AGREEMENT AND PLAN OF MERGER
AMONG
@ENTERTAINMENT, INC.,
UNITED PAN-EUROPE COMMUNICATIONS N.V.
AND
BISON ACQUISITION CORP.
DATED AS OF JUNE 2, 1999
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June 2, 1999, among
@Entertainment, Inc., a corporation organized under the laws of the State of
Delaware (the "Company"), United Pan-Europe Communications N.V., a corporation
organized under the laws of The Netherlands ("Parent") and Bison Acquisition
Corp., a corporation organized under the laws of the State of Delaware ("Merger
Sub").
RECITALS
WHEREAS, the Executive Board of Parent and the respective Boards of
Directors of Merger Sub and the Company have approved the acquisition of the
Company by Merger Sub;
WHEREAS, in contemplation thereof it is proposed that Merger Sub will
make a tender offer (as it may be amended from time to time as permitted by this
Agreement, the "Offer") to purchase all the issued and outstanding shares of
Common Stock, subject to the terms and conditions of this Agreement, at a price
of $19.00 per share net to the seller in cash (such amount, or any other amount
per share of Common Stock to be paid pursuant to the Offer, the "Offer Price");
WHEREAS, to complete such acquisition, the Executive Board of Parent
and the respective Boards of Directors of Merger Sub and the Company, have
approved the merger of Merger Sub into the Company (the "Merger"), pursuant to
and subject to the terms and conditions of this Agreement; and
WHEREAS, the Board of Directors of the Company has unanimously (x)
determined that each of the Offer and the Merger are advisable and fair to, and
in the best interests of, the holders of the capital stock of the Company,
including, but not limited to, the holders of the Common Stock, (y) approved the
Offer and the Merger and (z) recommended the acceptance of the Offer, the
approval of the Merger and the approval and adoption of this Agreement by the
stockholders of the Company; and
WHEREAS, Parent and Merger Sub are unwilling to enter into this
Agreement unless certain holders of Common Stock immediately following the
execution and delivery of this Agreement, enter into stockholders agreements
(the "Common Stockholders Agreements") among Parent, Merger Sub and each of
certain holders of Common Stock, Options and Company Warrants providing for,
among other things, the agreement of such holders to tender all shares of Common
Stock owned by such persons pursuant to the Offer, the granting to Parent and
Merger Sub of an option to purchase all such shares of Common Stock, Options and
Company Warrants owned by such Person and requiring the Parent and Merger Sub to
purchase the Options and Company Warrants if such option is no exercised, in
each case under the circumstances set forth in such agreements; and
WHEREAS, Parent and Merger Sub are unwilling to enter into this
Agreement unless each of the holders of Company Preference Shares immediately
following the execution and delivery of this Agreement, enter into stockholders
agreements with Parent and Merger Sub (the "Preferred Stockholders Agreements"
and, collectively with the Common Stockholders Agreements, the "Stockholders
Agreements") among Parent, Merger Sub and each such holder providing for, among
other things, the agreement of such holders to grant to Parent and Merger Sub an
option to purchase all such Company Preference Shares and requiring Parent and
Merger Sub to purchase such Company Preference Shares if such option is not
exercised, in each case, under the circumstances set forth in such agreements;
and
WHEREAS the Board of Directors of the Company has (i) approved the
terms of the Stockholders Agreements and the transactions contemplated thereby,
including for the purposes of Section 203 of the DGCL and (ii) approved Parent
and Merger Sub and the Stockholders party thereto entering into the Stockholders
Agreements which are to be executed following the execution hereof; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, Parent, Merger Sub and
the Company hereby agree as follows:
ARTICLE I
Definitions
As used in this Agreement, the following terms shall have the
respective meanings set forth below:
"Acquisition Proposal": As defined in Section 8.2(a).
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"Affiliate": As defined in Rule 12b-2 under the Exchange Act.
"Agreement": as defined in the preamble hereto.
"Agreements and Instruments": as defined in Section 6.8.
"Authorization": Any consent, approval or authorization of,
expiration or termination of any waiting period requirement (including pursuant
to the HSR Act) by, or filing, registration, qualification, declaration or
designation with, any Governmental Body.
"Business Plan": As defined in Section 8.1(d).
"By-Laws": The by-laws of the Company.
"Cash Payment": As defined in Section 8.11(b).
"Certificate of Merger": The certificate of merger with respect to
the merger of the Company with and into Merger Sub, containing the provisions
required by, and executed in accordance with, Section 251 of the DGCL.
"Claim": As defined in Section 8.7(a).
"Closing": The closing of the Merger.
"Closing Date": The date on which the Closing occurs.
"Code": The Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder, as in effect from time to time.
"Common Stock": The Company's common stock, par value $0.01 per share.
"Common Stockholders Agreements": As defined in the fifth recital
hereof.
"Company": @Entertainment, Inc., a Delaware corporation.
"Company Certificates": As defined in Section 5.2(a).
"Company Charter": The Amended and Restated Certificate of
Incorporation of the Company, as amended to the date hereof and as it may be
further amended prior to the Effective Date with the consent of Parent pursuant
to Section 8.1.
"Company Disclosure Statement": The disclosure statement, dated the
date of this Agreement, delivered by the Company to Parent.
"Company Preference Shares": The Company's Series A and Series B 12%
Cumulative Preference Shares, par value $0.01 per share.
"Company SEC Reports": As defined in Section 6.12.
"Company Stockholders' Meeting": As defined in Section 8.4.
"Company Warrants": Warrants to purchase shares of Common Stock.
"Confidentiality Agreement": The Confidentiality Agreement between
Parent and the Company.
"Control": With respect to any Person, the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract, or otherwise.
"DGCL": The Delaware General Corporation Law.
"Dissenting Stockholder": As defined in Section 5.2(c).
"Effective Time": As defined in Section 3.2.
"Employee Plan": As defined in Section 6.9(a).
"Employees": As defined in Section 6.9(a).
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended, and all regulations promulgated thereunder, as in effect from time to
time.
"ERISA Affiliates": Any trade or business, whether or not
incorporated, that is treated as a single employer with the Company or any of
its Subsidiaries under Section 414 of the Code.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Executive Agreements": As defined in Section 8.9(a).
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"Executive Officer": Any "officer" (determined in accordance with
Rule 16a-1(f) under the Exchange Act as in effect on the date hereof) of an
entity.
"Governmental Body": Any supranational, national, provincial, county,
local, municipal or other legislative or executive body or governmental
department, authority, commission, court, board, bureau, agency or
instrumentality, including without limitation, any of the foregoing constituted
by the Republic of Poland, the United Kingdom, the United States of America or
any of their respective political subdivisions.
"Government Licenses": As defined in Section 6.4.
"HSR Act": The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Indemnified Parties": As defined in Section 8.7(a).
"Information Statement": As defined in Section 2.3.
"Intellectual Property": As defined in Section 6.11.
"knowledge": With respect to the Company, the actual knowledge of any
Executive Officer of the Company and, with respect to Parent or Merger Sub, the
actual knowledge of any Executive Officer of Parent or Merger Sub, as the case
may be.
"Law": Any foreign or domestic law, statute, code, ordinance, rule,
regulation promulgated, or order, judgment, writ, stipulation, award, injunction
or decree entered by any Governmental Body.
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"Letter of Transmittal": As defined in Section 2.1(b).
"Lien": As defined in Section 6.17.
"Material Adverse Effect": A material adverse effect on the
business, properties, assets, liabilities, operations, results of operations or
condition (financial or otherwise) of the Company and its Subsidiaries taken
as a whole.
"Material Systems": As defined in Section 6.22.
"Merger": As defined in the third recital hereto.
"Merger Consideration": As defined in Section 5.1(b).
"Merger Sub": Bison Acquisition Corp., a Delaware corporation.
"Merger Sub Common Stock": Merger Sub's common stock, par value
$0.01 per share.
"Minimum Condition": As defined in Annex A to this Agreement.
"NASDAQ": The Nasdaq Stock Market, National Market System.
"Offer": As defined in the second recital hereof.
"Offer Documents": As defined in Section 2.1(b).
"Offer Price": As defined in the second recital hereof.
"Offer to Purchase": As defined in Section 2.1(b).
"Option": As defined in Section 8.11(a).
"Parent": United Pan-Europe Communications N.V., a corporation
organized under the laws of The Netherlands.
"Parent Disclosure Statement": The disclosure statement, dated the
date of this Agreement, delivered by Parent to the Company.
"Parent Representatives": As defined in Section 8.6.
"Paying Agent": As defined in Section 5.2.
"Payment Date": The date which is the third business day after the
Tender Offer Acceptance Date.
"Payment Fund": As defined in Section 5.2(c).
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"PCI": Poland Communications Inc., a New York corporation and Wholly
Owned Subsidiary of the Company.
"Permitted Investments": As defined in Section 5.2(c).
"Permitted Liens": As defined in Section 6.17.
"Person": Any individual or corporation, company, partnership,
trust, incorporated or unincorporated association, joint venture or other entity
of any kind.
"Preferred Stockholders Agreements": As defined in the sixth recital
herein.
"Proxy Statement": As defined in Section 6.16
"Relevant Date": Each of the following dates: September 4, 1999,
September 9, 1999, December 31, 1999, January 1, 2000, February 28, 2000,
February 29, 2000, March 1, 2000, December 31, 2000, and January 1, 2001.
"Schedule 14D-1": As defined in Section 2.1(b).
"Schedule 14D-9": As defined in Section 2.2.
"SEC": The Securities and Exchange Commission.
"Securities Act": The Securities Act of 1933, as amended.
"Stockholders Agreements": As defined in the sixth recital hereof.
"Stock Incentive Plans": As defined in Section 5.5(a).
"Stock Options": As defined in Section 5.5(a).
"Stock Plans": As defined in Section 5.5(a).
"Subsidiary": As to any Person, any other Person of which more than
(i) 50% of the equity and (ii) 50% of the voting interests are owned, directly
or indirectly, by such first Person; provided that, for purposes of the
covenants set forth in Article VIII, references to Subsidiaries shall not
include any Person as to which such first Person's voting interests are subject
to a voting agreement, proxy, management contract or other arrangement as a
result of which such first Person does not Control such other Person. For the
avoidance of doubt, the term "Subsidiary", when applied to the Company, includes
any Person listed as a Subsidiary on Schedule 6.2 to the Company Disclosure
Statement.
"Superior Proposal": As defined in Section 8.4(a).
"Surviving Corporation": Shall mean the Company in its capacity as
the surviving corporation in the Merger pursuant to Section 3.1 of this
Agreement.
"Tax": As defined in Section 6.10(e).
"Tax Controversy": As defined in Section 6.10(b).
"Tax Return": As defined in Section 6.10(e).
"Tender Offer Acceptance Date": The date on which Merger Sub shall
have accepted for payment the shares of Common Stock validly tendered and not
withdrawn prior to the expiration date of the Offer.
"Tender Offer Conditions": As defined in Section 2.1(a).
"Wholly Owned Subsidiary": As to any Person, a Subsidiary of such
Person 100% of the equity and voting interest in which (other than directors'
qualifying shares) is owned, directly or indirectly, by such Person.
"Voting Debt": As defined in Section 6.6(a).
"Year 2000 Compliant": As defined in Section 6.22.
ARTICLE II
The Offer
2.1 The Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Article X hereof and so long as none of the events
set forth in Annex A hereto (the "Tender Offer Conditions") shall have occurred
and are continuing (unless such event shall have been waived by Parent or Merger
Sub), as promptly as practicable, but in no event later than the fifth business
day after the date of this Agreement, Parent and Merger Sub shall, and Parent
shall cause Merger Sub to, commence the Offer at the Offer Price. The initial
expiration date for the Offer shall be the twentieth business day following the
commencement of the Offer. The obligations of Merger Sub to accept for payment
and to pay for any shares of Common Stock tendered shall be subject only to the
Tender Offer Conditions, any of which may be waived by Parent or Merger Sub in
their sole discretion; provided, however, that Merger Sub shall not waive the
Minimum Condition without the prior written consent of the Company. The Tender
Offer Conditions are for the sole benefit of Parent and Merger Sub and may be
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asserted by Parent and Merger Sub regardless of the circumstances giving rise to
any such Tender Offer Conditions or, except as expressly set forth herein, may
be waived by Parent and Merger Sub in whole or in part. Parent and Merger Sub
expressly reserve the right to modify the terms of the Offer; provided however,
that without the prior written consent of the Company, Merger Sub shall not (i)
reduce the number of shares of Common Stock to be purchased in the Offer, (ii)
reduce the Offer Price, (iii) modify or add to the Tender Offer Conditions, (iv)
change the form of consideration payable in the Offer or (v) make any other
change in the terms of the Offer which is materially adverse to the holders of
Common Stock. Notwithstanding the foregoing sentence, Merger Sub may, without
the consent of the Company, (A) extend the Offer, if at the then scheduled
expiration date of the Offer any of the conditions to Merger Sub's obligations
to purchase the shares of Common Stock have not been satisfied or waived, until
the third business day after the day Merger Sub reasonably believes to be the
earliest date on which such conditions will be satisfied, (B) extend the Offer
from time to time up to a maximum of an aggregate of 30 days beyond the first
day all of the Tender Offer Conditions have been met, and/or (C) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the SEC or the staff thereof applicable to the Offer.
Notwithstanding the foregoing, (x) the Offer may not, without the Company's
written consent, be extended beyond the date of termination of this Agreement
pursuant to Section 10.1(a) and (y) the Offer may not, without the Company's
prior written consent, be extended pursuant to clause (A) above if the failure
to satisfy any condition was caused by a material breach by Parent or Merger Sub
of any of their representations, warranties, covenants or agreements set forth
in this Agreement. Notwithstanding any thing to the contrary in this Agreement,
Parent and Merger Sub agree that if immediately prior to any scheduled
expiration date of the Offer, the Regulatory Conditions (as defined in Annex A)
shall not have been satisfied, but at such scheduled expiration date each of the
other conditions set forth in Annex A (other than the Minimum Condition) shall
then be satisfied, at the request of the Company, Merger Sub shall extend the
Offer from time to time, subject to the right of Parent, Merger Sub or the
Company to terminate this Agreement pursuant to the terms hereof. Upon the terms
and subject to the conditions of the Offer, Merger Sub shall, and Parent shall
cause Merger Sub to, promptly purchase all shares of Common Stock which are
validly tendered on or prior to the expiration of the Offer and not withdrawn.
Parent shall provide, or cause to be provided, to Merger Sub on a timely basis
all funds necessary to accept for payment, and pay for, all shares of Common
Stock that Merger Sub becomes obligated to purchase pursuant to the Offer.
(b) As soon as reasonably practicable on the date the Offer is
commenced, Parent and Merger Sub shall file, and Parent shall cause Merger Sub
to file, with the SEC and disseminate to the holders of shares of Common Stock
to the extent required by law a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "Schedule 14D-1")
with respect to the Offer. The Schedule 14D-1 shall contain (included as an
exhibit) or shall incorporate by reference an offer to purchase (the "Offer to
Purchase") and a form of the related letter of transmittal (the "Letter of
Transmittal"), as well as all other information and exhibits required by law
(which Schedule 14D-1, Offer to Purchase, Letter of Transmittal and such other
information and exhibits, together with any supplements or amendments thereto,
are referred to herein collectively as the "Offer Documents"). The Company and
its counsel shall be given the opportunity to review and comment upon the
Schedule 14D-1 and any amendments thereto prior to their filing with the SEC.
