Exhibit 10.18
STOCK OPTION AGREEMENT BETWEEN
XXXXX XXXXX
AND @ ENTERTAINMENT, INC.
This Stock Option Agreement ("Option Agreement") is made effective as
of January 1, 1998 (the "Effective Date"), by and between Xxxxx Xxxxx ("Xxxxx")
and @ Entertainment, Inc., a Delaware corporation (the "Company"), pursuant to
the @Entertainment, Inc. 1997 Stock Option Plan, as amended (the "Plan").
1. Grant of Option and Option Period.
a. The Company hereby grants Xxxxx an option (the "Option") to
purchase Two Hundred Fifty Thousand shares (250,000) (the "Shares") of the
Company's common stock ("Common Stock"), with a par value of $0.01 per share,
pursuant to the terms and conditions set forth in this Option Agreement. The
exercise price for the Option (the "Exercise Price") shall be Twelve Dollars
(U.S. $12.00) per share.
b. The option to purchase Thirty-one Thousand Two Hundred
Fifty (31,250) of these Shares will vest at the end of each fiscal quarter on
March 31, June 30, September 30 and December 31 of 1998 and 1999, provided,
however, that (i) the Option shall vest in full immediately (A) on the date of
change in control of Poland Communications, Inc. ("PCI") (for purposes of this
clause, the term "change in control" shall have the same meaning as that term
has in the Indenture dated as of October 31, 1996, between PCI and State Street
Bank and Trust Company as trustee with respect to those certain 9 7/8% Senior
Notes of the Company due 2003 (the "Indenture")) or (B) on the date of change in
control of the Company (for purposes of this clause, the term "change of
control" shall be determined in the same manner as in clause (A) above), and
(ii) no portion of the Option shall vest after the date (the "Cut-Off Date")
that Xxxxx'x employment with the Company, or any of its affiliates, is
terminated for any reason whatsoever. For the purposes of this Agreement, the
term "affiliate of the Company" shall mean any entity that controls, is
controlled by or is under common control with the Company.
c. If Xxxxx'x employment with the Company, or any of its
affiliates, is terminated for any reason, Xxxxx shall have only sixty (60) days
after the Cut-Off Date to exercise that portion of the Option that has vested as
of the Cut-Off Date, and Xxxxx shall have no right to exercise any portion of
the Option that has not then vested.
d. Notwithstanding any other provision of this Option
Agreement, the Option shall expire and be of no further force or effect with
respect to any Shares on the earlier to occur of (i) the tenth anniversary of
the Effective Date or (ii) sixty days after the date that Xxxxx ceases to be an
employee of the Company, or any of its affiliates, for any reason
whatsoever (including but not limited to Xxxxx'x death, disability, voluntary
termination or involuntary termination).
e. Each exercise of the Option shall reduce, by an equal
number, the total number of shares of @Entertainment Common Stock that may
thereafter be purchased by Xxxxx under the Option.
2. Manner of Exercise.
Subject to the conditions and restrictions contained in Section 3
below, the Option shall be exercised by delivering written notice of exercise to
the Secretary of the Company. Such notice shall be irrevocable and must be
accompanied by payment in cash, banker's draft or such other form of
consideration as the Company may approve, and a signed Subscription Agreement,
reasonably acceptable to both parties.
3. Non-transferability.
Neither this Option nor any interest therein may be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner (other than by
will or by the laws of descent and distribution during the option period
described in Section 1, or in a manner as may be established from time to time
by the Company's Stock Option Committee pursuant to the Plan ). This Option is
not assignable by operation of law or subject to execution, attachment or
similar process. During Xxxxx'x lifetime, the Option can only be exercised by
Xxxxx. Any attempted sale, pledge, assignment, hypothecation or other transfer
of the Option or any interest therein contrary to the provisions hereof, or the
levy of any execution, attachment or similar process upon the Option or any
interest therein shall be null and void and without force or effect. No transfer
of the Option by will or by the laws of descent and distribution shall be
effective to bind the Company unless the Company shall have been furnished
written notice thereof executed by the personal representative of the estate of
Xxxxx which shall be accompanied by an authenticated copy of the letters
testamentary appointing such personal representative, or such other evidence as
the Company may deem reasonably necessary to establish the validity of the
transfer, and also evidence as the Company may deem reasonably necessary to
establish the acceptance by the transferee or transferees of the terms and
conditions of the Option. The terms of the Option transferred by will or by the
laws of descent and distribution shall be binding upon the executors,
administrators, heirs and successors of Xxxxx.
4. Adjustment in the Event of Change in Stock.
In the event of any change in the outstanding Common Stock of the
Company due to stock dividends, recapitalizations, reorganizations, mergers,
consolidations, split-ups, rights offering, warrants, or exchange of shares, the
number and kind of the Shares and/or the purchase price per Share will be
appropriately adjusted, upwards or downwards, consistent with such change. The
reasonable determination of the Company regarding any adjustment will be final
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class
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shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of the Shares.
5. No Stock Rights.
Xxxxx shall not be entitled to vote, be deemed the holder of any
Shares, have the right to receive dividends with respect to any Shares, or
otherwise have any of the rights of a stockholder of the Company with respect to
any Shares, unless and until Xxxxx has exercised the Option with respect to such
Shares in accordance with the terms and conditions of this Option Agreement.
