuant to a contract entered into prior to
the withdrawal or expiration of such tender offer or exchange offer or
pursuant to a tender offer or exchange offer commenced by a Stockholder
prior to such time);
(ii) the Applicable Percentage of SPE, USI or the Claridge
Group equaling or exceeding 80%, provided that, in the case of USI, such
percentage shall be 33 1/3% at any time USI and its Affiliates
beneficially own more Voting Shares than any other holder of Common
Stock;
(iii) with respect to any Stockholder, such Stockholder's
Applicable Percentage being less than 15% (provided that such
restrictions shall be reinstated if such Stockholder's Applicable
Percentage equals or exceeds 15% within one year thereafter);
(iv) any Person (other than a Stockholder or a Permitted
Transferee) beneficially owning more than 20% of the Voting Shares,
excluding from the Voting Shares beneficially owned by such Person
Voting Shares acquired from a Stockholder, a Permitted Transferee or the
Company; or
(v) the Public Stockholders beneficially owning more than
66 2/3% of the Voting Shares.
(d) Notwithstanding anything to the contrary herein, if a
Stockholder who would otherwise be in violation of Section 6.1(a) has violated
such Section inadvertently, and after becoming aware of such violation such
Stockholder divests as promptly as practicable a sufficient number of Voting
Shares so that such Stockholder would no longer be in violation of such
Section, then such Stockholder shall not be deemed to have been in violation
of Section 6.1(a) for any purposes of this Agreement.
(e) Notwithstanding anything to the contrary herein, the
provisions of Section 6.1(a) shall not be applicable to any member of the
Claridge Group so long as the Applicable Percentage of the Claridge Group is
less than 15% (provided that an acquisition by any member of the Claridge
Group shall be subject to the restriction of Section 6.1(a) if such
acquisition would result in the Applicable Percentage of the Claridge Group
equalling or exceeding 15%).
SECTION 6.2 Standstill among the Stockholders.
(a) Each of SPE and USI
covenants and agrees with the other and each member of the Claridge Group
covenants and agrees with each of SPE and USI that neither such Stockholder
nor any of its Affiliates will acquire, directly or indirectly, the beneficial
ownership of any Voting Shares if immediately prior to such acquisition such
Stockholder's Applicable Percentage exceeds 50%, excluding Voting Shares
acquired from another Stockholder or its Permitted Transferees, or if, as a
result of such acquisition, (i) such Stockholder and its Affiliates would
beneficially own an aggregate of more than 50% of the Voting Shares, excluding
Voting Shares acquired from another Stockholder or its Permitted Transferees,
or (ii) the Public Stockholders would beneficially own less than 20% of the
outstanding Voting Shares; provided, however, that this clause (ii) shall not
be applicable to USI or any of its Affiliates, or SPE or any of its Affiliates
or the members of the Claridge Group and their respective Affiliates, if, upon
consummation of such acquisition, such Stockholder's Applicable Percentage
would be less than 25%. Notwithstanding the foregoing, the provisions of this
Section 6.2(a) shall not prohibit the acquisition of Common Stock upon the
conversion of Non-Voting Common Stock.
(b) The restrictions of Section 6.2(a) shall terminate if:
(i) the Applicable Percentage of either SPE or USI is less
than 10% (provided that such restrictions shall be reinstated if such
Stockholder's Applicable Percentage equals or exceeds 10% within one
year thereafter);
(ii) a bona fide tender or exchange offer to acquire more
than 15% of the outstanding Voting Shares is made by any Person (except
that such restrictions shall not terminate as to any Stockholder if such
tender or exchange offer is made by such Stockholder or any of its
Affiliates or by any Person acting in concert with such Stockholder or
any of its Affiliates or is induced by such Stockholder or any of its
Affiliates), provided that if such offer is withdrawn or expires without
being consummated, Section 6.2(a) shall be reinstated (but no such
reinstatement shall prohibit any Stockholder from thereafter purchasing
Voting Shares pursuant to a contract entered into prior to the
withdrawal or expiration of such tender offer or exchange offer or
pursuant to a tender offer or exchange offer commenced by a Stockholder
prior to such time); or
(iii) any Person (other than a Stockholder or a Permitted
Transferee) beneficially owns more than 15% of the Voting Shares,
excluding Voting Shares acquired from a Stockholder or a Permitted
Transferee, but only if the sum of the Applicable Percentages of SPE and
USI is less than 45%.