The Schedule 14D-1 will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and the
date first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Merger Sub with
respect to any information supplied by the Company expressly in writing for
inclusion or incorporation by reference in the Schedule 14D-1. Parent and Merger
Sub agree to promptly provide the Company and its counsel with (i) any comments
Parent, Merger Sub or their counsel may receive from the SEC or its staff with
respect to the Schedule 14D-1 after the receipt of such comments and (ii) copies
of any responses by Merger Sub or Parent to such comments. Each of Parent and
Merger Sub agrees to promptly correct any information provided by it for use in
the Offer Documents that shall be, or have become, false or misleading in any
material respect, and Parent and Merger Sub further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to holders of
Common Stock, in each case as and to the extent required by applicable federal
securities laws. In the event that the Offer is terminated or withdrawn by
Merger Sub, Parent and Merger Sub shall cause all of the tendered shares of
Common Stock to be returned to the registered holders of the shares of Common
Stock represented by the certificate or certificates surrendered to the Paying
Agent.
2.2 Company Actions. (a) The Company hereby consents to the Offer and
the Merger and represents that (X) its Board of Directors (at a meeting duly
called and held) has by the unanimous vote of the directors, (i) determined that
each of the Offer and the Merger is (x) advisable and (y) fair to, and in the
best interests of, the holders of shares of capital stock of the Company,
including but not limited to holders of shares of Common Stock, (ii) approved
the Offer and the Merger and approved and adopted this Agreement, the
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Stockholder Agreements and the transactions contemplated hereby and thereby in
accordance with the provisions of the DGCL, (iii) recommended acceptance of the
Offer, approval of the Merger and approval and adoption of this Agreement by the
stockholders of the Company, (iv) approved the changes in the Options, Company
Warrants, Stock Incentive Plans and Stock Plans contemplated by this Agreement,
and (v) taken all other applicable action necessary to render (x) Section 203 of
the DGCL and any other applicable state takeover statutes and (y) Article VIII
of the Company Charter inapplicable to the Offer and the Merger; and (B) Xxxxxxx
Sachs International has delivered to the Board of Directors of the Company its
opinion that the consideration to be received by the holders of Common Stock,
other than Parent and Merger Sub, pursuant to the Offer and the Merger is fair
to such holders of Common Stock from a financial point of view, subject to the
assumptions and qualifications contained in such opinion.
(b) The Company shall file with the SEC, as soon as practicable on the
date of the commencement of the Offer, a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing the recommendations referred to in clause (X) of
Section 2.2(a) and shall disseminate the Schedule 14D-9 as required by Rule
14d-9 under the Exchange Act. Parent and Merger Sub and their counsel shall be
given the opportunity to review and comment upon the Schedule l4D-9 and any
amendments thereto prior to their filing with the SEC. The Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by Parent or Merger Sub in writing for inclusion in the Schedule 14D-9.
The Company agrees to provide Parent and its counsel with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments and shall provide
Parent and its counsel an opportunity to participate, including by participating
with the Company and its counsel in any discussions with the SEC or its staff,
in the response of the Company to such comments.
(c) In connection with the Offer, the Company will promptly furnish
Merger Sub with mailing labels, security position listings and any available
listing or computer list containing the names and addresses of the record
holders of the Common Stock as of the most recent practicable date and shall
furnish Merger Sub with such additional information (including, but not limited
to, updated lists of holders of Common Stock and their addresses, mailing labels
and lists of security positions) and such other assistance as Merger Sub or its
agents may reasonably request in communicating the Offer to the Company's
stockholders. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and its Affiliates and
associates (as defined in Rule 12b-2 under the Exchange Act) shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated in accordance with Article X, shall
promptly deliver to the Company all copies of such information then in their
possession and shall certify in writing to the Company their compliance with
this Section 2.2(c).
(d) The Company has been advised that each of its directors and
Executive Officers intends to tender pursuant to the Offer all shares of Common
Stock owned of record and beneficially by him or her, if any, except to the
extent such tender would violate applicable securities laws.
2.3 Composition of the Board of Directors. (a) Promptly upon the
acceptance for payment of, and payment by Merger Sub in accordance with the
Offer for, shares of Common Stock equal to at least a majority of the
outstanding shares of Common Stock, pursuant to the Offer, Merger Sub shall be
entitled to designate up to such number of directors on the Board of Directors
of the Company, rounded up to the next whole number, as will give Merger Sub,
subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, representation on such Board of Directors equal to at
least that number of directors which equals the product of the total number of
directors on the Board of Directors (giving effect to the directors elected
pursuant to this sentence) multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock beneficially owned by Merger Sub
and Parent and the denominator of which shall be the number of shares of Common
Stock then outstanding, and the Company and its Board of Directors shall, at
such time, take any and all such action needed to cause Merger Sub's designees
to be appointed to the Company's Board of Directors (including using its
reasonable best efforts to cause directors to resign). Subject to applicable
law, the Company shall take all action requested by Parent which is reasonably
necessary to effect any such election, including mailing to its stockholders an
information statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder (the "Information
Statement"), and the Company agrees to make such mailing with the mailing of the
Schedule 14D-9 so long as Merger Sub shall have provided to the Company on a
timely basis all information required to be included in the Information
Statement with respect to Merger Sub's designees. Parent or Merger Sub will be
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solely responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1. In furtherance thereof, the Company will increase the size of the
Company's Board of Directors (subject to the limitations set forth in the
Company Charter and By-Laws), or use its reasonable efforts to secure the
resignation of directors, or both, as is necessary to permit Merger Sub's
designees to be elected to the Company's Board of Directors. At the Effective
Time, the Company, if so requested, will use its reasonable efforts to cause
persons designated by Merger Sub to constitute the same percentage of each
committee of such board, each board of directors of each Subsidiary and each
committee of each such board (in each case to the extent of the Company's
ability to elect such persons and subject to any applicable stock exchange
regulations).
(b) Following the election or appointment of Merger Sub's designees
pursuant to this Section 2.3 and prior to the Effective Time, any amendment or
termination of this Agreement or the Company Charter or By-Laws, any termination
of this Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Parent and Merger Sub
or waiver of any of the Company's rights hereunder, and any other consent or
action by the Board of Directors hereunder, will require the concurrence of a
majority (which shall be at least two) of the directors of the Company then in
office who are directors on the date hereof and who voted to approve this
Agreement or are designated by a majority of the directors of the Company who
are directors on the date hereof and who voted to approve this Agreement.
ARTICLE III
The Merger
3.1. The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time, the Merger Sub shall be merged with and into the Company
in accordance with the provisions of Section 251 of the DGCL and with the effect
provided in Sections 259 and 261 of the DGCL. The separate corporate existence
of Merger Sub shall thereupon cease and the Company shall be the Surviving
Corporation and shall continue its corporate existence as a Subsidiary of Parent
and shall continue to be governed by the laws of the State of Delaware. The name
of the Surviving Corporation shall be "@Entertainment, Inc."
3.2. Effective Time. The Merger shall become effective on the date and
at the time (the "Effective Time") that the Certificate of Merger shall have
been accepted for filing by the Secretary of State of the State of Delaware (or
such later date and time as may be specified in the Certificate of Merger as
Parent, Merger Sub and the Company may agree), which shall be on the Closing
Date or as soon as practicable thereafter.
3.3. Closing. Subject to the fulfillment or waiver of the conditions
set forth in Article IX, the Closing shall take place at the offices of White &
Case LLP, 1155 Avenue of the Americas, New York, New York, at 10:00 a.m. on the
earliest practicable date (but no later than the fifth business day) following
the satisfaction or waiver of the conditions set forth in Article IX (other than
those conditions to be satisfied or waived at the Closing) or at such other
place and/or time and/or on such other date as Parent, Merger Sub and the
Company may agree.
ARTICLE IV
Terms of Merger
4.1. Certificate of Incorporation. The Certificate of Incorporation of
Merger Sub (amended to change the name of Merger Sub to "@Entertainment, Inc.")
in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and of the DGCL.
4.2. The By-Laws. The by-laws of Merger Sub immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation, until duly
amended in accordance with the terms thereof, of the Certificate of
Incorporation of the Surviving Corporation and of the DGCL.
4.3. Directors. The directors of Merger Sub immediately prior to the
Effective Time, shall be the directors of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and by-laws.
4.4. Officers. The officers of the Company immediately prior to the
Effective Time, be the officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and by-laws.
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ARTICLE V
Share Consideration; Conversion or
Cancellation of Shares in the Merger
5.1. Share Consideration; Conversion or Cancellation of Shares in the
Merger. Subject to the provisions of this Article V, at the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or the holders thereof, the shares, options and warrants of the
constituent corporations shall be converted or canceled as follows:
(a) Each share of Merger Sub Common Stock that is issued and
outstanding immediately prior to the Effective Time shall become one fully paid
and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(b) Each share of Common Stock then issued and outstanding (other than
(i) any shares of Common Stock which are held by any Subsidiary or in
the treasury of the Company, or which are held, directly or indirectly,
by Parent or any direct or indirect Subsidiary of Parent (including
Merger Sub), all of which shall be canceled and none of which shall
receive any payment with respect thereto and (ii) shares of Common
Stock held by Dissenting Stockholders) shall be canceled and converted
into and represent the right to receive an amount in cash, without
interest, equal to the Offer Price for each share of Common Stock
pursuant to the Offer (the "Merger Consideration").
(c) Each Company Preference Share shall be canceled and no further
consideration shall be payable in respect thereof.
5.2. Surrender of Certificates; Payment. The manner of making
payment for Shares in the Merger shall be as follows:
(a) (i) Prior to the Effective Time, Parent shall designate a
bank or trust company located in the United States reasonably
satisfactory to the Company to act as Paying Agent (the
"Paying Agent") for the holders of shares of Common Stock in
connection with the Merger and to receive the funds which
holders of shares of Common Stock will be entitled to receive
pursuant to Section 5.1(b). Promptly after the Effective Time,
the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the
Effective Time represented outstanding Common Stock (the
"Company Certificates") (other than those which are held by
any Subsidiary of the Company or in the treasury of the
Company or which are held directly or indirectly by Parent or
any direct or indirect Subsidiary of Parent (including Merger
Sub)) (1) a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to
the Company Certificates shall pass, only upon proper delivery
of the Company Certificates to the Paying Agent) and (2)
instructions for use in effecting the surrender of the Company
Certificates for payment therefor. Upon surrender of Company
Certificates for cancellation to the Paying Agent, together
with such letter of transmittal duly executed and any other
required documents, the holder of such Company Certificates
shall be entitled to receive the Merger Consideration
deliverable in respect thereof and the Company Certificates
shall forthwith be cancelled. Until so surrendered, Company
Certificates shall represent solely the right to receive the
Merger Consideration payable in respect of the shares of
Common Stock represented thereby.
(ii) If the Merger Consideration is to be paid to or
issued in a name other than that in which the Company
Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange
that the Company Certificate so surrendered shall be
properly endorsed and otherwise in proper form for
transfer and that the Person requesting such exchange
shall pay to the Paying Agent any transfer or other
taxes required by reason of the foregoing or shall
establish to the reasonable satisfaction of the
Paying Agent that such tax has been paid or is not
applicable.
(b) In the event that any Company Certificate has been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Company Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting by
such Person of a bond in such reasonable amount as Parent may direct as
indemnity against any claim that may be made against it with respect to
such Company Certificate, the Paying Agent will deliver to the Person
delivering such affidavit the Merger Consideration payable in respect
of the Common Shares represented by such lost, stolen or destroyed
Company Certificates.
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(c) Concurrently with or immediately prior to the Effective Time,
Parent shall, or shall cause Merger Sub to, shall deposit in trust with
the Paying Agent cash in United States dollars in an aggregate amount
equal to the product of (i) the number of shares of Common Stock
outstanding immediately prior to the Effective Time (other than shares
of Common Stock which are held by any Subsidiary or in the treasury of
the Company or which are held directly or indirectly by Parent or any
direct or indirect Subsidiary of Parent (including Merger Sub) or a
Person known at the time of such deposit to be a Dissenting
Stockholder) and (ii) the Merger Consideration (such amount being
hereinafter referred to as the "Payment Fund"). The Payment Fund shall
be invested by the Paying Agent as directed by Parent in direct
obligations of the United States, obligations for which the full faith
and credit of the United States is pledged to provide for the payment
of principal and interest, commercial paper rated of the highest
quality by Xxxxx'x Investors Services, Inc. or Standard & Poor's
Ratings Group or certificates of deposit, bank repurchase agreements or
bankers' acceptances of a commercial bank having at least $100,000,000
in assets (collectively "Permitted Investments") or in money market
funds which are invested in Permitted Investments, and any net earnings
with respect thereto shall be paid to Parent as and when requested by
Parent. The Paying Agent shall, pursuant to irrevocable instructions,
make the payments referred to in Section 5.1(b) hereof out of the
Payment Fund. The Payment Fund shall not be used for any other purpose
except as otherwise agreed to by Parent. Promptly following the date
which is six months after the Effective Time, the Paying Agent shall
return to the Surviving Corporation all cash, certificates and other
instruments in its possession that constitute any portion of the
Payment Fund (other than net earnings on the Payment Fund which shall
be paid to Parent), and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Company Certificate may surrender such
Company Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
exchange therefor the Merger Consideration, without interest, but shall
have no greater rights against the Surviving Corporation or Parent than
may be accorded to general creditors of the Surviving Corporation or
Parent under applicable law. Notwithstanding the foregoing, neither the
Paying Agent nor any party hereto shall be liable to a holder of shares
of Common Stock for any Merger Consideration delivered to a public
official pursuant to applicable abandoned property, escheat and similar
laws.
5.3. Transfer of Company Shares after the Effective Time. No transfers
of Common Stock shall be made on the stock transfer books of the Company after
the close of business on the day prior to the date of the Effective Time. No
transfer of shares of Common Stock shall be made on the stock transfer books of
the Surviving Corporation. Company Certificates presented to the Surviving
Corporation after the Effective Time shall be canceled and exchanged for cash as
provided in this Article V. At and after the Effective Time, each holder of a
Company Certificate shall cease to have any rights as a stockholder of the
Company, except for, in the case of a holder of a Company Certificate (other
than shares to be canceled pursuant to Section 5.1(b) hereof and other than
shares held by Dissenting Stockholders), the right to surrender his or her
Company Certificate in exchange for payment of the Merger Consideration or, in
the case of a Dissenting Stockholder, to perfect his or her right to receive
payment for his or her shares pursuant to Delaware law if such holder has
validly perfected and not withdrawn his or her right to receive payment for his
or her shares.