6. Reservation and Issuance of Shares.
a. The Company will at all times have authorized, and reserve
and keep available, free from preemptive rights, the number of shares of Common
Stock that is sufficient for the purpose of enabling it to satisfy any
obligation to issue the shares of Common Stock upon exercise of the Option.
b. The Company covenants that all Shares will, upon issuance
in accordance with the terms of this Agreement, be duly authorized, fully paid
and non-assessable.
7. Lock-up Agreement
a. During the term of this Option Agreement, Xxxxx if
requested by the Company and the lead underwriter of any public offering of the
Common Stock or other securities of the Company (the "Lead Underwriter"), hereby
irrevocably agrees not to sell, contract to sell, grant any option to purchase,
transfer the economic risk of ownership in, make any short sale of, pledge or
otherwise transfer or dispose of any interest in any Common Stock or any
securities convertible into or exchangeable or exercisable for or any other
rights to purchase or acquire Common Stock (except Common Stock included in such
public offering or acquired on the public market after such offering) during the
180-day period following the effective date of a registration statement of the
Company filed under the Securities Act of 1933, as amended, or such shorter
period of time as the Lead Underwriter shall specify. Xxxxx further agrees to
sign such documents as may be requested by the Lead Underwriter to effect the
foregoing and agrees that the Company may impose stop-transfer instructions with
respect to such Common Stock or such other securities subject until the end of
such period. The Company and Xxxxx acknowledge that each Lead Underwriter of a
public offering of the Company's stock, during the period of such offering and
for the 180-day period thereafter, is an intended beneficiary of this Section 7.
8. Representations and Warranties of Xxxxx. In order to induce the
Company to accept this Option Agreement, Xxxxx hereby represents and warrants to
the Company as follows:
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a. If in the future Xxxxx desires to offer or dispose of the
Option or any the Shares or any interest therein, he will do so only in
compliance with applicable securities laws and this Option Agreement.
x. Xxxxx acknowledges that there may be restrictions under the
securities laws of the jurisdiction(s) in which he resides on the sale of the
Shares he obtains on exercise of the Option, and that he should seek legal
assistance before proceeding with the purchase or sale of said Shares.
x. Xxxxx agrees that the representations and warranties of
Xxxxx set forth in this Section 8 shall survive the exercise of the Option and
the termination or expiration of this Option Agreement for a period of six
months.
9. Governing Law.
This Option Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware without regard to the principles
of conflicts of laws or choice of law.
10. Benefit.
This Option Agreement shall be binding upon the Company, Xxxxx, their
heirs, executors, administrators, legal representatives, successors, and
permitted assigns, and Xxxxx in furtherance thereof may execute a will directing
Xxxxx'x executor to perform this Option Agreement and to execute all documents
necessary to effectuate the purposes of this Option Agreement, but the failure
to execute such a will shall not affect the rights of the Company or the
obligations of Xxxxx'x estate as provided in this Option Agreement. Nothing in
this Option Agreement, expressed or implied, is intended to confer upon any
person, other than the parties hereto, any rights or remedies under or by reason
of this Option Agreement.
11. Specific Performance.
The parties to this Option Agreement hereby agree that an award of
damages alone is inadequate to remedy a breach of terms of this Option Agreement
and that specific performance, injunctive relief or other equitable remedy is
the only way by which the intent of this Option Agreement may be adequately
realized upon breach by one or more of the parties. Such remedy shall, however,
be cumulative and not exclusive, and shall be in addition to any other remedy
which the parties may have.
12. Waiver.
Failure to insist upon strict compliance with any of the terms,
covenants or conditions of this Option Agreement shall not be deemed a waiver of
such terms, covenants or conditions, nor shall any waiver or relinquishment of
any right or power hereunder at any one time or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
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13. Notice.
a. All notices required to be given under the terms of this
Agreement or which any of the Parties may desire to give hereunder shall be in
writing and delivered personally or sent by express delivery, by facsimile, or
by registered or certified mail with proof of receipt, postage and expenses
prepaid and with return receipt requested addressed as follows:
If to the Company:
@ Entertainment, Inc.
xx. Xxxxxxxxxxx 0X
Xxxx X
00-000 Xxxxxx, Xxxxxx
Facsimile: (00-00) 000-0000
Attention: Xxxxxxxxxx Xxxxx
With a copy to:
Xxxx X. Xxxx
Xxxxx & XxXxxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000
U. S. A.
Facsimile: (000) 000-0000
If to Xxxxx:
Xxxxx Xxxxx
00 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
U. S. A.
b. Notice given in accordance with this Section 13 shall be
deemed to have been given when delivered personally, or when received if sent
via express delivery, facsimile, or registered or certified mail, postage
prepaid and return receipt requested.
c. Any party may change its address for notices by
communicating its new address in writing to the other party.
14. Entire Agreement.
This Option Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by writing executed by all of the parties.
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15. Severability.
The invalidity or unenforceability of any provisions of this Option
Agreement shall in no way affect the validity or enforceability of any other
provision hereof.
16. Headings.
The headings to the sections of this Option Agreement are used for
reference only and are not to be construed as limiting or extending the
provisions hereof.
17. Counterparts.
This Option Agreement may be executed in any number of counterparts,
each of which shall be considered an original but all of which shall constitute
the Option Agreement by and among the parties.
IN WITNESS THEREOF, the undersigned have executed this Option Agreement
effective as of the date first above written.
@ ENTERTAINMENT, INC.,
a Delaware corporation
By: ____________________________
Xxxxxx X. Xxxxxx, III
Its: Chairman of the Board
--------------------------------
Xxxxx Xxxxx
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