(c) Notwithstanding anything to the contrary herein, if a
Stockholder who would otherwise be in violation of Section 6.2(a) has violated
such Section inadvertently, and after becoming aware of such violation such
Stockholder divests as promptly as practicable a sufficient number of Voting
Shares so that such Stockholder would no longer be in violation of such
Section, then such Stockholder shall not be deemed to have been in violation
of Section 6.2(a) for any purposes of this Agreement.
(d) Notwithstanding anything to the contrary herein, the
provisions of Section 6.2(a) shall not be applicable to any member of the
Claridge Group so long as the Applicable Percentage of the Claridge Group is
less than 10% (provided that an acquisition by any member of the Claridge
Group shall be subject to the restrictions of Section 6.2(a) if such
acquisition would result in the Applicable Percentage of the Claridge Group
equalling or exceeding 10%).
ARTICLE VII
EQUITY PURCHASE RIGHTS
SECTION 7.1 Equity Purchase Rights.
(a) If the Company proposes to issue or
sell any Voting Shares pursuant to a transaction in respect of which SPE or
USI shall have the right to consent pursuant to clause (vii) of Section 3.1(a)
(any such Stockholder, an "Offeree"), each Offeree shall have the right,
exercisable in whole or in part and subject to the applicable rules of any
stock exchange on which the Common Stock shall then be listed, to acquire from
the Company up to a number of shares or other amount of Voting Shares equal to
the number or amount of Voting Shares proposed to be issued or sold to Persons
other than such Offeree or any of its Affiliates (the "Issuance Shares")
multiplied by such Offeree's then Applicable Percentage, prior to giving
effect to the consummation of the proposed issuance or sale and any
acquisition by an Offeree pursuant to this Section 7.1(a) (with respect to
each Offeree, the number or amount of Voting Shares which such Offeree may
purchase pursuant to this Section 7.1(a) shall be referred to as such
Offeree's "Offered Shares"). Notwithstanding anything to the contrary
contained in this Section 7.1(a), in the event that SPE and its Permitted
Transferees beneficially own Non-Voting Common Stock and Common Stock, SPE's
Offered Shares will be allocated between Non-Voting Common Stock and Common
Stock in the same proportion.
(b) The Company shall give written notice of a proposed issuance
or sale described in Section 7.1(a) to each Offeree within two Business Days
following any meeting of the Board of Directors at which any such issuance or
sale is approved. Such notice (the "Issuance Notice") shall set forth the
material terms and conditions of such proposed transaction, including the name
of any proposed purchaser(s) or the proposed manner of disposition, in the
case of a public offering, the number or amount and description of the
Issuance Shares and, except in the case of a public offering, the proposed
purchase price per share, including a description of any non-cash
consideration sufficiently detailed to permit valuation thereof. Such notice
shall also set forth the number of Offered Shares for all Stockholders and
shall be accompanied by any written offer from the prospective purchaser to
purchase such Voting Shares, if available and permitted pursuant to the terms
thereof. The Issuance Notice shall be received by each Offeree at least 20
days prior to the proposed issuance or sale.
(c) At any time during the 20-day period following an Offeree's
receipt of an Issuance Notice, each Offeree shall have the right to
irrevocably elect to purchase up to the number of such Offeree's Offered
Shares at the purchase price set forth in the Issuance Notice (or if such
price includes property other than cash, the equivalent in cash of such price)
and upon the other terms and conditions specified in the Issuance Notice by
delivering a written notice to the Company. Except as provided in the
following sentence, such purchase(s) shall be consummated concurrently with
the consummation of the issuance or sale described in the Issuance Notice.