5.4 Dissenting Stock. Notwithstanding anything contained in this
Agreement to the contrary but only to the extent required by the DGCL, shares of
Common Stock that are issued and outstanding immediately prior to the Effective
Time and are held by holders of Common Stock who comply with all the provisions
of the law of the State of Delaware concerning the right of holders of Common
Stock to dissent from the Merger and require appraisal of their shares of Common
Stock (such holders, "Dissenting Stockholders") shall not be converted into the
right to receive the Merger Consideration but shall become the right to receive
such consideration as may be determined to be due such Dissenting Stockholder
pursuant to the law of the State of Delaware; provided, however, that (i) if any
Dissenting Stockholder shall subsequently deliver a written withdrawal of his or
her demand for appraisal (with the written approval of the Surviving
Corporation, if such withdrawal is not tendered within 60 days after the
Effective Time), or (ii) if any Dissenting Stockholder fails to establish and
perfect his or her entitlement to appraisal rights as provided by applicable
law, or (iii) if within 120 days of the Effective Time neither any Dissenting
Stockholder nor the Surviving Corporation has filed a petition demanding a
determination of the value of all shares of Common Stock outstanding at the
Effective Time and held by Dissenting Stockholders in accordance with applicable
law, then such Dissenting Stockholder or Dissenting Stockholders, as the case
may be, shall forfeit the right to appraisal of such shares and such shares
shall thereupon be deemed to have been converted into the right to receive, as
of the Effective Time, the applicable Merger Consideration, without interest, as
provided in Section 5.2, and such shares shall no longer be Dissenting Shares.
The Company shall give Parent and Merger Sub (x) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
related instruments received by the Company, and (y) the opportunity to direct
12
all negotiations and proceedings with respect to demands for appraisal. The
Company shall not voluntarily make any payment with respect to any demands for
appraisal and shall not, except with the prior written consent of Parent, settle
or offer to settle any such demand.
5.5 Stock Option and Other Plans; Company Warrants. (a) To the
extent that Options and Company Warrants were not cancelled pursuant to Section
8.11, prior to the Effective Time, each of the Board of Directors of the Company
(or, if appropriate, any committee thereof) and the Company shall use its best
efforts to obtain the consent of all of the holders of Options heretofore
granted under any Stock Plans to provide for the cancellation, effective at the
Effective Time, of all the outstanding Options, as follows: Immediately prior to
the Effective Time, each Option, whether or not then vested or exercisable, and
each Company Warrant, whether or not then vested or exercisable, shall no longer
be exercisable for the purchase of shares of Common Stock but shall entitle each
holder thereof, in cancellation and settlement therefor, to payments in cash,
subject to any applicable withholding taxes, of the Cash Payment, at the
Effective Time, equal to the product of (x) the total number of shares of Common
Stock subject to such Option (or Company Warrant, as the case may be) as to
which such Option (or Company Warrant) could have been exercisable and (y) the
excess, if any, of the Merger Consideration over the exercise price per share of
Common Stock subject to such Option (or Company Warrant), each such Cash Payment
to be paid to each holder of an outstanding Option or Company Warrant, as the
case may be, at the Effective Time. The Company will ensure that any
then-outstanding stock appreciation rights or limited stock appreciation rights
shall be canceled as of immediately prior to the Effective Time without any
payment therefor. As provided herein, the Stock Plans and any other plan,
program or arrangement providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any Subsidiary (collectively
with the Stock Plans, referred to as the "Stock Incentive Plans") shall
terminate as of the Effective Time. The Company will ensure that neither the
Company nor any of its Subsidiaries is or will be bound by any Options, other
options, Company Warrants, other warrants, rights or agreements which would
entitle any Person, other than Parent or its Affiliates (including Merger Sub),
to own any capital stock of the Surviving Corporation or any of its Subsidiaries
or to receive any payment in respect thereof. The Company will ensure that after
the Effective Time, the only rights of the holders of Options to purchase shares
of Common Stock or Company Warrants in respect of such Options and Company
Warrants will be to receive the Cash Payment in cancellation and settlement
thereof.
(b) All Stock Plans shall terminate as of the Effective Time
and the provisions in any other Employee Plan providing for
the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the
Company shall be deleted as of the Effective Time, and the
Company shall use its reasonable best efforts to ensure that
following the Effective Time no holder of an option to
purchase Common Stock or any participant in any Stock Plan
shall have any right thereunder to acquire any capital stock
of the Company, Parent or the Surviving Corporation.
ARTICLE VI
Representations and Warranties of the Company
The Company hereby represents and warrants to Parent and
Merger Sub:
6.1. Organization, etc. of the Company. The Company is a corporation
duly organized, validly existing and, except as set forth in Schedule 6.1 to the
Company Disclosure Statement, in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted and
proposed by the Company to be conducted. The Company is duly qualified and in
good standing in each other jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary and where the failure to be so qualified or in good
standing has or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The Company has made available to Parent
and Merger Sub complete and correct copies of the Company Charter and By-Laws
and the certificate of incorporations, by-laws or other similar organizational
documents of its Subsidiaries, in each case as amended to the date of this
Agreement. The respective certificates of incorporation and by-laws or other
similar organizational documents of the Subsidiaries do not contain any
provision limiting or otherwise restricting the ability of the Company to
control such Subsidiaries other than as required under Polish law.
6.2. Subsidiaries. Schedule 6.2 of the Company Disclosure Statement
contains a complete and accurate list of all of the Subsidiaries of the Company
as of the date hereof. Each Subsidiary of the Company is a corporation or other
legal entity duly organized, validly existing and (if applicable) in good
standing under the laws of the jurisdiction of its organization and has all
requisite corporate, partnership or similar power and authority to own its
properties and conduct its business and operations as currently conducted.
Except as set fourth in Schedule 6.2 of the Company Disclosure Statement, each
13
Subsidiary of the Company is duly qualified and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary, except where
the failure to be so qualified or in good standing does not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
6.3. Agreement. The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. This Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized and unanimously approved by the Board of Directors of the Company and
have been duly authorized by all other necessary corporate action on the part of
the Company, and no other corporate action on the part of the Company is
necessary to authorize the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated hereby
except for the approval of the Company's stockholders contemplated by Section
8.4. This Agreement has been duly executed and delivered by a duly authorized
officer of the Company and (assuming the due execution and delivery of this
Agreement by the other parties hereto) constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except that such enforceability may be subject to bankruptcy, insolvency and
other similar laws effecting debtors' rights or creditors' rights generally and
except that the remedies of specific performance, injunction and other forms of
equitable relief may not be available. The Board of Directors of the Company has
approved the transactions contemplated by this Agreement, including the Merger,
so as to render the provisions of (x) Section 203 of the DGCL and (y) Article
VIII of the Company Charter, inapplicable to the transactions contemplated by
this Agreement and to Parent and Merger Sub in connection with this Agreement.
The Board of Directors of the Company has directed that this Agreement be
submitted to the stockholders of the Company for their approval. The affirmative
approval, by vote or written consent, of the holders of Company Common Stock
representing a majority of the votes that may be cast by such holders, and the
holders of each class of Company Preference Shares (voting as separate classes)
representing 66 2/3% of the votes that may be cast by the holders of each such
class of Company Preference Shares, are the only votes of the holders of any
class or series of capital stock of the Company necessary to approve and adopt
this Agreement and approve the Merger.
6.4. Permits; Compliance. Except as disclosed in Schedule 6.4 of the
Company Disclosure Statement, the Company and its Subsidiaries possess such
permits, licenses, approvals, concessions, consents and other authorizations
(including, without limitation, all permits required for the operation of the
business of the Company and its Subsidiaries by the Republic of Poland and the
United Kingdom) (collectively, "Governmental Licenses") issued by the
appropriate Governmental Body or self regulatory organizations necessary to
conduct the business now operated by them except where the failure to possess
such Governmental Licenses would not, singly or in the aggregate, reasonably be
expected to (i) have a Material Adverse Effect or (ii) prevent or materially
delay the consummation of the transactions contemplated by this Agreement; the
Company and its Subsidiaries, except as disclosed in Schedule 6.4 of the Company
Disclosure Statement and except where the failure to so comply would not, singly
or in the aggregate, reasonably be expected to (i) have a Material Adverse
Effect or (ii) prevent or materially delay the consummation of the transactions
contemplated by this Agreement, are in compliance with the terms and conditions
of all such Governmental Licenses; all of the Governmental Licenses are valid
and in full force and effect, except as disclosed in Schedule 6.4 to the Company
Disclosure Statement and except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force and
effect would not reasonably be expected to (i) have a Material Adverse Effect,
or (ii) prevent or materially delay the consummation of the transactions
contemplated by this Agreement; and except as disclosed in Schedule 6.4 to the
Company Disclosure Statement, neither the Company nor any of its Subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
reasonably be expected to (i) have a Material Adverse Effect or (ii) prevent or
materially delay the consummation of the transactions contemplated by this
Agreement. To the knowledge of the Company, except as described in Schedule 6.4
of the Company Disclosure Statement, there exists no reason or cause that could
justify the variation, suspension, cancellation or termination of any such
Governmental Licenses held by the Company or any of its Subsidiaries with
respect to the construction or operation of their respective businesses, which
variation, suspension, cancellation or termination could reasonably be expected
to (i) have a Material Adverse Effect or (ii) prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
6.5. Opinion of the Company's Financial Advisor. The Board of Directors
of the Company has received the written opinion, dated as of the date hereof, of
Xxxxxxx Xxxxx International to the effect that the Merger is fair to the
stockholders of the Company from a financial point of view, subject to the
assumptions and qualifications contain in such opinion, and a complete and
correct signed copy of such opinion has been, or promptly upon receipt thereof
will be, delivered to Parent.
14
6.6. Capital Stock. (a) Each of the authorized, issued and outstanding
shares of capital stock of the Company as of the date hereof is as set forth in
Schedule 6.6 to the Company Disclosure Statement. The shares of issued and
outstanding capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive or other
similar rights of any securityholder of the Company. Except as disclosed in
Section 6.6 of the Company Disclosure Statement, (i) there are no shares of
capital stock of the Company authorized, issued or outstanding and (ii) there
are not as of the date hereof, and at the Effective Time there will not be, any
outstanding or authorized options, warrants, rights, subscriptions, claims of
any character, agreements, obligations, convertible or exchangeable securities,
or other commitments, contingent or otherwise, relating to Common Stock or any
other shares of capital stock of the Company, pursuant to which the Company is
or may become obligated to issue shares of Common Stock, any other shares of its
capital stock or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of the capital stock of the
Company. The Company has no authorized or outstanding bonds, debentures, notes
or other indebtedness the holders of which have the right to vote (or
convertible or exchangeable into or exercisable for securities having the right
to vote) with the stockholders of the Company or any of its Subsidiaries on any
matter ("Voting Debt"). After the Effective Time, the Surviving Corporation will
have no obligation to issue, transfer or sell any shares of Common Stock of the
Surviving Corporation pursuant to any Employee Plan.
(b) No class of capital stock of the Company is entitled
to pre-emptive rights.
(c) The outstanding Options and Company Warrants are as set
forth in Schedule 6.6 to the Company Disclosure Statement.
There are no Company Warrants or Options held in the treasury
of the Company.
(d) Except as disclosed in Schedule 6.6 of the Company
Disclosure Statement, all of the issued and outstanding
capital stock of each Subsidiary of the Company has been duly
authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or
through its Subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity
and none of the outstanding shares of capital stock of such
Subsidiaries was issued in violation of any preemptive or
similar rights arising by operation of law, or under the
statute or by-laws (or other similar organizational documents)
of any Subsidiary of the Company or under any agreement to
which the Company or any of its Subsidiaries is a party. No
shares of capital stock of any of the Subsidiaries are
reserved for issuance and there are no outstanding or
authorized options, warrants, rights, subscriptions, claims of
any character, agreements, obligations, convertible or
exchangeable securities, or other commitments, contingent or
otherwise, relating to the capital stock of any Subsidiary of
the Company, pursuant to which such Subsidiary is or may
become obligated to issue any shares of capital stock of such
Subsidiary or any securities convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of
such Subsidiary. Except as disclosed in Schedule 6.6 of the
Company Disclosure Statement and except as required by
applicable Law, there are no restrictions of any kind which
prevent the payment of dividends by any of the Subsidiaries of
the Company. Except as disclosed in Schedule 6.6 of the
Company Disclosure Statement, the Company does not own,
directly or indirectly, any capital stock or other equity
interest in any Person or have any direct or indirect equity
or ownership interest in any Person and neither the Company
nor any of its Subsidiaries is subject to any obligation or
requirement to provide funds for or to make any investment (in
the form of a loan, capital contribution or otherwise) to or
in any Person. The Company's Subsidiaries have no Voting Debt.
6.7. Litigation. Except as disclosed in the Company SEC Reports filed
prior to the date hereof or as set forth in Schedule 6.7 to the Company
Disclosure Statement, there are, as of the date hereof, no actions, proceedings,
suits, inquiries or investigations before or by any Governmental Body or any
arbitrator or any other alternative dispute resolution forum, now pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries, except actions, proceedings, suits, inquiries or investigations
which, individually or in the aggregate, would not reasonably be expected, if
adversely determined to (a) have a Material Adverse Effect or (b) prevent or
materially delay the consummation of the transactions contemplated by this
Agreement. Except as disclosed in the Company SEC Reports filed prior to the
date hereof, neither the Company nor any of its subsidiaries is subject to any
judgment, order or decree entered in any lawsuit or proceeding which could
reasonably be expected to have a Material Adverse Effect.
15
6.8. Compliance with Other Instruments, Etc.; No Conflict. Neither the
Company nor any Subsidiary of the Company is (1) in violation of its charter or
statute, as applicable, or by-laws (or other similar organizational documents),
(2) in violation or default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which or any of them may be bound, or to which any of the property or assets of
the Company or any of its subsidiaries is subject (collectively, "Agreements and
Instruments"), except, with respect to clause (2) only, for such violations or
defaults which, whether individually or in the aggregate, do not or would not
reasonably be expected to (i) have a Material Adverse Effect or (ii) prevent or
materially delay the consummation of the transactions contemplated by this
Agreement. Assuming (i) the approval of the Company's stockholders as
contemplated by Section 8.4, (ii) the filings required under the Exchange Act
relating to the Offer, the Proxy Statement and the Merger, (iii) the filing of
the Certificate of Merger and other appropriate merger documents, if any, as
required by the DGCL, and (iv) the approval from the Governmental Bodies listed
on Schedule 6.8 of the Company Disclosure Statement, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not (i) result in any violation of or conflict with, or
constitute a default under, the charter, bylaws or other organizational
documents of the Company (or any of its Subsidiaries) or (ii) result in any
violation of or conflict with or require any consent, waiver, or notice under
any Law. Except as set forth in Section 6.8 of the Company Disclosure Statement,
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will not result in any violation of or
conflict with, constitute a default under, require any consent, filing, waiver
or notice under any term of, or result in the reduction or loss of any benefit
or the creation or acceleration of any right or obligation under, any agreement,
note, bond, mortgage, indenture, contract, lease, Governmental License or other
obligation or right (excluding options, restricted stock, employment contracts
and other employee related obligations or rights which are addressed in Section
6.9) to which the Company or any of its Subsidiaries is a party or by which any
of the assets or properties of the Company or any of its Subsidiaries is bound,
or any instrument or Law, or result in the creation of (or impose any obligation
on the Company or any of its Subsidiaries to create) any mortgage, lien, charge,
security interest or other encumbrance upon any of the properties or assets of
the Company or any of its Subsidiaries pursuant to any such term, except where
any of the foregoing, individually or in the aggregate, does not and would not
reasonably be expected to (i) have a Material Adverse Effect or (ii) prevent or
materially delay the consummation of the transactions contemplated by this
Agreement.
6.9. Employee Benefit Plans. (a) Schedule 6.9 of the Company Disclosure
Statement sets forth as of the date hereof a true and complete list of each
material "employee benefit plan" (as defined in Section 3(3) of ERISA) of the
Company and its Subsidiaries in which current or former employees, agents,
directors, or independent contractors of the Company or its Subsidiaries
("Employees") participate or pursuant to which the Company or any of its
Subsidiaries may have a liability with respect to Employees (each, an "Employee
Plan"). Except as disclosed on the Company Disclosure Statement, each Employee
Plan is exempt from coverage under ERISA pursuant to Section 4(b)(4) of ERISA,
and neither the Company nor any of its Subsidiaries has any commitment to
establish any additional Employee Plans or to modify or change materially any
existing Employee Plan. The Company has made available to Parent with respect to
each Employee Plan: (i) a true and complete copy of all written documents
comprising such Employee Plan (including amendments and individual agreements
relating thereto) or, if there is no such written document, an accurate and
complete description of such Employee Plan; and (ii) the most recent financial
statements and actuarial reports, if any.
(b) Each Employee Plan has been established and maintained in
accordance with its terms and in compliance with all
applicable local Laws, and all contributions required to be
made to the Employee Plans have been made in a timely fashion,
except where such failure to establish, maintain or comply, or
to make such contributions, individually or in the aggregate,
does not and would not reasonably be expected to have a
Material Adverse Effect on the Company.
(c) Except as set forth in Schedule 6.9 of the Company
Disclosure Statement, the Company has not at any time in the
past five years contributed to or been obligated to contribute
to a "multiemployer plan" (as defined in Section 3(37) of
ERISA) or a "multiple employer plan" described in Section
4063(a) of ERISA.
(d) Except as set forth in Section 5.5 and in Schedule 6.9 of
the Company Disclosure Statement, none of the execution or
delivery of this Agreement, stockholder approval of the Merger
by the stockholders of the Company at the Company
Stockholders' Meeting or otherwise, or the consummation of the
transactions contemplated hereby or thereby (either alone or
together with any additional or subsequent events),
constitutes an event under any Employee Plan, loan to, or
16
individual agreement or contract with, an Employee that may
result in any material payment (whether of severance pay or
otherwise), restriction or limitation upon the assets of any
Employee Plan, acceleration of payment or vesting, increase in
benefits or compensation, or required funding, with respect to
any Employee, or the forgiveness of any loan or other
commitment of any Employees.
(e) There are no actions, suits, arbitrations, inquiries,
investigations or other proceedings (other than routine claims
for benefits) pending or, to the Company's knowledge,
threatened, with respect to any Employee Plan, except for any
of the foregoing that do not and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect.
(f) No material amounts paid or payable by the Company or any
Subsidiary of the Company to or with respect to any Employee
(including any such amounts that may be payable as a result of
the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby or
thereby) will fail to be deductible for United States federal
income tax purposes by reason of Section 280G of the Code.
(g) Except as set forth in Schedule 6.9 of the Company
Disclosure Statement, there are no agreements with, or pending
petitions for recognition of, a labor union or association as
the bargaining agent for any of the employees of the Company
or any of its Subsidiaries; no such petitions have been
pending at any time within two years of the date of this
Agreement and, to the knowledge of the Company, there has not
been any organizing effort by any union or other group seeking
to represent any employees of the Company or any of its
Subsidiaries as their bargaining agent at any time within two
years of the date of this Agreement. There are no labor
strikes, work stoppages or other labor troubles, other than
routine grievance matters, now pending, or, to the Company's
knowledge, threatened, against the Company or any of its
Subsidiaries which have or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect and there have not been any such labor strikes, work
stoppages or other labor troubles, other than routine
grievance matters, with respect to the Company or any of its
Subsidiaries at any time within two years of the date of this
Agreement. Except as set forth on Schedule 6.9 of the Company
Disclosure Statement, the Company and its Subsidiaries are in
substantial compliance with all applicable Laws respecting
employment and employment practices, terms and conditions and
wages and hours.
6.10. Taxes. Except as set forth on Schedule 6.10 to the Company
Disclosure Statement:
(a) The Company and its Subsidiaries have timely filed or
caused to be timely filed all income Tax Returns and all
material other United States federal, state, county, local and
foreign Tax Returns required to be filed by or with respect to
them. Such Tax Returns have accurately reflected all liability
for Taxes of the Company and its Subsidiaries for the periods
covered thereby in all material respects. All Taxes shown to
be payable on such Tax Returns or on subsequent assessments
with respect thereto have been paid in full on a timely basis.
The amount of the liability of the Company and its
Subsidiaries for unpaid Taxes or all periods ending on or
before December 31, 1998, does not, in the aggregate, exceed
the amount of the current liability accrual for Taxes
(including reserves for deferred Taxes) reflected on the
Company's December 31, 1998 balance sheet.
(b) There are no material Tax assessments or adjustments that
have been asserted against the Company or its Subsidiaries
for any period.
(c) There are no audits, examinations, actions, suits,
proceedings, investigations, claims or assessments pending or
threatened to the knowledge of the officer of the Company and
each Subsidiary responsible for tax matters, against the
Company or any of its Subsidiaries for any alleged deficiency
in any Tax (a "Tax Controversy") and the Company has not been
notified in writing of any proposed material Tax Controversy
against the Company or any of its Subsidiaries (other than a
Tax Controversy set forth in Schedule 6.10 of the Company
Disclosure Statement which is being contested in good faith or
which is immaterial in amount). There are no material
"deferred intercompany transactions" or "intercompany
transactions" the gain or loss in which has not yet been taken
into account under the consolidated return Treasury
17
Regulations currently or previously in effect. Neither the
Company nor any of its Subsidiaries have been included in any
"consolidated," "unitary" or "combined" Tax Return provided
for under the law of the United States, any foreign
jurisdiction or any state or locality with respect to Taxes
for any taxable period for which the statute of limitations
has not expired. The Company has delivered to Parent correct
and complete copies of all United States federal, state, and
foreign income Tax Returns (to the extent filed as of the date
hereof or, if not filed, correct and complete copies of
extensions thereof), examination reports, statements of
deficiencies assessed against or agreed to by the Company and
any of its Subsidiaries, or any other similar correspondence
from a taxing authority, relating to taxable years 1996 and
1997.
(d) There are no liens for Taxes on the assets of the Company
or any of its Subsidiaries, except for statutory liens for
current Taxes not yet due and payable.
(e) (i) Neither the Company nor any of its Subsidiaries (A)
has entered into an agreement or waiver or been requested to
enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of Taxes of
the Company or any of its Subsidiaries.
(ii) All Taxes which the Company or any of its
Subsidiaries is (or was) required by law to withhold or
collect (other than immaterial amounts) have been duly
withheld or collected, and have been timely paid over to the
proper authorities to the extent due and payable.
(iii) No claim has ever been made by any taxing
authority in a jurisdiction where the Company or any of its
Subsidiaries does not file Tax Returns that the Company or any
of its Subsidiaries is or may be subject to taxation by that
jurisdiction.
(iv) There are no tax sharing, allocation,
indemnification or similar agreements (excluding customary Tax
gross-up clauses contained in financing agreements and
excluding commercial agreements entered into in the ordinary
course of business requiring payments to be made net of taxes)
in effect as between the Company or its Subsidiaries or any
predecessor or affiliate thereof and any other party under
which the Company, Parent or Merger Sub could be liable for
Taxes or other claims of any party.
(v) Neither the Company nor any of its Subsidiaries
has applied for, been granted, or agreed to any accounting
method change for which it will be required to take into
account any adjustment under Section 481 of the Code or any
similar provision of the Code or the corresponding tax laws of
any nation, state or locality.
(vi) No election under Section 341(f) of the Code has
been made or shall be made prior to the Effective Time to
treat the Company or any of its Subsidiaries as a consenting
corporation, as defined in Section 341 of the Code.
(vii) Neither the Company nor any of its Subsidiaries
is a party to any agreement that would require the Company or
any of its subsidiaries or any affiliate thereof to make any
payment that would constitute an "excess parachute payment"
for purposes of Sections 280G and 4999 of the Code.
(viii) Neither the Company nor any of its
Subsidiaries is a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the
Code.
(f) For purposes of this Agreement, the term "Tax" means any
United States federal, state, county or local, or foreign or
provincial income, gross receipts, profits, capital gains,
capital stock, occupation, severance, stamp, withholding,
property, sales, use, license, excise, franchise, employment,
payroll, value added, alternative or added minimum, ad valorem
or transfer tax, or any other tax, levy, custom, duty or
governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty imposed
by any Governmental Body, and shall include any liability for
such amounts as a result either of being a member of a
combined, consolidated, unitary or affiliated group or of a
contractual obligation to indemnify any person or other
entity. The term "Tax Return" means a report, return or other
information (including any attached schedules or any
18
amendments to such report, return or other information)
required to be supplied to or filed with any Governmental Body
with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated
Tax.
6.11. Intellectual Property. Except as disclosed in Schedule 6.11 to
the Company Disclosure Statement, the Company and its Subsidiaries own or have a
valid and enforceable license to use the rights to all patents, trademarks,
tradenames, service marks and copyrights, together with any registrations and
applications therefor, licenses, inventions, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names or
other intellectual property (collectively, "Intellectual Property") used in and
necessary to carry on the business now operated by them; provided, however, that
the enforceability of such license may be subject to bankruptcy, insolvency and
other, similar laws effecting debtors' rights or creditors' rights generally and
except that the remedies of specific performance, injunction and other forms of
equitable relief may not be available. Except as disclosed on Schedule 6.11 of
the Company Disclosure Statement, the operation of the business of the Company
and its Subsidiaries as currently conducted requires no material rights of
performance or display or their equivalent or to the knowledge of the Company,
other rights, including, but not limited to, "moral rights" under copyrights
other than copyrights owned by the Company or its Subsidiaries or licensed by
any of them pursuant to license agreements. Except as disclosed in Schedule 6.11
to the Company Disclosure Statement, neither the Company nor any of its
Subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
its Subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect.
6.12. Reports and Financial Statements. (a) The Company and PCI have
filed all forms, reports and documents with the SEC required to be filed by them
since January 1, 1997 pursuant to the federal securities laws and the SEC rules
and regulations thereunder (collectively, the "Company SEC Reports"). None of
the Company SEC Reports, as of their respective dates, contained any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
consolidated balance sheets (including the related notes) included in the
Company SEC Reports presents fairly, in all material respects, the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates thereof, and the other related statements (including the related notes)
included in the Company SEC Reports present fairly, in all material respects,
the results of operations and the changes in financial position of the Company
and its Subsidiaries for the respective periods or as of the respective dates
set forth therein, all in conformity with generally accepted accounting
principles consistently applied during the periods involved, except as otherwise
noted therein and subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments. All of the Company SEC Reports, as
of their respective dates, complied as to form in all material respects with the
requirements of the Exchange Act, the Securities Act and the applicable rules
and regulations thereunder.
(b) Except (i) as and to the extent disclosed or reserved
against on the balance sheet of the Company as of December 31,
1998 included in the Company SEC Reports or (ii) as incurred
after the date thereof in the ordinary course of business
consistent with prior practice and not prohibited by this
Agreement and not involving borrowing by the Company or its
Subsidiaries, the Company does not have any liabilities or
obligations of any nature, absolute, accrued, contingent or
otherwise and whether due or to become due, that, individually
or in the aggregate, have or would reasonably be expected to
have a Material Adverse Effect on the Company.
6.13. Absence of Certain Changes or Events. During the period since
December 31, 1998, except as disclosed in the Company SEC Reports filed prior to
the date hereof:
(a) the business of the Company and its Subsidiaries has been
conducted only in the ordinary course, consistent with past
practice, except for the execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby, and except as otherwise expressly
permitted or required by this Agreement;
(b) neither the Company nor any of its Subsidiaries has taken
any action or omitted to take any action, or entered into any
contract, agreement, commitment or arrangement to take any
action or omit to take any action, which, if taken or omitted
after the date hereof, would violate Section 8.1; and
19
(c) there has not been, and, to the best knowledge of the
Company, nothing has occurred that would reasonably be
expected to have, a Material Adverse Effect.
6.14. Affiliated Transactions, Registration Rights and Certain Other
Agreements. Set forth in Schedule 6.14 of the Company Disclosure Statement is an
accurate and complete listing, as of the date hereof, of (a) all contracts,
leases, agreements or understandings, whether written or oral, to which the
Company or any of its Subsidiaries is a party or is otherwise bound which
contain any restriction or limitation on the ability of the Company or any of
its Affiliates (other than the Stockholders and their non-Company Affiliates) to
engage in any business anywhere in the world, other than (i) any such contracts,
leases, agreements or understandings the loss or breach of which, individually
or in the aggregate, does not and would not reasonably be expected to have a
Material Adverse Effect, (ii) the financing documents set forth on Schedule 6.18
to the Company Disclosure Statement and (iii) geographical, functional and
temporal limitations in programming contracts and licenses and (b) all
contracts, leases, agreements or understandings, whether written or oral, giving
any Person the right to require the Company to register securities or any type
or to participate in any registration of securities of any type. The Company has
previously provided or made available to Parent true and complete copies of each
of the foregoing agreements. Except as disclosed in the Company SEC Reports,
there are no relationships or transactions of a type required to be disclosed in
the Company SEC Reports pursuant to Item 404 of Regulation S-K promulgated under
the Securities Act.
6.15. Brokers and Finders. Except for the fees and expenses payable to
Xxxxxxx Xxxxx International (whose fees and expenses will be paid by the
Company), which fees and expenses are reflected in its agreements with the
Company, copies of which have been furnished to Parent by the Company, no agent,
broker, Person or firm acting on behalf of the Company is, or will be, entitled
to any fee, commission or broker's or finder's fees from any of the parties
hereto, or from any Person controlling, controlled by, or under common control
with any of the parties hereto, in connection with this Agreement or any of the
transactions contemplated hereby.
6.16. Proxy Statement, Schedule l4D-9 and Schedule l4D-1. The
definitive proxy statement and related materials, if required, to be furnished
to the holders of Common Stock in connection with the Merger pursuant to Section
8.3 hereof (the "Proxy Statement") and the Information Statement will comply in
all material respects with the Exchange Act and the rules and regulations
thereunder and any other applicable laws. If at any time prior to the Company
Stockholders' Meeting any event occurs which should be described in an amendment
or supplement to the Proxy Statement, the Company will file and disseminate, as
required, an amendment or supplement which complies in all material respects
with the Exchange Act and the rules and regulations thereunder and any other
applicable laws. Prior to its filing with the SEC, the amendment or supplement
shall be delivered to Parent and Merger Sub and their counsel. None of the
information supplied by the Company for inclusion or incorporation by reference
in (i) the documents pursuant to which the Offer will be made, including the
Offer Documents, or (ii) the Proxy Statement, will, in the case of the Offer
Documents, at the respective times the Offer Documents are filed with the SEC,
or in the case of the Proxy Statement at the date such information is supplied
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made,
in light of the circumstance under which they are made, not misleading. None of
the information supplied by the Company in the Schedule 14D-9, at the respective
times the Schedule 14D-9 is filed with the SEC, will contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which they are made,
not misleading. Notwithstanding the foregoing, no representation or warranty is
made with respect to any information with respect to Parent, Merger Sub or their
officers, directors or affiliates provided to the Company by Parent or Merger
Sub expressly in writing for inclusion or incorporation by reference in the
Schedule 14D-9, the Proxy Statement or the Information Statement. The Schedule
14D-9 will comply in all material respects with the Exchange Act and the rules
and regulations thereunder and any other applicable laws. If at any time prior
to the expiration or termination of the Offer any event occurs which should be
described in an amendment or supplement to the Schedule l4D-9 or any amendment
or supplement thereto, the Company will file and disseminate, as required, an
amendment or supplement which complies in all material respects with the
Exchange Act and the rules and regulations thereunder and any other applicable
laws. Prior to its filing with the SEC, the amendment or supplement shall be
delivered to Parent and Merger Sub and their counsel.