The closing of any purchase by an Offeree may be extended beyond the closing
of the transaction described in the Issuance Notice to the extent necessary to
obtain required governmental approvals and other required approvals and the
Company and the Offeree shall use their respective best efforts to obtain such
approvals.
(d) If the Offeree(s) do not elect pursuant to Section 7.1(c) to
purchase Offered Shares, the Company shall be free to complete the proposed
issuance or sale described in the Issuance Notice on terms no less favorable
to the Company than those set forth in the Issuance Notice, provided that (x)
such issuance or sale is closed within 90 days after the latest of the
expiration of the 20-day period described in Section 7.1(c) or, in the case of
a public offering, within 20 days of the declaration by the Commission of the
effectiveness of the applicable registration statement filed by the Company,
(y) the price at which the Voting Shares are transferred must be equal to or
higher than the purchase price described in the Issuance Notice (except in the
case of a public offering, in which case the price at which the Voting Shares
are sold (before deducting underwriting discounts and commissions) shall be
equal to at least 90% of such price) and (z) subject to Section 7.1(f), the
amount of securities to be issued or sold by the Company may be reduced. Such
periods within which such issuance or sale must be closed shall be extended to
the extent necessary to obtain required governmental approvals and other
required approvals and the Company shall use its best efforts to obtain such
approvals.
(e) If (i) the consideration specified in the Issuance Notice
consists of, or includes, consideration other than cash or a publicly traded
security for which a closing market price is published for each Business Day,
or (ii) any property other than Voting Shares is proposed to be transferred by
the Company in connection with the transaction to which the Issuance Notice
relates, then the price payable by the Offerees under this Section 7.1 shall
be the Determination of the Independent Directors of the Fair Market Value of
the consideration per share or other amount in the case of clause (i) and the
Determination of the Independent Directors of the Fair Market Value of the
consideration per share or other amount determined to be properly allocable to
the Voting Shares in the case of clause (ii). Notwithstanding anything to the
contrary contained in this Section 7.1, the time periods applicable to an
election by the Offerees to purchase the Offered Shares set forth in Section
7.1(c) shall not be deemed to commence until the Determination of the
Independent Directors under this Section 7.1(e) has been made. The Company
agrees to use its best efforts to cause the Determination of the Independent
Directors under this Section 7.1(e) to be made as promptly as practicable but
in no event later than ten Business Days after delivery by the Company of the
Issuance Notice.
(f) To the extent that, after an Offeree's election to acquire
Voting Shares pursuant to its purchase right under this Section 7.1, the
number of Issuance Shares shall be reduced (whether at the discretion of the
Company or otherwise), then the number of shares or other amount of Voting
Shares that such Offeree has the right to acquire under this Section 7.1 shall
be reduced pro rata and such Offeree's election shall be deemed to have been
its irrevocable commitment to purchase such reduced number of shares or other
amount of such Voting Shares.
(g) Notwithstanding anything to the contrary contained in this
Section 7.1, an Offeree shall not be entitled to purchase any securities
pursuant to this Section 7.1 (i) unless and until the Company actually issues
or sells the securities that gave rise to the Offeree's purchase right under
this Section 7.1 (and the Company may in its sole discretion elect at any time
to abandon any such issuance or sale) or (ii) in connection with any pro rata
stock split, stock dividend or other combination or reclassification of any
Capital Stock of the Company.