6.17. Title to Assets. Except as reflected in the Company's financial
statements as of December 31, 1998 or disclosed in Schedule 6.17 of the Company
Disclosure Statement, the Company and each of its Subsidiaries has good and
marketable title to (or in the case of leases or other contracts, the full and
unencumbered right to exercise its rights under such leases or other agreements)
the properties and assets used by it, free and clear of all mortgages, deeds of
trust, liens, security interests, pledges, encumbrances, encroachments,
easements, leases, agreements, covenants, charges, restrictions, option, joint
ownership or adverse claims or rights whatsoever (collectively, "Liens"), except
for Permitted Liens, and except for properties and assets disposed of in the
ordinary course of business since December 31, 1998. "Permitted Liens" means:
20
(i) rights of lessors or lessee under the terms of leases (x) which have been
disclosed to Parent in this Agreement or Schedule 6.17 of the Company Disclosure
Statement or (y) for office equipment entered into in the ordinary course of
business;
(ii) Liens for Taxes not yet due or payable; (iii) Liens reflected in
the Company SEC Reports; (iv) Liens imposed by applicable law and incurred in
the ordinary course of business for obligations not yet due and payable to
laborers, materialmen and the like; (v) zoning and other restrictions,
variances, covenants, rights-of-way, encumbrances, easements and or other minor
irregularities of title, none of which, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on the value of any of
the real property of the Company, or would impair in any material respect the
ability of the Company or the relevant Subsidiary of the Company to sell such
property for its current use, (vi) with respect to items of personal property,
unperfected purchase money security interests existing in the ordinary course of
business without the execution of a security agreement and (vii) Liens which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
6.18. Contracts. Schedule 6.18 of the Company Disclosure Statement sets
forth the following oral or written contracts and other agreements to which the
Company or any of its Subsidiaries is a party:
(a) any agreement (or group of related agreements, with the
same third party or any of its Affiliates) for the lease of
personal property providing for lease payments in excess of
One Hundred Thousand Dollars ($100,000) per annum;
(b) any agreement (or group of related agreements for the
purchase or sale of supplies, products or other personal
property, or for the furnishing or receipt of services, the
performance of which involve consideration in excess of One
Hundred Thousand Dollars ($100,000) per annum; provided,
however, that this clause (b) shall not include any employment
agreement included pursuant to clause (e) below or excluded
from clause (e) below by virtue of the monetary threshold set
forth therein;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements, with the
same third party or any of its Affiliates) under which the
Company or any of its Subsidiaries has created, incurred,
assumed, or guaranteed any indebtedness for borrowed money, or
any capitalized lease obligation, in excess of One Hundred
Thousand Dollars ($100,000) per annum or under which it has
imposed a lien on any of its material assets, tangible or
intangible;
(e) any agreement with an employee of the Company or any of
its Subsidiaries, providing for a base salary per annum in
excess of One Hundred Thousand Pounds Sterling
((pound)100,000);
(f) any other agreement (or group of related agreements with
the same third party) the performance of which involves
consideration in excess of One Hundred Thousand Dollars
($100,000) per annum; provided however, that this clause (f)
shall not include any employment agreement excluded from
clause (e) above by virtue of the monetary threshold set forth
therein.
The foregoing are referred to hereafter as the "Material
Contracts". With respect to the Material Contracts, except as set forth
in Schedule 6.18 of the Company Disclosure Statement: (i) all are in
full force and effect against the Company or any of its Subsidiaries in
accordance with their terms, except that such enforceability may be
subject to bankruptcy, insolvency and other similar laws effecting
debtors' rights or creditors' rights generally and except that the
remedies of specific performance, injunction and other forms of
equitable relief may not be available; (ii) neither the Company nor any
of its Subsidiaries and to the Company's knowledge no other party
thereto is, in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; (iii)
neither the Company nor any of its Subsidiaries has assigned any of its
rights or obligations under any of the Material Contracts; (iv) neither
the Company nor any of its Subsidiaries has received any outstanding
notice of cancellation or termination in connection with any of them;
and (v) neither the Company nor any of its Subsidiaries is, and to the
Company's knowledge no party thereto is the subject of bankruptcy
proceedings, nor has had a trustee appointed on its behalf or is
insolvent. The Company has delivered to the Parent and Merger Sub a
correct and complete copy of each written Material Contract (as amended
to the date of this Agreement), except for the Coop Agreements and
Conduit Agreements listed on Schedule 6.11 of the Company Disclosure
Statement, and a written summary setting forth the terms and conditions
of each oral agreement constituting a Material Contract referred to in
Schedule 6.18 of the Company Disclosure Statement.
21
6.19. Compliance. Except as set forth in Schedule 6.19 of the Company
Disclosure Statement, neither the Company or any of its Subsidiaries is in
conflict with, or in default or violation of any law, rule, regulation, order
judgment or decree applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, except for such conflicts, defaults or violations that would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Affect or would not be reasonably likely to prevent or materially delay
consummation of the transactions contemplated by this Agreement.
6.20. Insurance. The Company and its Subsidiaries have obtained and
maintained in full force and effect insurance (including director's and
officer's insurance) with insurance companies or associations in such amounts,
on such terms and covering such risks as disclosed in Schedule 6.20 of the
Company Disclosure Statement.
6.21. Company Preference Shares. Except as set forth in Section 6.21 of
the Company Disclosure Statement, neither the holders of the Company's 12%
Series A Preference Shares nor the holders of the Company's 12% Series B
Preference Shares are entitled to (i) receive any accrued dividends which have
not been paid when due or (ii) elect members to the Company's Board of Directors
in accordance with the terms of their respective Certificate of Designation.
6.22. Year 2000. All internal computer systems, computer software or
technology that are material to the business, finances or operations of the
Company and its Subsidiaries or were sold or licensed to customers of the
Company and its Subsidiaries (collectively, "Material Systems") are (i) able to
receive, record, store, process, calculate, manipulate and output dates from and
after September 4, 1999, time periods that include any Relevant Date and
information that is dependent on or relates to such dates or time periods, in
the same manner and with the same accuracy, functionality, data integrity and
performance as when dates or time periods prior to September 4,1999, are
involved and (ii) able to store and output date information in a manner that is
unambiguous as to century (the circumstances set forth in clauses (i) and (ii),
collectively, "Year 2000 Compliant"). All Material Systems that are not Year
2000 Compliant as of the date of this Agreement are set forth on Schedule 6.22
of the Company Disclosure Statement.
ARTICLE VII
Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub each, jointly and severally, represents and
warrants to the Company that:
7.1. Organization, etc. of Parent. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the Kingdom
of the Netherlands.
7.2. Subsidiaries. Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is a
Wholly Owned Subsidiary of Parent.
7.3. Agreement. Each of Parent and Merger Sub has all necessary
corporate power and authority to execute and deliver this Agreement and the
Stockholder Agreements, to perform its obligations hereunder and to consummate
the transactions contemplated hereby and thereby. This Agreement and the
Stockholders Agreements and the consummation of the transactions contemplated
hereby and thereby have been approved by the Executive Board of Parent and Board
of Directors of Merger Sub and by Parent as the sole stockholder of Merger Sub,
and have been duly authorized by all other necessary corporate action on the
part of Parent or Merger Sub. This Agreement and the Stockholders Agreements
have been duly executed and delivered by a duly authorized officer of each of
Parent and of Merger Sub and (assuming the due execution and delivery of this
Agreement by the other parties thereto) constitutes a valid and binding
agreement of Parent and Merger Sub, enforceable against Parent and Merger Sub in
accordance with its terms, except as such enforceability may be subject to
bankruptcy, insolvency, and other similar laws affecting debtors' rights or the
rights and remedies of creditors generally, and except that the remedies of
specific performance injunction and other forms of equitable of relief may not
be available.
7.4. Compliance with Other Instruments, Etc.; No Conflict. Assuming (i)
the filings required under the Exchange Act relating to the Proxy Statement and
the Merger, (ii) the filing of the Certificate of Merger and other appropriate
merger documents, if any, as required by the DGCL, and (iii) the approval of the
Government Bodies listed on Schedule 7.4 of the Parent Disclosure Statement, the
execution, delivery and performance of this Agreement and the Stockholders
Agreements and the consummation of the transactions contemplated hereby and
thereby will not (A) result in any violation of or conflict with, or constitute
a default under, the charter, bylaws or other organizational documents of Parent
(or any of its Subsidiaries) or (B) result in any violation of or conflict with
or require any consent, waiver, or notice under any Law. Except as set forth in
Section 7.4 of the Parent Disclosure Statement, the execution, delivery and
22
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any violation of or conflict with,
constitute a default under, require any consent, waiver or notice under any term
of, or result in the reduction or loss of any benefit or the creation or
acceleration of any obligation under, any agreement, note, bond, mortgage,
indenture, contract, lease, Permit or other obligation or any instrument to
which Parent or Merger Sub is a party or by which any of the assets or
properties of Parent or Merger Sub is bound or any instrument, except where any
of the foregoing, individually or in the aggregate, does not and would not
prevent or materially delay the consummation of the transactions contemplated
hereby.
7.5. Brokers and Finders. Except for the fees and expenses payable to
Xxxxxx Xxxxxxx & Co., Limited, which fees and expenses will be paid by Parent,
no agent, broker, Person or firm acting on behalf of Parent or Merger Sub is, or
will be, entitled to any fee, commission or broker's or finder's fees from any
of the parties hereto, or from any Person controlling, controlled by, or under
common control with any of the parties hereto, in connection with this Agreement
or any of the transactions contemplated hereby.
7.6 Offer Documents, Schedule 14D-9 and Proxy Statement. The Offer
Documents will comply in all material respects with the Exchange Act and the
rules and regulations thereunder and any other applicable laws. If at any time
prior to the expiration or termination of the Offer any event occurs which
should be described in an amendment or supplement to the Schedule 14D-1 or any
amendment or supplement thereto, Merger Sub will, and Parent will cause Merger
Sub to, file and disseminate, as required, an amendment or supplement which
complies in all material respects with the Exchange Act and the rules and
regulations thereunder and any other applicable laws. Prior to its filing with
the SEC, the amendment or supplement shall be delivered to the Company and its
counsel. The information supplied or to be supplied by Parent and Merger Sub for
inclusion or incorporation by reference in the Proxy Statement, the Schedule
14D-9 and the Information Statement of the Company, at the time such documents
are supplied to the stockholders of the Company, and with respect to the Proxy
Statement and the Information Statement, at the time of the Company Stockholders
Meeting and at the Effective Time, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made, in light of the circumstances
under which they are made, not misleading. Notwithstanding the foregoing, no
representation or warranty is made with respect to any information with respect
to the Company or its officers, directors and affiliates provided to Parent or
Merger Sub by the Company expressly in writing for inclusion or incorporation by
reference in the Offer Documents or amendments or supplements thereto.
ARTICLE VIII
Additional Covenants and Agreements
8.1. Conduct of Business of the Company. Except as set forth in
Schedule 8.1 of the Company Disclosure Statement, as expressly permitted by this
Agreement (including any transaction permitted by Schedule 8.1 of the Company
Disclosure Statement), as required by any change in applicable Law, or as
otherwise agreed by Parent in writing (which agreement shall not be unreasonably
withheld), during the period from the date of this Agreement to the Effective
Time, (i) the Company will, and will cause each of its Subsidiaries to, conduct
the Company's business in the ordinary course of business consistent with past
practice, and (ii) to the extent consistent with the foregoing, the Company
will, and will cause each of its Subsidiaries to, use their reasonable best
efforts to preserve intact its current business organizations, keep available
the service of its current officers and employees, and preserve its
relationships with customers, suppliers and others having business dealings with
it (but without the obligation to pay any additional compensation to any such
officers, employees, customers, suppliers and other persons), in each case with
respect to the Company's current business, with the objective that the goodwill
and ongoing businesses of the Company shall be materially unimpaired at the
Effective Time. Without limiting the generality of the foregoing, from and
including the date hereof to the Effective Time, the Company will not, and will
not permit any of its Subsidiaries to, without the prior written consent of
Parent (except to the extent set forth in Schedule 8.1 of the Company Disclosure
Statement):
(a) except for (i) Company Common Stock issued upon exercise
of options or other rights outstanding as of the date hereof
under Employee Plans in accordance with the terms thereof and
(ii) securities issued in connection with the conversion of
convertible or exchangeable securities of the Company or its
Subsidiaries outstanding as of the date hereof in accordance
with the terms of such securities, issue, deliver, sell,
dispose of, pledge or otherwise encumber, or authorize or
propose the issuance, sale, disposition or pledge or other
encumbrance (in each instance, whether through the issuance or
granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) of (A) any additional shares
of its capital stock of any class, or any Voting Debt or any
securities or rights convertible into, exchangeable for, or
23
evidencing the right to subscribe for any shares of its
capital stock or Voting Debt or any rights, warrants, options,
calls, commitments or any other agreements of any character to
purchase or acquire any shares of its capital stock or Voting
Debt or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for,
any shares of its capital stock, or (B) any other securities
in respect of, in lieu of, or in substitution for, Company
Common Stock outstanding on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any of its outstanding
securities, other than pursuant to existing agreements
requiring the Company to repurchase or acquire any shares of
its capital stock (provided that such repurchase or
acquisition is in accordance with the terms of such agreement
as in effect on the date hereof);
(c) split, combine, subdivide or reclassify any shares of its
capital stock or declare, set aside for payment or pay any
dividend, or make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or
otherwise make any payments to stockholders in their capacity
as such (other than dividends or distributions paid by any
Wholly Owned Subsidiary of the Company to the Company or
another Wholly Owned Subsidiary of the Company);
(d) (i) grant any increases in the compensation of any of its
directors, officers or employees, except for increases granted
to employees other than officers in the ordinary course of
business consistent with past practice, (ii) pay or award or
agree to pay or award any pension, retirement allowance, or
other non-equity incentive awards, or other employee benefit,
not required by any of the Employee Plans to any current or
former director, officer or employees, whether past or
present, or to any other Person, except for payments or awards
to current employees other than officers that are in the
ordinary course of business, consistent with past practice,
(iii) pay or award or agree to pay or award any stock option
or equity incentive awards, (iv) except as provided for in the
business plan previously dated April 29, 1999 provided by the
Company to Parent and Merger Sub (the "Business Plan"), enter
into any new or amend any existing employment agreement with
any director, officer or employee except for employment
agreements with new employees entered into in the ordinary
course of business consistent with past practice and except
for amendments in the ordinary course of business, consistent
with past practice, that do not materially increase benefits
or payments, (v) enter into any new or amend any existing
severance agreement with any current or former director,
officer or employee, except for agreements or amendments in
the ordinary course of business, consistent with past
practice, that do not provide for material benefits, or (vi)
become obligated under any new Employee Plan which was not in
existence on the date hereof, or amend any such Employee Plan
in existence on the date hereof, except for any such amendment
in the ordinary course of business, consistent with past
practice, that does not provide for material additional
benefits;
(e) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any
Subsidiary of the Company not constituting an inactive
Subsidiary (other than the Merger and other than any such
merger, consolidation, restructuring, recapitalization or
other reorganization that is used to effect an acquisition
permitted pursuant to Section 8.1(f) and which does not result
in a change of control of the Company or change the Company's
Common Stock into a different number or kind of securities);
(f) make any acquisition, by means of stock or asset purchase,
recapitalization, merger, consolidation or otherwise, of (i)
any direct or indirect ownership interest in or assets
comprising any business enterprise or operation or (ii) except
in the ordinary course and consistent with past practice, any
other assets; provided further that such acquisitions do not
and would not prevent or materially delay the consummation of
the Merger; and provided further that the foregoing shall not
prevent the Company from exploring on a preliminary basis and
conducting diligence investigations (including having
discussions with any potential acquisition target) with
respect to any potential acquisition that would require
24
Parent's consent hereunder, for the purpose of determining the
desirability of such potential acquisition and developing the
basis on which to seek Parent's consent, so long as the
Company does not submit any formal proposal or indication of
interest with respect to such an acquisition to such
acquisition target, or make any binding commitments with
respect to such potential acquisition, without obtaining
Parent's consent;
(g) (i) dispose of any interest in any material business
enterprise or operation of the Company, (ii) make any other
disposition of any other direct or indirect ownership interest
in any material assets of the Company (except for the
replacement or upgrade of assets, or disposition of
unnecessary assets, in the ordinary course and consistent with
past practice), or (iii) except in the ordinary course and
consistent with past practice, dispose of any other assets of
the Company;
(h) adopt any amendments to the Company Charter or the
by-laws or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure
or ownership of any Subsidiary of the Company; (i) incur any
indebtedness for borrowed money or guarantee any indebtedness
of any other Person or make any loans, advances or capital
contributions to, or investments in, any other Person (other
than to the Company or any Wholly Owned Subsidiary of the
Company);
(j) except as provided for in the Business Plan,
engage in the conduct of any business other than the
Company's existing businesses;
(k) enter into any agreement or exercise any discretion
providing for acceleration of payment or performance as a
result of a change of control of the Company or its
Subsidiaries, except in connection with the Offer and the
Merger; provided that this paragraph (k) shall not restrict
the Company's right to respond or take action in response to
any such acceleration so long as such action is permitted
under this Section 8.1;
(l) enter into any contracts, arrangements or understandings
requiring in the aggregate the purchase of equipment,
materials, supplies or services in excess of $2 million
individually or $20 million in the aggregate other than any
such contracts, arrangements or understandings providing for
capital spending of the Company or its Subsidiaries in
accordance with the Business Plan;
(m) enter into or amend, modify, terminate or waive any right
under any agreement with any Affiliates of the Company (other
than its Subsidiaries), other than any of the foregoing as may
be done in the ordinary course of business and that (x) would
not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect or (y) would not be
reasonably likely to prevent or materially delay consummation
of the transactions contemplated by this Agreement;
(n) settle or compromise any material litigation or material
Tax Controversy with respect to the Company or its
Subsidiaries or waive, release or assign any material rights
or claims with respect to the Company or its Subsidiaries,
except in the ordinary course of business consistent with past
practice;
(o) effect any material change in any of its methods of
accounting, except as may be required by law or generally
accepted accounting principles;
(p) take any action, engage in any transaction or enter into
any agreement which would cause any of the representations or
warranties set forth in Article VI hereof that are subject to,
or qualified by, a "Material Adverse Effect", "material
adverse change" or other materiality qualification to be
untrue as of the Closing Date, or any such representations and
warranties that are not so qualified to be untrue in any
respect which would have a Material Adverse Effect;
(q) take any action, including without limitation, the
adoption of any shareholder rights plan or amendments to the
Certificate of Incorporation, which would, directly or
indirectly, restrict or impair the ability of Parent to vote,
or otherwise to exercise the rights and receive the benefits
of a shareholder with respect to, securities of the Company
that may be acquired or controlled by Parent or Merger Sub or
permit any shareholder to acquire securities of the Company on
a basis not available to Parent in the event that Parent were
to acquire securities of the Company;
25
(r) authorize, recommend or propose (other than to Parent),
or announce an intention to do any of the foregoing, or enter
into any contract, agreement, commitment or arrangement to do
any of the foregoing.
8.2. No Solicitation of Other Offers. (a) The Company and its
Affiliates and each of their respective officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents shall immediately cease any discussions or negotiations with any
other parties that may be ongoing with respect to any Acquisition Proposal (as
defined below). Neither the Company nor any of its Affiliates shall, directly or
indirectly, take (and the Company shall not authorise or permit its or its
Affiliates, officers, directors, employees, representatives, consultants,
investment bankers, attorneys, accountants or other agents or Affiliates, to so
take) any action to (i) encourage, solicit, initiate or facilitate the making of
any Acquisition Proposal (including, without limitation, by taking any action
that would make the Article VIII of the Company Charter or Section 203 of the
Delaware General Corporation Law inapplicable to an Acquisition Proposal), (ii)
enter into any agreement with respect to any Acquisition Proposal or enter into
any arrangement, understanding or agreement requiring it to abandon, terminate
or fail to consummate the Merger or any other transactions contemplated by this
Agreement or (iii) participate in any way in discussions or negotiations with,
or, furnish or disclose any information to, any Person (other than Parent or
Merger Sub) in connection with, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal; provided, however, that the
Company, in response to an unsolicited Acquisition Proposal and in compliance
with its obligations under Section 8.2(b) hereof, may participate in discussions
or negotiations with or furnish information (pursuant to a confidentiality
agreement with terms not more favourable to such third party than the terms of
the Confidentiality Agreement) to any third party which makes an Acquisition
Proposal if (i) the Board of Directors reasonably determines (based upon the
advice of an independent, nationally recognized financial advisor) that such
Acquisition Proposal will lead to a Superior Proposal (as defined below) and
(ii) the Board of Directors believes (and has been so advised in writing by
independent outside nationally recognized legal counsel) that failing to take
such action would constitute a breach of its fiduciary duties. In addition,
neither the Board of Directors of the Company nor any Committee thereof shall
(A) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or Merger Sub the approval and recommendation of the Offer and this
Agreement or (B) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal; provided that the Company may recommend to its
stockholders an Acquisition Proposal and in connection therewith withdraw or
modify its approval or recommendation of the Offer or the Merger if (1) a third
party makes a Superior Proposal, and (2) (a) five (5) business days have elapsed
following delivery to Parent of a written notice of the determination by the
Board of Directors of the Company to take such action and during such five (5)
business day period the Company has fully co-operated with Parent including,
without limitation, informing Parent of the terms and conditions of such
Superior Proposal, and the identity of the Person making such Superior Proposal,
with the intent of enabling both parties to agree to a modification of the terms
and conditions of this Agreement, and (b) at the end of such five (5) business
day period the Acquisition Proposal continues to constitute a Superior Proposal.
"Acquisition Proposal" shall mean (i) any inquiry, proposal or
offer from any Person relating to any direct or indirect acquisition or purchase
of a substantial amount of assets of the Company or any of its Subsidiaries or
of over 10% of any class of equity securities of the Company or any of its
Subsidiaries, (ii) any tender offer or exchange offer that, if consummated,
would result in any Person beneficially owning 10% or more of any class of
equity securities of the Company or any of its Subsidiaries, (iii) any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, or (iv) any other transaction the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or the Merger or which could reasonably be
expected to dilute materially the benefits to Parent of the transactions
contemplated hereby.
"Superior Proposal" shall mean a bona fide proposal made by a
third party to acquire all of the Shares pursuant to a tender offer, a merger or
a sale of all of the assets of the Company (w) on terms which a majority of the
members of the Board of Directors of the Company determines in its good faith
reasonable judgment (based on the advice of an independent outside nationally
recognized financial advisor (relating to financial matters) and independent
outside nationally recognized legal advisors (relating to legal matters)) to be
more favorable to the Company and its stockholders than the transactions
contemplated hereby, (x) for which financing is then available (it being
understood that financing evidenced by highly confident letters and similar
letters shall not be considered "available" for purposes of this Section), (y)
which is not subject to any financing or due diligence condition and (z) which
an independent nationally recognized financial advisor has advised the Board of
Directors is more favorable to the Company's stockholders from a financial point
of view than the transactions contemplated hereby, as proposed to be modified by
Parent in accordance with the proviso to the last sentence of the first
paragraph of this Section 8.2 (a).
26
(b) From and after the date hereof, in addition to the obligations of
the Company set forth in paragraph (a), on the date of receipt thereof, the
Company shall advise Parent of any request for information or of any Acquisition
Proposal, or any inquiry, proposal, discussions or negotiation with respect to
any Acquisition Proposal, the terms and conditions of such request, Acquisition
Proposal, inquiry, proposal, discussion or negotiation and the Company shall
promptly provide to Parent copies of any written materials received by the
Company in connection with any of the foregoing, and the identity of the Person
making any such Acquisition Proposal or such request, inquiry or proposal or
with whom any discussion or negotiation are taking place. The Company shall keep
Parent fully informed of the status and details (including amendments or
proposed amendments) of any such request or Acquisition Proposal and keep Parent
fully informed as to the details of any information requested of or provided by
the Company and as to the details of all discussions or negotiations with
respect to any such request, takeover proposal or inquiry. The Company shall
promptly provide to Parent any non-public information concerning the Company
provided to any other Person in connection with any Acquisition Proposal which
was not previously provided to Parent.
(c) Immediately following the execution of this Agreement, the Company
shall request each Person which has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring the Company or any
portion thereof to return all confidential information heretofore furnished to
such Person by or on behalf of the Company.
8.3. Proxy Statement. If stockholder approval of the Merger is required
by law or by the Company Charter or By-Laws, as promptly as practicable,
following Parent's request, the Company will prepare and file a preliminary
Proxy Statement with the SEC and will use its reasonable best efforts to respond
to the comments of the SEC, if any, in connection therewith and to furnish all
information regarding the Company required in the definitive Proxy Statement
(including, without limitation, financial statements and supporting schedules
and certificates and reports of independent public accountants). Parent, Merger
Sub and Company will cooperate with each other in the preparation of the Proxy
Statement. Without limiting the generality of the foregoing, each of Parent and
Merger Sub will furnish to the Company the information relating to it required
by the Exchange Act to be set forth in the Proxy Statement. Promptly after the
expiration or termination of the Offer, if required by the DGCL in order to
consummate the Merger, the Company will cause the definitive Proxy Statement to
be mailed to the stockholders of the Company and, if necessary, after the
definitive Proxy Statement shall have been so mailed, promptly circulate
amended, supplemental or supplemented proxy material and, if required in
connection therewith, resolicit proxies. The Company will not use any proxy
material in connection with the meeting of its stockholders without Parent's
prior approval.
8.4. Stockholder Approval. (a) Promptly following the purchase of
shares of Common Stock pursuant to the Offer, if required by DGCL in order to
consummate the Merger, the Company, acting through its Board of Directors,
shall, in accordance with applicable Law, duly call, give notice of, convene and
hold a meeting of the holders of Common Stock and Company Preference Shares (the
"Company Stockholders' Meeting") for the purpose of voting upon this Agreement
and the Merger and the Company agrees that this Agreement and the Merger shall
be submitted at such meeting. The Company shall use its reasonable best efforts
to solicit from its stockholders proxies, and shall take all other action
necessary and advisable, to secure the vote of stockholders required by
applicable law and the Company Charter or By-Laws to obtain the approval for
this Agreement. The Company agrees that it will include in the Proxy Statement
the recommendation of its Board of Directors that holders of Common Stock and
Company Preference Shares approve and adopt this Agreement and approve the
Merger. Parent will cause all shares of Common Stock and Company Preference
Shares owned by Parent and its Subsidiaries (including Merger Sub) to be voted
in favor of this Agreement and the Merger.
(b) Notwithstanding the provisions of Section 8.4(a), in the event that
Parent and Merger Sub shall acquire in the aggregate at least 90% of the
outstanding shares of Common Stock and 90% of the outstanding shares of each
class of Company Preference Shares, the parties hereto shall, at the request of
Parent, take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
shareholders of the Company, in accordance with the DGCL.
8.5. Reasonable Best Efforts. Subject to Section 8.5(c), the Company
and Parent shall, and shall use their reasonable best efforts to cause their
respective Subsidiaries, as applicable, to: (i) promptly make all filings and
seek to obtain all Authorizations (including, without limitation, all filings
required under the HSR Act, the applicable merger regulations of the European
Community and all applicable Polish competition statutes) required under all
applicable Laws with respect to the Merger and the other transactions
contemplated hereby and will reasonably consult and cooperate with each other
with respect thereto; (ii) not take any action (including effecting or agreeing
to effect or announcing an intention or proposal to effect, any acquisition,
business combination or other transaction except as set forth in the Company
Disclosure Statement) which would impair the ability of the parties to
consummate the Merger; and (iii) use their reasonable best efforts to promptly
(x) take, or cause to be taken, all other actions and (y) do, or cause to be
27
done, all other things reasonably necessary, proper or appropriate to satisfy
the conditions set forth in Annex A of this Agreement and Article IX (unless
waived) and to consummate and make effective the transactions contemplated by
this Agreement on the terms and conditions set forth herein (including seeking
to remove promptly any injunction or other legal barrier that may prevent such
consummation); provided, however, that no loan agreement or contract for
borrowed money shall be repaid except as currently required by its terms, in
whole or in part, and, subject to Section 8.1, no contract shall be amended to
increase the amount payable thereunder or otherwise to be more burdensome to the
Company or any of its Subsidiaries in order to obtain any such consent, approval
or authorization without first obtaining the written approval of Parent and
Merger Sub. Each party shall promptly notify the other party of any
communication to that party from any Governmental Body in connection with any
required filing with, or approval or review by, such Governmental Body in
connection with the Offer and the Merger and the other transactions contemplated
hereby and permit the other party to review in advance any proposed
communication to any Governmental Body in such connection to the extent
permitted by applicable law.
8.6. Access to Information. Subject to currently existing contractual
and legal restrictions applicable to the Company, the Company shall (and shall
cause each of its Subsidiaries to) afford to officers, employees, counsel,
accountants and other authorized representatives of Parent ("Parent
Representatives") reasonable access, during normal business hours throughout the
period prior to the Effective Time, to its properties, books and records
(including, subject to execution of customary access letters, the work papers of
independent accountants), such access not to unreasonably interfere with the
Company's business or operations, and, during such period, shall (and shall
cause each of its Subsidiaries to) furnish promptly to such Parent
Representatives all information concerning its business, properties and
personnel as may reasonably be requested. All information obtained pursuant to
this Section 8.6 shall be subject to the Confidentiality Agreement, which shall
remain in full force and effect until consummation of the Merger or, if the
Merger is not consummated, for the period specified therein; provided, however,
that neither Parent nor the Company shall be precluded from making any
disclosure which it deems required by law or applicable rule or regulation of
any Governmental Body or self-regulatory organization in connection with the
Merger.