(h) Notwithstanding anything to the contrary contained in this
Section 7.1, upon any purchase of Voting Shares by an Offeree pursuant to this
Section 7.1 on a later date than the issuance or sale of securities described
in the Issuance Notice (x) the purchase price shall be adjusted by subtracting
therefrom the Fair Market Value (as established by a Determination of the
Independent Directors) of any dividend or distribution received in respect of
such Voting Shares after the date of such issuance and prior to the purchase
by such Offeree hereunder, (y) the purchase price and number of shares or
amount to be purchased shall be adjusted to reflect any stock split, stock
dividend, or other combination or reclassification of the Company's Capital
Stock during such time and (z) such Offeree shall be entitled to exercise any
rights to purchase additional Voting Shares available to all holders of Voting
Shares proportionately that it would have been entitled to exercise if it had
been the owner of the Voting Shares purchased by such Offeree hereunder on the
record date for the distribution of such rights.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Conflicting Agreements.
Each Stockholder and the Company represents
and warrants that such party has not granted and is not a party to any proxy,
voting trust or other agreement that is inconsistent with or conflicts with
any provision of this Agreement.
SECTION 8.2 Duration of Agreement.
Except as otherwise provided in this
Agreement, the rights and obligations of a Stockholder and its Permitted
Transferees under this Agreement shall terminate upon such Stockholder's
Applicable Percentage equalling less than 6.25% (or, in the case of the
members of the Claridge Group, 3.5% until the five-year anniversary of the
Closing and 5% thereafter), provided that in the event that a Stockholder's
Applicable Percentage shall be less than 6.25% (or, in the case of the members
of the Claridge Group, 3.5% until the five-year anniversary of the Closing and
5% thereafter) as a result of the issuance of additional Voting Shares by the
Company, such Stockholder shall be so advised by the Company by written notice
following any required recalculation of the number of such Stockholder's
designees pursuant to Section 2.1(e) or Section 2.1(g), and the Agreement
shall continue to bind and enure to the benefit of such Stockholder for a
period of 180 days following such Stockholder's receipt of such notice and
will continue to bind and enure to the benefit of such Stockholder thereafter
in the event that such Stockholder (and/or its Permitted Transferees)
acquires, during such 180-day period, a sufficient number of Voting Shares
such that its Applicable Percentage equals or exceeds the applicable
percentage set forth above.
SECTION 8.3 Best Efforts.
Each of SPE and USI covenant and agree with the other to use
its best efforts to cause the Company to fulfill the Company's obligations
under Article II and Article III of this Agreement. If either SPE or USI
fails to use its best efforts to cause the Company to fulfill in any material
respect any of the Company's obligations under Article II or Article III, such
Stockholder shall immediately cease to have any rights under the provisions of
such Articles, provided, however, that if such failure is reasonably capable
of being cured, such Stockholder shall retain its rights under such provisions
if such failure is cured within 30 days after such Stockholder has received
written notice of such failure.
SECTION 8.4 Ownership Information.
(a) For purposes of this Agreement, a
Stockholder, in determining the amount of outstanding Voting Shares, may rely
upon information set forth in the most recent quarterly or annual report, and
any current report subsequent thereto, filed by the Company with the
Commission, unless the Company shall have updated such information by delivery
of notice to all Stockholders.
(b) Upon the reasonable request of the Company or any
Stockholder, each Stockholder shall deliver to the Company and each other
Stockholder a notice specifying the amount of each class of Voting Shares then
beneficially owned by such Stockholder, its Permitted Transferees and its
Affiliates. The Company and the other Stockholders shall be entitled to rely
on the most recently delivered such notice for all purposes of this Agreement,
unless such Stockholder shall have updated such information by delivery of a
subsequent notice (including a notice delivered pursuant to Section 4.6).
SECTION 8.5 Further Assurances.
At any time or from time to time after the date
hereof, the parties agree to cooperate with each other, and at the request of
any other party, to execute and deliver any further instruments or documents
and to take all such further action as the other party may reasonably request
in order to evidence or effectuate the consummation of the transactions
contemplated hereby and to otherwise carry out the intent of the parties
hereunder.
SECTION 8.6 Amendment and Waiver.
Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or any Stockholder unless such modification,
amendment or waiver is approved in writing by the Company and each Stockholder
whose rights or obligations hereunder are affected by such modification,
amendment or waiver, provided that (i) the Company shall not agree to any of
the foregoing without the prior written consent of SPE and USI and (ii) unless
approved by a Determination of the Independent Directors, the Company shall
not agree to any amendment, modification or waiver of any provision contained
in Section 2.1 (other than Section 2.1(c) and 2.1(k)), Sections 2.6 and 2.7,
clauses (v) and (vi) of Section 3.1(a), Sections 3.3, 3.4, 4.1, 4.2, 4.5(b),
6.1 and 8.2 or this Section 8.6. The failure of any party to enforce any of
the provisions of this Agreement shall in no way be construed as a waiver of
such provisions and shall not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its
terms.
SECTION 8.7 Severability.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
SECTION 8.8 Entire Agreement.
Except as otherwise expressly set forth herein,
this document and the other documents dated the date hereof embody the
complete agreement and understanding among the parties hereto with respect to
the subject matter hereof and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, that
may have related to the subject matter hereof in any way. Without limiting
the generality of the foregoing, to the extent that any of the terms hereof
are inconsistent with the rights or obligations of any Stockholder under any
other agreement with the Company, the terms of this Agreement shall govern.
SECTION 8.9 Successors and Assigns.
Except as provided in Section 4.5, neither
this Agreement nor any of the rights or obligations under this Agreement shall
be assigned, in whole or in part (except by operation of law pursuant to a
merger whose purpose is not to avoid the provisions of this Agreement), by any
party without the prior written consent of the other parties hereto. Subject
to the foregoing, this Agreement shall bind and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns.
SECTION 8.10 Counterparts.
This Agreement may be executed in separate counterparts each
of which shall be an original and all of which taken together shall constitute
one and the same agreement.
SECTION 8.11 Remedies.
(a) Each party hereto acknowledges that money damages would not
be an adequate remedy in the event that any of the covenants or agreements in
this Agreement are not performed in accordance with its terms, and it is
therefore agreed that, subject to the provisions of Section 3.3, in addition
to and without limiting any other remedy or right it may have, the non-
breaching party will have the right to an injunction, temporary restraining
order or other equitable relief in any court of competent jurisdiction
enjoining any such breach and enforcing specifically the terms and provisions
hereof.
(b) All rights, powers and remedies provided under this Agreement
or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise or beginning of the exercise
of any thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
(c) In the event that either SPE or USI (the "Aggrieved
Stockholder") has a good faith belief that any other Stockholder or the
Company is likely to breach in any material respect or has breached in any
material respect any of its obligations under Sections 2.1, 2.4, 2.5, 2.6,
2.7, 3.1, 3.2 or 3.5 or Article VI of this Agreement, upon notice of such
belief from the Aggrieved Stockholder, such Stockholder and/or the Company, as
the case may be, agrees to immediately cease taking any action to the extent
such Aggrieved Stockholder believes in good faith that such action breaches or
would breach any of the foregoing provisions of this Agreement in any material
respect. Upon receipt of notice of the Aggrieved Stockholder's belief and
until the dispute is resolved, the Company and each of the Stockholders agree
not to take any action that would facilitate any such breach and to take
reasonable actions to prevent such breach, if it has not yet occurred, or to
minimize any adverse consequences to the Aggrieved Stockholder of any such
breach. The parties agree that the Aggrieved Stockholder shall have the right
to a temporary restraining order from any court of competent jurisdiction
enjoining any such breach or potential breach (or otherwise preserving the
status quo) pending decision as to whether the Aggrieved Stockholder's belief
is correct by, at the Aggrieved Stockholder's election, the court or the
Arbitrator. If the Aggrieved Stockholder seeks a judicial determination of
such dispute, the parties agree that the court should schedule a hearing to
resolve the dispute on one day's notice. If the court or the Arbitrator, as
applicable, shall determine that there is a breach or potential breach, the
parties agree that the court or the Arbitrator, as applicable, should impose a
remedy that would put the Aggrieved Stockholder in the same position it would
have been in had there been no such dispute. If any dispute under this
Section has been previously determined by a court or the Arbitrator adversely
against any party, in connection with any subsequent dispute that is
determined by a court or an Arbitrator adversely against such party, such
party shall bear all costs and expenses of the Arbitrator or the court, as the
case may be, in connection with such subsequent dispute.
(d) In the event that SPE or the Company shall breach in any
material respect any of their respective obligations to USI under this
Agreement, at the request of USI, SPE and the Company shall use their
respective best efforts to amend the Certificate as soon as practicable,
including calling a special meeting of stockholders or soliciting written
consents from stockholders, so as to authorize a class of common stock of the
Company which would be issued by the Company to USI and its Permitted
Transferees on a one-for-one basis in exchange for all the Shares then
beneficially owned by them. Such class of common stock would be identical in
all respects to the existing Common Stock, except that (i) the consent rights
contained in Article III would be incorporated in such class and SPE and USI
would cease to have any consent rights under this Agreement, (ii) such class
would entitle the holders thereof to proportionate Board representation on the
same basis that USI is entitled to Board representation pursuant to Article II
and (iii) shares of such class could be converted from time to time at the
holder's election into Common Stock on a share-for-share basis. In addition,
USI and its Affiliates will have the right to convert any Common Stock from
time to time into shares of such class on a share-for-share basis.
SECTION 8.12 Notices.
Any notice, request, claim, demand or other communication under
this Agreement shall be in writing, shall be either personally delivered or
sent by reputable overnight courier service (charges prepaid) to the address
for such Person set forth below or such other address as the recipient party
has specified by prior written notice to the other parties hereto and shall be
deemed to have been given hereunder when delivered personally or one day after
deposit with a reputable overnight courier service.
If to the Company:
LTM Holdings, Inc.
711 Fifth Avenue, 11th Floor
New York, NY 10022
Attention: Larry Ruisi
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: David Golay
If to SPE:
Sony Pictures Entertainment
10202 West Washington Boulevard
Culver City, CA 90232
Attention: Ronald N. Jacobi
with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019
Attention: Morton A. Pierce
If to USI:
Universal Studios, Inc.
100 Universal City Plaza
Universal City, CA 91608
Attention: Brian C. Mulligan
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3909
Attention: John G. Finley
If to the Trust:
Charles Rosner Bronfman Family Trust
c/o Claridge Inc.
1170 Peel Street, 8th Floor
Montreal, Quebec, Canada H3B 4P2
Attention: Robert Rabinovitch
with a copy to:
Goodman Phillips & Vineberg
1501 McGill College Avenue, 26th Floor
Montreal, Quebec, Canada H3A 3N9
Attention: Michael D. Vineberg
SECTION 8.13 Governing Law; Consent to
Jurisdiction. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflicts of law. Except as provided in Section 3.3, each of
the parties hereto hereby irrevocably and unconditionally consents to submit
to the non-exclusive jurisdiction of the courts of the State of New York and
of the United States of America, in each case located in the County of New
York, for any action, proceeding or investigation in any court or before any
governmental authority ("Litigation") arising out of or relating to this
Agreement and the transactions contemplated hereby and further agrees that
service of any process, summons, notice or document by U.S. or Canadian
registered mail to its respective address set forth in this Agreement shall be
effective service of process for any Litigation brought against it in any such
court. Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to the laying of venue of any Litigation arising out of
this Agreement or the transactions contemplated hereby in the courts of the
State of New York or the United States of America, in each case located in the
County of New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such Litigation
brought in any such court has been brought in an inconvenient forum. Each of
the parties irrevocably and unconditionally waives, to the fullest extent
permitted by applicable law, any and all rights to trial by jury in connection
with any Litigation arising out of or relating to this Agreement or the
transactions contemplated hereby.
SECTION 8.14 Legends.