8.7. Indemnification of Directors and Officers. (a) From and after the
Effective Time, Parent and the Surviving Corporation shall jointly and severally
indemnify, defend and hold harmless each of the Persons set forth in Schedule
8.7 of the Company Disclosure Statement, and each of the present and former
officers and directors of the Company and any of its Subsidiaries, former
Subsidiaries and their predecessors, and any Person who is or was serving at the
request of the Company as an officer, director, employee or agent of another
Person (collectively, the "Indemnified Parties"), against all losses, expenses,
claims, damages or liabilities arising out of actions or omissions occurring on
or prior to the Effective Time (including the transactions contemplated by this
Agreement) to the fullest extent permitted under applicable Law (and shall also,
subject to Section 8.7(b), advance expenses as incurred to the fullest extent
permitted under applicable Law; provided that, the Person to whom expenses are
advanced provides an undertaking reasonably satisfactory to the Company to repay
such advances if it is ultimately determined that such Person is not entitled to
indemnification); provided, however, that such indemnification shall be provided
only to the extent any directors' and officers' liability insurance policy of
the Company or its Subsidiaries does not provide coverage and actual payment
thereunder with respect to the matters that would otherwise be subject to
indemnification hereunder (it being understood that Parent or the Surviving
Corporation shall, subject to Section 8.7(b), advance expenses on a current
basis as provided in this paragraph (a) notwithstanding such insurance coverage
to the extent that payments thereunder have not yet been made, in which case
Parent or the Surviving Corporation, as the case may be, shall be entitled to
repayment of such advances from the proceeds of such insurance coverage). Parent
and Surviving Corporation agree that all rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(each, a "Claim"), existing in favor of the Indemnified Parties as provided in
the Company Charter or By-Laws or pursuant to other agreements, or certificates
of incorporation or by-laws or other similar documents of any of the Company's
Subsidiaries, as in effect as of the date hereof, with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided, however, that all rights to indemnification in
respect of any Claim asserted, made or commenced within such period shall
continue until the final disposition of such Claim. The Surviving Corporation
shall maintain in effect for not less than six years after the Effective Time
the current policies of directors' and officers' liability insurance maintained
by the Company and the Company's Subsidiaries with respect to matters occurring
prior to the Effective Time; provided however, that in no event shall Parent be
required to expend in any one year an amount in excess of 150% of the annual
premiums currently paid by the Company for such insurance which the Company
represents to be $430,000 for the twelve month period ending May 1, 1999;
provided further, however, that the Surviving Corporation may substitute
therefor policies of at least the same coverage containing terms and conditions
which are no less advantageous to the Indemnified Parties with an insurance
company or companies, the claims paying ability of which is substantially
equivalent to the claims paying ability of the insurance company or companies
providing such insurance coverage for directors and officers of Parent.
28
(b) In the event that any Claim relating hereto or to the
transactions contemplated by this Agreement is commenced,
before the Effective Time, the parties hereto agree to
co-operate and use their respective reasonable efforts to
vigorously defend against and respond thereto. Any Indemnified
Party wishing to claim indemnification under paragraph (a) of
Section 8.7, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent
thereof, whereupon Parent or the Surviving Corporation shall
have the right, from and after the Effective Time, to assume
and control the defense thereof, and upon such assumption, the
Surviving Corporation shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof. Notwithstanding the
foregoing, if counsel for the Indemnified Parties advises that
there are issues which raise conflicts of interest between
Parent or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain separate counsel
and the Surviving Corporation will pay all reasonable
documented fees and expenses of such counsel; provided that
the Surviving Corporation will not be obligated pursuant to
this sentence to pay for more than one firm of counsel for all
Indemnified Parties (plus one local counsel in each
appropriate jurisdiction for all Indemnified Parties) with
respect to any Claim. The Surviving Corporation shall not be
liable for any settlement effected without its prior written
consent.
(c) This Section 8.7 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of
Parent, Merger Sub and the Surviving Corporation.
8.8. Notification of Certain Matters. Each of the Company and Parent
shall give prompt notice to the other party of any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement.
Parent or Merger Sub shall promptly give notice to the Company upon any of their
Executive Officers obtaining knowledge of any actual failure of any of the
Tender Offer Conditions or any event which would result in an actual failure of
the Tender Offer Conditions.
8.9. Employee Matters. (a) From and after the Effective Time, Parent
will cause the Surviving Corporation to honor, in accordance with their terms,
the employment contracts, severance agreements and similar agreements with
officers and employees of the Company and its Subsidiaries set forth in Schedule
6.9 of the Company Disclosure Statement (the "Executive Agreements"); provided,
however, that nothing herein shall preclude any change in any Executive
Agreement effective on a prospective basis that is permitted pursuant to the
terms of this Agreement or the applicable Employee Plan. Company performance in
respect of any performance or other programs shall be calculated without taking
into account any expenses or costs directly associated with or arising as a
result of the transactions contemplated by this Agreement or any non-recurring
charges that would not reasonably be expected to have been incurred had the
transactions contemplated by this Agreement not occurred. With respect to
employees of the Company and its Subsidiaries, the obligations of the Company
and its Subsidiaries under the Employee Plans as in effect immediately prior to
the Effective Time and will provide employee benefit plans with aggregate
employee benefits to Company Employees that are no less favorable than the
aggregate benefits provided to them immediately prior to the Effective Time
pursuant to the plans set forth in Schedule 6.9 of the Company Disclosure
Statement; provided that Parent at its sole option may provide employee benefits
to Company Employees which, in the aggregate, are no less favorable than those
applicable to similarly situated employees of Parent. With respect to any plans
established by Parent, to the extent a Company Employee becomes eligible to
participate in any such plans, Parent shall grant to such Company Employee from
and after the Effective Time, credit for all service with the Company and its
affiliates and predecessors (and any other service credited by the Company under
similar Employee Plans) prior to the Effective Time for eligibility to
participate, benefit accrual and vesting purposes. To the extent Parent benefit
plans provide medical or dental welfare benefits, such plans shall waive any
preexisting conditions and actively at-work exclusions with respect to Company
Employees (but only to the extent such Company Employees were provided coverage
under the Employee Plans) and shall provide that any expenses incurred on or
before the Effective Time in the applicable plan year by or on behalf of any
Company Employees shall be taken into account under the Parent benefit plans for
the purposes of satisfying applicable deductible, co-insurance and maximum
out-of- pocket provisions for such Company Employees.
(b) The Company may amend and/or take action with respect to
its stock incentive plans prior to the Effective Time to
provide that upon the Merger, that options, stock appreciation
rights or other awards granted under such plan and outstanding
as of the Effective Time shall be fully vested, and in the
case of stock options or stock appreciation rights, be
immediately exercisable.
29
(c) For purposes of this Section 8.9, the term "Company
Employees" shall mean all individuals employed by the Company
and its Subsidiaries (including those on lay-off, disability
or leave of absence, paid or unpaid) immediately prior to the
Effective Time.
8.10 Preparation of Tax Returns and Payment of Taxes. The Company and
its Subsidiaries shall prepare and timely file all Tax Returns and amendments
thereto required to be filed by or with respect to them on or before the
Effective Time. Parent shall have a reasonable opportunity to review all such
Tax Returns and amendments thereto prior to filing. The Company and its
Subsidiaries shall timely pay all Taxes shown to be payable on such Tax Returns.
8.11 Stock Option and Other Plans; Company Warrants. (a) Prior to the
Tender Offer Acceptance Date, both the Board of Directors of the Company (or, if
appropriate, any committee thereof) and the Company shall use their reasonable
best efforts to obtain the consent of all of the holders of options to purchase
Common Stock (the "Options") heretofore granted under any stock option plans of
the Company (the "Stock Plans") and the holders of Company Warrants to provide
for the cancellation, of all the outstanding Options and Company Warrants on the
terms set forth in Sections 8.11 and 5.5.
(b) Within three business days after the Payment Date, each Option,
whether or not then vested or exercisable, and each Company Warrant, whether or
not then vested or exercisable, shall, subject to the receipt by the Company of
any required consents from the holder of such Options and Company Warrants, no
longer be exercisable for the purchase of shares of Common Stock but shall
entitle each holder thereof, in cancellation and settlement therefor, to
payments in cash (subject to any applicable withholding taxes, the "Cash
Payment") equal to the product of (x) the total number of shares of Common Stock
subject to such Option or Company Warrant, as the case may be, as to which such
Option or Company Warrant could have been exercisable (assuming such Option or
Company Warrant was fully vested) and (y) the excess, if any, of the Offer Price
over the exercise price per share of Common Stock subject to such Option or
Company Warrant. The Company will pay each such Cash Payment to be paid to each
holder of an outstanding Option or Company Warrant, as the case may be, within
six business days of the Payment Date; provided that such holder has delivered
the consent described in Section 8.11(a) to the Company. Parent shall provide,
or cause to provided, to the Company on a timely basis all funds necessary to
pay each such Cash Payment.
ARTICLE IX
Conditions to the Merger
9.1. Conditions Precedent to Obligations of Parent, Merger Sub and the
Company. The respective obligations of Parent and Merger Sub, on the one hand,
and the Company, on the other hand, to effect the Merger are subject to the
satisfaction or waiver (subject to applicable law) at or prior to the Effective
Time of each of the following conditions and only the following conditions:
(a) Approval of Company's Stockholders. To the extent required
by applicable law, this Agreement and the Merger shall have
been approved and adopted by holders of a majority of the
outstanding share of the Common Stock of the Company entitled
to vote in accordance with applicable law;
(b) HSR Act. Any waiting period applicable (and any extension
thereof) under the HSR Act applicable to the Merger shall have
expired or been terminated;
(c) Other Regulatory Approvals. All required approvals of the
Polish Anti-Monopoly Commission shall have been granted. A
decision of the Commission of the European Communities that
the purchase of the Common Stock pursuant to the Offer and the
Merger are compatible with the common market shall have been
received if required;
(d) Injunction. No preliminary or permanent injunction or
other order shall have been issued by any court or by any
governmental or regulatory agency, body or authority which
prohibits the consummation of the Offer or the Merger and the
transaction contemplated by this Agreement and which is in
effect at the Effective Time; provided, however, that, in the
case of a decree, injunction or other order, each of the
parties shall have used reasonable best efforts to prevent the
entry of any such injunction or other order and to appeal as
promptly as possible any decree, injunction or other order
that may be entered;
(e) Statutes. No statute, rule, regulation, executive order,
decree or order of any kind shall have been enacted, entered,
promulgated or enforced by any court or governmental authority
which prohibits the consummation of the Offer or the Merger or
has the effect of making the purchase of the Common Stock
illegal;
30
(f) Minimum Condition. Merger Sub shall have purchased shares
of Common Stock pursuant to the Offer in a number sufficient
to satisfy the Minimum Condition; and
(g) Company Preference Shares. Merger Sub shall have purchased
the Company Preference Shares from the owners thereof and
shall be the sole record and beneficial owner of all of the
issued and outstanding Company Preference Shares; provided,
however, that this Section 9.1(g) shall not be a condition to
the obligations of Parent and Merger Sub if Parent or Merger
Sub shall have failed to purchase all of the Company
Preference Shares in breach of their obligations under the
Preferred Stockholders Agreements.
ARTICLE X
Termination
10.1. Termination by Mutual Consent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval by stockholders, by the mutual written consent of Parent
and the Company.
10.2. Termination by Either Parent or the Company. This Agreement may
be terminated (upon notice from the terminating party to the other parties) and
the Merger may be abandoned by action of the Board of Directors of either Parent
or the Company if:
(a) the Payment Time shall not have occurred by the date (the
"Termination Date") which is 120 days after the date hereof;
provided that the right to terminate this Agreement under this
clause shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause
of or resulted in the failure of the Merger Effective Time to
occur on or before the Termination Date; or
(b) any court of competent jurisdiction or Governmental Body
shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise
prohibiting the acceptance for payment of, or payment for,
shares of Common Stock pursuant to the Offer or the payment
for shares of Common Stock or the making of any Cash Payment
pursuant to the Merger and such order, decree, ruling or other
action shall have become final and nonappealable.
10.3. Termination by the Company. This Agreement may be terminated
(upon notice to Parent) by the Company and the Merger may be abandoned by action
of the Board of Directors of the Company:
(a) if Parent or Merger Sub breaches or fails in any material
respect to perform or comply with its covenants and agreements
contained herein or breaches its representations and
warranties in any material respect and such breach cannot or
has not been cured within fifteen (15) days after the giving
of written notice of such breach to the Parent and Merger Sub,
other than any breach or breaches which is or are not
reasonably likely to affect adversely Parent's or Merger Sub's
ability to complete the Offer or the Merger; or
(b) if Parent or Merger Sub shall have (i) failed to commence
the Offer within five (5) business days following the date of
this Agreement, (ii) terminated the Offer in violation of its
terms or this Agreement; or (iii) failed to pay for shares of
Common Stock in accordance with the terms of the Offer and, in
any event, on or prior to the Termination Date, unless, in the
case of (i), (ii) or (iii), such failure shall have been
caused by the failure of the Company to satisfy the conditions
set forth in clauses (e) or (f) of Annex A.
10.4. Termination by Parent and Merger Sub. This Agreement may be
terminated (upon notice to the Company) by Parent and Merger Sub, and the Merger
may be abandoned by action of the Board of Directors of Parent if:
(a) the Board of Directors of the Company shall have withdrawn
or modified its approval or recommendation of this Agreement,
the Offer or the Merger in a manner adverse to Parent or
Merger Sub;
(b) if the Offer is terminated or expires in accordance with
its terms without Merger Sub having purchased any Common Stock
thereunder due to an occurrence which would result in a
failure to satisfy any one or more of the conditions set forth
on Annex A hereto, unless any such failure shall have been
caused by or resulted from the failure of Parent or Merger Sub
31
to perform in any material respect any covenant or agreement
of either of them contained in this Agreement or the material
breach by Parent or Merger Sub of any representation or
warranty of either of them contained in this Agreement;
(c) in the event of a breach by the Company of any
representation, warranty, covenant or agreement contained in
this Agreement which (i) would give rise to the failure of a
condition set forth in clause (e) or (f) of Annex A, (ii)
cannot or has not been cured prior to the earlier of (x)
fifteen (15) days after the giving of written notice of such
breach to the Company and (y) two (2) business days prior to
the date on which the Offer expires and (iii) has not been
waived by Parent pursuant to the provisions hereof;
(d) if any condition contained in Annex A hereto shall not
have been satisfied by the expiration date of the Offer and on
or prior to such date it shall have been publicly disclosed,
or Parent shall have otherwise learned, that beneficial
ownership (determined for the purposes of this clause (d)(ii)
as set forth in Rule 13d-3 promulgated under the Exchange Act)
of 30% or more of the Common Stock has been acquired by any
Person or group (as defined in Section 13(d)(3) under the
Exchange Act); or
(e) any Stockholders Agreement shall have ceased to be in full
force and effect or any party to any such agreement (other
than Parent or the Merger Sub) shall materially breach or
repudiate any such agreement.
10.5. Effect of Termination and Abandonment. In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
Article X, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement, except as
provided in Section 8.7 or Section 10.6, and except that nothing herein will
relieve any party from liability for any breach of this Agreement.