(a) Upon original issuance thereof, and until such time as the
same is no longer required hereunder or under the applicable requirements of
the Securities Act or applicable state securities or "blue sky" laws, any
certificate issued representing any Shares held by a Stockholder or any
Permitted Transferee (including all certificates issued upon Transfer
(including to any Third Party Transferee who has entered into an agreement
contemplated by Section 4.5(c)) or in exchange thereof or in substitution
therefor) shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO VOTING
AGREEMENTS AND RESTRICTIONS ON TRANSFER SET FORTH IN A CERTAIN
STOCKHOLDERS AGREEMENT DATED AS OF SEPTEMBER 30, 1997 AMONG SONY
PICTURES ENTERTAINMENT, INC., UNIVERSAL STUDIOS, INC., CHARLES
ROSNER BRONFMAN FAMILY TRUST, THE OTHER STOCKHOLDERS PARTY THERETO
AND LTM HOLDINGS, INC. (THE "COMPANY"), COPIES OF WHICH AGREEMENT
ARE ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY."
(b) The certificates representing the Shares (including any
certificate issued upon Transfer (including to any Third Party Transferee who
has entered into an agreement contemplated by Section 4.5(c)) or in exchange
thereof or in substitution therefor) shall also bear any legend required under
any applicable state securities or "blue sky" laws.
(c) The Company may make a notation on its records or give
instructions to any transfer agents or registrars for the Voting Shares in
order to implement the restrictions on Transfer set forth in Article IV.
(d) In connection with any Transfer of Voting Shares, the
transferor shall provide the Company with such customary certificates,
opinions and other documents as the Company may reasonably request to assure
that such Transfer complies fully with applicable securities and other laws.
(e) The Company shall not incur any liability for any delay in
recognizing any Transfer of Voting Shares if the Company in good faith
reasonably believes that such Transfer may have been or would be in violation
in any material respect of the provisions of the Securities Act, applicable
state securities or "blue sky" laws, or this Agreement.
(f) After such time as any of the legends described by this
Section 8.14 are no longer required on any certificate or certificates
representing the Voting Shares, upon the request of any Stockholder, the
Company will cause such Stockholder's certificate or certificates to be
exchanged for a certificate or certificates that do not bear such legend.
SECTION 8.15 Interpretation.
The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
SECTION 8.16 Agents for Stockholders.
(a) The Trust shall act as the
sole agent for each member of the Claridge Group and its Permitted Transferees
(if any) and shall be authorized to exercise all rights of the members of the
Claridge Group and such Permitted Transferees hereunder except that the
designation of Claridge Directors shall be effected by such party as may be
designed in writing at any time or from time to time by the members of the
Claridge Group. The Trust shall have sole power and authority to take any
action on behalf of the members of the Claridge Group and such Permitted
Transferees pursuant to this Agreement, including delivering any notice or
granting any waiver or consent hereunder, and the other parties hereto shall
be entitled to rely on any action taken by the Trust as being taken on behalf
of all members of the Claridge Group and such Permitted Transferees. The
rights of the members of the Claridge Group and such Permitted Transferees
under this Agreement shall be exercised only by the Trust on behalf of such
members and such Permitted Transferees and no such members or Permitted
Transferees shall be separately entitled to exercise any such rights. Any
notice required to be delivered hereunder to any such member or Permitted
Transferee shall be delivered to the Trust.
(b) SPE shall act as the sole agent for each of its Permitted
Transferees (if any) and shall be authorized to exercise all rights of such
Permitted Transferees hereunder. SPE shall have sole power and authority to
take any action on behalf of its Permitted Transferees pursuant to this
Agreement, including delivering any notice or granting any waiver or consent
hereunder, and the other parties hereto shall be entitled to rely on any
action taken by SPE as being taken on behalf of such Permitted Transferees.
The rights of such Permitted Transferees under this Agreement shall be
exercised only by SPE on behalf of such Permitted Transferees and no such
Permitted Transferees shall be separately entitled to exercise any such
rights. Any notice required to be delivered hereunder to any such Permitted
Transferee shall be delivered to SPE.
(c) USI shall act as the sole agent for each of its Permitted
Transferees (if any) and shall be authorized to exercise all rights of such
Permitted Transferees hereunder. USI shall have sole power and authority to
take any action on behalf of its Permitted Transferees pursuant to this
Agreement, including delivering any notice or granting any waiver or consent
hereunder, and the other parties hereto shall be entitled to rely on any
action taken by USI as being taken on behalf of such Permitted Transferees.
The rights of such Permitted Transferees under this Agreement shall be
exercised only by USI on behalf of such Permitted Transferees and no such
Permitted Transferees shall be separately entitled to exercise any such
rights. Any notice required to be delivered hereunder to any such Permitted
Transferee shall be delivered to USI.
SECTION 8.17 Additional Agreement.
The Company agrees to comply with the
provisions set forth in Exhibit C relating to the use of sound systems in
theaters.
SECTION 8.18 Effectiveness.
This Agreement shall become effective upon consummation of
the Transaction and prior thereto shall be of no force or effect, provided
that the provisions of Section 3.3(d) shall be effective as of the date of
their Agreement. If the Master Agreement shall be terminated in accordance
with its terms, this Agreement shall automatically be deemed to have been
terminated and shall thereafter be of no force or effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement as of the date first written above.
LTM HOLDINGS, INC.
By:/s/ Stanley Steinberg
Name: Stanley Steinberg
Title: Executive Vice President
SONY PICTURES ENTERTAINMENT INC.
BY:/s/ Ronald N. Jacobi
Name: Ronald N. Jacobi
Title: Executive Vice President &
General Counsel
UNIVERSAL STUDIOS, INC.
By:/s/ Brian C. Mulligan
Name: Brian C. Mulligan
Title: Senior Vice President
CHARLES ROSNER BRONFMAN FAMILY TRUST
By:/s/ Robert Rabinovitch
Name: Robert Rabinovitch
Title: Authorized Representative
By:/s/ Michael Vineberg
Name: Michael Vineberg
Title: Authorized Representative
CHARLES R. BRONFMAN
By:/s/ Robert Rabinovitch
Name: Robert Rabinovitch
Title: Authorized Representative
By:/s/ Michael Vineberg
Name: Michael Vineberg
Title: Authorized Representative
E. LEO KOLBER
By:/s/ Robert Rabinovitch
Name: Robert Rabinovitch
Title: Authorized Representative
By:/s/ Michael Vineberg
Name: Michael Vineberg
Title: Authorized Representative
ARNOLD M. LUDWICK
By:/s/ Robert Rabinovitch
Name: Robert Rabinovitch
Title: Authorized Representative
By:/s/ Michael Vineberg
Name: Michael Vineberg
Title: Authorized Representative
PHYLLIS LAMBERT FOUNDATION
By:/s/ Robert Rabinovitch
Name: Robert Rabinovitch
Title: Authorized Representative
By:/s/ Michael Vineberg
Name: Michael Vineberg
Title: Authorized Representative
3096475 CANADA INC.
By:/s/ Robert Rabinovitch
Name: Robert Rabinovitch
Title: Authorized Representative
By:/s/ Michael Vineberg
Name: Michael Vineberg
Title: Authorized Representative
SCHEDULE I
Applicable Percentage Number of Directors
6.25% and < 9.375% 1
9.375% and <15.625% 2
15.625% and <21.875% 3
21.875% and <28.125% 4
28.125% and <34.375% 5
34.375% and <40.625% 6
40.625% and <46.875% 7
46.875% and <53.125% 8
53.125% and <59.375% 9
59.375% and <65.625% 10
65.625% and <71.875% 11
71.875% and <78.125% 12
78.125% and <84.375% 13
84.375% and greater 14