10.6. Payment of Certain Fees. (a) If this Agreement is terminated by
Parent in accordance with Section 10.4(b) or 10.4(c) hereof by reason of the
occurrence of any event, not resulting from the wilful action or wilful omission
or gross negligence of the Company or any of its Subsidiaries, and which is
specified in clause (e) of Annex A, then the Company shall reimburse Parent in
immediately available funds for the reasonable documented expenses of Parent and
Merger Sub incurred in connection with the transactions contemplated by this
Agreement (including, without limitation, printing fees, filing fees and fees
and expenses of its legal and financial advisors and all fees and expenses
payable to any financing courses) not to exceed $8,000,000, such payment to be
made by the Company not later than the second business day after receipt by the
Company of documentation evidencing such expenses.
(b) If this Agreement is terminated (i) by Parent in accordance with
Section 10.4(b) because of the occurrence of any event specified in
clauses (f) or (g) of Annex A or any event specified in clause (e) of
Annex A and resulting from wilful action or wilful omission or gross
negligence of the Company or any of its Subsidiaries; (ii) by Parent in
accordance with Section 10.4(a) or Section 10.4(c) (but, in the case of
Section 10.4(c), only to the extent such event results from the wilful
act or wilful omission or gross negligence of the Company or any of its
Subsidiaries); or (iii) by Parent pursuant to Section 10.4(d), if
within twelve months of the date of such termination the Company enters
into a definitive agreement for a transaction in respect of an
Acquisition Proposal with any Person other than Parent or its
Affiliates; then the Company shall pay to Parent, on the business day
next succeeding the date of termination (or in the case of a
termination pursuant to Section 10.6(b)(iii), the date on which such
definitive agreement is entered into), by wire transfer in immediately
available funds an amount equal to $32,000,000.
ARTICLE XI
Miscellaneous and General
11.1. Expenses. Except as set forth in Article VIII and Section 10.6,
each party shall bear its own expenses, including the fees and expenses of any
attorneys, accountants, investment bankers, brokers, finders or other
intermediaries or other Persons engaged by it and filing fees, incurred in
connection with this Agreement and the transactions contemplated hereby.
11.2. Notices, Etc. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), when delivered by
telecopy and confirmed by return telecopy, or upon receipt after being mailed by
first-class mail, postage prepaid and return receipt requested in each case to
the applicable addresses set forth below:
32
If to the Company:
@Entertainment, Inc.
c/o At Entertainment Limited
00-00 Xxxxxxx Xxxxxx
Xxxxxx X0X 0XX
Attn: Xxxxxx X. Xxxxxx, III
Facsimile: (00 000) 000 0000
with a copy to:
Xxxxx & XxXxxxxx
000 Xxxxxxxxxxx Xxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
If to Parent or Merger Sub:
c/o United Pan-European Communications N.V.
Xxxx. Xxxxxxxxxxxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attn: Xxxxxxx Xxxxx
Facsimile: (00 00) 000 0000
with a copy to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Xx., Esq.
Facsimile: (0 000) 000 0000
or to such other address as such party shall have designated
by notice so given to each other party.
11.3. Amendments, Waivers, Etc. This Agreement may be amended, changed,
supplemented, waived or otherwise modified only by an instrument in writing
signed by the party (or, in the case of Section 8.7, the Indemnified Party)
against whom enforcement is sought; provided that, after the adoption of this
Agreement by the stockholders of the Company, no such amendment, change,
supplement or waiver shall be made without the further requisite approval of
such stockholders if such amendment, change, supplement or waiver by law
requires the further approval by such stockholders.
11.4. No Assignment. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns; provided that, except as otherwise expressly set forth
in this Agreement, neither the rights nor the obligations of any party may be
assigned or delegated without the prior written consent of the other parties.
11.5. Entire Agreement. Except as otherwise provided herein, this
Agreement (together with the Company Disclosure Statement, the Parent Disclosure
Statement and the Confidentiality Agreement and the other agreements expressly
contemplated hereby) and Annex A to this Agreement embody the entire agreement
and understanding between the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter. There are no representations, warranties or covenants by the parties
hereto relating to such subject matter other than those expressly set forth in
this Agreement (including the Company Disclosure Statement and the Parent
Disclosure Statement) and any writings expressly required hereby.
11.6. Specific Performance. The parties acknowledge that money damages
are not an adequate remedy for violations of this Agreement and that any party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable Law, each party waives any
objection to the imposition of such relief.
11.7. Remedies Cumulative. 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.
33
11.8. No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
11.9. No Third Party Beneficiaries. This Agreement is not intended to
be for the benefit of and shall not be enforceable by any Person or entity who
or which is not a party hereto, except for the indemnification provisions
contained in Section 8.7, which provisions may be enforced by any Indemnified
Party referred to therein. Notwithstanding anything to the contrary contained in
this Agreement, the provisions of Section 8.7 of this Agreement may not be
amended or altered in any manner with respect to any Indemnified Party without
the written consent of such Indemnified Party. No assignment of this Agreement
shall relieve Parent from its obligations to any Indemnified Party contained in
Section 8.7 of this Agreement.
11.10. Jurisdiction. Each party hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the District of
Delaware or the Chancery Court of the State of Delaware in any action, suit or
proceeding arising in connection with this Agreement, and agrees that any such
action, suit or proceeding shall be brought only in such court (and waives any
objection based on forum non conveniens or any other objection to venue
therein); provided, however, that such consent to jurisdiction is solely for the
purpose referred to in this Section 11.10 and shall not be deemed to be a
general submission to the jurisdiction of said courts or in the State of
Delaware other than for such purpose. Parent, Merger Sub and the Company hereby
waive any right to a trial by jury in connection with any such action, suit or
proceeding.
11.11. Public Announcements. Parent and the Company will agree upon the
timing and content of the initial press release to be issued describing the
transactions contemplated by this Agreement, and will not make any public
announcement thereof prior to reaching such agreement unless required to do so
by applicable Law or regulation or stock exchange requirement. To the extent
reasonably requested by any other party, each party will thereafter consult with
and provide reasonable cooperation to the others in connection with the issuance
of further press releases or other public documents describing the transactions
contemplated by this Agreement.
11.12. Governing Law. This Agreement and all disputes hereunder shall
be governed by and construed and enforced in accordance with the internal laws
of the State of Delaware, without regard to principles of conflict of laws.
11.13. Name, Captions, Etc. The names assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Unless otherwise specified,
(a) the terms "hereof", "herein" and similar terms refer to this Agreement as a
whole and (b) references herein to Articles or Sections refer to articles or
sections of this Agreement. Wherever appearing herein, the word "including"
shall be deemed to be followed by the words "without limitation."
11.14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
11.15. Survival of Representations, Warranties, Covenants and
Agreements. The respective representations and warranties of the parties
contained herein or in any certificates or other documents delivered prior to or
at the Closing shall survive the execution and delivery of this Agreement, but
shall terminate at the Effective Time. The respective covenants and agreements
of the parties contained herein or in any other documents delivered prior to or
at the Closing shall survive the execution and delivery of this Agreement and
shall only terminate in accordance with their respective terms.
11.16. Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable in a jurisdiction, such provision shall
be modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other jurisdiction.
11.17. Disclosure Statements. The parties acknowledge that the Company
Disclosure Statement and the Parent Disclosure Statement to this Agreement (i)
relate to certain matters concerning the disclosures required and transactions
contemplated by this Agreement, (ii) are qualified in their entirety by
reference to specific provisions of this Agreement, (iii) are not intended to
constitute and shall not be construed as indicating that such matter is required
to be disclosed, nor shall such disclosure be construed as an admission that
such information is material with respect to the Company or Parent, as the case
may be, except to the extent required by this Agreement.
34
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties set forth below.
@ENTERTAINMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx, III
Name: Xxxxxx X. Xxxxxx, III
Title: Chief Executive Officer
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Chairman of the Management Board
and Chief Executive Officer
BISON ACQUISITION CORP.
By: /s/ Anton H.E. van Voskuijlen
Name: Anton H.E. van Voskuijlen
Title: Vice President
35
ANNEX A
The capitalized terms used in this Annex A shall have the
meanings set forth in the Agreement to which it is annexed, except that
the term "Merger Agreement" shall be deemed to refer to the Agreement
to which this Annex A is appended and "Purchaser" shall be deemed to
refer to Merger Sub.
Notwithstanding any other provision of the Offer or the Merger
Agreement, Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the Commission,
including Rule 14e-1c under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered shares promptly after
termination or withdrawal of the Offer), pay for any shares of Common
Stock tendered pursuant to the Offer and may terminate or amend the
Offer and may postpone the acceptance of, and payment for, any shares
of Common Stock, if (i) there shall not have been validly tendered and
not properly withdrawn prior to the expiration of the Offer a number of
shares of Common Stock which represent at least a majority of all of
the issued and outstanding shares of Common Stock, on a fully diluted
basis, on the date the Offer is consummated (the "Minimum Condition"),
(ii) any applicable waiting period (and any extension thereof) under
the HSR Act shall not have expired or been terminated (the "HSR
Condition"), (iii) all applicable approvals of the Polish Anti-Monopoly
Commission shall not have been granted prior to the expiration of the
Offer (the "PAMC Condition"), (iv) if required by applicable law, a
decision of the Commission of the European Community that the purchase
of the Stock pursuant to the Offer and the Merger are compatible with
the common market has not been received prior to the expiration of the
Offer (the "EU Condition" and together with the HSR Condition and PAMC
Condition, the "Regulatory Conditions"), or (v) if, at any time on or
after the date of the Merger Agreement and at or before the time of
payment for any such shares of Common Stock (whether or not any shares
of Common Stock have theretofore been accepted for payment or paid for
pursuant to the Offer) any of the following shall occur:
(a) there shall be instituted or pending any action or
proceeding by any Governmental Body, or by any other Person,
domestic or foreign, before any court of competent
jurisdiction or governmental authority or agency, domestic or
foreign (other than proceedings and claims referenced on
Schedule 6.7 to the Company Disclosure Statement), (i)
challenging or seeking to, or which could reasonably be
expected to make illegal, impede, delay or otherwise directly
or indirectly restrain, prohibit or make materially more
costly the Offer or the Merger or would reasonably be expected
to result in material damages, (ii) seeking to prohibit or
materially limit the ownership or operation by Parent or
Purchaser of all or any material portion of the business or
assets of the Company and its Subsidiaries taken as a whole or
to compel Parent or Purchaser to dispose of or hold separately
all or any material portion of the business or assets of
Parent and its subsidiaries taken as a whole or the Company
and its Subsidiaries taken as a whole, or seeking to impose
any limitation on the ability of Parent or Purchaser to
conduct its business or own such assets, (iii) seeking to
impose limitations on the ability of the Parent or Purchaser
effectively to exercise full rights of ownership of the share
of the capital stock of the Company, including, without
limitation, the right to vote any such shares of capital stock
acquired or owned by Purchaser or Parent on all matters
properly presented to the Company's stockholders, (iv) seeking
to require divestiture by Parent or Purchaser of any shares of
capital stock of the Company, (v) requiring or permitting the
Company's competitors to share access to the Company's
broadcast systems (other than access required under Polish law
on the date hereof), or (vi) otherwise directly or indirectly
relating to the Offer or the Merger and which would have a
Material Adverse Effect or a material adverse effect on the
business, properties, assets, liabilities, operations, results
of operations or condition (financial or otherwise) of Parent
and its Subsidiaries, taken as a whole;
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction, enacted,
enforced, promulgated, amended or issued and applicable to or
deemed by a Governmental Body to be applicable to (i) Parent,
Purchaser, the Company or any Subsidiary or (ii) the Offer or
the Merger, by any Governmental Body, court, administrative or
regulatory authority or agency, other than the routine
application of the waiting period provisions of the HSR Act,
the approval process of the Polish Anti-Monopoly Commission
and, if required by applicable law, the approval process of
the Commission of the European Community to the Offer or to
the Merger, which could reasonably be expected to directly or
indirectly, result in any of the consequences referred to in
clauses (i) through (vii) paragraph (a) above;
A-1
(c) any change shall have occurred, or Parent shall have
become aware of any fact, that has had or would have a
Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the
Nasdaq Stock Market's National Market (excluding any
coordinated trading halt triggered solely as a result of a
specified decrease in a market index), (ii) any decline in the
Nasdaq Composite Index in excess of 30% measured from the
close of business on the trading day immediately preceding the
date of the Merger Agreement, (iii) a suspension of the
currency exchange markets for the U.S. Dollar which continues
in effect for three business days or for the Dutch Guilder
which continues in effect for five business days, (iv) a
declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or The
Netherlands, (v) any material limitation (whether or not
mandatory) by any United States or Dutch Governmental Body on
the extension of credit by banks or other lending
institutions, (vi) the actual declaration of war on or by the
United States, The Netherlands or Poland, or the invasion of
the territory of a NATO member state by a non-NATO member
state, or (vii) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material
acceleration or material worsening thereof;
(e) any of the representations or warranties made by the
Company in the Merger Agreement that are qualified as to
materiality shall be untrue or incorrect in any respect or any
such representations and warranties that are not so qualified
shall be untrue or incorrect in any material respect, in each
case as of the date of the Merger Agreement and the scheduled
expiration date of the Offer, except (i) for changes
specifically permitted by the Merger Agreement and (ii) that
those representations and warranties which address matters
only as of a particular date shall remain true and correct as
of such date.
(f) the Company shall have failed to perform any material
obligation or to comply with any material agreement or
material covenant of the Company to be performed or complied
with by it under this Agreement;
(g) the Company's Board of Directors or any committee thereof
shall have withdrawn, or shall have modified or amended in a
manner adverse to Parent or Purchaser, the approval, adoption
or recommendation, as the case may be, of the Offer, the
Merger or the Merger Agreement, or approved or recommended, or
announced a neutral position with respect to, any merger,
consolidation, other business combination, sale of material
assets, takeover proposal or other acquisition of Stock other
than the Offer and the Merger or upon request by Parent, shall
fail to reaffirm its approval and recommendation of the Offer,
the Merger or the Merger Agreement;
(h) it shall have been publicly disclosed, or the Purchaser
shall have otherwise learned, that beneficial ownership
(determined for the purposes of this paragraph (h) as set
forth in Rule 13d-3 promulgated under the Exchange Act) of 30%
or more of the Common Stock has been acquired by any Person
(including the Company or any of its Subsidiaries or
Affiliates) or group (as defined in Section 13(d)(3) under the
Exchange Act), which person or group is not, on the date of
the Merger Agreement, the beneficial owner of 30% or more of
the Common Stock;]
(i) the Merger Agreement shall have been terminated in
accordance with its terms;
(j) any Stockholders Agreement shall fail or cease to be in
full force and effect or any party to any such agreement
(other than Parent or the Purchaser) shall materially breach
or repudiate any such agreement.
which, in the reasonable judgment of Purchaser, in any such case and
regardless of the circumstances giving rise to any such condition,
makes it inadvisable to proceed with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of Parent
and the Purchaser and may be asserted by Parent or the Purchaser, or
may be waived by Parent or the Purchaser, in whole or in part at any
time and from time to time in their respective reasonable discretion.
The failure by Parent or the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time. Any determination by Parent or the
Purchaser concerning the events described in this Annex A shall be
final and binding upon all parties.
